Intro. [Recording date: August 24th, 2020.]
Russ Roberts: Today is August 24th, 2020. My guest is economist Lisa Cook of Michigan State University. She has written widely on the role of race in American economic history. I want to thank Plantronics for providing today's guest with the Blackwire 5200 headset, and I want to let listeners know that today's conversation may include topics that are disturbing to young children. Lisa, welcome to EconTalk.
Lisa Cook: The pleasure is all mine. Thank you for having me.
Russ Roberts: Our topic for today is the research you've done on innovation and racism, along with some of your other work on the role of racism in affecting entrepreneurship. I also hope we get to the present moment as well.
I want to start with your work on violence and economic growth. You were interested in how violence, particularly the lynching and race riots affected patenting and innovation. So, describe that research.
Lisa Cook: So, I'd like to start with the motivation for the research. I was working on the Russian economy, the post-Soviet economy. I was writing my dissertation on Russian banking, in Moscow. I was doing surveys of banks and entrepreneurs. And one thing that I kept getting a question about--from both bankers and entrepreneurs--was, 'Why doesn't innovation come to Russia?' They had it during the Czar's period, they had it during the Soviet period, but why is it not coming back now that they had intellectual property laws on the books, intellectual property rights protected, ostensibly? Why wasn't it coming?
And, you know, I didn't have an answer for them. I wasn't working on innovation at the time. I was working on property rights, but not the kind they were thinking about.
So, I put that question on the back burner. I needed to finish my dissertation. I needed to get a job. You know, I needed to do some other things. But, it nagged me.
And I was just wondering: If there could be an historical experiment that could elucidate, what my response would be? Because I saw one banker per month being killed in Russia on average, and that was the sector I was studying.
And I was thinking, 'Well, that could be a barrier to innovation or a barrier to people doing productive things in general.'
So, I started thinking about an historical experiment that might elucidate this. And I was drawn to inventors and invention in the United States, and I was drawn to the period when there was violence that was visited upon African Americans. And this was riots, lynchings, and segregation laws that enabled and protected that kind of extra-legal behavior.
And I thought that this was the kind of experiment that might elucidate the Russian situation.
And, what I found was better than I expected with respect to an illustration. What we see is that when this violence kicks up in the US [United States], African Americans stop inventing: African American inventors stop inventing. And, when it subsides, they start inventing again.
But, it remains the case that 1899 is still the peak year for invention per capita for African Americans.
So, this can have a long term persistent effect.
But, I'll stop there because I will tell possibly the rest of the story, but that's how the research got started. And I wanted to use this as a cautionary tale for Russia. And I got my answer--it wasn't necessarily what I scripted. I had no priors, really. I just wanted to see if this would be elucidating, and it was.
And when I gave this talk, the people who keep me engaged about this, who are always engaged in the seminar, keep me afterwards for questions are from China. They're from Russia. They're from Ukraine. They're from the former Soviet Union. And they understand how personal security--the lack of protection of the rule of law--can inhibit intellectual property-right protection and can inhibit innovation from happening in general. And, of course, you know that's the bedrock, the foundation, of long-term growth. So, that's where the research got started. It's punchline[?].
Russ Roberts: I'm reminded a little bit of our conversation, here, about the book In the First Circle by Solzhenitsyn, which is about the attempt by the Soviet regime to have its scientists and mathematicians innovate in the Gulag. And of course, the tension and the poignance and the power of that book, part of it, comes from the fact that science doesn't advance very well in an atmosphere of fear and politics. We watch these prisoners desperately struggle with the ethics of what they're doing, the morality of what they're doing, and just the climate of stress and intensity.
And I'm sympathetic to your finding because of that. I think you and I as academics know that science, scholarship, research requires a certain level of serenity to have the kind of thoughts that lead to breakthroughs and innovation.
Russ Roberts: At the same time, I think what you've tried to do is so ambitious, that I have some skepticism about it. So, I want you to talk about the incredible amount of work you had to do just to get your data ready for any kind of analysis.
Lisa Cook: So, thank you for that suggestion. I actually didn't know about Solzhenitsyn's work, but as you probably know, I have a whole research agenda on investigating innovation during the Soviet period. And, all of these experiments that were tried and failed, and the thing that worked was allowing Soviet inventors to obtain patents outside of the Soviet Union, namely in the United States.
So, we were the only ones who were able to validate whether this was the original idea.
This is something that motivated Russian scientists. And these were largely scientists. These weren't, like, American inventors. Most of these were scientific teams at institutes. So, anyway, thank you for that reference.
Russ Roberts: Yeah; we'll talk.
Lisa Cook: But, getting back to my work: It was an incredible feat. I had no idea what I was embarking on. This was a second to third dissertation. I had thought that these had already been identified. I did not know that race did not appear on patents. So, that was the first thing I needed to identify: African Americans who were in the patent data. Now, I thought that was going to be a doable, feasible thing, because there was a whole research agenda and economics related to black names.
Now, one thing that I did notice was that these were post-Civil Rights-era names that were being used in this literature in the 2000s. [inaudible 00:08:14 ? Mola Nathan and Bertrand, Bertrand Mola Nathan, Fryer and Levitt ?]. And, I thought that it would be fairly easy to identify them in the data. Well, it wasn't. And, there had never been a systematic review of black names in the historical period before the Civil Rights era.
So, I wound up creating the first list, the first systematic investigation, identification, of black names in the historical period. And, I needed those to be able, I thought, to identify African Americans in the dataset.
Well, it worked okay. It didn't work out so well. Many of these did not have typical African American names for the period I was covering from 1870 to 1940.
So, it was interesting in that sense.
So, it wasn't--that wasn't the right approach. So, I needed--or it wasn't a complete approach, I needed to do something else.
So, I needed to try to find the universe of people who would be inventors. I looked in every directory imaginable of scientists, of educated people, of just famous people. And, so, this is what was done for inventors generally, for the literature at the time. So, I was following their methodology.
And, that didn't prove to be so useful. African Americans often weren't in these Who's Who editions--they are famous people, well-known people. So, I just tried to find articles about inventors and looked in every nook and cranny.
I started reading obituaries, because often, African Americans weren't identified as inventors during their lifetimes or they didn't identify themselves as inventors in the Census. But, their relatives would identify them as inventors rather than as machinists as they might have identified themselves as in the Census. So, it was a sweeping effort.
And, for each of those datasets, it took about a year. So, I was at Stanford from 2002-2005, and that's where most of this initial research got done. And it was a sweeping effort. So, you're right: It was ambitious, but it wasn't ambitious by intent, not from the outset. I thought it was going to be a much easier slog.
Russ Roberts: Talk about the magnitudes that are involved here. I think it's really important to help people. Because what you're going to look at is the impact of lynching, race riots, segregation laws as well on patenting by African Americans. And I think it's--one of the most important pieces of the work is just to lay out just those magnitudes: to get a feel for--I think a lot of people would have said, 'Well, before Civil Rights, before, say, the 1960s, how many black inventors were there?' I mean, they're obviously very poor, limited economic opportunity due to educational failings, racism, and so on. So, give us a feel for how much patent activity there was in this time period. And then give us a feel for how much lynching and other atrocities are present in this time period. Go ahead.
Lisa Cook: The magnitudes are small, but they--I mean, what I find is that the number of patents that would be missing would have constituted the patents that we would have seen in that same period from a medium-sized European country. Which would have been substantial. So, I think we really want to make sure that we have the perspective of the entire dataset.
Now, per capita, you see from the first graph, what you see is the different orders of magnitude with respect to patenting per capita for African Americans versus all other patentees. And, they're assumed to be white: all others are assumed to be white if they're not black in this dataset.
And, the orders of magnitude are quite different. And that is--I'm going to say that, from the outset, I'm looking at the direction of invention and innovation for this paper, and they were moving in the same direction before 1899, and they started moving in opposite directions after these waves of violence.
So--I'm taking into account, though, all those factors that you've mentioned. I'm taking into account literacy, in the estimation, in the formal estimation. I'm taking into account literacy and job opportunities, the occupations they were in. I'm taking into account the overall economy. So, I think I'm controlling for the factors that you mentioned. And they're--
Russ Roberts: Yeah--I'm not--that's not my criticism. I'm just trying to set the stage. I think the context, is--for me, the numbers are actually surprisingly large. Not the impact.
There's two factors here: there's the level and then the change and response to the violence.
The level, in the absence of violence--or at least when the violence, not absence, but when the violence was lower--the levels actually, to me is surprisingly high given the handicaps that the African American community face.
And you identify a number of important inventions and creativity of the community in the face of those challenges that I think is quite, actually quite inspiring.
But, your point is that starting around 1900, it takes a big drop. The drop is a little--while the level of white innovation and patents by white inventors continues to stay high, or rise. That's the point of the paper, correct?
Lisa Cook: Right. Exactly. Exactly.
And this was the alarm bell that went off for me. Inventors have many of the same characteristics--and this is the point of other papers that I've written about--great inventors have some of the same characteristics, whether they're white or black. They are mobile. They're highly mobile. They go to where the opportunities are.
So, I wanted to know how the incentives changed for the two sets of inventors. Why would some respond to incentives and others not?
So, during wartime, there is an incentive to invent. Certainly the composition of invention changes; but still, there's an incentive to invent. And I didn't see that. I didn't see African Americans responding to that.
So, something just seemed weird, and I wanted to figure out what was happening. So, you're absolutely right in that sense: it had an economic motive. The alarm bells rang out with respect to innovation, the incentives for innovation.
Russ Roberts: I guess one of the challenges I have, listeners know I'm very skeptical of econometric work generally. So, don't take it too personally, Lisa.
Russ Roberts: But, one of the challenges here is teasing out the independent impact of, say, lynching or race riots. What, in a Jewish context in Russia, would be called a pogrom. An act of, basically, state-sanctioned violence where the police step aside and let really evil people perpetrate violence on innocent people. Obviously, that's not good for invention--
Lisa Cook: Right. Right, right, right--
Russ Roberts: You can't--there's nothing to debate there. The question is: What's the causal piece that causes dramatic changes? Is it that they can't travel to where the opportunities are? Or is there something else going on below the surface--you know, like a failure of the education system--that's really the causal driver of the change?
Lisa Cook: So, of course, there would be--yeah. I hear what you're saying, and that's why I decided to make sure that I had as many differing datasets as I could get that would be independent of this dataset, but could be illustrative. And as you saw at the end of the paper, I use newspapers; and we see exactly the same pattern, this dramatic drop in 1899.
And, I would say that it was all of these factors together, that there was something in the water that was changing. Maybe it's that racial animus that the Southerners were imposing on the rest of the country. So, you know, the Civil Rights Act of 1875 was being rolled back and challenged by the southern states. And, they started winning. And, certainly, the big prize was Plessy v. Ferguson. So, they put an end to Reconstruction in that way. So, I would say--
Russ Roberts: That's 1896.
Lisa Cook: That's right, it's 1896. But, it takes about three years--as my Constitutional law colleagues tell me--it takes a couple of years, at least a couple of years for rule-making to start.
And I think that that's where you see a rupture in inventors being able to see one another freely, say, at public libraries. So, you have the segregation of public accommodations of public spaces. Inventors are not able to get to their patent attorneys. There aren't African American patent attorneys until the 1970s.
So, they were heavily dependent on white patent attorneys and they weren't able to get to them, because central commercial districts--business districts--would have been all white.
So, I think that this had the same effect in baseball. You had organized baseball that was integrated until the late 1890s, and then it was segregated. And we have the same kind of phenomena happening: You see a decline in productivity, but you see the alternate universes that arise, and then they come back together in the 1940s, 1950s.
Russ Roberts: It's a little bit different than the standard story you started with where, say, a lack of property rights discourages innovation because you can't capitalize on the costs that you've incurred with future gains.
I'm struck by a finding you talk about--not a finding, but an empirical finding that you mentioned in another piece of your work--which is that, in this, part of this period we're looking--just to remind listeners, we're looking at basically 1870 to 1940, and we see sort of a breakpoint around 1900. And yet, in 1900 to 1930, there's quite a bit of black entrepreneurship.
And it strikes me that your story--if your empirical finding, your econometrics are capturing what's going on--that maybe it's an example of segregation per se. What you were talking about: the inability to mingle with other folks, whether it's white attorneys, whether it's intellectual influences from libraries or other social or intellectual gatherings that aren't as easy as it used to be.
It's not so much fear. The fear part is horrible, but it's--I don't know how important that is in the patenting, inventive, innovation, destruction rather than the segregation, per se.
Lisa Cook: Right. Okay, I'll give you an example. So, you know, where I started, my story was with the lack of rule of law. But let me give you a few examples. My cousin, Percy Julian, who was the first director of a corporate research lab of Glidden Laboratories, first African American admitted to the National Academy of Sciences. His house was firebombed twice. It is violence. I want to be very clear about that.
What was W.B. Du Bois doing at this time? So, let's take an example from the early period here, let's say in the 1906 Atlanta riot. What was W.B. Du Bois doing? He was in Tuskegee, in Alabama, collecting data. Famous Sociologist, one of our first contributors to economic information, economic data on African Americans. And, he had to come back from rural Alabama, come back to Atlanta, pack up his family, get a gun, move his family. All of his research stopped. All of it just stopped, all of a sudden.
So, I think that segregation had something to do with it. I--absolutely--that's why I keep segregation laws in. But, it's also violence: because they have a differential effect. These three different factors have different effects on innovation.
So, segregation laws, for example, have a greater impact on electrical patents. And I can see how that might be the case, right? Because you might have many more steps involved--many more steps involving other people, related to electricity.
So, segregation laws, the introduction of segregation laws, could stop that kind of innovation, that kind of invention in several different places. So, to me, that makes a lot of sense.
Lynchings would have a greater impact on, let's say, mechanical ones, where you might need to go to work--to work on a railroad--or that's where you typically work. And lynchings make people flee and intimidate people.
So, I can see how different types of violence have different impacts on various types of innovation.
Russ Roberts: No; I don't mean to suggest that they didn't. I was just trying to contrast--and I certainly agree with you all on all that, obviously. I was just thinking about the growth of entrepreneurship, which, over this time period of 1900 to 1930, which I presume was mainly within the African American community, and not broader--
Lisa Cook: You're right. And this is--this is clear contrast. African Americans had to serve the African American community. So, this was a golden age. Some people characterize this, scholars characterize this as the Golden Age of African American businesses.
Well, they had no other options. And they turned out to be--but there were businesses, black businesses before 1899 or 1896. And, what we saw--and we see this through different inventors--is that they stopped selling to the public because the racial discrimination coming from consumers was increasing. So, they decided to stop interacting with consumers, and they became wholesalers, or they found some way not to interface with the public.
But, that also meant that their clients may wind up being poor, because average African Americans were going to be poor, especially if they were going to be in the North. So, the weird thing is that we had African Americans setting aside, like, White days at the skating rink or White days at the pool, if a pool was being operated by African Americans. And, this is the way other businesses segregated themselves: maybe they had Black days. Certainly, museums had Black days; or, fairs featuring inventions had Black days.
So, they started using some of the same tactics to be able to attract white customers. So, I think that that is a stark contrast.
But, these inventions typically were not for black people. They weren't servicing just black people. They were outside the black community. Garret Morgan's traffic light was for everybody. The gas mask was for everybody. It was for the military. It was for fire departments. So, they had to sell to a much broader audience.
Russ Roberts: I think the--you raise another factor, which is: If there's a rise in racism on the part of white consumers, the economic incentives for black invention are going to be smaller except for their ability to be anonymous--and we're going to talk about that in a minute. But, I wouldn't push that too far, personally. It's not--I don't think it's just an economic--it's not just those financial incentives. It's the other incentives, I think, of fear and being at ease and other things that I think would make invention harder.
Let's turn to Garrett Morgan, because it's an extraordinary story. You want to something? Go ahead.
Lisa Cook: So, to--I'm not sure I understand. I think that the entrepreneurs had the opportunity to sell exclusively to African Americans is not necessarily something they wanted to do.
Russ Roberts: No. Of course, not.
Lisa Cook: And, often those businesses couldn't get insurance. The African American homeowners couldn't get mortgages, even though mortgages were fairly rare before the 1930s. But, even still, that would help with financing innovation, and African Americans didn't have access to that.
So, I'm suggesting that entrepreneurs had a slightly different experience, and I think that we're going to get to this, talking about Garrett Morgan. And I think an example like that would be illustrative, because he changed his business based on how segregation was growing and how racial animus from the customers was growing.
Russ Roberts: Actually, I think you misunderstood--I was making a different point before. I was trying to make the argument that entrepreneurship--local entrepreneurship, starting a business in your local community--was different, if you're an inventor trying to sell to a broader audience. If you're an inventor selling to a broader audience, and suddenly, because of racism and other problems you weren't going to be able to market that effectively to white customers, there'd be a financial incentive in and of itself that would discourage black innovation--
Lisa Cook: Before the violence happens or after the violence happens?
Russ Roberts: After it happens.
Russ Roberts: And so, my point was that, I don't think that's the whole story. I think there are psychological and other forms of impact, not just the financial disincentives that violence brought, to the black inventor. That was my whole point.
Lisa Cook: Okay, that's fair enough.
But, I would argue that people like Garrett Morgan found ways to adapt, and that there was both a financial incentive, and you know, he was selling haircare products to the black community while he was trying to sell his gas masks largely to the white community, the fire departments.
Russ Roberts: Yeah. Let's talk about that. Talk about the Garrett Morgan story: what he was doing creatively to get around some of the challenges he was facing.
Lisa Cook: One of the things that you mentioned that I'll pick up on is that patents helped some inventors stay anonymous. So, all you see recorded is the name and the place where the person lived. So, there was no Internet at the time; there was no way to fact-check who was who. And, this happened a lot that people with non-black sounding names at the time would show up for different jobs or to sell their inventions, and they were turned away because it was found out that they were not white as it was suspected, but they were black.
So, Garrett Morgan, in particular, found creative ways to keep selling to his white customers. He sold his gas mask in different ways by hiring white salesmen who pretended to be Garrett Morgan. So, in searching out newspapers during this period and just looking for Garrett Morgan doing what he did across the country, we found somebody pretending to be Garrett Morgan. He is selling the gas mask, demonstrating it. And this was clearly a white person, because it would have been big news had this been a black person. I don't think a black person would have felt comfortable being this far out in a rural area in New York at the time.
So, that's one thing that he did. He also hired a Native American to pretend to be him, and he pretended to be his research assistant. So, they would both be at the demonstration, but Native Americans were known for their famous medicine shows; and they were thought to be rather clever, rather inventive with their boats and their moccasins and their chemical remedies, their plant remedies. So, they were trusted as people who could be inventive. So, he hired a Native American to work with him, so that he would be the one answering all the questions. So, this was just to get his foot in the door. So, that's one thing he did.
Then, he just started dressing up like this Native American chief, and he would answer these questions, as well.
So, he was being very creative in trying to sell the gas mask.
What outed Garrett Morgan was this disaster at Lake Erie, whereby no one could bring out the workers working under Lake Erie. They were building a gas line under Lake Erie, and there was this disaster: people had died. And he got his brother--it was the middle of the night. They put on their gas mask and they started bringing people out. So, they started bringing out both the people who were still alive and those who had already passed away; but they were the only ones who could do it. So, this was the ultimate trial, ultimate test of their gas mask. So, he was successful at doing this.
And, the unfortunate thing for him was that his picture appeared in the paper, with his gas mask, and bringing out these dead bodies and these people who were alive. So, he wasn't given the accolades, all the accolades of bringing people out dead or alive, but it was shown that this was an African American.
And, Southern fire departments who had ordered the gas mask, canceled their orders. So, he suspected this would happen, and in fact, it did happen.
Russ Roberts: Yeah. It's incredible. It's just an example of incredible entrepreneurial creativity combined with the inventive ability that he had. What year was that, roughly?
Lisa Cook: Roughly, this is the mid-1910s to the mid-1930s, I would say.
Russ Roberts: I guess, and really, I kind of minimized the financial incentives, but obviously, if there's rising racism or racial animus from white consumers or Southern fire departments, that's not a trivial effect on the demand for your product if you want to make great innovations. It's not irrelevant.
Lisa Cook: Right, right. Right. Right. But, to your point I would say, it's not just financial, he went into--I thought he was a consummate entrepreneur, and I think he's under-appreciated in that sense. He also was selling real estate. And he was selling real estate for black communities to evolve. And he was saying that it was a place of 'peace and leisure'--a place where they could be themselves and interact without the threat of violence or the threat of being discriminated against.
So, I think that the incentives--and, it didn't seem to be a big business. In his papers, this wasn't a major feature. But certainly it was there, and it was a surprise that it was there. I had no idea that he engaged in that as well.
Russ Roberts: Do you worry that in your--you have to tell me how much of your research depends on--obviously, you have to identify the patents, you said the race of the patent holder. Did you worry that some of--and you may have mentioned in the article; I don't remember--did you worry that some of the patents may have been African American inventors using white names because of the very factors we're talking about now, after, say 1900?
Lisa Cook: So, I don't think so, because the names--remember, I have data from 1870 going forward, right? So, I wasn't able to find these names in the period before 1899, based on typical techniques for identifying African Americans in large datasets. So, I don't think they changed their names. They would have to change their names a lot. And, you know, it's funny you should bring that up because the only conversation that I had with Milton Friedman, it was a similar conversation, was about this. And, not only did he encourage me to pursue this, to publish it, publish it in a Top-Five Journal, but he also worried that, maybe, the violence caused people to change their race to pass.
Russ Roberts: Represent--
Lisa Cook: Right, right. And, you know, certainly we have evidence of this happening. There is a great book by Jaspin called Alive in the Bitter Waters, where he shows, all over the country, where there was a violent event and people showed up in neighboring counties and counties throughout the United States, as another race, that some people were passing.
But, for a number of inventors to fall out like this. so dramatically, there would have to be a lot of passing. There would have to be a lot of people changing their names. And, I just don't see that. I don't see that happening.
Russ Roberts: Well, I guess the other issue is, it's not so useful to have a patent in somebody else's name.
Lisa Cook: Right. No, right, right. No, exactly.
Especially because: you bring up an interesting point, when you see advertisements from that period; and I've compared other inventors in Cleveland, white inventors in Cleveland, to Garrett Morgan, a famous inventor in Cleveland, and everything, everything that was advertised with respect to those inventions had the person's picture on it.
So, Edison--Edison was everywhere. So, so inventors really wanted to identify with their inventions because that's what everybody else did. And when you look at the haircare products that Garrett Morgan also produced, his picture was there and everybody in his family. Right? But you don't see this for all the other products that he was selling to the broader community.
Russ Roberts: Before we move on, I want to just mention one issue that I think is--I want to let you react to, which is, you look at the impact of patenting, which, of course, as you suggested earlier on, the magnitudes are enough to--that because this violence, there was reduction in patenting that an innovation that was non-trivial. I just--I always worry about our focus on things that can be measured.
Russ Roberts: And of course, growth is important. But, despair is, to me, more important. And I wondered, as you were doing this very focused work on patents and growth rates and innovation, whether you ever worried about the fact that you were going to lose sight of the human cost, which is not measurable of lynching and segregation and riots?
Lisa Cook: I never lost sight of the human cost. And in fact, I had to stop working on it when Google Search started bringing up images of lynchings. And I started this work much before Google was including these. And it was just--it was traumatizing. It was less traumatizing to my students, but still I kept checking in with them. So, I think that's a fair question.
But, particularly, I'm glad you raised the question of measurement. Because, I started with inventions, not just patents. And it was so hard to find these inventions recorded someplace--and systematically. And I==someone would claim that he or she would have an invention, and I couldn't find it recorded anywhere. I couldn't find it in trademark records, for example, or even in copyright records. But, that I think you're right.
Now, you point to something that is very interesting about this period. The most contested patents in U.S. history, and may still be, is the cotton gin, an invention of an African American slave that was being used on a Georgia plantation; and Eli Whitney just happened to be the first person to get to the patent office.
Now, it wasn't Jim's--I think it was Jim's father, who was the one who--the enslaved person whose father actually invented it, who was contesting it. It was the other planters in the region of that plantation who were quickly using it and quickly upgrading it. That's true for most agricultural innovation at the time. And they were very angry about not having been the first to get to the patent office, and they were the ones suing him.
So, you're absolutely right: there's a lot of agricultural innovation that African Americans were engaged in, and that all people were engaged in, especially Southerners.
But, because it happened so fast, they typically don't get a patent for it. And this is something that they thought, these planters thought, that Eli Whitney was taking advantage of==the fact that they don't register a lot of southerners and rural people, people engaged in agricultural typically don't do. So, I think that's a fair question.
But, I'm very aware that this doesn't capture all innovation. It doesn't capture all invention. It was just too hard to study those other things.
Russ Roberts: It doesn't capture all the costs--
Lisa Cook: Yes, absolutely--
Russ Roberts: The human costs. As an economist, or semi-former economist, the part of economics I don't like is the emphasis on what can be measured at the exclusion of other things. Obviously, a good economist doesn't exclude them[ but sometimes hard to keep that in mind.
Russ Roberts: I want to move to the current moment. And, I know you've been involved. I want to look at two topics: the state of economics as a profession, and the reckoning that we're least trying to have some of us on race issues here in America.
Let's start with the economics profession. You're involved with efforts to change the level of diversity in the profession. Talk about what you think is going on there.
Lisa Cook: So, one of the things that I learned from this research--and as you know, it took me a decade, and many twists and turns to get the research published--and, one thing that I just walked away from the research with was that we need to minimize the barriers to the free flow of ideas. And, the barriers in my research happened to be violence, happened to be segregation laws. But, I see the same--and a metaphor, an analogy--in the economics profession: By not having the diversity, not taking advantage of the people who are in the field, you're also not taking advantage of their ideas.
And, when ideas become incestuous, they become less useful, and the whole field becomes less vibrant. So, I think that the only way the economics profession is going to survive, is by allowing the free flow of ideas.
Now, we'll never be perfect. I understand that. But, I also would suggest that we've got to be much more curious about others who are sitting in front of us, that we have to be more welcoming.
If we're just talking about the American landscape, this is becoming a majority-minority country, and I think that we really have to take advantage of the people who are with us.
And one thing that I find, a calculation that I did with a colleague, was to show that GDP [Gross Domestic Product] could be between 0.6% and 4.4% higher per capita if more African Americans and women--those were the two groups I looked at--so I think it would be higher if you included people of other ethnicities and races more systematically. So, everybody is losing out. It's not just African Americans and women who are losing out. It's the entire society, entire economy that is losing out.
Russ Roberts: I don't know, Lisa, I think having more economists is not necessarily a good thing, but I assume that work was a broader look at inclusion.
That's a humorous remark, but it's also a serious remark, in that I don't think we should have a goal of having x% of the economics profession have a certain makeup. I do think that it is a loss to the profession and a loss to the world at large of how few there are--how few, particularly, black economists--there are. It's a much more dramatic disparity between blacks and women, especially in the graduate school pipeline right now.
Lisa Cook: Right. Right. And I just believe, like Janet Yellen believes--I mean, she has said that the lack of diversity of the economists who were analyzing the data related to the Financial Crisis was a cause of the Financial Crisis. That it led to groupthink. There was little diversity and lived experience. And, I think that's absolutely right. I think we get great questions when people have different lived experiences. So, that's what I mean by the free flow of ideas. Sure.
Russ Roberts: I agree with that, obviously; although I don't know how important it is that--I don't know the relative importance of, say, black and female economists in talking about the financial crisis. I think, certainly there was groupthink across non-racial, non-gender lines that was costly.
Lisa Cook: Well, I think Janet would say otherwise. I think that she started collecting--
Russ Roberts: No, I disagree with that, but go ahead--
Lisa Cook: she started collecting data at the San Francisco Fed, and she started seeing all the opportunities--I mean, African Americans in the economy can be canaries in the coal mine. And I think, you know, when she's out talking to different community groups about the mortgage crisis, she decided that this was not an asymmetric information exercise --she could not just going out and saying what the Fed is doing--but collecting data from these community development arms of the Fed, that they can be useful in getting information.
A nd, a lot of things happen to African Americans, let's say unemployment, than--we're a leading indicator for a number of things, including unemployment. So, I think it was a good use of data. And I think if you had people who had that lived experience, they could interpret data in a different way.
I mean, I interpret data in a different way when I am advising, when I was advising President of the United States at the CEA [Council of Economic Advisers]. And I think that I caught some things that other people didn't catch. I caught them earlier.
So, I think that you might discount seeing black and female, what we might add to it. But I think you would probably say the same thing about directions in the car.
Russ Roberts: Meaning?
Russ Roberts: What do you mean?
Lisa Cook: Women catch different things. Like, how we--when we were flying[?]. Women often--
Russ Roberts: Lisa . I don't disagree with you. What I disagree with is on the Financial Crisis per se. I think the nature of the group think was not particularly racial- or gender-related. I don't disagree that having a wider range of life experiences could have improved our understanding of, say, the Financial Crisis or helped to see it earlier.
So, I don't think we disagree. It's just a question of magnitude in terms of this particular piece of data.
Lisa Cook: Sure. Sure. She turned out to be the most accurate on the Financial Crisis according to the Fed note. So I think there's something to that. But, I don't want to focus too much on this particular crisis here. Sure.
Russ Roberts: I liked your dance move before. For those who missed the YouTube bit, if you only listen to the audio, you want to check out the EconTalk page at YouTube, to see the punchline to Lisa's comment there.
Russ Roberts: Getting serious again. Well, first, what do you think the profession ought to be doing about this?
Lisa Cook: The first thing that I think it should be doing is to encourage the pipeline. As you know, I've been Director of the AEA Summer Program. I think it's a great program, and I think that it fosters the kind of environment, both among the faculty and among the students, that we'd like to see to augment the free flow of ideas. I think that's the first thing.
But we can't focus exclusively on the pipeline. I think there are some issues related to workplace climate, a workplace in general, that we need to address.
As you saw from the climate survey, many more women had been the victims of sexual assault. I think this is one thing that the New York Times pointed to. And I think it scared all of us, all of those worked on that survey. All of us who are reading those data were absolutely horrified to see this.
And, I think that we have to--black women report having to do more than any other group to avoid sexist and racist behavior. Moving institutions, not going to seminars, doing other things like that. They also report being the most discriminated against and discriminated against with respect to promotion and pay.
So, I think that we need to make sure that we are closing these gaps, that we're not treating women differently. For example, not asking them to do more service just because they are women, or just because we think that they might be interested in it, or we're not paying women because we think that that's what they would accept.
So, there are things that we can do that are best practices that appear on the AEA [American Economic Association] website.
But I think it's a generational thing. It's not something that's going to happen overnight. We have to be better bystanders. When we see things happening to our colleagues, to our students, we need to step in and say something. This is something that we haven't been doing as much of in the past, but I certainly think because we can be educated about it and aware of it, I think we can do more of in the future.
And I think this will augment the free flow of ideas. If people really feel like they can contribute, I think they will.
Russ Roberts: Just--AEA stands for American Economic Association--for non-economists listening at home. And CEA is the Council of Economic Advisers that you alluded to earlier.
I think the bystander part's large and challenging. The cultural part's a huge piece of this, obviously. When you have a bunch of one type of person running institutions--in this case, mostly white men until only recently--a set of norms develop that are not necessarily conducive to intellectual life, kindness, a thousand things. And changing that is not going to be easy.
Obviously, changing it through that bystander effect for me is ideal, but I suspect there'll be other attempts to use other, more top-down ways to enforce it. But, we'll see how that goes.
Lisa Cook: That's right. And I think it was important that we adopted a code of conduct that--so, did NBER [National Bureau of Economic Research], so have different departments--
Russ Roberts: National Bureau--
Lisa Cook: I think--National Bureau of Economic Research--for Economic Research.
And I think that adopting that more widely does set a set of expectations about how people will interact. We are getting rid of--of course, we're getting rid of that for this go-round. But, interviewing in hotel rooms. Now, that it did go to zero, but I think it's a long-standing practice that some of us just got used to, we thought was weird, our friends thought was weird. And it just took a fresh pair of eyes from graduate students, to get us to do better, to do something different.
So, I think there's hope, and you're right: people set the standard. My hope is that we have much better representation. I'm on the Executive Committee; I was elected last year, and I think that it's just a much more diverse committee than it's ever been. So, I'm hoping that will bring some fresh ideas and other white men who are allies who will bring fresh ideas to the table.
Russ Roberts: Let's turn to the country. We're at a particularly powerful moment, or at least I hope we are, I think we are. For a variety of reasons. The death of George Floyd has catalyzed--we've reached a tipping point of some kind.
The challenge for me, the way I see it, is that, now the challenge is to do something that actually makes the world better, not worse. The two areas that I worry the most about in terms of policy as opposed to culture--just talking about culture; obviously, culture is a huge part of this.
But, in terms of policy, police--policing and education are two areas where I think the black community has been punished, and in inappropriate ways, horrible ways. And I'm curious where you think we ought to go from there. I think the cries for, quote, "defunding"--although you could debate what that word means in a different context. But, that's not so straightforward as far as I'm concerned.
In terms of education, I think we need to try something radically different. I'm curious your take on those two issues.
Lisa Cook: I think those are great issues to bring up, and I think we are at a very important moment.
I would argue and I've argued before this happened, before the death of George Floyd, that--because my father used to be administrator of a mental institution, and I've seen de-institutionalization. And I've seen police take on roles that are absolutely not within their training.
And I think we're asking them to do way too much. In that sense, I would like for there to be more attention to what we're asking the police to do.
I'd also like for them to be trained better. In most states--and I' seeing the data for various states--it seems as though police have fewer hours of training than hairstylists. So, and nail techs. This is one of the most important jobs in the community. And obviously, as I've been talking to you about the rule of law, Russ, it seems to me such an important pillar of society that I would like for them to focus on that.
And we hear these stories all the time of people going to jail, like, going back to jail. Getting in the criminal justice system. Because, that's where they can get their meds. That's where they can get drug treatment.
Why are we putting all of this on the police? That's not what they're supposed to be doing.
So, I think we need to have them focused on public safety, and get them trained properly, so that they can do what we're asking them to do, rather than do a lot of other things. That's Number One.
Number Two, with respect to education: I certainly think that education has got to be a way that Americans see themselves going forward.
And, I would also say, though, that we've got to change racial discrimination, such that the education that people have is actually used. That, this is a part of the free flow of information that I'm talking about. Especially in your neighborhood, Russ. Because in Silicon Valley, what I find is that workplace discrimination, especially in this era, post-George Floyd, there are a lot of conversations about how African Americans were let go, were not funded, were subject to workplace harassment.
And just before the George Floyd incident, just before this happened, tech companies were scaling back anything that had to do with attracting more minorities to their firms, because they were coming under such pressure, such backlash from their white counterparts in these firms.
So, I think that that's a serious issue that has to be addressed, fundamentally addressed, at all levels.
Especially, it's the innovation economy that I know most about. So, that's where I would say, we need to leverage the education that already exists. And, we need to make sure that African Americans are showing up, and women are showing up, where they may not have been welcomed before. And again, I'm focused on STEM [Science, Technology, Engineering, and Mathematics] education before. And, I still think there need to be more and more participation on patent teams. Patenting by women is one order of magnitude lower than it is for men in the patent dataset. That doesn't make any sense.
And what we do know is that co-ed teams, that diverse teams, are more productive at patenting than those who are not. Single-sex female teams are less productive than single-sex male, but they're both less productive than those that are integrated.
So, I'm just saying that we've got to leverage the education we have, do a better job at welcoming people into educational spaces where they haven't been welcomed before. So, I agree with you on that: there's a lot more that we could do.
Making sure that there's rural broadband, for example--I think this is something that's been laid bare by--and, equitable, universal broadband. So, even within urban spaces, there isn't enough broadband to get the educational outcomes, more uniform educational outcomes.
There's a lot to do. There's absolutely a lot to do.
Russ Roberts: But, I think the K-12 part of it is just a terrible barrier to the kind of inclusiveness that you'd like to see, say, at the tech level, and the STEM level, and I think--
Lisa Cook: That's right. And Chetty--the work of Chetty et al. shows us this--that exposure to inventors actually changes one's life outcomes. Right? And, what we see is that minorities and poorer children who don't have access to inventors have worse life outcomes. And I know that that's a correlation that this entire research, I think, was elucidating just using those correlations. So, I would hope that we would be able to get better at a K-12 education, and education along many different dimensions.
Yeah. Well, we have a lot to do. But, the main thing I would urge people to think about is trial and error. We've failed at universal attempts to reform education, especially for people in poor families, as you mentioned, and I think it's a disgrace.
That's right. And there are a lot of great experiments that are going on, say, at Michigan State and at the University of Michigan, promising college to high-achieving students who are of lower socio-economic backgrounds. And it's just that promise--just that promise--that makes a big difference, because they don't even think that this is something that they can afford, that their families can afford. And it can have an effect on the entire family--the outcomes, the ultimate outcomes of the entire family, not just on that individual.
So, I think that there are a lot of experiments that are going on, that need to be replicated. And I think you're right: we have to keep trying. We have to keep with these experiments. Typically, they take place at one university at a time or one state at a time, but I think there's a lot more we can replicate.
Russ Roberts: I don't mean literally experiment. That's okay; I just want more innovation on the ground at the school system--that I want to get away from the public school system, the way it's regimented, and I think it--it needs an overhaul.
Lisa Cook: Okay, I'll leave that to my colleagues who do specialize in education, I don't want to step on their feet. But, from what I see, from the policymakers' perspective, is that a lot of these experiments are going on in bubbles and we just need to replicate them. And we don't need to give up. I think you're right: we don't need to give up on trial and error, on innovation, and there are a lot of these happening. So, let's replicate what we've seen as being successes.
Russ Roberts: Yeah. Let's close with the state of America. A lot of people are increasingly suggesting that America's mission, vision, past--and present--is irredeemable. That we are steeped in racism. We're a country built on slavery, at least to a large extent. And, going forward, we're going to need a new narrative.
Obviously, there are people pushing back against that narrative. I'm fascinated by the idea that there is a narrative. I think a nation without a narrative can't really cohere; and I think what's up for grabs right now is what that narrative is. And I'm curious what you think that narrative might be going forward as we come to grips with our past. A mere 300 years after it started. A little late, but maybe not. What are your thoughts?
Lisa Cook: The first thing that I'd like to say is that I may not be the typical economist in that I'm always hopeful. And, I would say that 300 years might be late, but it's never too late.
First of all, we need to just acknowledge the history. I grew up in Milledgeville, Georgia, the capital of Georgia during the Confederacy from 1803 to 1863. And there are monuments to the Confederacy everywhere. I learned a lot about the Confederacy.
There's so much more that the country needs to learn. This is not just for African Americans to learn; it's not just for southerners to learn; but the entire American country to learn. Everybody benefited from slavery, everybody. Everybody in the economy at the time--besides those who were enslaved persons or related enslaved persons--benefited from the economy at that time. We have to come to terms with that.
It's not just universities who bought and sold enslaved people. It is institutions, it's banks, insurance companies that underwrote the ships. There is so much complicity. And, we can't say that we're looking at it from a 21st century lens. We can't just say that, because they were people at the time saying that. And we know that, and it's not just from the Hamilton musical that we know that, but we know that from a lot of the historical research that's been done.
So, I think that we absolutely need some sort of reckoning with that. There are many proposals on the table to study the possibility of reparations, many economic proposals being put forward, and I think they should all be taken seriously. And, I certainly think that institutions need to keep doing what we're seeing a number of institutions doing:checking the names of buildings, for example, or monuments that are erected, that are named for Confederate generals or for slave owners. We need to keep reconciling this history. We learn more, so we need to do more.
And, as a person, again, who grew up around these statues and these monuments, we don't see this in Europe. We don't see statues and monuments to the Nazis in Europe, where I lived for a good part of my life. I don't see this. We don't see it there. And, I don't think that we need these constant reminders, these things that are intimidaters.
In fact, I have updated the lynching data, and I've constructed this dataset from 1683 to 1984. And what we see is that Confederate monument-building took the place of lynching: that it was a substitute for lynching. So, it was meant to intimidate. It was not done at the time of the Civil War; it was done, 50 years afterwards and the time of the Voting Rights Act.
So, it was definitely meant to intimidate, to--getting rid of those kinds of things, I think, would be a national acknowledgement of what the history actually was. And it's not a, 'If you're a member of this party, you think this way; if you're a member of that party, you think that way.' No. There's historians, who were trained in this stuff, actually have made this determination.
So, I would say that we have to come to terms with that history in order to go forward. And I would hope that we are able to do it in a way that South Africa was able to do it. And, of course, there was an ongoing experiment and South Africa, too; but at least starting with a Truth and Reconciliation Commission and making people whole in that regard: figuring out who is to partake in that, and ways that we can bring more people into the economic-opportunity fold. That's what I'm really concerned with.
Russ Roberts: My guest today has been Lisa Cook. Lisa, thanks for being part of EconTalk.
Lisa Cook: Thank you so much for having me, Russ. It's been a great conversation.