YouSaid · the spoken record

Michael Spence

lines on the record: 117
first: 2019-10-25
most recent: 2019-10-25
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Embrace trade, braced openness, and they had started to modernize Then, of course, World War II, and they were an imperial power, you know. All over Asia, right? All over Asia, you know, China, Korea, et cetera. So World War II was a huge setback, but basically they got back on track.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Capital that enables this growth is people provided they're educated and so on and not just mineral wealth. Yeah, so basically I think the situation was Japan Was a hybrid because it had gotten to middle income status, and the reason it got there is that in 1868, the Meiji Restoration, it abandoned the policy of isolationism.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“So, Japan is a kind of hybrid. So, most of Asia, by the way, right after World War II, Asia was by far the poorest part of the world. Worse than Africa. Yeah. And the economists at the time, you know, when asked development economists, when asked where was the real trouble going to be, they said Asia, many of them said Asia, because Asia doesn't have natural resource wealth on balance. And Africa is by far the richest country. Minerals, oil, oil, diamonds, you know, you name it. And that turned out not to be a good guess because it turns out that the kind of real...”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Right? Yeah, that's half of my 60%. You've got the rest of Asia that some of it came earlier, some of it came later, and so on. So I think this convergent process is going to be very hard to stop because people... Because the structures are there to enable it. And because people have gotten the hang of it that it's actually possible.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I think it's well underway. I mean, I may have been a bit optimistic, but you know, China looks like it's well on the way. It's a high middle income country with a very good chance of being a high-income country, admittedly at the low end of the spectrum in another 10 to 15 years. India is a bit further behind, but they're, you know, humming along. You add those two together and you've got 2. I think it's 7 billion people, which is a significant fraction of the world's...”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. So that was basically it. Then the other 85% are living in countries that we now call emerging economies. Most of them, some of them haven't emerged very much. But that's the other group, and they were held back by... Essentially, a global economy that wasn't really open and the colonial structure was the governance.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so the growth rates weren't breathtaking, you know, probably on the neighborhood of 2% in real terms. This is on a per capita basis. But if you do it for 200 years, you get a fairly big income. The magic of companies.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“And the people at the top end of the quality spectrum say that's not a very good price for me, right? And they take their product out of the market from the top end. And then the average quality falls and eventually people figure that out and the price goes down. And then the people at the top end of the remaining spectrum say that's not a very good price. I'll take mine out, right? So that's the origin of the term adverse selection. People are selecting in and out of the market and it's adverse because the top end of the quality spectrum leaves first. Let's talk about your book, The Next Convergence, because it's such a fascinating application of information flows. There's a quote in the beginning that”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so then it gets complicated. I mean, for sure. So the phenomenon that this gives rise to in markets is the one George Ackerloff wrote about, although insurance people have known it for years. It's called adverse selection. And what happens in that context is basically you have what I just described, this quality spectrum that has the unfortunate properties you can't tell the difference between the entities. Think of them as things for sale and differing in quality. Used cars is the example he used. So what happens in a market like that is that the price reflects the average quality.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Diverse entities that are in one of these. You know, silos that are distinguishable from other silos by what's visible or detectable, then you basically get the people at the upper end of some quality spectrum get treated as the average. And that's not good. And at the lower end, they get treated as the average, and that's great for them. So you're discriminating against the high quality end of the spectrum and you're favoring the low quality end. So this has to have huge implications for people looking at, let's say, making investments in either private or public companies. Absolutely.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“In the course of that, Les Thoreau came down and started talking about what he called statistical discrimination. So I don't want to make this too nerdy, but basically whenever you have it away. Okay. When you have missing information, then basically you get people classified by what you can see or detect as opposed to what you don't see. And Les's idea, and that automatically produces discrimination. So what happens in any economic or social context is that the members of a group who are otherwise indistinguishable from each other. I mean, in your world, think of asset classes. It's a little bit like this. Things get lumped into an asset class because they're supposed to be sort of similar until the markets get deep informationally, you don't see all the differences. So they tend to be averaged, right? When you average a bunch of”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“And so that was fascinating. And my job was to turn what was a kind of general discussion, you know how those go all over the place into nine pages that made it look like just brilliant, you know. Linear exposition exposition. So I did that and I had a lot of fun doing it. Ken Arrow to his dying day said that that was the thing he thought was my greatest skill, rapporteuring.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Myself and sit in a library and stuff. So he said He said the problem is you don't have enough human contact, you should teach. And so he did two things for me. He gave me a little bit of his course on social choice theory, which I screwed up royally. My first outing as a teacher. And the second thing he did is he made me what he called rapporteur of a faculty seminar in the then new one-year-old Kennedy school. It was an extraordinary group of people. It was Francis Bathor and Les Thoreau came down to visit from MIT and Canaro, Tom Shelling. So there's quite a run of Nobel laureates in that. Oh, no. It was pretty amazing. Not all of them have been recognized in that capacity then.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Did you find your way into that space? What are the dynamics of information flows? Well, so I got interested in this one. I was a graduate student. Probably a little color commentary. Sure. By the time I had finished my general exams, which is the first two years of a PhD program, I'd been in school up through high school, 13 years in Canada. Then I had four years at Princeton. These were all wonderful experiences. And two years at Oxford. Were you a road scholar, right? Rhodes Scholar, yeah. Doing mathematics eventually. And then two years in the PhD program, and I'd had about enough. So I went to one of my advisors, who's a great friend, Dick Zerchhauser, at the Kennedy School. And I said, I think I'm going to quit. And he said, what are you going to do? And I said, well, I'm tired of talking to him.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“My extra special guest this week is Michael Spence. He is the 2001 Nobel Prize winner in economics for his work on the dynamics of information flows in markets. He is the former Dean of the Stanford Graduate School of Business. He is currently a professor at NYU Stern. He is a senior advisor at General Atlantic, a very large private equity firm which manages about $35 billion. Michael Spence, welcome to Bloomberg. Thank you very much. It's great to be here. So I'm fascinated by the work you do. Your Nobel Prize, I'm going to take what is normally a somewhat esoteric research area and see if I can make it understandable how people make decisions when critical information is hard to find. Is that a fair oversimplification? Yeah, it's certainly part of it. Yep. So tell us about that.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Impact of not just technology, but government institutions and intellectual capital, you're going to find this to be an absolutely fascinating conversation. So with no further ado, my interview with NYU's Michael Spence.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“This week on the podcast, I have an extra special guest. His name is Michael Spence, and this is a conversation just filled with wonky goodness. He is the winner of the Nobel Prize in Economics from 2001. Effectively on information theory about how information impacts market structures. We talk about asymmetries and gaps and really how digital economies are just changing the entire world. Spence has had a number of really fascinating forecasts that have all turned out to be quite pressing. He's almost blas ⁇ about it. He describes them as all inevitable. This is really a fascinating conversation. If you're interested at all in information signaling, in how economies develop and grow about the”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source