127. Rajiv Shah Never Wastes a Crisis

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My guest today, Raj Shah, is currently the president of the Rockefeller Foundation, and before that, he led USAID, the centerpiece of American foreign aid.

Within a week of taking that job at USAID, Raj unexpectedly found himself in charge of the largest single humanitarian effort in the nation's history.

I got into my office and I saw that I had one bar on my BlackBerry and I thought, oh my gosh, am I going to miss a phone call from the president?

Welcome to People I Mostly Admire with Steve Levitt.

Somehow, Ross Shah has managed over and over to get himself in the middle of huge projects, from the Haiti earthquake recovery to the Ebola crisis to a vaccination program responsible for immunizing almost 1 billion children.

His new book called Big Bets, How Large-Scale Change Really Happens, recounts experiences on these projects, both the lessons he's learned and the mistakes he made.

I'm guessing when it comes to sheer intensity, for you nothing compares to the events of January 2010.

You're absolutely right about that.

You were 35 years old and somehow you'd impress people enough that President Obama had just put you in charge of an organization called USAID, which had a budget of $20 billion a year, and it's responsible for most of the U.S.

foreign aid activity.

You hadn't even been with that organization for a week when a devastating earthquake hits Haiti, killing hundreds of thousands of people, one of the deadliest single events in recorded history.

Do you remember where you were and what you were doing when you first heard about the earthquake?

I remember, absolutely.

I had just finished touring the Emergency Operations Center at the U.S.

Agency for International Development.

And U.S.AID was created by John F.

Kennedy based on a simple idea that if we help people when they're at their most vulnerable around the world, we make our planet safer and more prosperous for everyone, America included.

And it led global humanitarian actions at times like this.

So I was on my way back down from the floor where we had our Emergency Operations Center when I heard that an earthquake had hit, the phone rings, it's the White House, and they connect me to President Obama.

And he says, Raj, this is an extraordinary moment for our country.

It's a moral catastrophe.

We've got to do everything we can.

I'm putting you in charge.

I want you to make us proud.

And I thought, great, I'm ready to take down notes for what else he was going to say.

And then the line went dead.

And I thought, oh my goodness, I just hung up on the President of the United States.

And about 30 seconds later, the president, who had hung up on me was on television from the White House saying, I just spoke to Administrator Shah.

I've put him in charge of our global response.

I've asked him to use military assets.

And he went through a list of six or seven things.

And I said, okay, this is how it works.

And I'm going to do the best I can.

Now, there's nothing funny about this horrendous catastrophe, but there's one moment you describe early on in the crisis in the Oval Office.

that is so perfectly awkward that it sounds like it's a sort of thing that would be in a script of a Hollywood movie, not real life.

Could you tell that story?

Well, the next morning, I walked into the Oval, and I think it is important to note, you know, in addition to the extraordinary death and destruction in Port-au-Prince, ministries had collapsed, as well as the United Nations offices.

And so the normal leadership that would take charge in a moment like this had either perished in the rubble or were searching for family members and trying to piece their lives back together.

We had a meeting at the Oval Office the next morning.

And so I got there early because I sure didn't want to be late.

And I walk in, and it was just the president and vice president.

And I overheard Vice President Biden say something like, are you sure about putting this Rod Shaw guy in charge?

He just got here.

He's 30-something.

And we have a very talented leader named Craig Fugate, who ran Federal Emergency Management.

Agency, who has a lot of experience with these types of situations.

And immediately, President Obama saw me come in and he ended the conversation, came over to me and said, Raj, come, sit down.

And literally within seconds, the room filled up and we got right down to business.

But I internalized that.

And on my way out of that room, I gave Craig Fugate, who is an amazing leader and led FEMA admirably, I put an arm around him and I said, Craig, I need all the help you can offer.

And he said, Raj, at this moment, I'll do anything you need.

And he was an incredible partner in helping to mount what was the largest humanitarian response to a catastrophe the United States had ever mounted at that point in time.

The idea of tackling a problem of this complexity, so many dimensions, so little ground truth, such urgency for action.

Could you walk us through the kinds of things you were thinking about in these first few days and how decisions were made?

You know, I wrote this book, Big Bets, to make the case that precisely at these moments of catastrophe and crisis, you have to be bold and you have to be highly aspirational and you have to be incredibly data-driven in order to have any chance at success.

We very quickly came to learn that, okay, there are more than 3 million people displaced or hungry.

We quickly came to learn that young women were unsafe in an environment where lighting and physical infrastructure had collapsed.

If people didn't get clean drinking water very, very quickly, there would be immediate outbreaks of disease and waterborne illnesses that would be catastrophic.

And we knew we had to set up housing and start removing rubble, all while saving the lives of people who are still alive and still trapped under these buildings that had collapsed.

How much of the information was coming from on the ground in Haiti and how much of it was just introspection?

A bunch of people who knew a lot about catastrophe and were checking off the boxes.

Initially, I'd say it was almost all introspection.

USAID is this big agency with 11,000 people around the world.

I had people call me that first night at 1, 2, 3 in the morning and say, Raj, you don't know me because you're new.

I'm in Afghanistan.

I'm on my way to Washington because I've done this before and you're going to need me at your side.

And the truth is, they knew that if we didn't remove rubble quickly, we would have a problem three weeks from now.

They knew you can actually take a couple of days to set up the feeding operation to reach as many as 3 million people.

What's critical is that you understand which communities are most vulnerable and you reach children and pregnant women first and with specialized solutions and products.

There was a lot of expertise, but the key was organizing it all in a data framework that helped us understand what are the needs and what percentage of that need are we meeting.

So describe Command Central.

It's populated with hundreds, I don't know, a thousand people who are all working on this from all over.

the world.

First, it was smaller than you might think.

It was one big operations center room, but every square foot foot of space was used.

A lot of military folks were there, a lot of folks from the Federal Emergency Management Agency, and a lot of USAID emergency contractors and partners were sitting side by side.

I'll tell you, when I left that Oval Office meeting with Craig and Craig said, I'm here to help, the first thing we did was went straight to the emergency operations center.

And what I noticed when I got back was that folks at USAID who had badges could get in very quickly.

And folks from the military, from FEMA, from different parts of the U.S.

government who were there to help and had really cleared their schedules to be a part of this project had to stand in a long line and get security clearance before they could go in.

So I remember asking the head of our security team there, just for this immediate crisis, could they actually just open the turnstiles, let people in, even without badges, and take the small security risk that would entail in order to allow everyone to feel welcome.

To me, it made a big difference because it said to our partners right away that, hey, we're not going to treat you differently.

Like, come on in, help us get this right.

So many times when we do complex projects together, we treat different people on the teams very differently.

And it's usually those small signals of let's all truly be in this together that create the sprit de corps and the sense of commitment that can make change possible.

I was working with a large bank and they had a New York office.

And when I would show up there, as you're describing, it would take forever to get into the building.

But the part that was so hilarious is at the end of this process where they take your ID and ask you a bunch of questions, the man would hand you a little yellow slip.

And then you would walk four steps down to the actual turnstile.

He would get out of his chair and walk four steps also.

You would hand the yellow slip back to the same guy who he just gave it to you.

And then you would go through the turnstile.

And so I said to the CEO of the bank, I just described this.

And everyone in the room laughed out loud and noted how ridiculous it was.

And I continued to work with that bank for another year.

And for the next seven visits I had, they still had that yellow slip.

Every time we got to that turnstile, we just thought, wow, this really symbolizes what is going on in this bank, where the smallest changes cannot happen, even when it's completely obvious that they're not serving anybody's benefit.

And I think that symbolism can be important.

The other takeaway for me is that especially when there's a crisis that taps people's sense of moral right and wrong, and when their work is connected to a higher sense of purpose, you know, that security team took some risks by just opening the gates, but they felt they too were part of a mission that was about saving lives in this moment with urgency on behalf of the people of Haiti.

Within academic economics, there is an enormous amount of effort in what we call development economics that goes towards Africa and also towards India,

but not really Haiti.

And it's always struck me as odd, and I've brought that up with people.

Why do you think it is that Haiti is such a forgotten stepchild, even though it's so close to the U.S.?

Do you have any theories on that?

Well, the only real theory I have is that it's a small outlier in a region that otherwise has achieved a high degree of economic development on a relative basis.

The New York Times actually did a thorough analysis of the impact of Haiti's French debt from centuries ago on its current economic realities.

And I think there's so much to study and learn from Haiti in terms of problems with governance, problems with agency, problems with long-standing debt obligations that have all undermined that country's ability to be a viable and safe economy.

And then they're sitting right in the Caribbean, incredibly vulnerable to every change and perturbation in climate and weather you can imagine.

Trevor Burrus, Jr.: Yeah, it also seems that there would be a feeling of solidarity, given their history of armed rebellion that was not that many years after the American Revolution.

I mean, obviously, the governance problems have been dramatic, right?

The difficulties with order and law have been is probably the real reason why academics don't study.

Academics are chickens, right?

They're afraid to go to Haiti.

It's a scary place to be.

All these things are interrelated.

There was a moment during that crisis response when we were really struggling to clear rubble from the streets.

And we had the 9-11 team that designed the evacuation around the collapsed World Trade Centers had actually developed a plan, but we needed to use Imminent Domain to take land from certain families in order to have a place to stage the removed rubble and reopen the streets.

And the Haitian government even in that moment, didn't have the strength relative to a handful of families that were large landowners to use imminent domain and take that land.

And ultimately, we had to negotiate that almost in the Oval Office with then President Praval and others.

And this is my one big critique of a field I love and am inspired by, which is development economics, which is that whole field sometimes doesn't fully appreciate and take account for the role of like real governance, real monopolistic ownership of assets, and what that can mean to put up roadblocks for recovery and development writ large.

Yeah, I do think you're right that economics has been slow to catch on to

how important politics and government are.

Economics doesn't like those topics because they're too local.

Economists love things that are universal.

But I think in the last 10 or 15 years, we are finally starting to recognize that it's really important to think through those issues, even though they're complex and economists don't like complexity.

It's just necessary if you want to get to the right answers.

You've got to incorporate that.

Aaron Powell, Jr.: And you know, I've spent a lot of my career, and this book is very much about the fight to end extreme poverty, the effort to achieve what many call the sustainable development goals, the idea that every person on earth in this modern era can have some basic dignities and basic human rights.

And increasingly, the people who are left behind are left behind because they're trapped in environments where you don't have infrastructure, you don't have effective governance, and you don't have enough political voice to be a community that can force positive change for your future.

So I hope the economists get it right in this next decade because we have a lot to do together.

So how do you know in a setting like this?

whether you're actually doing a good job.

I mean, it's much more complex than, say, if you're running a business where you can measure sales and profits or market share.

I believe you can be just as ambitious about performance and results measurement in this type of work as you can be running any business.

And to do that, we could develop the scorecard, which I write about, based on our intuition, but we could only keep score based on data from on-the-ground reality.

And so as the U.S.

military deployed in Port-au-Prince, I actually sent my only political appointee and close aide down there.

I said, just fill out this scorecard.

And I had another woman who I'd worked with before when I was at the Gates Foundation who said, Raj, I can help you build the scorecard.

So she built the scorecard and he populated it.

And between the hundreds of experts we were able to tap into, we had an ability to show up at the White House every day and say, look, we need to feed 3 million people.

We're reaching 600,000 right now.

Here's the plan to get to three.

And before it was all said and done, I could tell you that we were feeding 3 million people for more than three months.

I could tell you that American resources enabled surgeries to take place,

including limb reattachments and plastics operations.

I could tell you exactly how many transitional homes and housing we built and how many families that was able to support.

We just had to track the numbers with the same diligence you would track anything else.

And there were areas where we struggled and there were areas where we didn't meet our goals.

But unless you're keeping score, you're never going to know the answer to that question.

One of the things that's interesting about your description of the Haiti scorecard is that usually people who have data, they guard it closely.

They keep it secret because they don't want people to know when they're failing.

But you took the opposite approach.

You were completely transparent about the data and you let anyone see it, no matter how bad it looked.

And it's very refreshing.

Trevor Burrus, Jr.: Frankly, it was a management strategy.

At the end of the day, I didn't have line of sight into every NGO on the ground or every potential organization in America around the world that could be helpful here.

But I knew that if I got on television and said, look, these are the areas where we're succeeding, these are the areas we're challenged, that people would respond.

And they did.

When we went out and said we're having trouble figuring out how to clear rubble from the streets, people, some of whom were famous people like President Bill Clinton, called in the middle of the night and said, Raj, you got to contract with heavy machinery and tractor companies and Dominican Republic and get them in Port-au-Prince because three weeks from now you're going to need them to remove this rubble because you'll have sorted this piece out.

So I find that if you're not open and honest about what's not working, folks can't help you solve those problems.

Now, you tell a story about a gaffe you made early on relating to the C-130 cargo planes.

And it's totally unimportant to the main point.

You made a silly mistake.

Your note card had been smudged and you called a C-130 a C-13.

Even though it's so completely immaterial, it seems like it really stuck with you and it's haunted you all of these years.

Oh, you're 100% right about that.

It was actually my first what's called a principles committee.

It's like a cabinet-level meeting of the National Security Council, but without the president.

It was the night of the earthquake, and I was seated at the top of the table right across from Secretary Bob Gates, who ran the Defense Department and is both a heroic and a storied figure in American foreign policy, and Mike Mullen, who is the chairman of the Joint Chiefs of Staff.

I had smudged the ink on my little note card, and instead of saying we need C-130s to carry these urban search and rescue teams into Port-au-Prince, I literally said C-13s in a room full of America's top military and foreign policy leaders.

And I thought about that for years after.

So yes.

But thankfully, nobody said anything, and they all just were there to help.

But what I liked about the fact that you highlighted in your book is that I do stupid things all the time and you wouldn't believe how much effort I devote to hiding those stupid things from other people.

But what I love about you doing that is that you're really in some sense giving people permission.

I mean, your book is really for people who are trying to do good.

It's a recipe book for thinking about how to do it well.

And you talk about a lot of your mistakes.

I suspect you did it quite thoughtfully and consciously.

You wanted people who make those kind of mistakes to not feel too bad about them and know that's okay.

Am I right?

That's what you were doing there?

Maybe that and a little bit of therapy for me too.

In order to take on big bets, in order to do extraordinary big things, vaccinate every child on the planet, prevent a pandemic from spreading out of West Africa and infecting millions of people and killing hundreds of thousands of people, in order to achieve those things, you actually have to say, this isn't about my confidence or what I know or how smart I am.

It's about set the goal very, very high.

Admit you don't know a whole lot of things about how you get from here to there, and ask others to help.

I just don't think you can do that unless you're willing to make mistakes and be okay

with the consequences of some of those missteps.

We'll be right back with more of my conversation with Raj Shah after this short break.

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To be running a $20 billion US government organization at the age of 35, one might imagine that you took a very direct path, that you figured things out early and everything just fell into place.

But that's not actually true.

You were really struggling to find the right path in your 20s, it seems.

You know, it actually starts probably earlier than that because I'm Indian American by background.

My parents were immigrants from India that came in the late 60s, early 70s.

They came with no real resources, but with educational scholarships and built a solid middle class, upper middle class life for my sister and I and our family.

But it was always in this tight-knit Indian American community where, frankly, if you were pretty good at school, you should be an engineer or a doctor.

Those were the two options.

I chose engineer for a while.

My dad worked at Ford Motor Company.

I grew up around Detroit.

I thought I could be in the auto industry and I was a car kid.

And then I pivoted and said I would be a doctor.

But all along, I knew that my real passion was in public service, politics, but I really had no idea how to pivot from the expectations of being a practicing doctor to doing this type of work.

I didn't have role models or relationships or people I could call up for jobs, their internships.

If people are listening, they're probably shocked to hear that you went through medical school because nothing we've talked about gives any hint to the fact that you went through medical school.

And you also started an econ PhD program at the same time, right?

Yeah.

So when I left college, and by then I was an economics major.

I had studied abroad at the London School of Economics.

When I came back to the U.S., I went to Penn to go to med school and the business school.

And it wasn't until...

I took my final set of board exams and the next day basically got in my car with my girlfriend now wife drove 14 hours to nashville tennessee and started as a volunteer on al Gore's presidential campaign that I had really done anything to connect to my true passion.

And of course Gore lost the election ultimately, but the Gates Foundation was where you finally found your footing.

Now, I've worked a lot with the Gates Foundation and it does fantastic things.

And so while you were there, you worked for eight or nine years, mostly getting children in the developing world vaccinated.

Can you explain the economic case for vaccines as a health intervention?

What we now know about how communities develop around the world is the more you know your children are going to survive, the more families invest in those children to go to school and get educated.

That education then leads to higher incomes, better jobs, better community development, and uplifting the next generation.

And that basic cycle has been true in community after community all around the world.

And when this mission started, there were probably 11 or so million kids in the late 90s who would die every year, mostly from preventable diseases, almost entirely in low-income parts of the world.

And in fact, Bill and Melinda had read a, I think, a New York Times article that showed that 600,000 people are going to die that year from a disease called rotavirus, which is a disease, by the way, you and I have had, we all get here in the United States, but no one really dies of rotavirus in the U.S.

And Merck was planning to roll out a vaccine in the U.S., but not in the places where 600,000 kids were dying.

And it just triggered maybe not even an economic rationale, but a moral one in Bill and Melinda, where they said, this is wrong.

Why don't we work to make sure that every child everywhere gets every potentially life-saving vaccine?

And that mission, 20 years later, has led to 980 million kids vaccinated and 16 million child lives have been saved.

That's amazing.

When you got to the Gates Foundation, they were already working on vaccines.

What was the twist?

What was the big problem you specifically were trying to solve around vaccines?

Well, when I started...

You'll appreciate the title they granted me was chief economist, even though there were no other economists.

Very few would have actually called me an economist.

But the challenge was they had made this commitment to put real resources, $750 million, into creating something called the Global Alliance for Vaccines and Immunization, now simply known as the Vaccine Alliance.

And they were trying to figure out, instead of using those resources to just do what we could do, you know, vaccinate more kids in villages around the world, what would it actually take to vaccinate every single child born every year?

Instead of saying, let's use our $750 million to do the best we can, let's use our analytics to understand what would it cost to vaccinate every child on the planet.

And that might be in the tens of billions of dollars.

And let's figure out how to use our 750 to catalyze and stimulate financial solutions to that problem.

So the chapter I write about in the book is called Ask a Simple Question, because Bill Gates would pull us all into this conference room at the top of the Gates Foundation office and would ask, what does it take to vaccinate every child?

And I just remember so many experts we would consult with would say, gosh, you can't really answer that question.

It's too simplistic.

But after a couple of years of real analysis, we in fact developed a baseline plan with some baseline costing on what it would take.

And that work, while probably inaccurate, at least helped us understand what the big gaps were so we could solve those problems over time with a host of other partners around the world.

Aaron Powell, now you came up with an idea for a kind of forward contract that would allow you to spend more today, essentially using commitments, future commitments, to guarantee that those payments would be made.

That was, I imagine, a pretty radical idea in the space.

Did Bill Gates like the idea when you proposed it to him?

The very first time I met with him one-on-one about it, he pulled the memo out of his bag, and I saw that it already had notes all along the side, which I took as a bad sign.

And he's like, this is the worst idea I've heard in a long time.

And I'm pretty sure he had more colorful ways of saying it.

By then, I knew how Bill interacted.

And sometimes that was an opening to a set of arguments that he would make that would actually, if you debated and engaged and really thought about them, be really good arguments and they were just problems you needed to solve in order to make the project viable.

Now, one of the stories you tell, perhaps the most shocking story to me, actually, is when you were sitting with somebody over drinks and you made a promise that you couldn't possibly keep.

So, you know, as we were putting this proposal together, the central part of the proposal was collecting 15, 20-year commitments from largely European countries, using those commitments to create a bond, a securitization, that would give us the resources to do the types of advanced market contracts we needed to create a supply base for immunizing children in poor countries.

And in order to do that, we needed a lot of European countries to come together and say, okay, we'll buy into this and we'll use the full faith and credit of our governments to make this a viable bond.

It became clear that they would be much more inclined to say yes if we went first.

So I suggested that the Gates Foundation, which had a sizable endowment, could guarantee the bond if that guarantee were necessary, which would immediately take the risk out of issuing a new security in the market and make it easier for others to join.

Aaron Powell, but you just made that up.

I mean, you had talked to anybody about it.

That's correct.

If things went wrong, it would cost, what, a billion dollars or something?

Yeah.

I mean, I was a little beyond our skis is the phrase people would use.

But we were trying to problem solve in the moment.

And I thought, gosh, if everything goes right, all these countries that have incredible credit ratings would come together and we wouldn't need our guarantee.

Did you tell people?

back home what you're doing or you just kept that secret for a while.

No, well, it all happened very quickly.

So I'd say by the time we actually shared that maybe others had the perception that we were going to guarantee this, we had some way out.

But I did write about it in the book because I came to learn from that experience that especially in the social and nonprofit space, which can be more risk averse, sometimes someone has to jump first to get others in.

And these projects tend to be collective action problems.

So if you can get enough partners genuinely committed, you've de-risked the project so much that jumping first might not cost you anything.

And in this case, it didn't.

In this case, we were able to issue $5 billion worth of immunization bonds without any need for a guarantee from the Gates Foundation or anyone else because it was structured effectively and the market would purchase it on commercial terms.

Okay, let's fast forward back to your time at USAID and another global crisis that you had to deal with.

This is now in 2014 with Ebola.

It's easy to minimize ex post the threat to global health of that outbreak, but could you lay the groundwork of what was going on with that epidemic and then how you were thinking about it as you tried to head it off?

The mortality rate from catching Ebola, which is a hemorrhagic fever that results in people actually bleeding to death, was 70%.

And as a result of difficult management practices, nearly half of the infected Liberian healthcare workforce, almost all women, died in the summer of 2014 trying to care for people who had Ebola.

If that disease spread out of these three smaller West African countries, Liberia, Sierra Leone, and Guinea, you could have 1.4 million cases, including hundreds of thousands of cases in the United States.

And it was in that context that President Obama made a big bet, which was that we were going to do everything we could to solve Ebola in West Africa and prevent it from spreading beyond those borders.

So what do you do?

Well, at that point in time, remember, people who are trying to serve in the health sector were actually dying, and we didn't know exactly how to keep people safe.

So the first thing President Obama did was actually make the judgment that we would deploy almost 3,000 American troops to the region in order to build some infrastructure for Ebola treatment units, in order to build a field hospital so that if any healthcare workers and international personnel got sick, they could be evacuated and treated.

And what I find so powerful is that big bet was made when we knew the military would have to do some things to create a safe environment for the humanitarians to go in and do their job, but we didn't actually know which solution would solve the problem of Ebola.

And what eventually did become the solution that broke through?

Well, the solution that broke through, people thought would be these Ebola treatment units.

But frankly, people would go into them, never come out.

Their remains would never come out.

Their possessions would never come out.

And pretty soon, nobody went in.

What ultimately proved to work were called burial teams.

It turns out that where people were getting infected was after a person had died of Ebola by ritual and custom, their bodies would be washed, they would be redressed.

Often women in the families would hug and redress and pay their respects to those who had died.

And in that process, they would contract Ebola.

And so we developed a program.

Actually, local communities developed the solution together with the World Health Organization to have these fully clad, protected teams go in, perform a ritual and a ceremony around each deceased person, put the deceased individual in a WHO body bag, and remove the body.

And we saw a rapid reduction in transmission as a result of scaling up that particular intervention.

You know what I find so interesting about that is you could have a group of experts sitting in an office building in Washington, D.C.

strategize for a lifetime, and they would never think of anything like that.

The ideas came from

the people on the front lines, and the people at the top understood that and empowered them to do it in a way that could be scaled.

Aaron Powell Often we don't have the data architecture and infrastructure in place to know something's working or not working quickly.

And when you don't have that data, you tend to rely on your biases and judgments.

The experts in Atlanta or Washington or Geneva are the experts as opposed to local communities.

In this case, we built a data architecture quickly in Liberia.

and that included setting up some infrastructure, Wi-Fi, and mobile connectivity.

It included getting a famous epidemiologist from Sweden, Hans Rosling, to spend time in Liberia and just piece together a fast data system.

It involved deploying bioterror labs into rural communities and using helicopters to transport blood samples so we could quickly get validation of cases, whether they were positive or not.

And all of that allowed us to have data that would would very quickly tell us, is something working or not working?

And that substantiated that, hey, this local intervention around burial teams appears to be working.

By the time that COVID hit, you had become the president of the Rockefeller Foundation.

And I imagine that facing a crisis like COVID, leading Rockefeller, felt very different than had you still been high in the U.S.

government.

Oh, absolutely.

In fact, my first instinct was that the Rockefeller Foundation shouldn't really do that much on COVID in the United States because I thought America was, by all accounts, the best prepared country on the planet to deal with a public health emergency.

And I thought, okay, we're just a foundation.

We don't have the levers of policy decision-making or that kind of infrastructure and thousands of people spread around the country.

Now, you had already already thought quite a bit about pandemics prior to COVID because you were part of a United Nations task force on the topic many years earlier, right?

Aaron Powell, yes.

After Ebola, the one that Secretary General Ban Ki-moon asked me to be a part of was one of three or four, and they all had the same findings, basically, that we needed to invest in rapidly scaling up diagnostic testing capacity.

in the front end of a crisis so that you knew exactly where cases were happening and you could track them in real time right away, that we had to have the tools like vaccines and diagnostic tests and treatments readily available to deal with them, and that we had to do far more investments in community health all around the world, but particularly in those vulnerable communities where we underinvest in health care services so that we could protect those who are most vulnerable.

And unfortunately, both after Ebola and I would argue after COVID, the world has not fully taken those recommendations into account.

Aaron Powell, you probably don't know this, but you and I both co-authored op-eds early in the COVID epidemic with Paul Romer, Nobel Prize winning economist, about this idea of testing and how we were going to encourage people to test.

Well, well done, Stephen.

That's excellent.

I think your op-ed was a lot better than ours.

What was surprising to me about Paul is, like you, he's one of those really optimistic people who believes that good things will happen.

And Paul just believed that we would be able to get people to test for COVID, even if they had no symptoms, to the end of time.

And my view was, no, you're not going to get anybody to test for COVID.

And so he and I argued about that, and it ended up turning into an op-ed piece where we talked about the need to incentivize people to do testing.

But in the end, what was so crazy to me is how we as a country had no infrastructure and developed no infrastructure for testing.

First of all, your contribution was critical because you'll remember President Trump at the time was saying we should not test more people because we'll identify more cases and that would be problematic.

America in the spring of 2020 was doing PCR tests.

They were taking four to seven days to generate a result.

All the while people who were either asymptomatic and spreading or symptomatic and spreading were spreading the disease.

And of course, every nation that got this right had rapid tests available in a manner that was almost ubiquitous.

And America did not.

In fact, together with Paul Romer and 40 other experts around the country, Rockefeller helped create a national testing strategy that said we'll go from, it was 1,330.

We wanted to get to 1 million tests a week, then 3 million tests a week, then 30 million tests a week.

And ultimately, we got to 30 million tests a week, and that made a huge difference in allowing us to save lives and reopen parts of our economy.

You seem to have implied that you think we're just about as unprepared for the next pandemic pandemic as we were before COVID.

Is that your view?

On many critical elements of what it would take, we're not really prepared.

The world should have a singular genomics database so that as soon as a virus or a pathogen is identified anywhere in the world, all the information about that pathogen hits this central depository and everybody gets all the data they need about it right away.

Instead, we rely on governments to decide whether they want to report data and to be often very political in the withholding of data.

And remember, it's often in a government's interest to not raise their hand and say, hey, we might be housing a global pandemic in one of our communities because that doesn't exactly attract investment and confidence.

I think we've done a much better job on having systems stood up to rapidly develop vaccines.

That was our biggest success.

rapidly develop tests, which now people recognize is the key to being able to manage through a pandemic and not be locked down.

I'd argue that we're still very weak on investing in the kind of community health messaging and infrastructure in vulnerable communities.

And that's compounded by the unfortunate reality that whether you should get a vaccine became a political statement in the United States.

And frankly, we exported that.

That's true in probably 30 countries around the world now.

So yeah, I think we have a long way to go.

And in my view, crisis is opportunity.

I saw that after Ebola.

We see it after COVID.

I wish we had done more in the immediate aftermath of COVID to solve these kind of global partnership problems around the next pandemic.

You're listening to People I Mostly Admire with Steve Levitt and his conversation with Raj Shaw.

After this short break, Steve will share his one complaint about Raj's new book.

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In the time we have left, I'd love to talk with Ross Shaw about philanthropy more generally.

I have to say, for a long time, I've been deeply puzzled by the stark differences between the non-profit and the for-profit worlds.

So Bill Gates started Microsoft, and then he started the Gates Foundation.

And eventually Bill stepped away from Microsoft to focus his own attention on the Gates Foundation.

He clearly thinks it's doing important things.

So why do you think it is that the CEO of Microsoft gets paid maybe 30 times more than the CEO of the Gates Foundation?

More generally, why is there such a pervasive view that nonprofits shouldn't pay market wages?

I just don't get it.

Well, Stephen, I wish I had an answer to that question.

We hold ourselves to this idea that charitable work should be charity.

It's like doing good where you can.

Anything you do is pat on the back good enough.

And it's not the rigorous, high skill, technically sophisticated approach of actually solving problems for the world.

But the people who can structure those solutions, build those alliances, measure results with the same discipline of any CEO of a big company, maybe they shouldn't be compensated.

Maybe nobody, by the way, in society should be compensated the way modern CEOs seem to be compensated.

But we shouldn't put an artificial ceiling on our ability to attract the very best talent to this mission.

Aaron Ross Powell, because I'm not even meaning just about CEOs.

I just think, in general, it seems so bizarre to me.

I mean, the simplest economic model is to say, wait, we should be subsidizing people who are out doing good.

If you're out actually making the world a better place, that's probably a more valuable job than someone who's working for a company and just taking market share away from another company without any social good.

And yet up and down through the ranks of nonprofits, there's this idea that people shouldn't need to be paid regular wages to do nonprofit work.

I actually once asked Bill Gates the exact same question.

What did he say?

He looked at me, totally puzzled, and he said, the Gates Foundation is a nonprofit.

And so undeterred, I walked through my entire logic about the importance of human capital to the nonprofits and da-da-da-da-da-da.

And I finished, and he looked at me, just as puzzled, and he said again, the Gates Foundation is a nonprofit.

And that was the end of that.

But he, of all people, I would have expected him to say, I know it's crazy.

We should be paying real wages to people.

I just can't because of this reason or that that reason.

But somehow it hadn't affected his view of the world.

And I think if he changed the way he saw things, it might really trickle down to a much broader, huge benefit to society of letting the most talented people choose without having to make sacrifice, do they want to work on problems that are important to bettering the world or on problems that involve working in finance in New York City?

Aaron Ross Powell, I think institutions in the nonprofit space should do everything they can to attract the talent they need to be successful.

The flip side of that is they have to be just as rigorous about measuring results as you would be in the private sector.

So it's not okay to say, hey, we worked on COVID testing, but we don't know what our impact was.

We don't know how many tests per week we were able to stimulate.

We don't know the scale of the market, and we can't trace back the human lives saved from that intervention.

And that discipline of treating this work like it has the same rigor to it, the same intellectual challenge, the same determination to win, the same willingness to stick with it for long enough to overcome the challenges and to actually succeed.

Those traits, in my view, are the difference between a big bet mindset towards solving social problems and a more traditional charitable mindset.

And for folks in that big bet mindset space, we shouldn't ask people to make huge sacrifices on their family and their well-being in order to be able to give back and make a difference in the world.

Now, the title of your book is Big Bets, How Large Scale Change Really Happens.

I really like the book, but I have one tiny complaint that maybe you can take into account if you do a second edition.

Okay.

You've somehow managed over and over to be part of these remarkable projects that have had a global impact.

And I think as a consequence, the book, as written, written, thinks about big bets in those global terms.

But the reality is that all change is hard.

And for regular people, the kind of people who are listening to this podcast, hoping to make the world a better place,

for something to be a big bet doesn't mean it has to impact a million people.

Making a meaningful change in your own neighborhood or the place where you work, that's so difficult already.

It requires the exact same skills and techniques you've been using so effectively at a global scale.

And the thing I wish you had done a little bit more of in the book was giving people permission to think of their own local challenges as big bats.

You know, I agree with that.

There's a story in the book about Mayor Mitch Landrew and his efforts to take down statues in New Orleans that were put up to really inflict pain on the black American population in that community.

And he was able to get local community leaders and local community activists over two or three years working together, thinking together, planning together about removing these statues, one of Confederate General Lee, one of a terrorist attack on an integrated police force in New Orleans after Reconstruction.

And I write about a bet I made to support Mitch and that community of actors to take those statues down.

But at the end of the day, you're right.

Every one of the local community leaders that put meetings together, that led dialogues, and the work they did over three years, that was all part of making a big bet happen in their local community.

And I wish I'd done more to elevate and honor their courage and their story, because ultimately, those are big bets at a very local level.

And that's how change really starts and happens.

I've just been listening to you, and what you've done is impressive.

The way you talk about what you do is impressive.

Your commitment to data.

I mean, when I hear you talk, I just wonder why there are not presidential candidates who sound like you.

I've done some book talks on Capitol Hill, and I wish people got to see the seriousness with which some members of the House and Senate will get together and dig deep on how you measure the results of social spending, or how you construct projects that truly bring public and private sectors together to make a difference or how you even set goals that are about solving and not just improving problems.

Those tend not to be the ones that get on cable news, by the way.

I was really struck by when you wrote about sitting on Capitol Hill in the prayer session, prayer group.

Was that an odd experience for you?

It was an experience that grew out of learning that just being super data oriented and very business-like was not going to necessarily build the kinds of relationships that I would need to have in order to be successful in Washington.

And so I wrote in the book about testifying in front of Congress and offending people by suggesting that a particular Republican budget would lead to 70,000 children dying.

Wait, but why is that offensive if it's true?

Well, it was offensive because the Speaker of the House who controlled whether or not USAID would have a budget the following year found it offensive.

And so I visited with them and received a list of people that I should go get to know.

They all turned out to be very conservative Republicans who often cared about the work we were doing through the lens of faith.

And so I shared with many of those members my own faith tradition.

I'm Hindu by background, and I really believe that almost every faith has some common tenets of serving those who are underprivileged.

And through that, built some really strong relationships with people, often by praying together, that actually made my life better and more full and helped me understand that if you really want to build a broad tent and unlikely sets of partners, you have to go beyond your comfort zone.

My comfort zone was spreadsheets, and I had to put the spreadsheets down and think through why did we sit through all those prayer sessions as a kid hearing about doing good to others and how do we elicit that same sense of commitment to serve amongst people who have very different faith backgrounds?

Aaron Powell, have you thought about going back to Washington?

What about elected politics?

Is that something in your future, do you think?

It's hard to know.

Whenever I plan my future too many years in advance, I've been wildly off.

Remember, I started this whole thing wanting to design cars for a living.

So I don't know.

I will say I love public service.

I admire the people who do it.

I do wish more people were willing to run for office, to be serving in an administration, and to have that be part of their life story, because that's ultimately the concept of citizens giving back in a way that can make our country stronger.

Okay, Shaw for President 2028.

If you run, I pledge to be by your side, volunteering to do whatever I can to get you elected.

Well, there you go.

Thank you very much.

When I first started this podcast, I used to ask a lot of my guests whether they'd consider running for president of the United States.

Now, I didn't necessarily think they'd all be good presidents.

I was mostly just curious how they'd answer.

I think a lot of people dream about being president, but they don't say it out loud.

It's embarrassing to say you think you should be president because it implies you have a huge ego.

But Raj Shah is different.

Was it just me or did he seem presidential in the best possible way?

I'm not even sure what makes someone presidential, but once every couple years, definitely not more often than that, I meet someone like Raj who just feels special.

And every time it happens, I tell them I'm at the ready to pledge my full support.

Unfortunately, I'm still waiting for just one of those presidential types to take me up in my offer.

Nonetheless, I still fully expect that I'm going to hear from Raj Shah in just a couple more years.

At least I hope so.

So now is the time of the show where I welcome my producer Morgan on and we take a listener question.

Hi, Steve.

So a listener named Garrett asked a question about child daycare.

He asks, Steve, how do you fix the daycare crisis in the U.S.?

Should employers be doing more since the government is failing us?

For background, childcare costs in the U.S.

have risen 220% since 1990.

It's also estimated that childcare can cost anywhere between 8 and nearly 20% of a median family income per child.

Do you have any thoughts for solving this crisis?

This is just a really thorny problem because it's an industry where almost all of the costs are salaries to workers.

And it feels rightfully to parents like they're paying a whole lot of their income to cover child care costs.

But at the same time, nobody's getting rich on daycare and the employees are paid really, really low wages.

I've heard something like $13, $14 an hour for the wages of the employees.

So it's just this paradox of an industry where there hasn't been any kind of technological improvement or productivity gains because it's an industry where you've got a lot of labor, a lot of labor per kid who's being taken care of.

And people complain that the government regulation is part of it and it's too onerous, the regulation.

But at the same time, a lot of these kids can't talk in daycare and it's really hard to judge the quality.

And you can see why it would be a place where society would want regulation.

I don't think there's an easy answer to this problem.

It's just the thorny one because taking care of kids is hard work and we haven't got a great solution other than having adults watch them.

So the expense of child care seems to not even be the only issue here.

I have so many friends who are on wait lists to get into child daycare programs.

It seems like there aren't even enough child care centers to cover the demand.

When you have wait lists, when there are more people who want a product than can get it, you know what that tells you about the price?

It means the price is too low, right?

They need to raise the price to make supply and demand equilibrate.

So many people blamed government and government regulation.

And I have a former student, Devin Gorey, who's written about it.

And there is a little bit of evidence that...

the rules that are mandated about, say, caretaker to child ratios, a somewhat inefficient way of regulating the market so are there any solutions some countries have taken radical approaches like finland in finland there's universal free daycare that is a choice by a country that is very pro-women in the workforce and is interested in gender equality because being completely honest about this the availability of daycare is much more valuable for women than men because women do so much more of the childcare in the home.

I think many Americans might be in favor of that, that, but the politics in Washington right now are far from providing that kind of solution.

I think the other obvious place where there are market forces at work is employers.

You would expect, maybe more so than we even see, that big employers would see providing daycare on site as being a really valuable perk that would attract talented young workers, people to starting families, and also is a way to get workers back in the office.

There's been the struggle to get her away from remote work.

And if you bring your child in to a daycare at the campus site of where you're working, then that will certainly get the parents into work as well.

I don't have any statistics on that, but it does seem to me that if I were a CEO, that would be something I'd be contemplating really seriously right now.

If you have a question for us, our email is pima at freakonomics.com.

That's p-i-m-a at freakonomics.com.

We read every email that's sent and we look forward to reading yours.

In two weeks, we're back with a brand new episode featuring Blaise Aguero Jarquis.

Blaise is a fellow at Google Research who studies artificial intelligence.

But more important than that, the smartest people I know think Blaise is the smartest person they know.

I think I was 14 at the time.

They were looking for kids to sort of work in the military-industrial complex.

I ended up in that that program and worked for a series of arms of the government in my teens.

As always, thanks for listening and we'll see you back soon.

People I mostly admire is part of the Freakonomics Radio Network, which also includes Freakonomics Radio, No Stupid Questions, and the Economics of Everyday Things.

All our shows are produced by Stitcher and Renbud Radio.

This episode was produced by Julie Canfor and Morgan Levy with help from Lyric Vowdich.

It was mixed by Jasmine Klinger.

We had research assistance from Daniel Moritz Rabson.

Our theme music was composed by Luis Guerra.

We can be reached at Pima at freconomics.com.

That's P-I-M-A at freakonomics.com.

Thanks for listening.

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