Zoom isn’t as “encrypted” as you think, tech regulation amidst COVID-19, and economist Gene Sperling on being in a “jobs depression”

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hi everyone this is pivot from the vox media podcast network i'm kara swisher and i'm sky gaua and kara our dishwasher that bitch doesn't know what hit it oh my god are we abusing the dishwasher it this thing had not been turned on in two years

and now it is it is being asked to work overtime the dog even my dogs are sick of me my dogs like jesus christ get out of here already i've been sick at sick for you for since i met you but that's okay that's no problem so you're actually eating at home in other words correct yeah a lot of eating at home a lot of a lot of um i i i think about loading the dishwasher and unloading the dishwasher and occasionally i do it but it's just we also you know what we pass the hours playing this game called why do you do it that way and no one ever wins no one ever wins there's never a winner Why do you do things this way?

By the way, that's from the great Simon Holland.

He's this total dad joke guy on Twitter.

I still have a lot of material for him.

It is.

Yeah.

Well, you know, everyone's trying their hardest, I think.

You know, I try to keep that in mind.

Every time I go to be irritated, I try.

I've done it a couple of times, but I felt bad about it.

And then I'm like, extra nice because it's really just the tension of a situation.

Although last night, Amanda wanted me to buy one of those rose, those rose quartz rollers that you roll on your face and it makes you feel better.

Rose quartz rollers.

I find, yeah, I find I get shitty drunk and just say, I hate you.

That to me is my therapy.

That's my therapy.

Well, what you can't do is listen to President Trump touting a drug.

I have this feeling there are links somewhere

with the drug companies.

Some crime is happening as he keeps touting this hydroxychloroquine.

I had a big back and forth on Twitter with all these crazy, either they're Bitcoin, I don't know who they are.

they're just like insane like there are studies and when you click to them they're not really studies they're just they're trying to do clinical trials on this anti-malarial drug and they literally they have the president doing this and he wouldn't let Fauci answer Fauci thinks it's all quackery I think and has sort of said so um and you know that there's there's trials in place to deal with it, but it's a very dangerous drug if just used, but people are just like lost their friggin' minds.

It's really crazy.

So I'm very exercised about that.

That's what I got mad about last night.

I was ranting when I was sitting in bed about the situation, about crimes in plain sight.

Well, it's what

Jonathan Hyde said, that 9-11 was our last shared experience.

And what I find about hydroxychloroquine is that

people's

legitimacy around it is a function of their political party.

It's just very strange.

We used to, in this country, have a respect for science that, okay, we would all get, and it's on both sides.

I find that a lot of people who immediately think that there's no way it might be helpful, and who knows?

It might be.

It might be helpful.

It's worth looking into.

It's worth getting.

It is being looked into.

That's the thing.

I don't think I agree.

I disagree with you on both sides thing.

That's bullshit.

It is being looked into.

Nobody doesn't want to cure.

I think that it's just.

I'm glad you're being so even-handed.

No, but I mean, I'm like saying that it's both sides.

It's not both sides.

We're trying to like have people not die from something that's unproven.

Well, right.

But what I have found is that me and my progressive friends immediately are just 100% skeptical that there's no hope for this thing.

And the reality is, who knows, there might be, right?

There might be.

My point is, we are having two pandemics and Republicans believe this is a knockout drug.

Go back to work.

This works and isn't this great news.

And Democrats think this is just irresponsible junk science and this will never have any value around this disease.

And the reality is both both don't know.

What we are finding on the right, though, is that they seem to have believed that we can circumvent all standard norms around science and and how we test drugs like and that it's not about finding some i mean have you seen fox news fox news might as well be an infomercial for this

i know they're just well they're just trying to go from bad to worse because lawsuits have happened have started to occur against this this terrible terrible network um

But yeah, I agree.

I think I don't even understand why you would do this.

I don't, why would you put people's lives furthest?

It feels like

the GOP is suicidal.

It's really crazy.

And it's not, listen, everybody would like a cure and if this work that would be great but I think you have to do at least the minimum number of clinical trials to make sure it's fine because they today in the times they were talking about what happens if it goes awry and it can cause heart arrhythmias in healthy people um and i know every drug has its thing i get it that sometimes that's the the case but it just it i don't know they they're i think the the the concept like i was i was objecting to rudy gelani's trying to get subscribers to his website by touting it saying it's the miracle cure.

And whenever I hear the word miracle cure, I think of like a peddler wandering around the United States, killing people.

Like, and especially him, he's, you know, he's just become such a ridiculous, doddering menace that it's hard to contain myself anyway.

We haven't heard a lot from River Giuliani, the 9-11 of Mayors.

He's trying to become relevant again by hawking this ridiculous thing.

And

I am certain he has these stocks of these drug companies.

I don't even, I don't know, I'm certain.

I just, it's like, there's got to be some scam happening here.

And the ability of people to take advantage of a crisis like this is just really,

who had, who had, who had poo-pooed it before?

That's why I have no belief in the, in that situation.

Anyway, it's really irritating.

And especially using Twitter to do so is really irritating.

But speaking of technology, let's go back to technology and our big story today is Zoom had a few big weeks and now the answer has to answer some even bigger questions.

The University of Toronto released a paper looking into Zoom's encryption practices and found significant weaknesses in their system, including servers in China, which is not uncommon.

Last week, Washington Post reporter Drew Harwell and his colleagues found that as a result of the weaknesses, thousands of personal Zoom videos were available on the open web without a password.

This is a huge privacy concern.

Those videos include therapy sessions, job training calls with doctors.

Zoom wrote a blog post trying to explain what their version of encryption meant.

And they said, well, we never intended to deceive any of our customers.

We recognize there is a discrepancy between the commonly accepted definition of end-to-end encryption and how we were using it, which that's like a fantastic sentence.

The goal of our encryption design is to provide the maximum amount of privacy as possible, supporting the diverse needs of our client base.

You know, it's it, and then there's the not just the privacy, but the security, of course.

As you know, I have a victim of Zoom bombing, as I've noted 103 times.

But they've had a massive few weeks, they reached more than 200 million daily users last month in December.

They only had 10 million.

Zoom says that over 90,000 schools across 20 countries have started using the company for remote education and not the New York school system, which is moving away from Zoom to rival service Microsoft Teams.

Google also has software hangouts available to schools.

And on

CNN, Eric Yuan, who I'm trying to get to come on Rico Decode, he apologized on the privacy issues, saying we've learned our lessons.

We've taken a step back to focus on privacy and security.

So it's like tech really always comes through through in these moments of crisis, don't they?

Just like amazing.

Again, it's a good complex.

Go ahead, Scott.

Go for it.

Well, it's the same complexion, right?

The thing that's the thing, everything's about scale.

Everything's about demoting and/or you don't get promoted if you suggest anything.

Anyone who says, anyone who's in the background under their breath that says, have we thought about if this happens?

And anything that gets in the way of, well, we can go from 10 to how would we go from 10 to 200 million daily active users?

Anyone who says, well, have we thought about the security risks

gets sent to the island of misfit careers.

And it's the same.

It was a total disregard for scale that got Facebook in trouble with Cambridge Analytica and GRU.

It's been a total.

a total

lack of concern around what the scale is.

It's resulted in content on YouTube that has radicalized young men.

And it's the same thing at Zoom.

The temptation to be worth more than the U.S.

auto industry and be the new Mark Zuckerberg and the guy or the gal that gets invited to speak at Stanford Business School and be seen as kind of

the new idol in our capitalist society is so great that you just kind of hope that those security concerns don't come to haunt you.

And also they're the poster child for kind of big tech right now in this.

So they're getting a lot more scrutiny, but also there again, you just can't, it's so hard to do the right thing in these situations.

And the right thing should have been, we screwed screwed up here we're absolutely slowing this down and we're going to implement all kinds of uh new security features because there this gets it gets it's funny at first you hear stories that are kind of funny and then you hear about the fact that there are a lot of classes with eight-year-olds that are now public i mean this this could get pretty ugly pretty fast a hundred percent and they thought the new york school system was too quick i i noticed on on a lot of reaction to it was like well so what and i was like so what there's children involved and what was another another thing that was disturbing was the University of Toronto researchers also found that Zoom appears to own three companies in China through which at least 700 employees are paid to develop Zoom software.

Again, not uncommon,

but it's, you know,

it shows this interconnected world.

And of course, China's under great scrutiny for

under reporting.

The Washington Post had a terrific story this weekend about the delays.

And one part of it was about China not allowing our researchers to have examples of this virus.

So China's no winning place for anything going on with this virus, but at the same time, still continues to be a problem on the global scale of security, of privacy, security.

Yeah, well, it's again, it's just another, it's too bad for the tech community because Zoom was, Zoom is an incredible story.

And it's sort of like, oh, God, this shit again.

Another tech company that prioritizes shareholder value over stakeholder value.

What do you think of his reaction?

I think his reaction, I think it was right.

I just don't think it was strong enough.

I think it should have been, this is unacceptable.

We screwed up here.

These are all of the things we're doing.

But to come out and say, you say encryption, I say not really.

That just wasn't.

That was somebody in comms.

That was too many communications consultants.

That was saying, we failed here, full stop.

We did not anticipate.

the scrutiny and the opportunities and the leakage that come with this type of scale.

We are shutting down

the following features, and we are all over security.

And

our only priority is that.

The only thing I find disturbing about that is we were using it a lot.

I mean, I know at work, we use it a lot before this.

And so then I'm like, what did they take?

What did they take pictures of?

Very

confidential meetings happening, I think, with a lot of people.

I think previously, like, what happened to all that information?

Or where did it go?

Or

people have always said that if the Mossad, the GRU, the CIA,

and

the MI6 got together and tried to invent and imagine the ultimate reconnaissance tool, they couldn't have in their wildest dreams thought up Facebook in terms of how effective it would be for tracking people,

understanding where they are, what they're doing, who their friends are, and if they can hack into their account, begin manipulating the relationships.

But probably an even better tool would be, well, what if we could see everyone's communication on video, including the charts and graphs they were sharing with other people.

So, this is, I got, you got to imagine, for example, coming out of this, I bet there's just going to be so many layers here.

There's going to be insider trading laws that have been broken.

I'm almost certain that people have hacked into this to find out confidential meetings from lawyers and acquisitions and find out

non-public information, material inside information.

There's just so many,

there's just so you can just see this could go so many, um,

so many bad, so many, It'll be interesting to see if Microsoft Teams or Google Hangouts gets better.

Now, you know, there's always that old saying, you get what you pay for, and Zoom is free, and that's why a lot of people use it.

But it's easy.

It's just easy.

You just click on it, and it pops up.

Its biggest asset is its biggest flaw.

They made it just so easy that it's easy for everybody, right?

It's kind of easy to pull up and

start zooming, if you will.

Well, would you go to Microsoft Team or Google Hangouts?

I always have issues putting on Google anything.

You know, I have nested my house, and I don't, I'm thrilled my other house that I'm moving to doesn't have it.

I think, you know, I think I might consider using Microsoft Teams

because it seems like they at least, although, again, I can't believe I'm trusting Microsoft around privacy and security.

It's really, there's nowhere to go except for like shouting over the fence, essentially.

Shouting over the fence, I like that.

Yeah, I've always thought, I've always thought that Slack and Zoom are shorts because microsoft basically calls the the

the i t guy or your cto and your it or your cto guy who you think should be very strategic and some are at some companies but mostly they're with one one job and that is not to fuck up not to have the system go down not to to have your your entire it network go down and have someone from albania call you and demand 45 000 in bitcoin to make sure people show up every day and can turn on their computers and things work.

Their job is mostly they're invisible until they fuck up.

It's one of those jobs that is just incredibly, I think, unrewarding.

Having said that,

the opportunity and the reason why I think Slack and Zoom are shorts is that Microsoft has one very powerful sales tool.

And that is the sales guy calls and says, you know, we're secure.

You know, we're in the enterprise.

And when you let people use Collaborate on Slacks instead of Team and you let them use Zoom instead of our product, you're taking a risk for the enterprise and you have been warned.

And people freak out and say, I'm going with the enterprise solution that has shown itself to be pretty secure and that's Microsoft.

Well, that's true.

I mean, one of the things that

you say about Zoom or Slack is, look, they made better products.

They made better products.

And one of the problems with, you know, easier to use or simpler or more, you know, even the, even the name Zoom makes, you know, feels better in some way with Slack, same thing.

And so I think that's the, that's always been the push-pull is people that make sort of like Spotify, I think, is better than any of the music services, but now the others have caught up, essentially.

But there's a reason they, you know, they jumped out.

Any of these companies jump out is because they make better, they have more nimble companies.

And I think what happens along the way is they get sloppy in terms of design.

And so they have some weird version of encryption that isn't encryption.

And you would trust them initially because you assume that they're behaving like the bigger companies that you, even them, you don't trust as much.

So it's a real problem for consumers, especially right now.

But you talked about the psychology of it.

And I believe the psychology is linked to the economic cycle.

And that is, and we forget this because it's been so long that we are at this point in the economic cycle.

And that is, we are right now sitting here today at this moment.

We are heading into a recession.

And we don't know, we haven't had that feeling and that dynamic in 12 years.

And what happens going into a recession is that people are drawn towards gray hair.

People are drawn towards the big and the conservative.

In the last 10 days, I have lost two key employees to Google and to Nike who I would not have lost during a boom time.

Because during a boom time or coming out of a recession, people want to go with the innovators.

They want to go with the new thing.

They want to try stuff.

They want to be a part of a startup.

And then going into a recession, people get fearful and they immediately draw back from the new shit and they go to the tried and true and they go to safety.

There's a flight to safety.

And you're going to see that across tech products.

And coming out, I mean, unfortunately, it's like you said, I love that.

What did you say?

We're all yelling over the, over the fence?

Fence, yeah.

Everyone, everyone's like, okay, this is a fearful time.

Okay.

Are we moving too fast?

You know, our next turn, we're going to talk about legislation and everything kind of goes back to safety.

And what's safe?

Amazon, Apple, Facebook, and Google.

Yeah.

Presumably.

I don't trust many of them either.

See, that's the problem.

I think it's, it's a real, it's, it's sort of, we have given our lives over this, but they, these, these companies, they sort of hop out.

And again, they're, they are showing the way of things that are easier to use and easier to thing.

And then they just can't help but take advantage of the situation.

That's really, you know,

it's really quite it.

That's their job.

I, I don't, I, I, it's, you read that story and we're, we're leaking now into the next story where all the big tech companies after the break.

All the big tech companies can't resist and are taking advantage of the cloud cover of this crisis to say, well, maybe we should delay these privacy regulations.

Yeah, we're going to get into that.

We're going to go to a quick break and come back with one more big story and then a friend of pivot.

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Okay, Scott, we're back.

Let's talk about that topic we're just talking about: Silicon Valley lobbyists and what they're up to under the COVID-19 cloud cover, which is a great way that you've put it.

The New York Times David McCabe has the following story: Many industries like travel and hospitality have experienced immediate devastation by the virus and are seeking bailouts.

Not so Silicon Valley.

Google and Facebook lobbyists have asked California legislators to slow the rollout of the new California Consumer Privacy Act.

Remember, CCPA is the biggest privacy legislation to happen in the United States and looks a lot like Europe's GDPR.

It's different, has differences.

The CCPA requires businesses to give people a copy of the data that has been collected about them.

Companies have complained that the rules would place too many obligations on businesses right now.

And now that COVID-19 has slowed everyone's work, companies are saying that delaying the regulations is even more urgent.

What should

California Governor

Newsom do, Gavin Newsom do?

And it's not just California.

McKay reported that reps for Amazon and Alphabet are asking legislators to loosen regulations to limit where drones can deliver.

So delivery.

Look, they're saying afloat regularly and they're taking advantage.

Well, you know, under the cloud cover.

Oi, oi.

Yeah, you know, it's easy.

It's easy to tackle from the cheap seats and just say the governor and the respective governors and legislatures to just say no.

I don't know if there's, you know, I don't know the situation there because you always think, and I think

you're more,

I don't know, knowledgeable about the inner workings of government, but I've never understood how lobbyists, I guess it's because they are very knowledgeable, very nice, have big expense budgets.

I don't know what it is, or just give away money.

But how it appears that these incredibly smart people are just so vulnerable or susceptible to lobbyists.

But it feels like it would seem just very nakedly

greedy or self-serving to be showing up in this time and saying, shouldn't we use this as an opportunity to press the pause button?

And do we really want to be making changes right now?

Because a lot of these companies are saying, and the company that maybe has done this, maybe isn't, but the company that is in, in my opinion, the company that has the most cloud cover to get additional relief or benefit or regulations waived right now is Walmart.

It has struck me through this crisis how important Walmart is to the nation.

They're essentially right now the nation's food supply chain.

I mean, when we talk about the supply chain for essentials, yeah, Amazon will get you to your door.

But right now, you could not, if Walmart closed down, you could have chaos.

It really is just become so important

to people's basic essentials.

That is a really good insight.

And if they, you know, you could see, and I don't, I don't have no evidence that he's done this, but you could see the CEO of Walmart going going and saying we need out of all sorts of regulations around you know distribution taxation food distribution food safety i don't know what it is because we are feeding the nation right now and but i and i want to be clear i see no evidence that walmart's done that but i'm shocked it seems to me the one company that's in the position to go and say hey we are we are america right now would be walmart even more so than amazon

yeah well i think the idea of this crowd cover is really interesting and especially when it becomes self-serving.

And that's that, you know, I don't know.

I know there's that famous saying, I guess it was Rahm Emanuel or someone, like, don't let a good crisis go to waste, but it becomes ghoulish at this point.

You know, they just, they're ghouls that I could tell.

Not, you know, making basic mistakes is one thing, but, and, and then in the case of Zoom, for example, uncovering problems we didn't notice before.

That's really what's happened in that case, um, that were there, security and privacy issues.

Um,

and

not doing something about it really quickly.

That's the problem there.

And in this case,

I'm sure there was a meeting where they sat around and said, what do we need?

What's good?

And then they did it under the cover as we're trying to help people so they can give themselves the cover, emotional cover, that they're doing the right thing for American people.

We're only here to help, essentially.

So, you know, I can just see that meeting where they probably patted themselves on the back for pushing for drone,

you know, things that are possibly dangerous for people or pushing back on privacy legislation and i think the real question is are these companies now beyond this stuff going to say we need to be this big in order to battle things like coronavirus or china well and that we we came to the rescue here and and they'll take advantage of the fact that i think coming out of this there is going to be i don't want to call it goodwill, but less ill will towards big tech.

Although Zoom might reignite it, Zoom might go, Zoom might just be another data point that these guys are all about increasing their shareholder value, distinct of the damage to the Commonwealth.

It might reinforce this basic notion.

But the big tech right now, especially Sheryl Sandberg, is on the mother of all charm tours saying, all of a sudden, embracing, you know, we have a key role to play here and educating people.

And they're trying to get this right.

They're trying to, they're trying,

the word is redemption.

You know, they see this as an opportunity, redemption, hoping that people are less inclined to call for the breakup.

I think it would be wonderful if, effectively, just as this thing is ending, that the FTC ftc and the doj make more and more noises about actions against uh each of these companies i think it would i think it would basically say the government just sees sorry girlfriend we're not fooled that easily

well i don't think that's going to happen because they needed more money they need these were already company these are all divisions of the government that were suffering because of lack of money lack of staff under resources and we're outmatched i don't think there's more money coming now for the ftc or there's going to be like a sort of speaking of culling of the government is we can't afford to do that today, maybe later.

And so that's, you know, all of them, the FEC, the FTC, the Justice Department in terms of enforcement, I think they were all sort of doing it on like bubblegum and bailing wire.

And so to think of the federal government as

much weaker than these big companies, but they really are.

Yeah, they've been overrun.

DC has been overrun.

And I like that, and this is a naive thought.

And I know this is true of the CDC.

I was kind of hoping that it would leak to other things, but I'm hoping a new generation of leadership, and this is more of a longer term,

comes out of the millennial and Gen Z that says, look, it's clear that defunding our government and defunding our institutions and delegitimizing our institutions is bad for the world.

And that they learn from the sins of the father and they recognize things such as income inequality, climate change.

threats of big tech.

The government is really the only entity that's the countervailing force here.

That's probably naive, but I'd like to think that there's going to be a whole wave of voters that see these agencies not as bureaucracy, not as costs, but as key safeguards for our society.

I think we're learning that right now, whether we actually, whether that learning actually takes purchase or not.

We'll see.

I just, I don't know.

I just think like the slim suit crowd under Jared Kushner, who's probably the most incompetent person to handle.

Did you say the slim suit crowd?

Yeah, that was in the New York Times or the

post.

That's what they call it.

It's like an urban dictionary.

You're in a walking.

They wear slim suits.

I think

they're

slim intelligence is how I think of it.

But

they are doing a lot of stuff.

And let me just say, you know, using corporations, and I want to finish on this, and then we have to get to our friend of Pivot, is they're working hand in glove, the tech companies with Jared via Vanka.

You know what I mean?

Like she has developed relationships and others.

And so they're just right in there doing stuff with the Trump administration.

So sort of solidifying in case he wins again or if he wins again.

Jared Kushner, brand strategy 2012 crowd.

Learned everything he knows from the dog.

Ugh, please.

Was he in in your class?

You should have in my class.

Yeah, my student.

One of my students.

Nice kid.

Nice kid.

All right.

Good.

He shouldn't be running our response to COVID-19.

No, I did.

I did.

One of my sessions was how to handle the opioid crisis.

And then my next class was how to bring about peace in the Middle East.

So this is all, this is all my doing.

By the way,

I think when someone says to you, hey, you're responsible for Middle East peace, do you mind taking on the opioid crisis?

And you say yes, it reflects a lot of self-awareness.

A lot of self-awareness that's the only thing i'm happy about is that he was your student maybe you he inherited i'm giving paying you a compliment i'm hoping that some of your intelligence has oh yeah rest easy tonight america rest easy tonight

oh my god

a beacon of hope pizza professor galloway how far we've fallen oh my god oh my god i really do think you're a good teacher oh no no no no i don't think that's gonna save us thank you though

thank you though

Honestly, it's the slimmest of reeds that I'm holding my hand on.

I lack all self-awareness, and I realize I shouldn't be in this.

I'm going down, and I'm grabbing onto the thin reed of Scott Galloway.

It is a thin suit.

You want to talk about a slim suit of intellectual behavior.

Jesus Christ.

I am slim fit on steroids.

I have a girlish figure, actually.

I wear a lot of slim stits.

Lord, Scott, you're just making me feel better, not worse.

Anyway, moving on, we have a friend of Pivot with us, someone very smart.

His name is Gene Sperling.

He was director of the National Economic Council under under President Clinton and President Obama.

He is the author of a new book, Economic Dignity, coming out May 5th.

We're going to have him on Rico Deco to talk about the book.

But right now, we want to talk about the economy.

As of last week, 6.6 million people have filed for unemployment in the United States.

March was the worst month for job loss in the U.S.

since the Great Recession.

Gene, welcome to Pivot.

Thank you.

Thanks for having me.

So I'm going to ask the basic question.

Are we actually in a recession now?

And what makes this recession different from the 2008 recession recession or perhaps all other recessions?

We are in, I think you would call a jobs depression right now.

And I think it is different from virtually not only anything we've seen in our lifetime, but even different than the Great Depression in many ways.

And here's why.

You look at anything we've lived through or that we've studied.

It has kind of at least two characteristics.

It was caused by some economic or financial negative dynamic, some misfunction that you're trying to correct and quell.

And then, secondly, you're then trying to inject demand.

You're trying a Keynesian stimulus.

You want to get money out going so people buy things, so asset values go up, but mostly so that more people go back to work and they get paychecks and they start buying things.

You know, that really is what we've all been taught: what we do when we have a recession or depression.

This is not like that.

Number one, it's not caused by anything economic or financial.

It's caused by a pandemic.

And there is no economic or financial remedy that will ultimately get it out, get us out of this.

It's got to be a public health crisis response.

And that's first.

But then, second, think about it.

We're not really trying to stimulate people, give them money so that they will go back and travel more or go out to the restaurant more or have more cars being produced now.

We are not trying to, a sense, do a stimulus that gets people back buying all sorts of things and getting people back to work.

We are purposely shutting down whole parts of the economy and we don't want people to get back to work.

This is fundamentally different.

So

this is really an economic survival plan.

This is how do we really care for each other as a people.

How do we make sure that our families, uh people uh live through this with with the degree of dignity with with that they can support themselves that they can get through that is of course

happening here that's well that that's one big thing i guess what i'd say the second thing though is that We do want to prevent as much unnecessary harm and destruction.

Or what I like to think of are negative downward cycles that hurt people.

In other words, I heard somebody say you're almost almost trying to freeze the economy.

There's many things that happen in life that don't just hurt, they lead to a downward spiral.

When a person's unemployed for a few months, it kind of hurts.

It's difficult, but they usually get back on their feet.

If they're unemployed for two years, they start having a personal downward cycle they may not recover from.

Same happens with community.

If you guys drive out another podcast because you're so good, you're so insightful, you're so witty.

Go on, Dean.

Go on.

I'm trying to suck up, okay?

It's my first time on.

But, you know, that's creative destruction, right?

But if you're just like a small business who's like done everything right in life, you have a great service, you have a great restaurant, you have great food, there's nothing good.

It's just pure destruction.

And I think that's why you're seeing.

you know, kind of this debate going forward to phase four between two different types of approaches.

One says, let's just give money directly to people.

One of the best things in the package that happened, the CARES package, was this huge unemployment insurance bump, $600.

If a lot of people are getting 100% of their wages in UI, they will survive.

They will be able to care for their families.

They're getting their paychecks.

Others are saying, no,

you really should take a bit more of a European approach and try to keep the businesses going and essentially pay the businesses to keep idle people on their payroll.

And they're making the argument that will actually lead to less unnecessary destruction and will put us in a better position to reopen as an economy, as a people, when we finally get a healthy power.

So, I have a question, Gene, just along the idea.

I keep hearing this concept of permanent balance sheet damage, and that is 100% this is a health crisis.

Let's be optimistic and assume that the curve begins to flatten and this virus does burn out.

And obviously, we have to worry about relapse in the fall, but let's assume, let's be hopeful that it does burn out.

How much balance sheet damage has been done?

Is there a way?

I mean, we're all hoping, if you listen to the president and you listen to Fox News, you'd think that the economy is going to look like a V, that it's immediately going to snap back.

But there's this notion that there's going to be permanent damage and destruction done to our psyche and to balance sheets here.

If this thing does burn out, or if it does look as if we're going to, we, you know, at some point we'll have turned the corner and call it, I don't know, early summer.

It feels normal from a public health standpoint.

What do you think are the lasting effects on the economy?

How long would it take to bounce back?

Is there a bounce back coming or are we going into a sustained economic crisis?

Well, you know, it's the question.

And right, like economists like to say, is it a V shape?

Do you go straight down?

Did you come back up?

And sometimes, like, you know, the 1980 three recovery, there was all this pent-up demand.

People like went back and bought the houses and cars they didn't, and you kind of boosted up.

Or you can get more of that slower recovery which you got after the financial crisis because when it was over people were paying down their credit cards their balance sheets everybody was from companies to people to state governments and so you didn't get that big uh bounce up you know here you're really talking about a degree of human nature that is hard for some of us to know i mean i think there's you know, think about it even for yourself.

You know, if you've lost your spring vacation, you know, you might be thinking, man, if things were really great, I'm going to go out and spend a little more for an August vacation.

But you might also think, but I'm not going to go too far.

I'm not going to go overseas.

I'm not going to do anything.

And you just don't know.

I mean, we've obviously seen people, you know,

who've survived the Holocaust or, you know, were babies of the Great Depression, where that affected their behavior for years to come.

I think we'll see a mix.

I think you'll see some bounce back where people will want to get out, go to restaurants, do things, purchase.

I do think if we do things right, if we can keep more small businesses open, all of those things I think

will help to restart.

But whether or not there's kind of what the psychological impact is or whether people become worried about this, how do people act when it's not hypothetical and they've actually lost a loved one or friends lost a loved one?

How much risk averse does it make them

my grandmother was like that.

She was a child of the Great Depression and I think she never spent money.

She had quite a bit of money in the end and she never spent it.

She wore the same clothes.

It was really interesting psychologically from her point of view.

She was always, you know, she had a can full of pennies that she kept all the time, for example.

But one of the things that's interesting is the idea of how and when you turn the economy on and what what to do.

And obviously, President Trump had talked about like we're going to be open by Easter and we're not.

Obviously, that's not happening.

But is there a danger of turning it on too late in terms of

how many months people can take in terms of the economy?

Or is it just, look, this is what you're going to lose for this many months and then later you'll make it back or you'll have to, you know, just wait until everything returns to normal?

You know, Kara, I mean, when the president and there were some CEOs, and I think some of them will not

make comments that will not age well,

that were talking about like the decision to reopen.

When do you reopen?

I think that there are a lot of people, and I think this has united a lot of economists and economic policy makers like myself on the progressive side and my counterparts on the conservative side, who said, this is much less of a choice than you think.

It just goes to what we're talking about.

If somebody said to me today, it's reopen, we're still not going to go to the restaurant.

If you're worried that if you take a trip overseas, you might get stuck and not be able to get back,

you're not going to go.

So I think

this is the thing, and this is why this is such a, this is a fundamentally public health crisis.

As long as those risks and fears are worry and legitimate, people are going to behave in a certain way that's going to pull back whether or not their local leader tells them to.

So you can,

yes, you should be able to reopen some.

I I mean, you can imagine that

if you had massive testing, if we could know through antibodies who'd had it, many of those things would encourage, you know, a bit of economic activity.

You'd have a family member that could, you'd feel comfortable working with other people, buying for you, shopping for you.

But remember, those are kind of reopening the economy that's related to solving the public health crisis.

I just don't think you can make that decision as if it's somehow separate from the legitimate fear that people are going to feel of

a second wave,

even if things look a little better.

So, Gene, I'm definitely a glass half-empty guy on this.

In economic crises that end, there's a notion that, okay, the economy is coming back.

And that's what you're looking at the metric of the telltale sign to begin investing as a business or begin spending as a consumer.

When there's a war and war ends, there's a sense of victory, there's a sense of collective accomplishment, there's a sense of optimism.

Typically coming out of pandemics, there's a recognition of grief and a real sense of heaviness and a real sense of weight that does not lend itself to going out and buying that new Hyundai.

This to me feels like from a consumer confidence standpoint, that this is pretty bad, that we're going to come out of this and slow down and we're going to look at ourselves in the mirror and say, okay,

simply put, we did not handle this well.

This is something we're not prepared for.

And I think a lot of people are reevaluating that kind of what I call sleep test.

And that is how much cash do I need to have?

How much money do I need to have if something like this happens again?

And I just don't see how it doesn't permanently structurally shift the economy for the next several years.

It just the notion of a V, regardless of the health, seems just

delusional to me.

I'm curious to get your thoughts.

You're right.

I mean, I think a V is delusional.

I think you hope for kind of a U that, you know, things start to, they start to come back.

I mean, look, human nature has many components.

If my mother is, is, you know,

I fly from Los Angeles to Ann Arbor once a month to see my mother.

Now I can't.

I mean, I'm going to do that when things get better.

People love people.

They want to see people.

They're going to do some travel.

People are going to buy some things that they put off because they didn't want a repair person coming into their house now.

There will be a certain amount of rebound.

But yeah, there's also likely to be a certain amount of lasting effect.

Now, I also think how we handle this matters.

If the lesson is that, look, our country can respond with bigness.

They actually were able to say we had to shut down and they made sure I had 100% of my wages replaced, that I still had health care.

Well, that might make you feel more that you can spend because if something like this happens, the government is not going to let you go into one of these negative cycles.

And I think the hard part that we're dealing with right now, but we've got to grapple with, is, you know, as much as this is harmful for our country, it's not really hurting all 320 million people equally.

It's hurting

What is it going to be?

30, 50, 70 people, million people brutally.

They're losing their jobs.

I have many family members, you have people doing your show now that are doing fine.

Many people are doing fine, but a large chunk of Americans are going to lose everything.

And so what we're starting to see is how do we do, you know, I mean, how do we do major relief to help those people, those small businesses, you know, stay afloat.

And, you know,

I think, you know, sending out a $1,200 check is good.

It helps a lot of people.

But the thing you're going to need is that major response for the tens of millions of people who will get crushed.

And if we can do that well enough, then maybe we'll be in better shape.

And maybe, and I'm one of many who hope this, this will lead us to rethink our entire economic security.

Word, my brother.

Word, Gene.

A couple, a couple observations, Kiero.

The first is that the happiest countries in the world aren't necessarily the ones that have the most.

They're the ones where their citizens don't have to live in fear of things being taken away.

And I think this is where we're seeing how much can be taken away in this kind of hunger games capitalism that

we have created in this country.

And Kara, I learned so much in the show.

I have decided that I'm going to adopt Gene.

I'm going to adopt Gene.

I need a competent, loving person to come visit me every six weeks.

So, Gene.

No one's visiting Scott.

I'm adopting.

You heard it here.

I am adopting Gene's friends.

Scott will not even unload the dishwasher.

So please don't become his.

I'm looking forward to seeing you.

How come you didn't call me last night, Gene?

Last question, Gene.

I'm going to stop Scott from his incessant obsession

being cared for.

And he loves it.

So what you were talking about this, I think it does

is going to further these lines of income inequality that's been happening for a long time, obviously.

This is the real challenge of this country.

And the second thing is which companies are going to do well.

Now, tech companies were affected by the 2008 crisis.

How do you think?

I'm sorry to be a tech focus, but they look like they're going to cut.

We think they're going to come out of this looking great and doing well and being less regulatory scrutiny and everything else.

How do you think,

you know, we know hotels are going to be hit.

We know planes,

airline industry is going to be hit.

What about tech from your perspective?

Well,

you know more than I do that obviously the big tech companies here are enormously well off.

They have enormous cash piles.

They have enormous wealth.

I don't see how they are going to face much of a threat.

I think I'd worry more about people, companies that were...

going to be potential competitors who are somehow not related to

helping us telecommunicate, et cetera.

So I do think that one of the things you'd like to see from

the tech community, the venture capital community is, look, if you believe in a startup, you think they have a great vision, don't let them go under, you know, because we're down for six months or 12 months.

And I don't necessarily, you know, you should help keep something sustainable if you great, feel it's a great

long-term

investment.

But I think compared to others,

just by definition,

tech does help us social distance.

I still can FaceTime with my mother.

We're all used, you know, you've talked about Zoom Cara on the show and other things.

You know, so those things are not going to be the hard hit parts of our economy.

And I, people there have the resources that they should keep their workers 100%

employed.

But, you know, so that's not where my big, I would not have a big worry about big tech.

I might be worried about what happens to some of the some of the smaller competitors.

And just on the income inequality point, I mean, I do feel like this also makes it real in ways we haven't seen.

It's one thing to give them statistics about, you know, this person has, the top 1% has this much and they're doing so much better, but we're seeing it at a more human level.

Really, only some people get paid sick leave.

You know, we're seeing people on the front lines who are literally saving our lives and they don't get 15 bucks an hour.

I think this will

change us in a positive way.

I think it will make us ask, why do we have these holes in the social compact?

And I think a big company who said, yes, please give me some payroll because it's so important for me to help keep all my workers going, it's going to have a little harder time explaining why they located as a tax facility in Bermuda to not pay their fair share or why it's just the worst thing in the world if we were to have a mandatory paid sick leave or universal health care for everyone.

To your point, Gene, aren't we finding that the quote unquote essential services and essential workers are the ones that have been the lowest paid, which is sort of the irony of all this, that the quote unquote, the essential, the people on the front lines here, other than our healthcare workers, but the people in warehouses, the people ensuring the supply chain stays open, the people giving us our food are some of the lowest paid.

And the other notion is that over time, when you get to these levels of income inequality, you do have a self-correcting mechanism.

And while, to your point, 30, 50 million Americans are really getting hurt, doesn't this over sort of the medium term

serve as a leveler that perhaps you're seeing workers sort of flex their muscles, warehouse workers saying, we need to make more money if you're going to ask us to show up and take risks.

Don't events like this usually swing some balance back from capital to labor?

I certainly hope so.

I mean, look, I kind of philosophically always feel that way, but I think even if you're a hard-hearted libertarian, you have to be saying to yourself, wow, the person delivering food to me, the person who is the lowest level person in that hospital,

they are the MVPs of our economy right now.

They're the MVPs of our society.

And I, you know, I think we need to do everything to help the people who are working and putting themselves in danger.

The idea they don't have every bit of protective equipment they have is inexcusable.

And I think that those who've lost their jobs, we have to help 100%.

And I also think if we're giving massive assistance,

you know, we've got to do it swift.

It's got to be

sweeping,

but it should be fair too.

I was disgusted to see and hear stories of people running small tax and consulting companies making millions of dollars who are doing just fine, who were trying to apply for the small business loan when they hadn't had the revenue go down a penny.

I mean, I think there's a special place in hell for people like that.

And I think we're going to need to give more support to bigger companies.

I don't know why it's okay that Ford union workers are losing their jobs.

And I think we're going to have to make sure when we do that, that the public does have confidence that the money going there is going there exclusively to help people who would be laid off stay afloat, help the company stay afloat.

And that if it ends up looking like a lot of that money went to the well-off or to protect high salaries or investors,

I think it's going to create more anger justifiably.

There's a hope that anything good that comes out of this horrible crisis, tragic crisis, it would be that it made us all see the value and worth of each other in a way that strengthened our social compact for decades to come.

That would be the happy outcome.

Word, my brother, word.

We're going to end on that because compassionate capitalism, which is a lot of tech people talk about, I think they're making it up for them.

But I really, we really appreciate this.

Scott, you have anything last to say to Gene, who was fantastic?

No, I'm just, again, every time we have one of these guests on who gives sort of a sober, thoughtful, competent assessment of the facts, I think this is, you know, this is what we need.

This is what the public wants to hear.

They want a sober assessment from someone competent who actually does this for a living.

So

and on a down note, but I was just looking at the state unemployment numbers.

And I don't know if the

unemployment claims will be as high as 6.6 million again, but I think it will still be something like four or five million more.

And, you know, we're going to be headed to 20% plus unemployment, possibly, things we haven't seen since the Great Depression.

So

this is a moment for us as a people.

All right, Gene, thank you so much.

We really appreciate it.

Again, it's Gene Sperling.

He was director of the National Economic Council under President Clinton and President Obama and is the author of a new book called Economic Dignity.

I'll be talking to him much more in the coming weeks.

Thank you so much, Gene.

Thank you.

All right, Scott, Gene was fantastic, but one more quick break.

We'll be back for wins and fails.

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Okay, Scott, we're back.

That was something else.

What do you think?

Do I bring in good guests, Scott Galloway?

Isn't that good?

Yeah, no, Gina is very, I mean, as my, I'd like to say as my new son, as my new adopted son.

Wouldn't that be nice?

My son's just like, you know, my son just beat each other up and like, you know, are not, I would love to have a son like that.

They will be.

they will be.

You promise?

No, my son will be.

My sons will be like that.

My son calls me every day.

No, but mine will.

That makes sense.

Yours will.

Yours will.

Your sons are young.

They're young in their selfish mode.

Oh, it's like Iraqi insurgents took over the house.

I know.

They'll be fly.

They're young.

They're awful, kids.

It's hard.

This is hard on.

Just remember.

This is like, you know, like, it's hard on them.

I think about my son not getting to a prom.

He's not going to go to graduation.

He's a lucky kid.

Sure.

But telling him,

suck that up.

it sucks.

It sucks.

And so give him a break.

Give him a break.

We had one of those moments yesterday that really brought this crisis home in a very poignant and sad way.

Have you heard about these drive-by birthday parties?

No.

So

my youngest is nine, and his classmate, this lovely young kid, a boy named Harrison, had his birthday, like most nine-year-olds, loves his birthday.

And they didn't know what to do because we can't get all the kids together.

So they did this drive-by where all the cars pulled up and all the all the little kids uh stood outside their sunroof and we all turned on so today it's your birthday and we all sang to him and this kid was on us on his porch and he just lit up and it was so um moving and sad oh but it's lovely i'm gonna go with love yeah it was really nice well that gets us into wins and fails i think that's not a fail in any way that's a win it's a sad win but it's a win yeah it was really oh come on that's wonderful that's really lovely that you guys did that my son's birthday is coming up, but he didn't want a birthday party.

He's turning 15.

And so he's like, I don't do that anymore.

It's like Halloween.

I don't do that.

Get me a car.

Get me a car.

I hate you.

I'd like some sneaker money.

That's what he wants.

He's like, give me sneaker money.

All right, wins and fails.

I think, yeah, I think I'd like you to go, Scott.

What are your wins and fails?

I think there's a lot to be optimistic about for the first time, and hopefully it's a trend, not a blip.

New York reported, New York State for the first time in several weeks or for the first time, reported fewer deaths.

It looks like we're making progress against a blood test to determine who's had the coronavirus, which could

identify who has immunities, which is testing, I think, has been kind of the key around all of this.

So

there's a lot to be very optimistic about.

So I'm feeling...

you know, I think there's a lot of wins.

And also, just if you want to be moved every day, go onto YouTube.

Or if you're in a city, stick your head out the window and listen to the kind of spontaneous combustion of recognition and empathy and Americanism that when people go to their windows and start applauding our healthcare workers, I find that every day,

every day, I need two things: I need alcohol, and I need to hear that.

And I make sure every day that I listen to that on YouTube or stick my head out the window.

That is really, it's really wonderful.

And it'll make you feel better if you're in a city.

All right.

What about a fail?

So, my fail is my former student, Jared Kushner, and his, this stockpile was never meant for the States.

It's our stockpile.

My stockpile.

I didn't think that was his finest moment.

I actually like Jared.

I would say he might not be the most self-aware student I've ever had to take on the Oprah Wood and the Middle East peace process, but I do like him.

I think he's a good kid.

And I actually think

he gets probably a lot of warranted scrutiny, but I don't think that was his finest moment turning Feral as

you get on stage and say, my stockpile.

I've been doing it.

Okay, fair enough.

God, like, I can't even believe.

it.

Like, I know you say the nice guy.

I don't care if he's a nice guy.

I don't care.

Fair enough.

He's unqualified for the job.

Like, it's literally.

Okay, you just described every person in the administration and the majority of young people who go to Washington.

You would do a better job with the national stockpile.

I'm sorry.

But I'm the dope.

And I think you're the dope.

I don't want you near the national friggin' stockpile.

I'm just saying.

Really?

I'd give it to you.

That'd be a hell of a party.

I'd take that hydroxychloroquine.

I go with my friends to a gay raid, and we rock on my sister.

Don't do that.

Champagne, cocaine, and hydroxychloroquine for the dope.

Don't take that drug, please.

You will damage yourself.

Don't get on a ventilator, which apparently, you know, it was really, I think,

I'm going to do a win and fail.

Obviously, Rudy Giuliani is just really, continues to be the most appalling human being in history in terms of a flip of someone who was good and then turned bad.

It's literally, it's so, it's good.

He's got to pay for that seventh divorce.

Whatever.

There's going to be some epic.

movie about him and then I'm going to enjoy every minute of it.

And so

he's just, to me, just really his exemplification, sort of a get-rich quick scheme, Mac daddy, someone who goes to fail, Rudy, just the worst

just the worst.

I'm sorry.

And, and taking it and using Twitter to do it.

I just, I'm like, I got so mad last night about it.

But, um, and and then that for a win, um, it's, it's hard, you know, it's hard to find a win.

I'll tell you what a win is.

Win is having being in a quarantine with a baby.

I have to tell you, it's so pleasant.

Every day when I feel bad, I look at the baby who has no idea.

And so I have hope for the future in that regard is when you have, you know, you don't, they have no idea what's going on except you're around.

I think that's, that's a win that a lot of people will not remember this someday.

How old is your baby care?

Six months.

Six months yesterday.

Oh, wow.

Six months is funny.

Yeah.

Well, not really.

It's just less awful.

Every day it gets less awful.

No, it's not awful.

Not even psycho.

Oh, it's awful.

Who are you kidding?

It's not awful.

You can, you're, you're amongst friends.

You can be open.

I'm telling you, it's fantastic.

Like, I don't know what to tell you.

This is like the best baby.

Like, it's just the loveliest baby you could imagine.

There's not a minute that's that's like, oh, my God, I can't believe I did this.

I'm telling you.

I can't believe Louis' not going to prom.

I know.

I know, Louis.

So, what do they do?

They do like a Zoom prom or something.

Oh, they should do a drive-by.

Everybody gets in a car and sticks out of the sunroof.

I don't know what to say.

That's weird.

I'm guessing.

I don't know.

I wouldn't be the person I am now if I didn't stay home and

with my mom during prom, but I could have.

He's not last year.

I could have.

he's gone to a prophecy he went you know juniors and seniors go but I just feel like that's kind of an

I'm even wondering if they're gonna have graduation I think it's just kind of

it's a little tiny little thing and I know other people are suffering worse but um but they uh that's a moment's a moment it's a moment so um and then uh I think that's that's that's all I got for you I got for you I'm glad you were on a high note and I do think your story of your kids birthday party is beautiful

Harrison happy birthday Harrison Happy birthday.

We're not going to sing to you because I have a terrible voice.

But anyway, and my favorite win, I'm going to do a win, the story about the New York Times, the New York Times, about the landlord canceling rent for his tenants.

In Brooklyn, wasn't that a nice story?

That was a lovely story.

There is goodness and kindness in this world.

So let's focus on that.

Anyway, Scott, speaking of which, what brought you joy this week before we go?

What are you looking forward to?

Oh, 100%.

I'm looking forward to getting back to normal.

I'm a data guy.

I'm obsessed with these data sites.

And

there's just no doubt about it

across these

areas hardest hit, we're starting to see the curve, at least the arc of the curve starting to flatten.

What might be interesting is New York might end up being a safe haven.

in a couple of months.

And that is we might have developed herd immunity in New York and you might see an influx of people

coming to New York because it'll be a, I don't want to call it a safe house, but what's weird about this is it's rolling.

So people are in different parts of the arc.

And once the arc goes down, is that in fact a place?

And I guess this is a question for an epidemiologist.

Does it in fact become a safer place?

Yeah.

Because the virus doesn't have the transmission vehicles.

Does New York all of a sudden turn into a place you seek versus a void?

But yeah, there's, I think there's a ton.

I'm more, you know, I'm more hopeful.

I felt like this weekend.

I don't know if you felt this.

So much of this is just about the headspace you're in and your blood sugar at that moment.

but i did feel like this weekend i don't want to say to use the term turning point but i felt like this the light got got ignited at the at the at the end of the tunnel here this weekend i think you feel like you can handle it i think that's what it is yeah right yeah

you you're sort of used to it and you can handle it or you do think there's a turn okay that's good that's interesting yeah i think it's a question if you can handle it so scott let's meet at the top of the empire state building

do you know that meme oh wait is that isn't that Tom Hanks?

By the way, the Hanks are doing better.

Yes, they're doing better.

Tom and Reid are doing better.

You meet at the top of the Empire.

That's from Sleepless in Seattle, but it's actually from a movie before that.

But let's do that.

Let's meet at the top of the Empire State Building and not embrace, but shake hands.

Let's meet in the basement.

Let's meet in the basement of Los King on how Margaret.

All right, that sounds really good.

I'm going to leave you with a lovely quote from Charlie Chaplin if you're thinking of being

positivity.

Didn't he play Robert Downey Jr.

in a movie?

He did.

Yeah.

We must laugh in the face of our helplessness against the forces of nature or go insane.

I'm laughing.

There you go.

All right.

Okay.

Anyway, Scott, don't forget for our listeners, if there's a story in the news you're curious about and want to hear our opinion on, email us at pivot at boxmedia.com.

We get lovely, lovely emails, and we love every one of them.

We read them all to be featured on the show.

Scott, read us out.

Today's episode was produced by Rebecca Sinanis.

Our executive producer is Erica Anderson.

Special thanks to Drew Burroughs and Rebecca Castro.

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