What Adam Tooze Learned About the World Last Year

Joe Weisenthal (0:11)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:17)

And I'm Tracy Alloway.

Joe Weisenthal (0:19)

You know, we're kind of like at the point, Tracy, where, I mean, obviously we recently sort of hit the one year anniversary of the markets bottoming, but we talked to a lot of people around this time last year.

And, you know, the world was just, everything seemed in absolute chaos, and markets were, you know, still incredibly volatile. We had no idea where things were going. So I feel like it's kind of time to revisit some of those discussions a year later. Like, what have we learned?

Tracy Alloway (0:48)

Yeah, I think it's been pretty much exactly a year since we had the first Odd Lots episodes on what was going on at that time. And I think the consensus back in March or April of 2020 was that this was an unprecedented crisis that was going to lead to these big permanent changes.

And I think some of that still holds true. It's an unusual crisis, that's for sure. But I think the thing that no one was expecting was that we would basically see a recovery this quickly and that we would have a business cycle that was compressed basically in less than a year.

Joe Weisenthal (1:28)

Yeah, there's no question the recovery, especially for the US, but also I would say the world, even in areas that are still struggling with the vaccination rollout, has been much faster than people expected. And then of course, like the other thing that was really going on at this time, besides just like the pure health and economic shock, was just this idea that like all of the world's big institutions were like really being stress tested at once, whether it was the US Congress, whether it was the sort of institutional capacity of the US to rollout testing, which was pretty abysmal for the first several months, whether it was the ability of politicians to deliver a fiscal support and find a way to essentially keep businesses on ice or create a bridge to the other side through economic policy. Like there was this feeling everything was being tested at the seams all at once.

Tracy Alloway (2:23)

Yeah, tested with really, really tight deadlines as well and everyone sort of working under pressure. I remember talking a lot about the Fed response back in March and April and looking back on it now, it's sort of amazing how much they actually got done within a few weeks.

Joe Weisenthal (2:41)

Yeah, no, it's incredible. And the US fiscal performance in retrospect turned out to be massive and probably a big contributor to the strong US recovery. So anyway, it's been a year, lessons learned. I'm sure in 10 years from now, we'll also be even learning more lessons as people study this period further.

But I wanted to revisit one of our guests at the time, who is probably one of the best thinkers at sort of synthesizing big things in the world. So we are going to be speaking with Adam Tooze, who teaches history at Columbia University, also the director of the European Institute there. He wrote a sort of magisterial book about the financial crisis called, Crashed, which everyone was reading back in 2018

He has another book coming out later this year on COVID specifically called, Shut Down, How COVID Shook the World's Economy. We'll have him back on later this year to talk about it. But in terms of understanding, lessons learned from this year, we had Adam on, I think exactly this time, a year ago. So it's a good time to catch up with him. Adam, thank you so much for joining us.

Adam Tooze (3:51)

It's a pleasure to be back.

Joe Weisenthal (3:53)

Well, let's just start with like your big headline. Like, what has, let's start here, what has surprised you most? The single most surprising thing to you over the past year?

Adam Tooze (4:04)

Well, it's kind of banal, but it's simply that it happened, right? That all of those Cassandras, all of those folks that had for a long time, we now know, perhaps we weren't paying attention before, who'd been saying that a pandemic of this type could cause mayhem, were right.

And it seems to me that that has to shift our assessment of probabilities going forward quite fundamentally. The has really had been since the 1980s and then with increasing force from the 90s onwards, like global preoccupation in the global public health domain. Some economists were involved with this. Larry Summers wrote the paper about the potential economic cost to the world economy of a pandemic. All of those warnings were there and it happened. And in fact, I mean, Joe, I've seen your stuff on Twitter and I've been following these same graphs. I mean, the fact of the matter is from the US point of view, we almost begin to think of this in the past tense, especially if we think of it as a business cycle. But if you actually look at global infection rates, last week was the worst one of this pandemic. And the mortality rate now is much higher than it was in what we think of as it were, the North Atlantic crisis of COVID in March, April, when we first spoke a year ago.