From the gaps in financial literacy to the turbulence of college sports, the 2021 SIEPR Economic Summit highlighted a range of important challenges facing leaders in government, business and academia.
After a disruption in 2020 from the COVID-19 pandemic, the Summit returned this year in a virtual format, streaming a weeklong series of discussions, starting on March 1. Speakers shared insights, answered questions from the online audience, and talked about implications of decisions made from seats of government, boardrooms, courtrooms, classrooms and locker rooms.
The Summit kicked off with a keynote by Mellody Hobson, president and co-CEO of Ariel Investments, and closed with a keynote by Raphael Bostic, president and CEO of the Federal Reserve Bank of Atlanta. Both of those sessions were moderated by Mark Duggan, the Trione Director of SIEPR.
In other sessions, Microsoft CEO Satya Nadella shared his vision of how technology will impact people’s lives and transform organizations in a post-pandemic world; a trio of antitrust experts delved into the tricky aspects of regulating Big Tech; and a panel comprised of a professional athlete, a college athletic director and an economist held a no-holds-barred discussion on the future of college sports.
Highlights from all five sessions — and links to the recordings of them — are below.
The Summit also featured daily panel discussions accessible exclusively to SIEPR Associates. That lineup included SIEPR's Deputy Director Gopi Shah Goda and senior fellows John Shoven and Michael Boskin talking about financial literacy; Stanford economists Susan Athey and Erik Brynjolfsson on the interplay of AI, changes in the labor market and tech policies; Boskin and Rebecca Diamond, joined by Sarah Bohn of the Public Policy Institute on challenges facing the California economy; and Duggan and Senior Fellow John Taylor on a range of macroeconomic policy issues. Senior fellows Grant Miller and Pascaline Dupas participated in a session focused on global development and the work of the Stanford King Center on Global Development, which Dupas directs.
Information on the panels and speakers can be found on the Summit agenda
The language of money
Learning the ABC’s of money is glaringly absent across America, and that’s not right, according to Mellody Hobson.
“In high school, you could take woodshop or auto and not take a class on investing, which always leads me to ask, who today is cleaning their own carburetors or whittling in their spare time? No one,” said Hobson, president and co-CEO of Ariel Investments.
“So if you don’t grow up in a home where money, the stock market or investing is discussed, you’re literally behind the eight ball — which is why this financial literacy issue is so crucial to our society.”
Hobson advocates that understanding money should start at a young age, as early as elementary school: “It’s actually one of the things other than your family that you’re going to have a relationship with for your whole life.”
“Money becomes a language for a child,” she said. “We know the younger they are, the more fluent they become and their brains just adjust to the nomenclature and the language.”
Financial literacy has become more important especially as the concept of finance is more elusive than ever with the ubiquity of credit cards, the way we spend money over the internet, and how youngsters see money being spit out of ATM machines without realizing the cash is coming from someone’s savings account, Hobson said.
Getting smart about money and the stock market could be a game changer, she said. There are profound implications not only for a person’s own life and livelihood, but also their families.
“And to the extent people don’t understand these issues, they become a burden on society and therefore become all of our problems, and that’s where we all see taxes go up, and you see society insulate and protect on the downside for that lack of knowledge.”
Hobson, who was recently named to chair the board of Starbucks Corp., also discussed the importance of diversity in corporate boardrooms.
“Talent and genius do not discriminate, but for whatever reason, we don’t see the proportionate amount of talent and genius in corporate America that exists in all communities in our country,” she said. And it will take bold moves for that to change.
A more inclusive boardroom leads to better outcomes, she said.
Making heads or tails of competition and regulation of Big Tech
On Day 2 of the Summit, three scholars who served as former U.S. antitrust officials discussed the obstacles ahead as policymakers on Capitol Hill weigh proposals aimed at regulating the Amazons and Googles of the world.
One thing is clear, according to the expert panel: It’s a whole new game when it comes to monopoly power.
There are limitations to antitrust law, and the ever-expanding portfolio of tech behemoths is no longer just about easy-to-spot horizontal acquisitions of direct competitors. The extent of harm to consumers brought by modern monopolization — or potentially related anti-competitive behavior — is also up for debate.
The courts, which have become more conservative, are a constraint to antitrust efforts, said Tim Bresnahan, a senior fellow emeritus at SIEPR.
“The way the courts are now, the other two branches of government have limited room to maneuver to expand enforcement,” Bresnahan said. “There’s been an enormous drift away from thinking that monopolization or monopoly power can be a real problem.”
Doug Melamed, a professor of the practice of law at Stanford Law School, agreed. “The courts have been very conservative over the past forty years, and it’s been an appropriate correction in maybe the first 20 of those. But I think it’s gone too far.”
Yet even if antitrust allegations against companies had proven to be well-founded, “the remedies one would have obtained under existing antitrust law would not directly address or change the size and power of the (tech) platforms or their business models,” he said.
That’s an area of antitrust doctrine that needs to be revised, he said.
Mergers are not the only culpable mechanism either.
“We’ve had now decades of underenforcement against anti-competitive conduct outside of the merger realm,” said Nancy Rose, the Charles P. Kindleberger Professor of Applied Economics at MIT.
Part of the challenge, the panelists said, is recognizing and addressing “nascent competition” — and whether or not a corporate gambit in an emerging arena would eventually unfairly strengthen the dominant player and quash market entrants.
Did Facebook’s acquisition of Instagram, for instance, create a synergy or did it prevent the emergence of a rival?
If cases of nascent competition are stymied by the courts, or not brought by antitrust enforcers, “then we’re really stuck,” Rose said. “What that does is to say that you can buy up firms before they become an obvious competitor.”
Incumbents have the upper hand, too.
“They know the industry much better than the folks sitting in Washington,” Rose said.
Watch the full discussion as session moderator, Gene Sykes, a leading executive at Goldman Sachs, plumbs the panelists’ insights.
Where tech is going, where it’ll take us
What’s the world going to look like in 2030?
To be sure, there will be more computing, Microsoft CEO Satya Nadella said in response to the opening question during a conversation moderated by Jeff Raikes, chair of Stanford’s Board of Trustees.
“But the shape of computing will be different, and it will be more embedded in our lives, whether it’s in the hospital, on the factory floor, or at retail outlets,” he said.
Coming out of the pandemic, digital technology will be one of the most critical components to the resilience and structural changes of organizations, he said.
Along with innovations in artificial intelligence, the advancement of cloud computing — which allows for data transactions to function more flexibly across different devices and different locations — will transform personalized medicine and personalized shopping, as well as change the operational core of manufacturing and other industries.
And when it comes to the future of work, Nadella said it’s all about flexibility across three broad dimensions of change.
“It’s about new ways of collaborating, new ways of learning, and thinking of well-being as a first-class construct,” he said.
With the movement toward hybrid work models, where some people will be able to work remotely from home, meetings and collaborating will get more complicated, so more flexible tools will be needed to accommodate that.
Also, corporate America will have to pour more — and improve — resources into training or retraining workers, Nadella said. And management practices will need to address challenges like worker burnout, especially as video-meeting fatigue is already appearing to be an issue.
Raikes asked Nadella how technological innovations — and the economic surplus from them — could be shared broadly.
“It can’t just be about the tech industry. It’s got to be about agri-tech, fintech. It’s got to be about every part of the economy also benefitting from the advances in technology,” Nadella said. “And I’m optimistic that 10 years from now, we’ll see a more even spread.”
To get there, the ability to create and not just consume technology will need to be democratized, Nadella said.
And, “in order to have the (economic) pie distributed evenly, let’s first have the pie grow.”
Straight talk about the world of college sports
The sting of sports cuts. The prospect of player unions. And a call for getting rid of the NCAA.
In an unrestrained dialogue, the all-star panelists in the Summit session on college sports took on these touchy topics. They provided different — and sometimes conflicting — perspectives on some of the toughest challenges today facing universities and student athletes.
“Do you want me to leave the Zoom call right now — let you speak freely?” Bernard Muir, the Jaquish & Kenninger Director of Athletics of Stanford, quipped at one point.
Muir listened as Nnemkadi Ogwumike, ’12, a former Stanford basketball legend and now a power forward for the Los Angeles Sparks, WNBA All-Star, and president of the WNBA Players Association, talked about how the voices and needs of student athletes should be heard and addressed.
Ogwumike said the idea of student-athlete compensation was “just a thought” among athletes when she was at Stanford. But with legislation that will expand student-athletes’ abilities to unionize or get compensated for their name, image and likeness, now these ideas “have evolved from idealism to realism.”
Muir laid out how wild “the arms race” in college sports had become in the past decade. But “the last 12 months has exposed and exacerbated significant flaws in the economic model of college sports,” he said, in explaining Stanford’s decision to discontinue 11 of 36 of its varsity sports.
And there’s more pain to come, said Roger Noll, a leading sports economist and a senior fellow emeritus at SIEPR whose expert testimony has played a role in pivotal court decisions involving college sports.
“In the past 30 years, it was, how do we spend the 8 to 9 percent in (annual) revenue growth. Now it’s going to be, how do we cut the budget by 8 to 9 percent every year,” Noll said.
What would be the single biggest change to make a difference? asked the session moderator, Blakey Vermeule, a Stanford English professor who has taught about sports and culture.
“Give the economic governance, rule-making authority solely to the sports conferences and eliminate the NCAA,” Noll said.
An “uneven recovery”
The pandemic-driven recession — and the recovery thus far — has been strikingly uneven, and that’s a key concern for the nation’s central bank as it calibrates interest rates to help boost the economy and the labor market, said Raphael Bostic, chair of the Federal Reserve Bank of Atlanta.
The pandemic hurt service industries more severely than other business sectors and the unemployment rate has hit minorities the hardest, Bostic said.
In fact, the COVID recession has fully reversed the progress that Blacks had made in the labor market in recent years, he said.
An estimated 10 million people are unemployed because of the pandemic, but as the economy rebounds, “the winners are going to continue to be the winners and those who are struggling will continue to struggle,” Bostic said.
That suggests “we’re going to have to invest pretty significantly in helping workers reskill themselves,” he said. And workforce development efforts will need to get "much more functional and much more muscular to help those workers who are in those industries that may not be recovering as robustly get to a new place.”
Bostic’s remarks during his SIEPR Summit keynote dovetailed with the monetary policy stance that Fed Chair Jerome Powell had stated just the day before.
Bostic said he is not too worried about inflation, especially since the inflation rate had been staying below the 2 percent target for awhile.
“I’ll be comfortable letting the economy run hot and letting inflation get above 2 percent for some time as our target before I really show any sorts of concern” — and as long as it doesn’t spiral away from that anchor, he said.
“As long as that’s happening, I believe we can continue to provide some ample and strong support for the economy,” he said. “We’re ready and able to support the recovery for as long and as strongly as necessary, and we need to do all we can to minimize the long-term damage from the pandemic crisis and make sure the recovery is broad-based and as inclusive as possible.”