Krugman Says More Money Needs to Flow from DC

be reading. Why you're at home at this point, Um, Good to have you back with us, Paul, Um, Welcome back to Bloomberg Radio. So you know, the President looks like he has hit on another stimulus plan with Congress, and it looks like more money for really small businesses and also money to you know, help those that have

lost their jobs provide them with some income. I'm curious, as you have watched policies unfold from the government, are they the right ones and what's needed to kind of maintain the economy as much as they can right now and help us when we get on the other side. Okay, the this this program that just got some additional funding. So far, it has not worked particularly well. A lot of the money has gone to businesses that don't need it. But you know that doesn't worry that. That's actually, in

some way the least bad part of what's happening. Um. The two things that worry me a lot are still we have had no significant relief for state and local governments, and those governments have to balance their budgets and they're on the front lines, and it's gonna they're even in pure economic terms, they're going to be forced into austerity measures that are going to extend this slump long after the virus has let up. Um. And the other thing

is unemployment benefits. Um. We have a on paper, we have a really good plan that gives people a lot of compensation, but it's being run through state unemployment offices which have been totally overwhelmed. So the last number I saw it was in Florida. Uh, you know, only one person eight who has been approved for unemployed element has actually benefits, has actually received any money. So um, So we're falling down enormously on the implementation on the unemployment benefits.

So if you take it all together, what we have is, you know, we've had kind of the right ideas and how to deal with this, but we've fallen down enormously, that the money is just not flowing on our sufficient scale to deal with the magnitude of this catastrophe, and Paul, when it comes to execution it, it feels like one of the raging debates that it seems like we're we're having, maybe unwittingly or maybe very wittingly, is between the power

of the federal government, the responsibility of the federal government and the responsibility and the role of state and local governments. How did we get here and where do you think it goes from here in terms of that breakdown. Well, you know, we have a federal system, which does sometimes cause problems. I mean in you know, Britain, there's no question there's there's a government and and I mean they're

all local authority effectively, it's it's centralized. But um, we've have relied way too much on state and local initiative, UM in situations where they just don't have the resources.

So I've been looking on the unemployment front, and I'm looking at Canada, which also has a federal system with very strong provinces, but they have unemployment benetive scheme which is not too different from ours, except the federal government set up a portal and hotline, and people in Canada are getting their emergency unemployment benefits within days, whereas we

are still, you know, immensely backlogged. So uh why I think it's you could you can understand the political history that got us at this point, but this is a point where we really should have to take charge federal government in terms of of of getting that money to the people who needed and we don't. I do want to mention some headlines, um and I think you might appreciate, Paul, is that, uh New York Governor Andrew Cuomo apparently had did a conversation or interview with MSNBC and talked about

the conversation he had with President Trump. They talked about testing, but they also Governor Cuomo saying that the President seemed open to the need for state funding in the next bill. But but this is crucial because we've talked about you know, states they have to um balance their budget, right, so they've got no income coming in that if we don't help out these states. Certainly, some of these major states, whether it's New York or out on the West Coast,

I mean, these are important economies to the overall US economy. Well, we've seen this before. Remember the after this just have anate financial crisis. Um, there was a lot of austerity by state local governments. Uh. They eliminated about three million jobs over the course of several years there and that um that delayed recovery. We would have been probably at full employment by if it hadn't been for all those state cutbacks. Now they're to the catastrophe. That makes two

thousand and eight look like nothing. I mean, you know, states rely take of the rely on sales taxes and nobody's been shock. So um, this is this is and when when you think about what that means who who are who are the state and local employees? What are the jobs? Basically think school teachers. About half of state local jobs are in the education. So we're about that a situation where because of a pandemic, we're gonna have mass layoffs of school teachers, which is absolutely insane. And Uh.

But unless we get hundreds of billions of dollars of AIG headed out for for those lower levels of government soon, that's going to happen. Well, and Paul, you mentioned this

at the outset. You know, part of the execution has been that the money may not be going to the right places, and and it calls to mind something I know you've been looking at and certainly we've been talking about, which is the inequalities that are really being exposed, many inequalities candidly that you've been writing about four years in

years by this crisis. You know, you think about the restaurant industry, You think about frontline workers, You think about the fact that folks like us candidly we have the ability to do our jobs from home, there are many who don't. What do we need to do. What can we do in the short term to try and alleviate some of that huge structural problem. Well, again, I think the the interesting thing about this one is that this is, uh, for once, it's not a problem of low wages. It's

a problem of no wages. We're having a problem with people are just losing jobs and uh, we're probably uh it's going to be probably twenty five million or more jobs at least lost. Um And we can rush aid now the the Cares Act that that big two trillion dollar bill did uh not only enhance on them playing basis, but expanded the scope, which is the right thing to do. The trouble is as far as I can tell, almost nobody as we need those benefits yet I mean it

expanded it to big book as contractors self employed. But but the state offices uh can't even deal with the backlog of conventional unemployments insurance claims. So that's what we What you need is is we need to be getting income out to lots of people. I would say that that is, Um, this is a case where it's not hard to determine who who needs aid. You know, sometimes you can worry about it if this is administratively complicated. It's not. Now it's really it. Uh. And particularly since

since it's such an emergency. Uh if a few a few undeserving people get some money, who cares? Uh? The important point is it's the tens of millions of people who are suffering. So but and when we should take lessons, I mean, this will this is not going to be the last crisis we face. I am curious what your perspective is to Like, we have a headline crossing United Airlines said to offer shares fifty they're offering up over thirty million shares. I mean they're looking to raise money,

we get it. What is the balance between helping big companies as well as small companies, but big companies in particular, who do employ thousands and hundreds of thousands and millions of workers around the country. What's what's the balance between helping them out, which is kind of big bailouts, you know, versus helping you know, individuals. What is what is the how do you see from an economic point of view, what's the balance about what we need to do or

do we need to be all in on all of it? Well, we need to be all in with the caveat that we shouldn't be in the business of wrestling um stockholders particularly, I mean this is uh the uh famous Rami corporations are people and my friend but he but he actually meant was that they employee people, and their employees are absolutely just because someone happen to work for a big company doesn't mean that they're less deserving of help than

someone who's working for a small company. But but we want that to be bailouts that that uh where the taxpayers aren't aren't bailing out wealthy individuals who who are who are in you know stockholders? Uh so look we the auto bailout done to the Bio administration was actually a pretty good bailout. It saved a lot of jobs. Um, the cerebral government got a large ownership stakes, so it wasn't too much of bailout of the stockholders. Um. It

wasn't perfect. But if we could do something like that, of course, now we have to deal with with with something that is is maybe twenty times that big. But it's you know, with with a will with some If if we had a real full court press from hate sports metaphors and business way right, with a full court a full court press from from from Trump administration officials, bringing in lots of people too, uh, experts from many fields to to do this, then then we could. But

because nothing like that is happening. So what we're having is a kind of uh handwaving. We're throwing a lot of money, We're actually throwing a lot of guarantees, um, but leaving it up to banks to make the to decide who gets the money, um, which is really a derelation of responsibility. I mean, there's gonna be waste frog abuse. When you're gonna be spending probably in the end five billion dollars to rescue the economy, there's gonna be hundreds

of billions of waste frog in abuse. But that's not but that's a secondary point. But you do want to try and make sure that as much as possible, if the money goes to the people who you've been needed. So I want to talk a little bit about experts. You mentioned that just a second ago of Paul, you had a pretty provocative column yesterday, Uh in the New York Times. All your columns are provocative. That's what we love talking to. UM. I mean, this has been a

pretty remarkable thing to watch. Your column was called the right sends in the Quacks. This has been the big issue over the past few days of when to reopen the economy, who says what, who's leaning on which data? We have a big story in Bloomberg Business Week this week about the data being essentially unreliable in many ways or easily uh manipulated. How do we solve that problem? Well, you have to make educated guesses, but you also have to ask what are the consequences of being wrong in

which direction? So you know the UM let's talk about one area of the US government that remains extremely competent, which is fair reserve. Uh. The FED doesn't know what's happening to the economy any better than the rest of us do. They're also grasping at very incomplete numbers, but they've decided that the risks of doing too little vastly outweigh the risks of uh of doing too much, so they're going all out. The trouble is, I don't see I mean, uh, the the White House team UH is

not exactly people who inspire competents. I mean uh. Wilbert Ross told us that this virus was going to be good for American jobs. Larry Cutlow told us that the was contained and the economic impact was going to be minor um. And there's been no changes. No one else had been brought on board. It would have been interesting to see you have some sort of national unity, say if the Economy Group brought together, but there's been not

a hint of that. It's it's basically, the economic recovery program is being overseen by by people who's it seems to be a fundamental requirement that they have been wrong about everything so far. You know, it's so funny. We talked so much on Bloomberg and I'm sorry, you know about the importance of diversity of thought right to come out with the best programs and conclusions and thoughts about things. And and I don't want to get too political because

everybody's gonna yell at me on Twitter. Um, but I do think about that, right, Well, you would concede that you do want diversity. I thought, you want some conservatives, you want some liberals, you want people to figure out the best policy here. Oh, I'd be happy to see people called in from American Enterprise Institute, Cato Institute, the

uh uh, you know the uh. What's interesting? Actually, as far as I can make out, there's there's a surprising amount of consensus if you look at the economic recovery plans that are coming out from American Enterprise INSTITO, which is fairly conservative, and coming out from the Center for American Progress, which is which is very liberal. Um, they don't look that different, but they do look extremely different from what Trump is doing. So uh yeah, I mean

I'm all four. So So what what's the risk here? We've only got about I think a minute or so left here? Um, what's the risk by not really having the best people working on this for us? What? What do you see the risk here? Got about a minute left? Too? Risks too risks. One is that we loosen up prematurely and we have a whole second wave, and I'm now

terrified that that's going to happen. Uh. And the other risk is that because we don't provide enough aid, we leave lots of people, businesses, individuals, states, focal governments would cripple the balance sheets, which means that we never get a full recovery, or it takes years and years so that the hangover, the the convalescence from this thing goes on and on. And that's both of those are are really serious risks right now. Alright, well, we're gonna leave

it there a somber note, but a realistic one. As always, we really really value our time with you and really deeply appreciated. Paul Krugman is Distinguished Professor of Economics at the City University of New York, also, of course in New York Times, calumnist and author. We are delighted to spend some time with him. And I was madly and I could see YouTube Carol like scribbling downloads of interesting things, planning to include this in our weekend because that's why

he's a Nobel laureate. Folks. This is Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. We want to turn our attention now to our minds, our mental health. No one better to talk about it then Richard Pierce, and he's the co founder and the CEO of Headspace. You know the app. You know people who use it? I use it, Carol? Do you use it? I haven't app full disclosures on my phone? Use it on my phone as well. Rich joins us. Rich joins

us from Santa Monica, California. Great to have you with us. Really appreciate your time. Yes, thanks for having me. I really appreciate it. All right, So let's take stock here if we can. This is a really tough time for people. What do you make of it and what should we be thinking about, most prominently when we think about taking care of our our mental health at a time of

such upheaval. Yeah. Well, I think the first thing is that I think that this situation has brought to the surface a lot of the mental health issues I think maybe sitting under the surface that maybe we're unaddressed. And I think when you are forced into a situation where you it's much harder to you know, partake in all the almost distractions that we that we that we kind of do as human beings. I think it brings these

things and makes them kind of more acute. And so I think for the first time in a long time, we are actually looking at the state of our mind, and you know, for some of us, is incredibly challenging. UM. So I think that you know, the things that we're hearing from Folcus with a few things. I think one, I'm not sure that mental health was a topic that was being discussed in every single boardroom. Um, I think

it's being discussed in every single boardroom now. I think we're definitely seeing um, you know, and we've seen that we've had like up to four increased in terms of enterprise inquiries for our kind of be to be offering. So we're definitely seeing an increased there. Um, We're I think the other piece that's come you know, that comes to us is a lot around parenting and kids at home.

I think people are really struggling with how do they balance work life and and kind of raising children at home is a really really tricky things for folks, and they'd like two big things that are definitely coming towards us as we're seeing this crisis unfold. Totally agree. I feel like it's another one of those situations where we know the stuff's out there, and yet it's not until we have a crisis to people like, wow, this is a problem. One thing I want to get too rich.

I have a sister who's worked in the mental health profession for years and has just talked about how it's taken even the medical community and even like health insurance a long time to respect that mental health and a healthy mental health is as important as you know, your physical and medical well being. Um, Are we seeing that change significantly? Will something like COVID nineteen help even move

the needle on that one even more? Yeah, I absolutely think it's accelerated our kind of belief that we've had. You know, we've always believed that mental health is the kind of um, you know, inextrictly linked from physical health, and I think even if you look at all the research around stress related chronic diseases, that you cannot separate out the two. It's it really is kind of whole

personal health, not just physical health. So I think we're definitely going to see an acceleration towards people understanding that looking after the health of your mind. We believe is actually the most precious resource UM, and we think of it as your hard drive. You know, if if your mind is not healthy, how can you actually make healthy choices, the things that you eat, the exercise you take, the

relationships that you have, how you sleep. It really is the core component of living a healthy and balanced life. And I think it's been able to be pushed to the on the back burner, and some people have been open to it. And obviously some people are way out in front when I think of certain organizations and healthcare systems, But I think this crisis has made it top of everyone's agenda because everyone's dealing with it in real time.

So I absolutely believe that this is going to shift the whole conversation and this next wave of UM kind of looking for ways that we can support people with their mental health because we cannot train enough doctors. You know, you've mentioned your system. We cannot train enough people UM at one on one like, We're going to have to think of scalable ways that we can we can solve these issues. Where I think platforms like so like yours

are like play right to that. Yeah, exactly mean you give us a perfect bridge to to talk about headspace. I mean when you think about folks who were ahead of it and out there, I mean you and Andy founded this. Uh Andy puddycumb whose voice has been in my head many, many, many many times, uh founded this in you were out ahead of this. What have you learned, especially that you're applying now over those years, over those ten years or so, Uh, that that might be useful

to to folks listening right now. Yeah. I think one of the things is, you know, where for folks to ask themselves the question of where did they pro as size their mental health? But what do they actually do for their mind? Um? You know, we spend a lot of time looking after our physical appearance and other things in life, but how much time do we actually spend looking after our most pretty depressions resource. I think that's an interesting question for all of us to ask, um.

And then you know I would be I would be biased, but I do think that Um, you know, a mindfulness practice, however you apply that, whether that's with a seated meditation practice, whether that's applying it to the way that you run, whether it's applying that the way that you eat. UM. I think there's so many different ways that you can apply mindfulness in your life, and the biggest benefit of that is it gives you a different relationship with your

thoughts and your emotions. And if we think about stress, most of our stress is caused by our thoughts and our emotions. And it's not to say that thoughts and emotions are necessarily bad, but if we can practice a technique by meditation or mindfulness, we can actually create some distance between those thoughts and those emotions and therefore not get so swept up in them as they they occur. And I think that that process is um is one of the most valuable things that you can do for

your ongoing mental health. And to not to look at it is I think so many people think about it. Right, I get really really stressed, and I do a little exercise and I went so so stressed. More like an aspirin um. If we can actually think about it is as a kind of a vitsman or vitamin as you say in America, that we can get to prevention. You know, you could think about doing this. You're going to the the gym,

one you're not going to get fit. Our guest at this hour is rich Pearson, co founder and chief executive officer of Headspace, joining us on the phone from Santa Monica. You know, it's funny. I can't even tell you, Rich the conversation that was going with our team here at Bloomberg Business Week, our technical staff, our producer stuff, were like, are you on this app? Are you on this app? There's a lot of apps out there, and I think that alone can be stressful and overwhelming about like kind

of figuring how do you create meditation practice? You know that's calming and you don't feel overwhelmed like I gotta do this, I gotta do this. What would you suggest to somebody who's feeling stressed out? How should they approach it? Yeah? I think the worst thing that can assement is anyone trying to do ad the meditation practice to feel like another thing on your to do list that you never get to, which I think for a lot of people

that kind of feels like that. And so I really think, like with any habit, you should start off little and often um and I think even if you just commit to a few times a week as little as three minutes, and build up from there. You know, I always think it's like the good analogies like the marathon. If you've never run before, you wouldn't go and run a marathon like as your first running experience. And I think you've

got to think about that in the same way with meditation. UM. I think another really good tip is tom to attach it to a habit that you already have. So maybe you want to do it just before you go to bed, or maybe you want to do it after you have your morning coffee or before you have your shower, but trying to attach it to the habit that you already have because it's much easier to kind of couple it in that way, and also just not to put too

much pre sure on yourself. I think the real the big misconception, and this is probably the biggest thing that I could say to anyone, is that meditation is not about stopping your thoughts um, and it's not about having a calm and relaxed UM kind of benefit from it. That may be a side effect of the practice, but I think so many people go in with that expectation. UM. I promise you, if we could have learned how to stop off the thoughts, we'd have done it by ourselves

a long time ago. And so it really is a process of having a different relationship with your thoughts. It's not about stopping them. And because people have those pre perpections about what it is, when that doesn't happen, they give up and they say it's stressful and it doesn't work. So that would be the biggest thing that I could say to anyone. It's not about stopping thoughts, and it's not about feeling relaxed and calm. That may happen, but

that's not what you should go into it with. And so Rich, you know, one of the interesting things that's happened of late. And maybe it's in part because of the crisis, as Carol pointed out Elier in the conversation, Uh, and maybe it's part of the work that you and others have been doing. And I believe that to be true.

The idea of meditation has come much deeper into the mainstream, and it feels like it has allowed you guys, as a business, ultimately we are bloomberg here to really expand some partnerships and maybe uh set up some relationships with people who otherwise I mean talking about governments and other folks who maybe ten or fifteen years ago would be like, Okay, thanks a lot weirdos, but we got this, um, but you know, tell us about some of the some of

the stuff you're doing. Yeah, Well, people always responded to us like that in the early days. I can assure you they definitely thought we were strange and we talked about this idea. But yeah, that's definitely shifted. UM. I think the fact that you know, Governor rang a stop, that Michigan rang a stop. And I think the reason that that that happened and we partnered with New York and Michigan and we've got some more coming down the pipeline as well some other big partnerships with government is

because of the science and the efficacy of it. You know, we've been we're the only mental health digital mental health products out there with the volume of research. We have over sixty five papers currently in process, twenty of which have been published proving that headspace can reduce aggression, increased compassion, reduced stress, increased focus, reduced job burnout in in UM

in kind of approved journals. And I think that when you work with government, or you work with Starbucks or g or higher or any of these large enterprises which we do the efficacy in the science is really important. One thing saying, oh, this is an interesting thing that I should do anecdotally and people tell people about it,

which is great. Actually, when you can see the empirical evidence and you can see that it actually changes the structure of your brain and it actually reduces the things that causes pronic health conditions, I think that really changes the way people look at it. And I think that's been a big part of the journey of this kind of project. And I have to say what I really love.

I was doing some research and I think it was somebody out of Harvard, but just saying what's what's great too is people are doing more, you know, and larger studies about this so that you do understand the connection between mind and body, uh and staying healthy on all different levels. And I'm glad to see that there's more

respect for that. UM I just have to mention you, did you know, Sesame Street, you're working with You're working with the National Health Service in the UK, You're working with the New York UM as you said, Governor Cromo, you're working with Michigan. I mean, it's really great just tell us since the virus, you know, you know, just all the people that maybe are reaching out to you, and what your expectation is that once we get on the other side of this virus, you know, the impact

for your world, what might be the lasting impact? Yeah, I think one I want to say a master thank you to our incredible Headspace team that's been pulling off these partnerships in like real time, and they've been working weekends and nights to try and keep up with demand, and you know, without them, none of this would be possible.

That's the first thing I want to say. I think the sercond thing is, you know, and that's what we talked about at the top of the program, is that I really think this has accelerated the mental health conversation to put it at the top of every single person's agenda, whether you're in government, whether you're in health care, whether you're in schools, whether you're you know, whether you're at home and you're talking to about it with your partner

or your kids. I really think this has brought the conversation into the mainstream and this will be a durable story. Like I really think that people are gonna put this in the same way that they think about their physical health. Because I think it's made people realize that they are in extrictly linked, and I think that is going to change the world forever in terms of kind of mental health. Now, I think that's it's exactly right, and it's it's interesting.

In just a few minutes, we're going to talk to the CEO Planet Fitness. And you know, one of the things Carol and I have talked a lot about, but for is, once you discover this sort of thing about yourself and and this practice as it were, you don't really want to go back the the You can't unknow it, you can't unsee it. And I think it's a really important conversation and I know we're going to keep having it.

We really appreciate all the work you're doing. Rich Pearson is the co founder and the CEO of Headspace, joining us on the phone from Santa Monica, California. It's some really remarkable work that they're doing. And as I said, you know, the mainstreaming of this, it's a really important moment. And we look and when we look back, Carol, I think at this moment in time, uh, this could be a really catalytic moment in the history of understanding health

from a much more holistic perspective. Love it, love it,