Lester C. Thurow
INTERVIEWER: Today is October 27, 2009. I am Karen Arenson. We are talking with Lester Thurow, the former Dean of MIT's Sloan School of Management, and one of its best known economists, who has helped make economics accessible to wide audiences through a multitude of books, articles, newspaper columns, and talks. Lester thank you for talking with us this morning. What drew you to economics?
THUROW: Well I basically wanted a portable profession where you weren't dependent on a boss. There are two that are possible. One is law, one is economics. I knew I didn't want to be a lawyer and didn't want to go to law school. So I became an economist by accident. I didn't think I would become an academic economist when I began.
INTERVIEWER: But you've actually -- you're an economist but you're also an academic. An academic is less portable?
THUROW: Yes, my first job was in Washington, D.C. And I thought I'd either go back to Washington or go to a company. But I came back to Harvard for a year or two, and then to MIT. And I loved it. I've been here ever since. I've just retired. I've been here 41 years.
INTERVIEWER: Did you really think of going to a company?
THUROW: I really thought at the beginning that I would be mostly either in Washington or for a company. Not academic.
INTERVIEWER: Why not?
THUROW: Basically because I thought I had more skills than the other dimensions. But I came back to academics and loved it and stayed ever since. Never went back.
INTERVIEWER: Many economists remain in the ivory tower once they enter academia. But you clearly haven't. Why not?
THUROW: Well I think it had to do with frustration. I worked on Jimmy Carter's campaign committee. And by all rights I should have had an appointment in Washington. But he didn't give me one. So I wrote a book. So that's a popular book designed for a popular audience. That's how I started.
INTERVIEWER: Which book was that?
THUROW: The Zero-Sum Society. Which, I'll be a little proud, is in its 19th printing.
INTERVIEWER: Wow. And printed beyond the U.S.?
THUROW: Yes. I think it's in 27 countries and 18 different languages.
INTERVIEWER: How many copies?
THUROW: Lots. [laughter] Can't keep track. Some people don't tell you, like the Chinese don't tell you.
INTERVIEWER: What did you like about Washington? The fact that you wanted to go back?
THUROW: Well I think you have a feeling in Washington. I worked for the President's Council of Economic Advisers. I think you have a feeling you make a difference. And as an academic, maybe you affect your students, but you don't make a difference to the world. Or at least in the short run you don't make a difference.
INTERVIEWER: So you went to Washington to the CEA right out of graduate school.
THUROW: PhD program. I went with my adviser Otto Eckstein who was a member of the CEA. He and I went down to Washington. I was down there for two years.
INTERVIEWER: What kinds of things did you work on?
THUROW: Well one of the things that was very fun is in 1964 I was the economic campaign adviser to Lyndon Johnson. At that time, the CEA was not hatched. It could work politically. And so Johnson would call up and say, "What did the federal government do in, say, Lynchburg, Virginia?" And I'd tell him they made the sidewalks. He'd get off that plane and say "The federal government built the sidewalks in Lynchburg." so I was supposed to give him all the facts before he landed. That's a lot of fun. It's probably a lot of fun if you're 23, but it's not a lot of fun if you're 73.
INTERVIEWER: When you started writing for people outside of the discipline, was it a conscious decision? A conscious career choice?
THUROW: No, as I said, it was a fresh chance with Jimmy Carter. Since I was not given the job by Jimmy Carter in Jimmy Carter's administration, I thought I'll write for the public. That's how I wrote The Zero-Sum Society. If it wasn't for President Carter, I probably never would've.
INTERVIEWER: But writing for the public, did you think it would affect policy? Or what about writing for the public?
THUROW: I thought in the long run you'd affect kind of the general tone of the country. You'd have some impact on the system.
INTERVIEWER: How did you come up with the topic for that book?
THUROW: I don't know. It was a long time ago. I've forgotten. [Laughter] Basically, remember, Carter had, at the end of his administration, he had a period of zero growth. The question is how did he get out of it. So The Zero-Sum Society is how do you get out of a period of zero growth? And the answer is you have to go down to go up.
INTERVIEWER: That was a tight time economically for the country.
THUROW: Right. And instead President Reagan got elected.
INTERVIEWER: Right. But you didn't try to go back into government then.
THUROW: I would not go back under a republican. Or I would not be asked. But when the democrats came along, I basically wasn't interested anymore. You know, I did work for Bobby Kennedy in 1968, but then he was assassinated.
INTERVIEWER: When you started writing, did you know you would be good at it?
THUROW: No. You gotta try and see. I was surprised when it sold. You know, if you're a novice writer they publish your book in paperback. And then if it's a good book, it's published in hardback. This was first published in paperback, later in hardback. And then back to paper.
INTERVIEWER: So I thought maybe your being an undergraduate at a small liberal arts college meant that you had written a lot even though you --
THUROW: It probably means you've written a lot, but writing, I think, is one of the things that's changed. Because the only way you learn to write is like basketball. You have you shoot a million baskets, you have to write a million papers. And high schools just don't require that anymore, because their teachers don't want to grade them. So the only way you write well is write a lot. Over and over again.
INTERVIEWER: Did your first book feel like that? I mean, did you find you were writing pages again and again? Or did it just come out of you?
THUROW: I write everything at least three times.
INTERVIEWER: You do?
INTERVIEWER: How long does the first draft take?
THUROW: Well it depends on what the book is. There are two ways to write a book. One is you have an idea for a book and you start off from scratch. Probably that takes at least two years. The other way is you write academic articles, and you look back and you say, hey if I put these together and rewrote them, they'd be a book. That way, you have maybe half the book written. You'd have to rewrite half. But that way you can do a book in maybe a year.
INTERVIEWER: So you've done both ways.
THUROW: Both ways. I think on average I've averaged a book once every three years.
INTERVIEWER: Do you feel like you've been able to have greater impact on shaping policy and the economic direction of the United States and the world because of your writing?
THUROW: A little bit, but not much.
INTERVIEWER: Do you think anybody has?
THUROW: Probably not much.
INTERVIEWER: Let's back up. Biographically. Tell us where you grew up, what your childhood was like.
THUROW: I grew up in Montana. I'm a cowboy at heart. And then when I was in high school, the big hero in my neighborhood was named Casey Tibbs. He was a world champion cowboy. He had a purple Cadillac. I remember that in gold letters, he had on it the name, it says, Casey Tibbs. We all wanted to be Casey Tibbs and chase cows. But you end up going to college, and you learn that that's not the way to be successful. The way to be successful is to do something else. So gradually you started doing something else.
INTERVIEWER: Were you a good student in --
THUROW: I was always a good student. Good student in high school, good student in college, good student in graduate school.
INTERVIEWER: Were your parents or anyone in your family academics in any way?
THUROW: Well, slightly. My mother was a high school teacher of mathematics. My father was a Methodist minister. So that's pretty close.
INTERVIEWER: Did you like math as a child?
THUROW: I did.
INTERVIEWER: But you didn't think of becoming a mathematician?
THUROW: No, one of the things my mother did is she also taught the deaf. So she could lip read. So one of the things she did in class was she could tell when girls in the back of the room were talking to each other. She didn't hear them, but she could lip read. So she'd say something to make them know that she knew what they said. And they thought she was a ghost, could read minds. Because they knew she couldn't hear.
INTERVIEWER: Were you interested in politics as a child?
THUROW: Not really.
INTERVIEWER: So that came later.
THUROW: I don't think anybody in Montana was. Probably it came in 1959 and again in 1960 at a summer job in Washington, D.C. Worked for politicians. In 1959, I worked for a Montana senator by the name of Metcalf, in 1960 I worked for the democratic study committee, running a campaign brochure that basically would help congressmen get elected.
INTERVIEWER: This was by the time you were in college.
THUROW: Right. 1959, 1960. Summer of 1959 and summer of 1960. And I graduated in the spring of -- late summer -- late spring of 1960.
INTERVIEWER: What brought you east to college? Or what brought you east?
THUROW: You know Horace Greeley is wrong. He says "Go west young man and get your fortune." He should say "Go east young man and get your education." The best colleges are in the east.
INTERVIEWER: I mean, did you have friends that thought that? Or your family? How did you know that?
THUROW: My family knew that. At that time, Harvard had probably the reputation of being the best university in the world. Or the best university in America. And Williams College was always very good.
INTERVIEWER: And how did you choose Williams?
THUROW: Well we chose Williams because my mother, when she was teaching, saw an advertisement on the board for Williams College: apply now. So I applied and got in and went. First time I've ever been east of Chicago. When I went to college. And you can tell how the world has changed. That time we went by train. I think every year after that we went by plane. But the first year was by train.
INTERVIEWER: Your whole family came out?
THUROW: No, just me.
INTERVIEWER: Just you. You had some kind of special fellowship there?
THUROW: I had a Ting Fellowship in Williams, which is one of the reasons why I went. Because in theory, it provides financial support for seven years of education. Four years in Williams and three years anywhere you like. I never used the last three, but I could have.
INTERVIEWER: How many of those did they give out? One or more than one?
THUROW: They give out, I think, two a year.
INTERVIEWER: Any clue how you qualified for it?
THUROW: No. Probably because I came from Montana. At that time, colleges were interested in equal opportunity. Equal opportunity didn't mean black and whites. It meant people from disadvantaged geographic regions. So I think if I came from New York, I probably wouldn't have got it. It was only coming from Montana that allowed me to get.
INTERVIEWER: How big a -- Had you been out of Montana before you came to Williams?
THUROW: No, I'd been to my grandparents' home which is Sioux City, Iowa. They have all of 100,000 people. I think at that time, the biggest town in Montana had maybe 50,000 people. And they're were only about three of them. It was the first time I'd ever been to Chicago.
INTERVIEWER: On the way to --
THUROW: On the way to Williams.
INTERVIEWER: Did you get to stop and --
THUROW: We had to stop in Chicago. We had to change train stations. The trains came in in the western station, they left in the eastern station. So you had to take a taxi from one one train station to another.
INTERVIEWER: So you had a brief view of Chicago.
INTERVIEWER: What was being a student at Williams like?
THUROW: I think they gave a -- It's a better college now, because they let women in it. At that time it was all male. But the big thing about a small college is that professors worry about individuals. You know, what are their strengths, what are their weaknesses, how can we help them? I think at that time, probably that's what I needed. I was also admitted to Harvard. But my parents said, "Don't go to Harvard, it's too big." I think they were wrong, but they thought it was too big.
INTERVIEWER: Did you bond with any professors while you were in college?
THUROW: Over three or four years, yes. But I don't think -- freshman year, no.
INTERVIEWER: What were you studying? Or what did you go in thinking you were going to be?
THUROW: When I first went in, I thought I was going to be a medical doctor. So I took all the pre-med courses, then I decided not to be a doctor. So at the end I was a political science -- a PolyEc major, which is half economics half politics.
INTERVIEWER: So that's how you got to Washington for the summers.
INTERVIEWER: And what did you do after Williams?
THUROW: After Williams I was a Rhodes Scholar at Oxford. So I spent two years in England and had a great time. And then came back to Harvard for a PhD program.
INTERVIEWER: Right. So you got to Harvard eventually.
INTERVIEWER: So at Oxford, you --
THUROW: Probably that's the right combination. The Williams and then Harvard, not the opposite.
INTERVIEWER: You earned a degree at Oxford in philosophy, politics, and economics.
INTERVIEWER: Did you actually study all three subjects?
THUROW: I studied all three subjects. But what you did is, because I did economics as an undergraduate, you did a BPhil in economics. And you put them together and it's politics, philosophy, and economics. The reason you did it is because at that time, nobody in England did a graduate degree. There were English students. So if you did a graduate degree, you were all with foreigners. So if you wanted to be with English students, you had to do an undergraduate degree.
THUROW: They did doctorates called BPhils. But at that time, there was no course work, you just write a thesis.
INTERVIEWER: And were there doctorates in economics or something?
THUROW: Yes. People can get a doctorate in economics, but just by writing a thesis. There were no courses.
INTERVIEWER: If you could have embraced multiple disciplines as a graduate student, would you have? In other words, you say at Williams you combined politics and economics.
THUROW: And philosophy.
INTERVIEWER: At Oxford you sort of did both.
THUROW: No I think economics was a good choice.
THUROW: It's proved to have -- it's not portable in the sense that I had lots of different employers. But it's a profession where you can basically set your own agenda and decide what you want to do. What books you want to write. And you have to teach the classes, but that's negotiable as to what classes you teach.
INTERVIEWER: Is economics taught very differently in England than it is here? Or was it when you were studying?
THUROW: Yes, because here you do it by courses. There you do it by, your tutor gives you a list of readings for the next week, and you write a short essay about those list readings. And you come in and you present the essay verbally to the tutor. He criticizes it. And then you do again a group of short readings. He gives you a group of short readings to do, and then you write another essay. So there was a lot of writing.
INTERVIEWER: Did that experience shape what or how you taught here? Once you became a professor?
THUROW: I think it probably did.
INTERVIEWER: In what way do you think?
THUROW: Well Oxford is probably big on the Socratic method. Where you basically have a teaching in a class by asking questions. I still use that technique. So if you're in my class, one third of the grade depends on how well do you answer the questions I ask. And occasionally I do cold calling. Ask people questions when they don't put their hand up.
INTERVIEWER: That sounds like business school. Or law school.
THUROW: It is.
INTERVIEWER: What areas of economics did you focus on for your doctorate?
THUROW: It was macroeconomics. At that time, in 1962 to 1964 when I wrote my PhD thesis at Harvard, people were worried about employment. So I wrote a thesis on unemployment. Will unemployment ever disappear? And of course the answer is yes. And now it's back.
INTERVIEWER: Do you have any ideas about the current tirade? or do you think it'll just go away as the economy recovers?
THUROW: Well I think it'll go away as the economy recovers, but with a lag. Probably unemployment will go up to about 10.5%. It's now a little bit below 10. Because the unemployment goes up after the economy stars recovering. So probably we won't see the peak of unemployment until the middle of 2010. A year from now.
INTERVIEWER: Are you are other economists confident about when it will come down? It's gone up a little higher than people expected I think.
THUROW: I think Lord Keynes taught us some lessons. That is you can't over stimulate. And you know Bernanke graduated from here at MIT. He's the head of the Federal Reserve. He studied the great depression as his PhD thesis. The answer is stimulate, stimulate, stimulate. If you do too much, you can always cut back. You can't do too much. And who cured the great depression? It was not Lord Keynes. Not the head of the Federal Reserve Board, it was not Franklin Roosevelt. It was Adolf Hitler. He started World War II. If it wasn't for World War II, we might still be in the Great Depression. You know at the peak of World War II, more than half the GNP was spent by the federal government. They turned out liberty ships one a day. B-29 airplanes three a day. 12 million people were in the army. That's how we cured unemployment. Put them in the army. Put 12 million people in the army today, we wouldn't have any unemployment.
INTERVIEWER: Did you enjoy the graduate school period?
THUROW: Yes. I had good fun. I probably had good fun because I'd also done a lot of [INAUDIBLE] work at Oxford. So I took my PhD exam at the end of the first year, wrote the thesis in the second year. I spent only two years at Harvard. Not four, which is the normal case.
INTERVIEWER: And after you got your doctorate, how did you figure out what to do next?
THUROW: Well as I said, my thesis adviser, Otto Eckstein, said "Come with me to Washington." So I went to Washington.
INTERVIEWER: So that was right out of --
THUROW: Right out of the PhD.
INTERVIEWER: Once you finished down in Washington, you went into teaching.
THUROW: And back to Harvard. Because what they said in Washington is if you want a good job in Washington, what you want to do is bounce back and forth. Teach for a couple of years and then come back. So that's what I did. What I thought I was going to do.
INTERVIEWER: And Harvard, what was being an assistant professor like at that time?
THUROW: I taught some good courses at Harvard. Mostly undergraduate. And I had a great time. And then I had an offer from MIT to come to MIT. And I came. And I've been here ever since.
INTERVIEWER: What were your first impressions of MIT when you arrived in 1968 I believe?
THUROW: That's correct. I think MIT has changed. The big place it's changed is, it has a lot more women than it used to have. Always had some women, but it had very few. Now it has maybe 30, 40%. That's the biggest change. The negative changes, I think people are worse at writing today than they were 30 years ago or 40 years ago. Because high schools, they just don't make you write.
INTERVIEWER: Did they make you write that much then?
THUROW: High school didn't, but Williams did. And Oxford did.
INTERVIEWER: When you talk about the biggest change at MIT, or one of the biggest changes, being the growth in the number of women. Other than the fact that there are more, do you think that's changed --
THUROW: I think that changes the tone of everything.
INTERVIEWER: In what ways?
THUROW: Well classes are different if you teach all men or men plus women. Other big place that's changed is there's a lot of new great architecture. When I came, most of things were recycled factory buildings. So very little architecture. Now we have great architects.
INTERVIEWER: Yeah, although --
THUROW: Except on the [INAUDIBLE]
INTERVIEWER: The Gehry building, but --
THUROW: [INAUDIBLE] is also a famous architect. Same thing with one of the undergraduate dorms.
INTERVIEWER: Right, well they had right well they had Alvar Aalto, who had done the 1949 Baker House. And the Saarinen buildings, both of them. Did those -- You were at the other end of campus.
THUROW: Didn't see them very much. But you can see the Saarinen influence because the terminal at Kennedy Airport in New York is almost exactly like the center here.
INTERVIEWER: Right. I don't know if it still exists.
THUROW: The terminal at Kennedy? Well they've added on, but I think it still exists.
THUROW: Last time I was there it did.
INTERVIEWER: What was being a young economics professor here like, compared to --
THUROW: It was very exciting.
INTERVIEWER: You were there for two years, and then you came here.
THUROW: It was very exciting because everybody wanted to be a Samuelson or a Solow. And we can't be, but everybody wanted to be. They set the tone of the economics department, which, nobody sets the tone today.
INTERVIEWER: Was it a much smaller department here?
THUROW: Maybe a little but not much. Now the Sloan School has made a big change in size. When I came, the Sloan School had about 90 students a year, and about 30 faculty. Now the Sloan School has about 2,000 students in total over the two years, and has 150 faculty. The big change in size is the Sloan School, not the economics department.
INTERVIEWER: But the economics department here was pretty small. I mean there were very few faculty, and relatively, I mean, there were almost no undergraduates.
THUROW: Well I think in terms of PhD students they probably took, maybe, 25 a year? 20, 25, something like that.
INTERVIEWER: And probably not a lot more majors undergraduate. Compared to Harvard, where it was a huge major. No?
THUROW: No. It was relatively small. Although EC 1 was always very big, because everybody took a little bit of economics.
INTERVIEWER: At MIT.
THUROW: At MIT.
THUROW: 1401. I also taught 1401 for a few years.
INTERVIEWER: Were the economics undergraduates here much different from the ones at Harvard? They were probably more mathematical.
THUROW: Well the big difference is, here if you don't ask them a mathematical question on the exam, they feel cheated. At Harvard if you ask a mathematical question on the exam they feel cheated.
INTERVIEWER: How much math did you use in your economics work?
THUROW: We used a little bit of calculus, but not much compared to the average engineering student at MIT.
INTERVIEWER: But in your own research, was math much of a --
THUROW: It was not central, no. I remember one of the Sloan Fellows at the Sloan School, when we had the partial derivatives sign, she said, "What are the squiggly marks?"
INTERVIEWER: And you said?
THUROW: We explained to her what the squiggly marks meant.
INTERVIEWER: They didn't require a certain level of math to be admitted.
THUROW: No, but if you didn't have the right number of math, you had to take a review course. The Sloan Fellows didn't have to take it.
INTERVIEWER: Ah. And this was a Sloan Fellow.
THUROW: A Sloan Fellowess, I should say.
INTERVIEWER: When you came here, you said everybody wanted to be a Samuelson or Solow. Was it a close department? It really wasn't --
THUROW: I think it was, because at that time, in the faculty club, we had an economics table. Everybody came and sat at the economics table. And we learned what Samuelson and Solow thought about the world.
INTERVIEWER: Did you find that interesting or overpowering, or --
THUROW: I think it's fascinating. It's fun to watch great minds think. You know, it's like -- I've forgotten his name. What's the head of Microsoft? Gates. Bill Gates. Bill Gates comes and gives a speech once a year at MIT because he says, if I give a speech, students will come to Microsoft. And what do the students come to see him for? They come to see, am I smarter or dumber than Bill Gates? He made billions. If he makes billions, I can make billions. So I think you come to see how much the smart people are. What they -- how they think. You can say how they put their pants on -- one leg at a time.
INTERVIEWER: Was it generally a group where there was a lot of give and take? Or was it mostly Samuelson and Solow holding fort?
THUROW: I think there was a lot of give and take. They were also willing to listen as well as talk.
INTERVIEWER: Did they mentor people?
THUROW: Probably Solow more than Samuelson. But everyone wanted to be a Samuelson. When history is written maybe 200 years from now, the only economist at MIT who'll be remembered is Samuelson. The rest of us will all be forgotten.
INTERVIEWER: Maybe. Maybe not. You had joint appointment when you came, with one foot in the economics department, and one foot in the Sloan School. Was that hard?
THUROW: It just meant that you divided your teaching. You did part of your teaching in economics and part of your teaching in Sloan. And since I've been Dean, everybody moved. Technically I still have a joint appointment, but I've really moved entirely into the Sloan School. So all my teaching since I quit being Dean has been Sloan teaching.
INTERVIEWER: What was the difference in what you did in the teaching for one versus the other?
THUROW: Well I think the big difference is, in economics, everybody wants to be like you. I want to be assistant professor, associate professor, professor. In the Sloan School, nobody wants to be like me. Nobody wants to be a professor. They want to be a business person. Businessman or businesswoman. So you have to teach very differently. You've got to teach with relevance. I remember when I was Dean at MIT at the Sloan School, some group of students came in and said, "So and so is not teaching us relevant material. He's too academic." How can you be too academic at an academic institution? The answer was he wasn't teaching -- You've got to remember when you teach at the Sloan School, you're not teaching economists. You're teaching people how to use economics. They're going to be business people. So using economics is very different from producing economics.
INTERVIEWER: Were you still teaching macro for the most part?
THUROW: I think my whole life here I've taught macro. As an -- I taught in the economics department or in the Sloan School. Now in the Sloan School I taught both micro and macro, bit it was basically macro. Now in the last three or four years, and especially since I've been retired, I still teach. But I teach special topics. Anything I like.
INTERVIEWER: Such as?
THUROW: Like climate change.
INTERVIEWER: Ah. The economics of --
THUROW: The economics of climate change. Should we have nuclear power? What are the pros and cons?
INTERVIEWER: Did it offend your sensibilities at all to think that you had to tilt your economics teaching in a more practical way?
THUROW: No, because you have to recognize what they want to be. They don't want to to be you. They want to be a business person and be important.
INTERVIEWER: Do you think --
THUROW: They want to be the Henry Ford, so to speak.
INTERVIEWER: Do you think he knew any economics?
THUROW: Probably not but, he knew a lot of engineering. Now one of his grandsons went here at MIT. And studied economics. He was a Sloan Fellow.
INTERVIEWER: Did they -- Do the students coming to the Sloan School know much economics by the time they come in? Have most of them taken it as undergraduates?
THUROW: Almost all of them have taken it as undergraduates. But they're going to have to do a review course. Because we don't let people in the Sloan School unless they've had three years of business experience. They may have forgotten their economics. So they come and they spend two weeks getting up to speed, and they take microeconomics first. So when I taught them in the second semester, they'd already had a semester of economics.
INTERVIEWER: Did you find you were doing in different ways? Or did they say, gee, this wasn't what I learned.
THUROW: [INAUDIBLE] you were doing. You quickly learn you have to do in different ways. Cause the difference with the Sloan School students is they will rebel. They'll say, "He's a lousy teacher." And one of the things I take very seriously is at the end of the year, students fill out a report card on the professor. I don't read the report card when I get it, which is usually -- Let's say I quit teaching in May, I get the report card in June. I don't teach til next January. I read it the next January. What mistakes did I make last year that I can correct this year.
INTERVIEWER: What were some of the things you learned along the way or did differently along the way as you responded?
THUROW: Little things. This is relevant that's irrelevant. But you really learn what turns the students on. What do they like to hear.
INTERVIEWER: And? What turns students on?
THUROW: Things they think can be useful in business.
INTERVIEWER: Any that come to mind specifically? Things that popped up along the way?
THUROW: Well like one of the things we do in the current course is we talk about the recession. If you work in capitalism, you will have recessions. Like I say to the students, "How many recessions has the U.S. --" Now a recession is six months of negative growth. How many recessions has the U.S. had since World War II? Do you know the answer? 12. Capitalism comes with recessions like elk have horns. Capitalism has recessions. How do you deal with downturns? Everybody will have a downturn. Nobody is continually up. That's one of the problems in General Motors. In the 1930s, automobiles were taking off. So General Motors had no negative quarters until the recent ones. Even in the 1930s they could sell cars.
INTERVIEWER: Did you discuss with the students, then after you talked about this, whether there were ways to plan around it for a business? In other words --
THUROW: Oh absolutely.
INTERVIEWER: Did they get -- Did you find they were interested in this stuff?
THUROW: Well I think by now, the students who take economics say it's relevant. When 40 years ago they said it's irrelevant.
INTERVIEWER: And do you think that's -- I mean in the current climate they're feeling that? Or did they feel this five or ten years ago when things were going well?
THUROW: I think both. At the moment, at the Sloan School, everybody's worried about getting a job. Because if you ask who the biggest employers are, they're investment banks and consulting firms. They're both not hiring. So everybody's a little bit worried about getting a job. Now what I tell them is that five years later, nobody can tell the difference. You know if you graduate in a bad year, five years later opportunities will come along. But that's a very hard message to sell when you're -- you have to look at the time.
INTERVIEWER: How did you come to be Dean of the Sloan School?
THUROW: You have to ask the people on the committee.
INTERVIEWER: But you weren't curious? You never pieced it together after the fact?
THUROW: Well I think at the time, it always had insiders. Dean Schmittlein, the current Dean, is the first outsider they've ever had. So I was looking at it in the inside. And if you look at the inside, people about my age at that time, I think I was about 45 when I was selected Dean. I guess I was the logical choice.
INTERVIEWER: Had you done -- taken other leadership positions, and run any centers?
THUROW: Yeah. But not run centers, but run committees.
INTERVIEWER: Any that stick out? Were you very outspoken when you were on committees?
THUROW: I'm trying to think of the name. It was the committee on the future of MIT in the early 1970s. One of the people I remember was Sam Bodman who was in chemistry. He and I were on the committee. That lasted for four years. It was headed by a mathematician. Where does MIT go? Because at that time, the Draper Lab was part of MIT. Remember, the Draper Lab was probably doing things that were too specific. They were doing Viet Cong sniffers. How do you sniff out the Viet Cong? And there were a lot of antiwar sentiment.
INTERVIEWER: So this wasn't the Pounds Commission on the defense labs? This was subsequent.
THUROW: Subsequent, yes. I should say something about Dean Pounds. When I first came here, he was Dean of the Sloan School. He pulled out of his desk -- when he came here from Harvard, he pulled out of his desk plans for a new business school. In the -- where the parking lot is. Only 40 years later they're building the new business school. He said when you come here, you'll have a new business school. When I leave here there'll be a new business school.
INTERVIEWER: Have you had a tour of how far up this --
THUROW: Well I think they're at the top. But it's still very rough. We're scheduled to move in in the fall of 2010. I'm looking forward to it.
INTERVIEWER: Were there any objections to the school having two economists in a row? Abe Siegel I guess was an economist.
THUROW: It was three because you had Glen Urban and then you had Dick Schmalensee.
INTERVIEWER: But they followed you. But I mean, by the time you came along --
THUROW: No I don't think so.
INTERVIEWER: Nobody said we should be having more business-y people, less economics?
THUROW: I'm not sure that economists consider labor economics economics.
INTERVIEWER: Which Abe was. Right. Were you surprised when you were asked to be Dean?
THUROW: I was actually surprised, yes.
INTERVIEWER: Who reached out to you? And what was the conversation like?
THUROW: I've forgotten what the conversation was like. But basically, it had to do with -- Paul Gray, the president. The president offered the job. And he was president when I became Dean. Although when I ended, Chuck Vest was president.
INTERVIEWER: Did you have any thoughts about saying no?
THUROW: Probably not. Very few people will say no. Actually my friend, Henry Rosovsky at Harvard says almost nobody that's asked to be a Dean says no. It never has happened at Harvard. Probably very seldom happens at MIT.
INTERVIEWER: Did you find that the pace changed? That the job changed?
THUROW: The big that changes is you quit getting gossip. When you're a professor, you get all kinds of gossip. When you're a dean, nobody tells you the rumors or what's going on.
INTERVIEWER: It's certainly a less portable job than being a professor or an economist.
THUROW: That's true. But it also has less information. You have to go out and dig out information, rather than have it come to you automatically.
INTERVIEWER: So if you were taken by surprise, in a sense, did you come in with an agenda? Or how did you figure out what you wanted to do as Dean?
THUROW: By that time I'd probably already been here maybe 15 years. Longer than that because I became Dean in --
INTERVIEWER: 1987 to 1993.
THUROW: Right. 1987, so I came here in 1968. Almost 30 years. Basically the agenda was to change the curriculum. Because at that time, you did a first year of required courses. And the second year you did what you liked. So we changed the curriculum to, basically you have to do some required course in the first semester. And then you do what is called deep major, the second, third, fourth semester. But you can basically have three semesters when you get to pick your courses.
INTERVIEWER: Is this sort of the Oxford style? Let them have more freedom?
THUROW: Let them have more freedom. Because they know what they want. What they need. More than I do.
INTERVIEWER: Do you think that's true necessarily?
THUROW: As business people, yes. Because they've had three years of business experience. You know, what do I need to get ahead?
INTERVIEWER: You didn't have any of them coming in right out of college?
THUROW: No. By the time I was Dean of the Sloan School, there was nobody right from college. Even from MIT. I mean you go away and spend three years working and then come back.
INTERVIEWER: Do you think it ought to be like that in other professions?
THUROW: Probably not. Because in engineering, as a young person, you learn the new things. There's a real advantage to being young. In business, you have to be a little bit wise. So you have to have some experience. Because you don't manage machines, you manage people. The trouble with the 22 year old who graduated from college coming into a business school, he thinks, you just tell people what to do and they do it. And if you tell people what to do they don't do it.
INTERVIEWER: So as Dean, how did you figure out what you wanted to do? Did you tell people what to do? Or did you --
THUROW: The question is how do you indirectly persuade them? One of the things that's central to the whole thing is organizational behavior. Which is how do you motivate people to do what you want them to do. Rather than tell them what you want them to do. Economists think you can just tell people what you want them to do.
INTERVIEWER: You were talking about how much the Sloan School had grown during your period of deanship. Was it obvious that that was going to come next? Or did that take some thinking and persuading?
THUROW: It took thinking and persuading. But basically it was obvious you needed it. Because if you graduate 100 a year, you don't meet each other. Business students needs to meet each other.
INTERVIEWER: Once you're out.
THUROW: Once you're out. It's like having a few whales in the ocean that can't meet each other and have babies. You want business students to have a network out there. The strongest thing that Harvard Business School has is a network. A network occurs because you have people. So you've got to have lots of people to have a network.
INTERVIEWER: If it was that obvious, why hadn't it happened before?
THUROW: Probably because until that time, MIT thought of itself as an engineering school. With some add-ons. They didn't think of themselves -- And what is it today? Today about 10% of the graduate students at MIT are in the business school.
INTERVIEWER: And to the extent that you knew you wanted to grow it bigger, how did you figure out how much bigger?
THUROW: Well basically you say, who out there is optimal? In the sense that they're big enough, so that they can be seen. But not too big. Don't want to be Harvard, which means have about 1,200 students a year. But Stanford has about the same number we do.
INTERVIEWER: In the business school.
THUROW: Business school, yeah. And they're basically a famous business school on the west coast. Now if you take the colleges that have more, there are Columbia, Wharton, Harvard. Those are the famous ones. The rest of them are all about our current size.
INTERVIEWER: Some of the public universities are bigger?
THUROW: Oh they're much bigger. Take the University of Michigan. I think its business school is maybe bigger than even Harvard.
INTERVIEWER: What did you have to do to grow it? I mean and how much -- What kind of clearance did you need within MIT?
THUROW: Well I think Paul Gray was in favor of growing, but you needed classrooms. So you had to build a classroom building. You needed faculty, so you had to recruit faculty. And you need students. Now students are not a problem, because a lot of people apply. But the problem is how do you recruit the faculty to teach them.
INTERVIEWER: So where did you put them? I mean, you talk about the fact that you weren't --
THUROW: Remember we built the Tang Hall, which is basically a teaching facility. And we got the building across the street, which is a converted building for offices.
INTERVIEWER: Did -- Were there any issues in terms of getting approval from MIT? You said Paul was basically in favor.
THUROW: I don't think there were really any objections. They all wanted to do it. Now the current president of MIT, Susan, she's one of the reasons why we're building a new business school. She thinks it's a priority. Which it is. We've done studies of why do you lose students who apply? Let's say a student applies to both Harvard and MIT and gets admitted to both. Which do they choose? Or Stanford and MIT? Buildings make a difference. Students like buildings. There are students who go to Harvard simply because they have better buildings. After we get this new business school, you can't go to Harvard because they have a better building. MIT's buildings are just as good.
INTERVIEWER: Is it simply newness? Or what else about -- what's going to make a building a great building?
THUROW: I think it's having the right kind of classrooms. Now I teach sometimes in remade classrooms. They are basically recycled buildings. As opposed to new buildings. I'm a better teacher in new building, because you have tiered classrooms. You can plug in your computer. They have u-shaped place for students. I'm a better teacher in new buildings.
INTERVIEWER: What makes that better in terms of classroom shape and structure?
THUROW: Because you can get interaction easier. When you're right in the middle. If you're u-shaped, you can be up in the middle. You have students to your right and left and in front of you. If you're basically a flat classroom, you get people on the end you can't even see. Plus it's harder to see people in the back.
INTERVIEWER: Do you think it's more important in business than in other topics? Or should this be throughout the colleges?
THUROW: I think it probably should be everywhere. Building new classroom buildings is very important. Now the engineering school basically has buildings built for it, which are the central campus. The Infinite Corridor. It's only the outer tier of activities that had these recycled buildings.
INTERVIEWER: But in terms of things like sloped classrooms, is this throughout the Institute at this point?
THUROW: I think it's mostly. Very few are flat.
INTERVIEWER: Did you get into clickers or electronic modes of --
THUROW: I've never used that, but some people do. You can. The other thing I never -- very seldom is basically use -- where you basically have your computer, and you throw up pictures on the board. The reason I don't do it is I want to slow myself down. Otherwise I go too fast and the students can't keep up. So if I have to write on the blackboard, that's old fashioned, but it's slow.
INTERVIEWER: Interesting. What was it like to be dean of one of the smaller schools at MIT? Or to be dean of a management school in a university that's focused on science and technology?
THUROW: Well the big thing -- When I became dean, it was the Sloan School. When I left the deanship, it was the MIT Sloan School. I said, "They have a famous name at MIT. We don't have a famous name." Now you and I probably know who Sloan is, but most people don't know who Sloan is. It's like Wharton. Very few people know it's at the University of Pennsylvania. Wharton is more famous than the university. It's the opposite here. So we always want to emphasize MIT dash Sloan. In fact I tried to drop the name Sloan. Because in Sloan's will, he does not say it has to be called Sloan. It's called Sloan because they thought he'd gives us [INAUDIBLE] of money. He never did. But who knows what Wharton did. What did Wharton do? I think he was a railroader. Now Sloan was an unbelievable person, but [INAUDIBLE] know today. People didn't know the name MIT. So you want to say, the MIT School of Business. I have to use the word Sloan, to say, MIT dash Sloan School of Business.
INTERVIEWER: So you actually changed the name while you were --
THUROW: Yeah. Instead of calling it the Sloan School, we said the -- And all official publications it's the MIT Sloan School.
INTERVIEWER: And you did that during your six years?
THUROW: Yes. Never just [INAUDIBLE]
INTERVIEWER: So come back to your agenda. I mean you -- So you get called into the president's office. And they say, "We'd like you to be next Dean." And you say, "Great." Then you say, "Gee, I've been a professor of economics. What do I want to do?" Or do you call in all the professors and say, "What should we do?" Or --
THUROW: In the academic world you have to call on professors and say, "What should we do to make the Sloan School more famous? The MIT Sloan School more famous?"
INTERVIEWER: So that was one of the questions. How much were you aware that it wasn't that well known?
THUROW: Well because you could go out in business and say -- Do you know -- Most people didn't know the Sloan School. They knew MIT but didn't know the Sloan School. Where was it? You can survive if you're Wharton, because Wharton, as I said, is more famous than the University of Pennsylvania. [INAUDIBLE] Most schools these days are named. Like this University of Chicago business school has a name. I don't even know what the name is.
INTERVIEWER: So you wanted to change the name, to grow the school, change the curriculum. Did those changes sit well with all of the people within Sloan?
THUROW: No. There were some people who objected. But today they all love it.
INTERVIEWER: What were the objections? Do you recall?
THUROW: The objections were, especially around economic causes. This is not rigorous enough. They want to teach economics, not how to become the intelligent user of economics. You can always hire an economist if you're a business person. So somebody to give you good advice. How do you know which is good advice, which is bad advice. That's what you have to know. You don't have to be an economist yourself.
INTERVIEWER: So you say you, was it, doubled or more than doubled the --
THUROW: More than doubled. It basically went from about 250 students a year, over the two years. Not a year, but half of the year. A little over 2,000 students. So it was almost a factor of 10.
INTERVIEWER: In how long a period?
THUROW: Six, seven years.
INTERVIEWER: Wow. And how much hiring were you doing then?
THUROW: Lots of hiring of faculty.
INTERVIEWER: What was that like?
THUROW: That was hard. First we asked to offer money. But what we said to junior faculty is -- You have to get tenure. So we'll give you a -- Let's say a full professor teaches two classes a semester over the course of a year. An assistant professor teaches one. So come here and you'll get tenure somewhere because you'll have time to do research. So we cut the teaching load of the assistant professors. And we tried to pay the highest salaries we could.
I should tell you the story about -- the hardest thing to hire is accountants. Because who wants to do a PhD in accounting? And you can work for accounting firms and make a lot of money without a PhD. So there's a woman from Stanford who graduated a PhD in accounting. Everybody wanted her. We offered her a job, Harvard offered her a job, Wharton offered her a job. At the time, I think assistant professors made salaries of about $50,000. Harvard hired her for 110. We offered 90. That's the market. Economists are cheap. Accountants are not. I had some documents in my office when I was Dean that said about 10% of the faculty come and complain about their salary. So one document would say, "What field are you in? What's your teaching like? Good or bad?" So I could tell people what their salaries were. I never changed any salaries, but I could tell them. And what's your gender. Because females at that time made more money than men. For the same rank and same experience.
INTERVIEWER: Why was that?
THUROW: Because there were very few of them. Or one of them.
INTERVIEWER: Were you under pressure to hire women?
THUROW: Well there was a general pressure in the air. Not a specific pressure, but a general pressure. And what I would say to faculty is, "You can't hire anybody. But if you find a woman who fits your requirements, you can hire her." Lo and behold they could find one.
INTERVIEWER: Any other categories where that applied?
THUROW: We did the same thing of blacks, but it was very unsuccessful. There aren't that many blacks who get PhDs in business subjects. You can't make something out of nothing.
INTERVIEWER: And women? How successful were you in finding them?
THUROW: Some fields were very successful. I think that's why the president of Harvard got fired, Larry Summers. He said, "Women aren't in science." The current president of MIT is in science and biology. That's true there are few women in physics. I think last year, one woman got a PhD in physics.
INTERVIEWER: At MIT.
THUROW: In the whole country.
THUROW: The whole country. But biology's full of them. Chemistry has quite a few. So it depends on what field you're talking about.
INTERVIEWER: And within business? What areas?
THUROW: Organizational behavior has quite a few. Economists have very few. Still the economics department here at MIT I think has very few women. What else? Well leadership has a lot of women. The current head of leadership at MIT is a female.
INTERVIEWER: As the department began to grow, were there any growing pains?
THUROW: Well one of the big differences is you don't know everybody. When I first came to MIT, and as long as I was Dean, I knew the name of everybody. Now today, I go into a meeting, and I don't know the name of half the people. Now it's probably because I'm not a dean, so I don't make an effort. But the fact is it's just bigger. There's more people.
INTERVIEWER: Was there a camaraderie at the Sloan School or within the Sloan School when you first joined it?
THUROW: Yeah. Because very small. And one of the things people do these days is like -- the economics, finance, and accounting has lunch together at least once a week.
INTERVIEWER: Within the Sloan School.
THUROW: Within the Sloan School. So we get to know each other. But there are people who I don't know, don't recognize. Who are also in the Sloan School.
INTERVIEWER: So how big a group of you is that? I mean are we talking about 10 or 20 or 40?
INTERVIEWER: Economics, finance, and accounting?
THUROW: Probably 20. As I said, there's about 150 faculty members of the Sloan School in total.
INTERVIEWER: And there were how many when you started?
THUROW: Probably 25.
INTERVIEWER: Wow. Was there anything else you wanted to do with the Sloan School, or thought needed to be done, that you weren't able to accomplish? Or that you didn't finish?
THUROW: No I don't think so. Because basically I quit when I said my agenda is done. Time to have somebody else. Plus the fact that you have to quit after awhile, because otherwise you can't go back to being a -- you either have to go off and be a university president, or you have to go back to being a professor. And you're just away too long.
INTERVIEWER: Were you tempted at all by the idea of becoming --
THUROW: Never wanted to be a university president.
INTERVIEWER: Why not?
THUROW: Just didn't excite me.
INTERVIEWER: Did you have to do much fundraising as Dean?
THUROW: As Dean, you do fundraising. But that's not hard, if you're at a place like MIT. It's hard if you're at a place like University of South Dakota. Because at MIT, people know you have a good product, you do good things. All you have to do is go through a dance. A mating dance. And you have wealthy alumni. At University of South Dakota, first of all you don't have wealthy alumni. Second of all they don't know you're doing good things. Now the interesting thing about raising money is I almost never asked, until the end, people for money. What they want to do is tell you how they got rich. If you're willing to listen, and I think those stories are fascinating, at the end you say, "How about giving us X?" And they say yes. They don't want to know what you're going to do with the money. You don't go to them and say, "I'm going to do X with your money." You go to them and say I'm going to listen. How did you get rich?
INTERVIEWER: How much of your time did you spend fundraising, as opposed to other things?
THUROW: Probably you spend about a third of your time fundraising. You know Deans are Mr. Outside here at MIT. Usually they have associate deans who are Mr. Inside. Or Mrs. Inside.
INTERVIEWER: So did you enjoy that part of it? Some people don't.
THUROW: No, I think I did because at MIT it's relatively easy, and I enjoy the stories. I think it's very fascinating as to how people got rich.
INTERVIEWER: Do you know how much you were able to bring in during that period?
THUROW: I think we brought in about $250 million. Which at that time was a lot of money. Today it's not.
INTERVIEWER: How did you pay for the big expansion in the school? In other words, you were bringing in new faculty members before you had --
THUROW: Partially by raising money. And partially by the tuition they paid. It was also big in negotiations with central MIT how much tuition comes back to the Sloan School from what they pay central MIT.
INTERVIEWER: Is Sloan much more tuition driven than other schools at MIT? Because --
THUROW: I think so, yes.
INTERVIEWER: -- MBAs don't have the big fellowships that graduates students --
THUROW: The Sloan School offers no fellowships. They offer a lot of loans. But the assumption is, you're going to make a lot of money when you leave here. You can pay us back. So we offer loans, but no fellowships.
INTERVIEWER: So the economics of the School are quite different from the other schools?
THUROW: Like economics offers lots of fellowships. They live on fellowships.
INTERVIEWER: Right. As a member of the academic -- Well as Dean, you remember the academic counsel.
INTERVIEWER: So you had a front row on MIT's inner workings during that period.
THUROW: Academic Council, for those who don't know is a group of the deans, plus the provost, the president. And where does MIT go? The head of Buildings and Grounds.
INTERVIEWER: Was there anything that surprised you when you entered that group? Either about what you were hearing and learning? Or how it operated? Or anything?
THUROW: Well I was a little bit surprised that probably there wasn't a firmer agenda. It was just a general strategy. We're good, how do we remain good? And then let's do A, B, C, and D.
INTERVIEWER: You met weekly.
THUROW: We met weekly.
INTERVIEWER: Did what the Sloan School was doing ever become an issue? In other words, did you take turns presenting?
THUROW: We did. One of the ways we presented is -- When you give tenure to people, the dean at the school acts as a spokesperson for the person. And everybody else is a judge. So you get to say, "This is what the Sloan School is doing, because this is the professors we're hiring. This is what the chemistry department is doing. This is what professors we're hiring."
INTERVIEWER: Was it usually open and shut? Were the schools respectful of each other?
THUROW: No. Sometimes they said no. The school said I want to give a promotion to X. And they said no promotion to X. And then you learn. They don't like X. Not the person, but the general direction.
INTERVIEWER: Could you -- What did you do then?
THUROW: Sometimes you went back and came back with a promotion for the same person six months later. And sometimes you have to tell a person, you don't get promoted. We can't go in this direction. And this is the thing as Dean, is when I said people got promoted or not promoted, I always said to the faculty, "Don't tell." I think I never told somebody, "You got promoted," and he didn't already know. Or she didn't already know. But when they didn't know, when you had to deliver the bad news, you're always the first person to deliver the bad news. Rumors only work one way. They only work for positive news, they don't work for negative news.
INTERVIEWER: What do you think were the biggest and most important changes for the Institute during that period? In other words, not the 41 years with the more women and so forth.
THUROW: Well the biggest probably change at MIT -- Visible changes under President Vest. That's when they started building all these new buildings. The Stata Center. Center for Brain and Cognitive Sciences. The new undergraduate housing. So basically I think there was a renewed emphasis on good architecture. That's the thing he solved first.
INTERVIEWER: Do you think that there was a recognition that MIT had to do certain things the same way the Sloan School had to do certain things, to make it more competitive?
THUROW: Well I think you had recognition that you had to build some dormitories. Having a lot of these students live in Boston in apartments or fraternity houses just wasn't the way to go.
INTERVIEWER: Well that was the period where there was the death and the subsequent decision to -- Was there -- Did Academic Council get involved in those decisions very much?
THUROW: We had discussions about all those. But obviously in terms of hiring the architect and building the buildings and raising the money for undergraduate dorms, that's the president's job. Or the provost.
INTERVIEWER: Were there any things you recall that really were matters of great controversy within that group? Or did things pretty much get put on the table and you all agreed?
THUROW: I don't think there were a lot of controversies. I don't remember any great controversies.
INTERVIEWER: Why not?
THUROW: Because it's a good places to begin with. And you want to make it a better place. Everybody agrees on that. It's good but let's make it better.
INTERVIEWER: But you didn't have different priorities or different styles? Or did everybody simply saying engineering is going to always be the priority?
THUROW: It was live and let live. Engineering gets to make most of its decisions unless they make bad ones. Science gets mostly -- The big schools are engineering and science. Then you get the Sloan School, then you get the little schools. Humanities and Architecture. And city planning.
INTERVIEWER: Let's talk a bit about economics and economics policy. You've sometimes been critical of the discipline and the profession. What do you think of where it is today?
THUROW: Probably economists have less influence in Washington than they almost ever had.
INTERVIEWER: Do you really think that?
THUROW: I really do. Because if you say under Obama, "Who's important among economists?" The answer is nobody. If you said it under Lyndon Johnson, it was Walter Heller. If you said it under John Kennedy, you could say who the important people were. Charlie Schultze. Even under Eisenhower. It was an important CEA. I think the CEA is probably -- Council of Economic Advisers is probably less important today than it's ever been.
INTERVIEWER: But you think -- You don't think that even with the economic crisis that the country has faced in recent years, or last year, that any economists have had the ear of the president?
THUROW: Well now you have a head, basically, economic adviser in the White House which is Larry Summers, Secretary of Treasury. You didn't used to have anybody in the job that Larry Summers now has. The head of the CEA was the chief adviser to the president in economics. It is not today.
INTERVIEWER: But is that a structural issue you're talking about? In other words, so here's an economist he's listening to. It's not that he's not listening to an economist?
THUROW: Well I don't know. Somebody has an important job. Whether he's listened to or not listened to. You've got to be there to know.
INTERVIEWER: And you don't think the head of the CEA -- I mean Christina Romer.
THUROW: I think the head of the Fed is more important than it used to be. It probably has to do with Alan Greenspan raising the level. And Paul Volker. Bernanke now is a key adviser, even though he was appointed by a Republican president.
INTERVIEWER: Well I wonder if it's more important than it used to be. Or whether it's a matter of being perhaps less independent? In other words --
THUROW: In the CEA?
INTERVIEWER: Yeah. I mean, the Fed is, what, a quasi-independent branch. It's not --
THUROW: It's independent as long as it never uses its independence.
INTERVIEWER: Do you think that's been true last -- since it was set up? Or in the last --
THUROW: Because if the Fed knows -- That if the President says, "I really want you to do X." The Fed has to do X. Otherwise, if the President says, "I will go to Congress and take away your independence" Congress will always vote with the President. Because the Fed has no consistency. No Bernanke got his degree here at MIT.
INTERVIEWER: Right. So I mean, one interesting thing is that while he isn't chairman of the CEA, he is an economist.
THUROW: He does have influence.
INTERVIEWER: And he does have a voice. A big voice. I mean I guess the other big voice might be the head of the Treasury, certainly.
THUROW: The Treasury and economic adviser Larry Summers. Like if you take the CEA, it used to be you could always give the three names. Today you can't say it. Who's the chairman of the CEA?
INTERVIEWER: Christine Romer, right?
THUROW: I know, but --
INTERVIEWER: An MIT grad, yes?
THUROW: I know, but the average person, I don't think does know.
INTERVIEWER: No. The other two are --
THUROW: Who knows.
INTERVIEWER: So, do you think that whatever the structure is, that economic policy is being made an appropriate -- That the policies themselves are what they ought to be?
THUROW: I think we've learned a lot of things from the Great Depression. We're probably doing more or less the right things. The question is should we do more? Should we have more stimulus? Not less.
INTERVIEWER: And you would say?
THUROW: Do more. I would be with Lord Keynes. You can't do too much. Because you can always cut back if you do too much.
INTERVIEWER: Are there particular things you would believe? Is it just a matter of money? Or are there ways of putting it out there that you would recommend at this point?
THUROW: Probably some of the money ought to be spent on climate change. The question is can you do anything quick with climate change? Like if you take the issue of nuclear power, it's important in climate change. But we're not having a real debate. Should we have nuclear plants or not have nuclear plants? We haven't opened a new nuclear plant in what, 20 years? Something like that.
INTERVIEWER: In your economic studies, did you look at the nuclear issue?
THUROW: One of the things I teach in my class -- special topics is climate change and nuclear power. Wind energy, solar energy.
INTERVIEWER: And what do you say, what do you do, where do you come out on all of that?
THUROW: I'm in favor of using it. Because you have to go back and think about the realities. Nuclear bombs and nuclear power was high tech in 1945. It's not high tech in 2010. Anybody can build an A-bomb if they have plutonium. Anybody can build a nuclear power plant if they know how to do it. So you have to say things have changed in 50 years. What used to be high tech is no longer high tech.
INTERVIEWER: What kind of structure do your classes, say your climate change class. Do you say, let's look at the economics of each of these one by one? Or how do you --
THUROW: I have readings they have to do for each class. And then we have a discussion and questions about the readings in class.
INTERVIEWER: And are they mostly on the economics of these things? Or the political economics?
THUROW: Mostly on the economics. Because that's what I teach, is economics.
INTERVIEWER: Is there good work on this stuff?
THUROW: Yeah, I think so.
INTERVIEWER: Have you done a book on this topic?
INTERVIEWER: Are you tempted?
THUROW: No. Currently I'm writing a book on China. The PRC.
INTERVIEWER: What's it going to say?
THUROW: The title of the book I know is "The PRC is Number One." So the question is, will the PRC be the biggest economy in the world by 2100?
INTERVIEWER: Do you think it will?
THUROW: It starts from a low level. If you start from $500 per capita. And the U.S. starts from $45,000 per capita. And you grow. It can't get catch up in the next 100 years. It takes a long time to catch up.
INTERVIEWER: That long.
THUROW: Like how long did it take the United States to catch up with Great Britain in terms of per capita income? One, we didn't start with that difference. But it took 100 years. [INAUDIBLE] we started growing in 1830. Didn't catch up with Great Britain until World War I. Think about the Japanese. They started the Meiji Restoration which is 1860. They still haven't caught up with United States, and it's 2009. It takes a long time.
INTERVIEWER: Do you think the pace of catching up, though, has changed because technology moves out more quickly?
THUROW: Maybe technology moves a little more quickly, but it still takes a long time. Just as, if you take China, they're growing in their cities, but they're not growing in their rural areas. And 70% of the people live in rural areas. It's just a simple mathematic question.
INTERVIEWER: Have you made many trips to China for research?
THUROW: I have a co-author, who's Yunshi Wang who is a Chinese from Shanghai. Runs the Chinese Institute at the University of California in Davis. But one year I went to China 12 times. Most years I go three or four times.
INTERVIEWER: That's a lot of traveling.
THUROW: A lot of traveling.
INTERVIEWER: What do you do on a trip to China?
THUROW: One you read a lot. Two, you use your computer a lot. And three you sleep a lot. If you make a trip to China, it's about 24 hours.
INTERVIEWER: Have you -- But once you're there, how do you use your time when you're there usually? Do you travel -- try to cross? It's a huge country.
THUROW: Well you're trying to visit as many people as you can. But the thing to recognize is it's a huge country. And what's true in Shanghai may not be true in Wuhan. What's true in [INAUDIBLE] may not be true in [INAUDIBLE]
INTERVIEWER: So have you tried to move around to different parts of the country?
THUROW: Try to move around. But one of the things that I think was the wisest advice ever given by one of my students who was Chinese here at MIT was you can't go to rural areas. 70% of the people live in rural areas. If you went there, they wouldn't talk to you. Because of the cultural revolution. You've got remember, China had a peculiar punishment. Being sent to the countryside was punishment. Being sent to Iowa is not punishment. So China's different.
INTERVIEWER: And when you go do you talk mostly to economists and businessman? Or who do you find --
THUROW: Both. And some you look. How fast are things growing. I mean you can tell with your eye how fast Shanghai is growing.
INTERVIEWER: How much do you find that you're making contact with students you've met over the years?
THUROW: Quite a bit.
INTERVIEWER: That's interesting. One of the -- MIT graduates quite a number of students. I guess some of them Sloan School students and some not who are skilled at the kind of financial engineering that's been sought by Wall Street over the years. In recent years, though, we've heard complaints that it's financial engineering that's partly brought the United States to it's knees. Do you think that MIT and Sloan have played some role in bringing us to the point we're at?
THUROW: No. As I said, recessions are normal. Capitalism has them. You can't blame financial engineering or anything in particular. If it wasn't X it would be Y. And the last crisis was caused by housing. Housing prices went too high they went down. It could have been caused by something else.
INTERVIEWER: So you don't feel that there should be less emphasis or that it's anything MIT should try to --
THUROW: As I said, you've got to understand the nature of the beast. The beast is it has recessions. Now communism has no recessions, but it has no growth either. And Russia lasted from -- The Soviet Union was from 1917 to 1989. Not a single recession in the entire period of time. But no growth.
INTERVIEWER: Although I think after at least some of the recessions, we try to examine the economy and say, what about it wasn't working well?
THUROW: We never make the same mistakes twice.
INTERVIEWER: So for example, after the housing problems of --
THUROW: It'll be something else. It won't be housing again.
INTERVIEWER: But part of what they did was to open up the -- Well, there were the changes in Reg Q in the 1970s because the feeling was the housing market had shut down, because capital wasn't flowing. So now it flows.
THUROW: Brought investment banks and commercial banks back together again? After separating in the Great Depression?
INTERVIEWER: Do you think they ought to be?
INTERVIEWER: Do you think they will be?
THUROW: Yes. Even though Bernanke is against it. Bernanke recommends you separate them. But the answer is there will always be institutions that are too big to fail.
INTERVIEWER: Right. Do you, particularly with the failure of Enron and other companies, there was I think a new look at business ethics and whether or not it was taught enough. Is that something that's -- THUROW: I don't think ethics had anything to do with the Enron problem.
INTERVIEWER: You don't?
THUROW: The Enron problem was they were in Houston, not in Chicago. They were a commodities firm audited as an oil firm. But if they had been in Chicago, they would have been audited differently. I don't think people cheated Enron. I think Enron made some bad investments, but it had nothing to do with cheating.
INTERVIEWER: One of the issues right now is big salaries. Oversize bonuses, particular on Wall Street and so forth. As you think about -- You've looked at income distribution issues for many years. Do you think the big salaries are a problem? Is there anything --
THUROW: They're probably surprising. But if you say what can we do about them, the answers is not much.
INTERVIEWER: You do believe that.
THUROW: Yeah. How can you limit them? Because if you limit X, company Y had somebody move to a different company, make a new, different salary. So you already see that where, in places where the federal government is trying to hold salaries down, people leave. In capitalism, people get to vote with their feet.
INTERVIEWER: Certainly the spread in salaries in American companies has --
THUROW: One thing that's happening is the income distribution is very bad. As the number of poor people is rising, the number of rich people is rising, the number of middle class people is shrinking. Now we've always said you need large middle class to be successful. One, it probably isn't true, but two it isn't happening. And if you say you don't need the middle class for democracy. India has no middle class, but it has democracy. Other countries have lots of of people in the middle class but has no democracy.
INTERVIEWER: So you don't think you need a middle class.
THUROW: I think you probably need a middle class. But for economic reasons, not for political reasons.
INTERVIEWER: And for economic reasons, do you think, well India is moving forward, as you say --
THUROW: Suppose it divides into the rich and the poor. Sooner or later you have a revolution. The poor say, I want some of the rich. Or the money they have.
INTERVIEWER: If you were going to write Zero-Sum Society -- Well you say it keeps being reprinted. Do you revise it at all?
THUROW: No I don't revised it.
INTERVIEWER: You think basically what you said then holds true now?
THUROW: It probably isn't completely true, but I don't revise anything. Because revising is like regurgitating your own idiom. You just don't do it. You write a new book. You let old books -- If they're wrong, they're wrong. I'm old enough that people say, "What's the biggest mistake you've ever made?"
INTERVIEWER: What do you tell them?
THUROW: Very simply. Probably 1992, I wrote a book saying who would be the most successful economy in the world. I made a prediction it would probably be Europe. I was wrong. The Europeans have a great export machine in Germany. A great design machine in Italy and France. Financial market in London. If you ask the Japanese what are the ten goods you'd like to buy most? They're all French or Italian. But they've managed to throw it away. They will not be the most successful economy in the world. Despite the fact that they started from the strongest position. That's the biggest mistake. If you take my books that I've made.
INTERVIEWER: In what way do you think they've thrown it away?
THUROW: Well partly when they reunified Germany, they said we've got to stop inflation. You can't. Because in communism, prices didn't change for 90 years. In Russia the price of bread was the same in 1917 as it was in 1989. So you've got to let prices go up in east Germany. That causes inflation. So at that time, the German Central Bank had high interest rates. Now the German Central Bank was in fact the central bank for Europe. Because they had high interest rates, everybody else had high interest rates. So they had very slow growth. And today you say who's growing the slowest? It's not Asia, it's not America, it's Europe.
INTERVIEWER: One thing you've done that most academics haven't is to write for an editorial board of a major newspaper, and to be a major -- a columnist for major newspapers. Can you talk about how you entered those -- how those opportunities came along, how you took them, and what they were like?
THUROW: It's good fun to see whether you can write for a general audience. [INAUDIBLE] was a newspaper person. The way I worked for the New York Times editorial board was I was on sabbatical. Where do I go? I don't want to go to another university, because that's just like at home. Who wants to go to Yale? Who wants to go to Harvard? So I went to the New York Times for the year. Instead of University of Chicago or Stanford.
INTERVIEWER: How did you happen to make that connection? Do you know why they came to you?
THUROW: At that time, for a whole variety of reasons, I was reasonably well acquainted with people that were on the editorial board at the New York Times. Rosenthal was the chief editor.
INTERVIEWER: Jack Rosenthal.
THUROW: Jack Rosenthal. It wasn't the Rosenthal who owns the --
INTERVIEWER: Not Abraham.
THUROW: But he was there then.
INTERVIEWER: So you actually moved to New York for that period?
THUROW: Moved to New York.
INTERVIEWER: And showed up --
THUROW: Every morning.
INTERVIEWER: What was it like? Did you -- What was the process like while you were there?
THUROW: Oh I had a good time.
INTERVIEWER: They met a couple of times a week to discuss?
THUROW: Discuss individually. Now Peter Passell and I shared an office. He now works for the Milken Foundation out in California. And one of the things I had was a severed achilles tendon. So a couple times during the day, I had to be on the wall, stand on my head with my feet up in on the wall. So people would come into my office, and I'd be sitting there with my feet on the wall and on my head. They were always surprised.
INTERVIEWER: Did you find the speed of writing at all difficult in the beginning?
THUROW: No but the speed makes you a better writer. Because you learn -- You can do things -- Let's say you're given an assignment at 4:00 in the afternoon, you can do them by 8:00. You can do them. It's not impossible.
INTERVIEWER: The writing itself tends to be much shorter than an academic paper. But the thinking is much shorter too?
THUROW: I think -- I used to kid people at the New York Times -- NYT has a blood type.
INTERVIEWER: But you didn't ever move to journalism full time.
INTERVIEWER: Do you think that affects -- that experience of writing editorials full time for that period affected how you thought and wrote when you moved back?
INTERVIEWER: How so?
THUROW: Well one of the things it makes you say how does the average citizen regard this issue? How do they think about it? How do I -- How do I make contact with them? In the newspaper business, you have to make contact in the first paragraph. Because if you don't make contact in the first paragraph, they jump your article and go to somewhere else.
INTERVIEWER: And you found that people at the editorial board really worried about things like were people reading? Or were they holding --
THUROW: You don't want to write a page that nobody reads.
INTERVIEWER: Did you work with anyone there in terms of getting used to their style? Did you have any teachers? Or did you just do it and it worked?
THUROW: Well I looked carefully at what people were doing. Tried to emulate.
INTERVIEWER: Do you think you changed what the Times was saying, editorially, because you were there?
THUROW: Well no, but one of things I used to do is I used to -- worked with some people who were in economic journalism. Because at that time, people who were economic journalists at the New York Times did not have degrees in economics. Today they probably do. So I would say, "This is what an economist would ask." So I would do a little bit of consulting with the people who write economics.
INTERVIEWER: The distribution of wealth and income has been one of your primary themes throughout your career. what's happened to wealth and income distribution in the U.S. over your lifetime as an economist? And do you see any changes in that in the future?
THUROW: Well it became more equal. From basically 1930 to about 1985. Since 1985, it's become more unequal. The rich gaining, the poor, and the poor gaining. The middle class shrinking.
INTERVIEWER: Within the U.S.
THUROW: Within the U.S. I'm just talking about the U.S.
INTERVIEWER: And do you think that's simply ebbs and flows? Or do you think it's going to continue becoming more equal?
THUROW: Ebbs and flows a little bit, but it also depends on policies. What are the policies?
INTERVIEWER: And policy comes from people getting upset?
THUROW: Education policy is important. How do I help people get the skills that will allow them to earn a middle class income? But international affairs are also important. Take the automobile industry. People that worked in the automobile industry used to be upper middle class, or lower middle -- lower rich. Used to make $90 an hour at an automobile assembly line. They don't anymore because of China.
INTERVIEWER: This comes back partly, I think though, to the very big wages and bonuses in a small number of industries.
THUROW: Right. We all want to be in finance and get the bonuses.
INTERVIEWER: Do you think that will continue in the few years? In other words, what we've been through isn't going to be a corrective?
THUROW: No, I think it'll be a bit of a corrective.
INTERVIEWER: You think it will?
THUROW: Will be. One thing that was interesting was the editorial board, at that time I was there, used to occasionally meet with Goldman Sachs. And the partners at Goldman Sachs are about the same numbers as the editorial board. But the partners at Goldman Sachs used to make maybe 25 times as much. I used to sit there and scratch my head and say, "Why do they make 25 times as much as I do? Are they 25 times as smart?" Well the answer was no. But they make 25 times as much.
INTERVIEWER: But you were never tempted to go down to Wall Street?
THUROW: What did they have that I don't have?
THUROW: They have a different speed in dealing with things.
INTERVIEWER: How about income distribution around the world? I mean, do you look at the balance among countries? That's changed.
THUROW: That's probably becoming more equal.
INTERVIEWER: And will continue to become more?
THUROW: Because you had poor countries like China or India that are growing rapidly. So the poor are catching up with the middle class in America or Europe.
INTERVIEWER: And you don't -- Do you think that that conceivably could have an affect on American income distribution?
THUROW: I think it already is, because it's forcing automobile wages down. I think one thing is true. Maybe make this the final comment. If we come back 50 years from now, I don't think anybody will say, "I work in the American economy. I work in the Japanese economy. I work in the German economy." We'll all say we work in a world economy. I live in America but I work in a world economy. I live in Japan but I work in a world economy. I live in Germany but I work in a world economy. You can do that in your life. What percentage has a German car or a Japanese car. The only thing you can live on that's definitely American is the American house. Because that's where you live.