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Michael Kahana

Subject: A Breakthrough in Restoring Memory
Bio: Former Professor of Psychology at Penn and Founder of Nia Therapeutics

Transcript:

Larry Bernstein:

Welcome to What Happens Next. My name is Larry Bernstein.  What Happens Next is a podcast that covers economics, politics, and history. Today’s episode is A Breakthrough in Restoring Memory.

Our speaker is Michael Kahana who is one of the world’s leading experts on memory. He is a former Professor of Psychology at Penn, and he is now the founder of Nia Therapeutics which is a company seeking to bring a medical device to patients that can radically improve memory for individuals with a brain injury, dementia, or Alzheimer’s.

I want to hear from Michael about how memory function works and how a medical device can improve human memory retrieval to improve cognitive abilities.

I met Michael 10 years ago at a previous Penn Days event, and I was incredibly impressed by his research. As a result, I became one of the founding investors in his business venture.

This podcast was taped at a conference of UPenn professors that I hosted so you will hear questions from me as well as my friends.

Micheal, please begin with 6 minutes of opening remarks.

Michael Kahana:

My talk is about human memory and my journey from professor at Penn to building a company that will hopefully change the world. After 22 years at the University of Pennsylvania’s Department of Psychology, I’ll be dedicating my life to building Nia Therapeutics. A company that will be advancing therapeutics for memory loss.

Let me first start by telling you how I got into human memory. I started out studying physics in college. I was fascinated by mathematical descriptions of the physical world and by the human mind. I started reading up about neural network theory, the work that’s at the foundation of modern AI by John Hopfield, David Rumelhart and Jay McClellande.

I did my PhD working on mathematical models of how the brain stores and retrieves information. I was fortunate to have a wonderful academic career for over three decades studying memory, its mathematical description, and its neural basis.

The major focus of my early work was disproving the theory that says that memory involves two separate systems, short-term and long-term memory. That is a dated theory that has been disproven by extensive experimental data and theoretical work. I developed a new theory of memory that was an amalgam of ideas that is the basis of AI models, neural network theory and a concept called recursive retrieved context that endows a neural network with the ability to have memories that exist at a particular time and place in the system storing those memories.

I’m going to share with you two stories in my academic journey that changed my life. The first was in 1997, a young neurosurgeon Joseph Madsen at Children’s Hospital in Boston took me to the ninth floor North Wing and I saw a young man aged 16 sitting up in bed. He had a big ribbon cable going out of his brain into a port on the wall, and he was playing an Atari video game.

I asked, “who’s analyzing the data?” Joe said, “We don’t have enough memory storage to save the data. Once we see a seizure, we know what we’re going to do, and we delete the data at the end of the day.” That was the first time that I took a major risk in my academic career. I took my money and bought computers and hard drives. I set up a collaboration to harvest brain neural recordings from neurosurgery patients with intractable epilepsy who need to have electrodes implanted in their brain, record the signals, figure out where the seizures are coming from and then remove it if they can pinpoint it in the brain. That began a journey that lasted for two decades identifying the brain signals at a micro level within the brain that predict memory function.

The next major event happened in 2013, at the Society for Neuroscience meetings in New Orleans, we studied a patient where we had stimulated the brain and his memory got better. Now, usually, when you stimulate with electrical currents in the brain, memory get worse. This one patient his memory got better. Was that a one-off? How could we systematically investigate brain stimulation on a large scale? Because every hospital did it in a very ad hoc manner. There was no real science to it.

We got a big grant from Jeff Lang at DARPA, the Defense Advanced Research Projects Agency, who was a colonel in the US Army to help wounded warriors who had memory or cognitive loss due to IED blasts in Afghanistan and Iraq. We were given a $24.5 million-dollar four-year grant, which is about 10 times as big as a typical NIH grant and it allowed us to ramp up the study of electrical stimulation memory.

We invented a device here at Penn together with Medtronic, which hooks up to electrodes in the brain. For three years we mapped out the neural signals in the brain associated with memory and collected data from hundreds of neurosurgical patients. We gently stimulated the brain to learn how stimulation modulates neural circuits.

There were three major discoveries that came out of that project, but before I tell you, I want to tell you about an unsolved puzzle in memory research.

Memory is way more variable than any theory predicts. The theories predict some variation over time in the same individual but the data show massive variation. So, the same person one day their memory is pretty good, another day their memory is not so good and that range of memory function within each of us, especially people with a brain injury, neurological disease, dementia, that range is enormous. How large is it? It’s so large that if you take somebody in their bottom 50th percentile versus their top 50th percentile, there is a two-fold difference in memory function on every metric. So, when you’re not doing so well with your memory, you’re doing half as well as when you’re in your upper half of your own distribution. Huge variability and theories don’t explain it. I thought maybe the neural recordings could explain the variability.

Discovery one was we could use AI techniques to forecast when your memory was going to be good or bad. It’s a forecasting model, just like in financial time-series models. In this case, we can forecast memory very reliably.

Discovery two was if you looked at when brain stimulation pulses arrived, did it matter what the forecast said? It turned out it had a huge impact because if the forecast is that the brain is doing well, then stimulation made memory worse. But if the forecast said that the brain was doing poorly, then brain stimulation sometimes didn’t do anything and sometimes it made memory better.

So, the third question was, how do we learn when the stimulation does nothing, and when it makes memory better? That’s a simple engineering problem because it’s a search of the parameter space of stimulation, locations, amplitudes and frequencies in each person and you build a model. You take this massive data set on each human brain and you learn when I stimulate a bad state, what’s the probability that I jostle the brain into a better state or stay in the bad state? And we learned that.

How do we deploy this? $14 million of DARPA money went into inventing this gadget and we tested the therapy in human subjects who had electrodes implanted in their brains. In five published papers and four data sets, we showed that we could reliably improve memory consistently in human patients with this algorithmic stimulation.

How do I take this to market? Well, you can’t wear this device as a therapy. It’s too big. You can’t have electrodes coming out of your brain. You need a fully implantable system. The government is not going to fund that. So private investors, started a company, a spin out from Penn, and we developed a device similar to deep brain stimulation for Parkinson’s disease, which is now a widely used therapy. This device is a cranial implant. It doesn’t go in the brain but goes in the skull under the skin. It has electrodes that go into the brain. It has a hundred times the capability of recording than any existing device, but notably it has a computer inside of it and it can record the signals, analyze and deliver stimulation just like this larger device connected to a computer did in our research studies, and it harvests all the data and it goes on to a wearable earpiece like a hearing aid.

The plan is to bring it to human trials in the next six months. The first study will be in patients with traumatic brain injury. There’s no treatment for traumatic brain injury memory loss. The FDA was excited for these younger, healthier patients in their 20s or 30s who have debilitating memory loss. This therapy should work for any memory loss due to any neurological disorder or neurodegenerative process.

We have a team assembled to do a study in early Alzheimer’s disease based at Rutgers Alzheimer’s Center and the University of Texas Alzheimer’s Center. Then the third big activity that my company is going to be doing is to make the device a lot smaller.

Larry Bernstein:

Tell us about how a robotic neurosurgeon will install wires inside the brain.

Michael Kahana:

The implantation of EEG electrodes is done with a ROSA robot by neurosurgeons. 20 years ago, this was a risky procedure. Now it has essentially zero serious risks associated with it. The biggest aspect of this surgically is the craniotomy, where you put in the device. They wires go inside the memory centers of the brain. One of the reasons why no existing therapy can do what this does is because this does a different therapy for every patient.

There are 64 contacts that are placed along the key axes that cut through the memory areas of the brain with these tiny wires. It learns to model the memory of every patient, which is going to be a different model for me, for Larry, and for each patient, which is why it has the capability of learning to get better and better over time.

Larry Bernstein:

All of us are in good and bad memory states all day long. Even in a good day, there are bad moments. Tell us about how an electric shock does a reset and why it takes us back to a good memory state.

Michael Kahana:

The memory system is a complex electrical network that has stable configurations. It can fall into different stable attractor states. Some of those attractor states are conducive to good function and some are conducive to bad function. If I’m in a bad state, I deliver a small pulse to white brain matter tracts that coax the brain from a state that’s poor into a state that’s better.

Larry Bernstein:

And how does that work exactly?

Michael Kahana:

A short quarter of a second wave of electrical activity. You have an anode and cathode, two contacts that are made out of platinum and you deliver biphasic electrical pulses between these two. You don’t feel or hear anything, but it makes a little electrical pulse. And what we do with the device is we see the state of the brain before and after the burst. We see whether the burst coaxes the brain in a good direction or not and that’s how we can learn and adapt the therapy.

Larry Bernstein:

When you go to bed, you would charge up your device and download all of your brainwaves.

Michael Kahana:

All your brain data goes to the cloud encrypted. When we download the data and then we can analyze and improve the models of your memory system. It knows when your brain is in a better or worse state and it recalibrates the model on the fly, meaning if the brain is shifting its context, it can recalibrate the AI model.

When you do memory tests, you can tune the therapies. The therapy will learn that when your memory test scores are better or worse, it will refine the AI model. And you can rebuild the model every night and get a better model based on the new data that you’ve downloaded.

Larry Bernstein:

The next question comes from Rory MacFarquhar.

Rory MacFarquhar:

Why do you encrypt the data?

Michael Kahana:

For confidentiality of your brain data.

Rory MacFarquhar:

If someone got your brain data, what could they extract from that information?

Michael Kahana:

We published a paper where we showed that when you had people look at letters, we could tell what letter they were thinking of. If you thought of a word, we could tell whether that word was one of 25 different categories. You could probably build models to predict what people were thinking about.

Rory MacFarquhar:

Have you tried to rebuild something from the data that you’ve collected on all your patients? Is that literally possible? Can you put it up on a screen and see what they’re thinking?

Michael Kahana:

We published a number of papers showing this. The idea that you can use brain data to read the mind. Speech recognition systems are 90 odd percent accurate. These systems are way less accurate, but they’re way better than chance. If the question is what exact word am I thinking of, they’re going to be very unreliable. If the question is, am I thinking of a living or a non-living thing, they’ll be very reliable. The whole basis of the neural prosthetics work in motor systems is that you can read out the motor activity of the brain and build a model of speech or motor activity and that’s been advancing very rapidly in the last three years.

Larry Bernstein:

What kind of improvement in memory are you expecting?

Michael Kahana:

I would expect an improvement of about one standard deviation, so it’s a pretty big improvement. A standard deviation improvement in terms of an SAT score would be 200 points out of 1600, or for IQ, it would be 15 points with a 100 mean.

Larry Bernstein:

What does a one standard deviation improvement in memory entail?

Michael Kahana:

To evaluate memory function in real life with implications for whether somebody goes back to work, goes back to school after a head injury, or whether they’re going to develop dementia, it’s context dependent recall tasks. If you give people a list of words and then you ask them after a brief delay, what were the words in the list? That’s the kind of test. And there are many varieties of those tests and they all load on the same underlying factor, which is the same factor that we’re decoding.

Larry Bernstein:

I gave you 10 words and the average is six. Would a standard deviation be something like two?

Michael Kahana:

Yeah, that’s about right.

Michael Kahana:

We’re talking about people who give them a list of 10 words and either they get zero or one or they get three. And so that’s when we’re talking about patients with memory loss. We’re saying three is not great, but you can function. It’s not embarrassing. Zero or one, you don’t even want to leave the house. You don’t want to go to work.

That’s the thing about memory loss. People have a bad memory. It’s not such a big deal. A colleague of mine in my department once commented at a faculty meeting that “my memory isn’t as good as it used to be. I had this legendary memory. I would walk into a class with a hundred students and it would take me a few weeks to learn everybody’s name. I can’t do that anymore.” That’s not a problem.

The problem is when you’re sitting in the meeting like this and you don’t realize why you’re here and what’s going on and what am I supposed to be talking about? And the problem is that people with impaired memory, they have days like that and then they have other days where they’re just a little bit forgetful. It’s not such a big problem.

The goal of this therapy is to keep people out of those situations where they’re going to not want to go to work, not want to show up in front of their colleagues. We have prominent lawyers who get into a car accident. They have a head injury and they say, “I’m embarrassed to show up in a meeting. I don’t remember what’s going on. I have notes and I’m reading them over and over again just to figure out, to get my bearing. And it’s impossible.” That’s the kind of memory that we’re trying to blunt that horrible situation that people face.

Larry Bernstein:

Our next speaker is Brande Stellings.

Brande Stellings:

For degenerative memory loss that’s going to worsen over time, does starting this therapy arrest the deterioration of memory? Does it have any impact on it getting worse?

Michael Kahana:

The one standard deviation increase is about five to six years of degeneration. The question that you’re asking is critical. Does the rate of degeneration change? We will only know that when we do the trial.

Larry Bernstein:

Our next speaker is David Wecker.

David Wecker:

I was just curious how big you think this market is in terms of revenue. Does the device ever have to be replaced and is there a recurring revenue stream from the cloud service?

Michael Kahana:

It has a sales price of about $35,000, Manufacturing price at scale would be less than $10,000, so you’re talking about a $25,000 margin. The total possible number of patients who could benefit is 27 million. My expectation is that over a period of years, it’ll ramp up from small numbers to 10%. You could imagine different curves based on different levels of effectiveness.

In terms of recurring revenue, the idea of putting this earpiece or eyeglass as an element that can be easily updated every year you could get a new version. People can pay for that privately. Some insurance will pay, some insurance won’t, same as hearing aids. Some insurance will not let you upgrade your hearing aids. Medicaid probably won’t, but private insurers sometimes will. You can have recurring revenue from that and from cloud services and from the updates to the memory model that would be done periodically.

Larry Bernstein:

Michael didn’t say you need to replace the thing that’s in the brain.

Michael Kahana:

No, that’s intended to be permanent. We got breakthrough device designation, which gives us a special priority reimbursement where they give you an upgraded reimbursement above the base Medicaid- Medicare reimbursement level, the whole issue is market penetration. The market is enormous and it’s just about how quickly you capture the market.

Larry Bernstein:

The market is enormous now, but even you, Wecker, years from now, you’re a great candidate.

David Wecker:

Hopefully many years. Do you plan on trying to commercialize this yourself with a sales force or do you expect to sell or team up with a larger organization that has those resources?

Michael Kahana:

I want it to be successful and to scale and if the best way for that to happen is through an IPO, then we’ll do that. If the best way is through strategic acquisition by a larger company, then whatever makes the thing grow.

Larry Bernstein:

Our next speaker is Rory MacFarquhar.

Rory MacFarquhar:

There were memory impaired human subjects that you were testing. I didn’t think that you could do that with human subjects. How does that work?

Michael Kahana:

There’s only one neurosurgical treatment that requires chronic implantation of electrodes for a period of one to four weeks where you can record all those data. That was when I gave that talk at Harvard and they invited me to the ninth floor of the children’s hospital where patients with epilepsy who failed all their medications were having debilitating seizures, those patients also often have cognitive impairment and they get electrodes implanted in their brains for three or four weeks to get seizure data for a treatment involving the resection of the seizure focus. I saw the opportunity, the patient is sitting there, they’re playing video games in the hospital, let me do my memory experiments, have them play memory video games and then build models of memory. They were doing stimulation clinically so that when they would suction out a part of the brain, they didn’t cause harm.

Larry Bernstein:

Can you give an example where when you had a portion of the skull open and you put a probe in, what response, if you shocked it, how they would have a memory release?

Michael Kahana:

The patients would be playing memory games or remember lists of words and the computer unbeknownst to the subject would apply therapy on some trials and not apply therapy on other trials. And sometimes there was one patient at the Mayo Clinic, they got the stimulation and they’re remembering almost the entire list of 12 items and on the other trials they were remembering three items. That was a pretty dramatic case. Every time the stimulation therapy was applied, this patient had phenomenal memory and the patient reported they didn’t feel anything. They were just like, “My brain was clear on those trials.”

Larry Bernstein:

Our next speaker is Colin Teichholtz.

Colin Teichholtz:

There are other companies doing neural implants such as Neuralink. If each one of these types of devices is totally different and unrelated, are there additional applications to what you’re doing in addition to what you’re doing with memory?

Michael Kahana:

There are a number of competitors to Neuralink that are focusing on what I would call the input-output problem. They’re trying to solve the fact that some people have a damaged spinal cord or have a damaged input-output system. They’re recording the brain to read out motor signals. And they’re also trying to plan to do similar things for patients who have perceptual disabilities. A cochlear implant would be an example that’s very commonly used but now they’re developing therapies for people who are cortically blind to stimulate the cortical system to create sight. So those are input-output systems.

The other category of systems are central. They’re focused on the apex of the neural system neural processing tree. That’s like my device. There’s nothing else like it when I tried to do this. People said, “There’s no possible way you’re going to build a de novo medical device. You have to use an existing device.” I’m not Elon Musk, so I couldn’t just capitalize it on my own. But you could imagine a class of devices of which this is a version that treats central disorders that would include depression, PTSD, higher level language dysfunction. Memory is the big one. There’s a company that has an idea for treating severe PTSD, and they’ve recently approached me to see if we would license our technology to them because they didn’t imagine that they would want to try and build their own.

Larry Bernstein:

Our next speaker is Paul Orlin.

Paul Orlin:

In your paper you talk about random stimulation does not help memory but specific predictive pulses from the AI does. Can you explain why you think that is?

Michael Kahana:

Random stimulation is going to interrupt the brain during good states and bad states, whereas the AI predictive stimulation is going to be tailored to only perturb the brain when it’s in a bad state with parameters that are designed to coax it into a better state. So the random stimulation is not going to work. That makes sense because if random stimulation would work, this problem would have been solved a while ago with DBS type devices.

Paul Orlin:

What do you think’s happening to create the memory?

Michael Kahana:

You could imagine a version of this therapy that would create memories. We’re not doing that. I’ve thought about that. It’s science fiction. You could imagine the study that I proposed once, which I haven’t done, is you could barcode memories.

For example, if I wanted to, if I click my phone and I could say, “I want to remember that guy and his question and put a barcode in there and then later recapitulate that memory by triggering that barcode.” The therapy that we’ve developed is designed to take the brain and help it get to states that it knows how to facilitate the formation and the retrieval of memories. Naturally move the brain into a state that’s more conducive to creating and retrieving memories.

Larry Bernstein:

Our next question comes from Paul Rozin who is a Professor of Psychology at UPenn.

Paul Rozin:

Someone is in a bad memory state and you stimulate. When you get them in a better state, when you turn the stimulus off, did they go right back to a bad state or is there a residue?

Michael Kahana:

There’s a residue. We’ve shown that. There’s a residue of staying in the good state.

It will stop after a half or a quarter of a second and then it will wait for the brain to drift back into a bad state before it reapplies the therapy seconds or minutes later.

There was a conversation about kosher laws and rabbis before, so I just wanted to add a little fun note. I asked a famous old rabbi, “What do you think about this?” Is it kosher? Can you use it on the Sabbath? And he looked at me and he said, “Is this going to help me remember the whole Talmud?” And I said, “I think so. “ And he said, “You should do that.”

Larry Bernstein:

Our next speaker is Ron Miller.

Ron Miller:

How long is it going to take to finish these trials and how much money is it going to take?

Michael Kahana:

Five years. After you develop the device, you do the animal testing, which we’re finishing now. Then you do in humans for five years altogether. Because we got this breakthrough device designation and there’s a special program called TAP, which is run by the director’s office at the FDA. They try to fast track devices. The whole project as like a 10-to-12-year project from start to finish and it costs altogether about a hundred million dollars, the whole business.

David Wecker:

Remembering can be an intentional act but it can also be a passive act because memories sometimes just parade through one’s consciousness. There’s also the issue of sleep where we seem to be incorporating memories. I’m curious about how this might affect our consciousness where memories are popping up.

Michael Kahana:

I believe and my research supports the claim that the same basic machinery of memory is used when you try to remember a memory, you pull back something from the past, you update memory when some cue from the environment or from inside of your head involuntarily triggers the memory. Now those two are not exactly the same, but they involve the same mathematical rules. They involve the same equations and related to that is the idea that when you do have a spontaneous thought, it is a memory and it operates as a memory that alters your future beliefs, which is a fascinating idea because it means that circumstances that make one set of memories more likely to pop up than another set of memories will shape your beliefs separate from the ground truth of what happened to you.

David Wecker:

When you do the human trials, are you going to be able to collect any data around those types of issues?

Michael Kahana:

Absolutely. From a clinical and a pragmatic point of view, the therapy helps people in their daily lives and the best we can do right now is we can do tests that evaluate memory in a way that’s predictive of memory in your daily life. What you’re saying is that maybe the person with memory loss is having fewer of these spontaneous memories. And so, if you restore some of those spontaneous memories, maybe that will give them the capability to alter their beliefs in both good and not good ways based on their experiences. There may be situations where not learning and remembering is good. I don’t think that’s generally the case, but yes, if you’re learning and remembering things that are painful that then recur, we know that among people who’ve experienced a traumatic event, about 15% go on to develop PTSD and that’s because of the machinery of the memory system going awry.

The Nia Therapeutic trial with this device, one patient undergoing the therapy for a year will generate more data by a factor of 10 than all the data we’ve collected in these 20 years of NIH and DARPA funded studies. That’s one patient in one year. You can imagine what you would learn from the first 5,000 patients.

Larry Bernstein:

Next speaker is Brande Stellings.

Brande Stellings:

For many companies their real business is data.

Michael Kahana:

The data will be enormously valuable for a given patient to improve their therapy. The company by pooling data in an encrypted, safe, anonymized way will be able to deliver far better therapy to the next patient in the study. Data are extremely valuable. The only thing I’ve been focused on is the therapeutic side.

Larry Bernstein:

Many of us might be reticent to install a wire system in their brain, but when we see Mitch finally being able to function, and we see incredible improvement in his cognitive skills and memory capabilities.

Michael Kahana:

In neurosurgery, things that were unimaginable two decades ago are becoming accepted today and once you know people who benefit from whether it’s a cochlear implant or DBS for Parkinson’s disease, I think this will be more effective than either of those therapies, then there’s no more stigma. Nowadays, people don’t worry about getting a cardiac pacemaker, but 25 years ago, very few patients who needed pacemakers got pacemakers. What you see is you see a course of adoption where a therapy that is clearly beneficial to people is adopted at 1% in the beginning and then later it’s adopted at 20%. It’s never adopted at 100%.

Larry Bernstein:

Do you want to end in a note of optimism?

Michael Kahana:

When I was teaching, students get to do one lecture where I just answer their questions. One student Kobe asked me, “How did the study of memory help you think about how you could be a better person, live a better life?” The answer I gave him is, “Every day try to make good memories for yourself because the memory system is going to think about those memories when you’re asleep, when you’re walking around and make good memories and that will benefit you in many ways.” That’s my note of optimism. And this is a good memory, so thank you.

Larry Bernstein:

Thanks to Michael for joining us.

If you missed our previous podcast, it was Predicting the Midterms.

Our speaker was Patrick Ruffini who is a pollster and a Substack writer for The Intersection that does analysis on topics like gerrymandering, realignment, and polling errors. He is also the author of a book Party of the People.

Patrick discussed who will win in the midterms in the House and Senate. Our discussion got into the weeds about campaign issues, the current state of play, and who will win the close races.

Previous episodes and transcripts are available on our website as well as at Apple Podcasts and Spotify. 

I am Larry Bernstein with the podcast What Happens Next.

Check out our previous episode, Predicting the Midterms, here.

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Patrick Ruffini

Subject: Predicting the Midterms
Bio: Pollster and Author of The Intersection

Transcript:

Larry Bernstein:

Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast that covers economics, politics, and history. Today’s episode is Predicting the Midterms.

Our speaker is Patrick Ruffini is a pollster and the author of his own Substack entitled The Intersection that includes frequent analysis on topics like gerrymandering, realignment, and polling errors. He is also the author of a book Party of the People.

I want to learn from Patrick about who will win the midterms in the House and Senate. My plan is to get into the weeds and find out what the issues will be, what the state of play looks like now, and who will win the close races.

Patrick, can you please begin with six minutes of opening remarks.

Patrick Ruffini:

In 2024, I wrote a book called Party of the People: Inside the Multiracial Populist Coalition Remaking the GOP. That election had a realignment of working-class and non-white voters towards Trump and the GOP. Now it’s been about a year and a half of Trump. We are about four months away from the midterm election. You have the normal midterm backlash, particularly against someone like Trump who has been extremely assertive about the use of executive powers.

This has intensified Democratic energy to put a check on him. In some respects, the groups we saw swinging towards Trump on the basis of inflation are swinging back. Some of the gains that Trump made in 2024 are reversed, but some are durable. There’s a flip side to this Democratic energy, that side of the aisle seems unruly. You’ve seen a string of progressive primary victories in Colorado and New York where progressive candidates swept congressional primaries. You will have a healthy Democratic Socialist of America contingent in the next House.

Republicans were quite successful in redistricting this cycle. That doesn’t mean that they have protected themselves from losing the House, but they’ve protected themselves from getting wiped out and built in a lot of safe seats for Republicans. It means that at best, you’re talking about a Democratic majority maybe 220 or 225 seats, maybe up to 230, which is pretty narrow. That means this DSA caucus will have outsized influence. They will provide the margin and decide whether Hakeem Jeffries can become Speaker, and if we’ll see the same chaos and drama that we saw on the Republican side a few years ago.

Larry Bernstein:

The House has 435 seats and so a majority would be 218 seats or more, so if the Democrats were to win 220 seats that would be a 5-member majority. That would give enormous influence to the 5 marginal players from the DSA (Democratic Socialists of America caucus.)

Patrick Ruffini:

After the Biden debacle, Democrats were told to trust this older, steady-hand candidate that failed them badly. Now, they are not inclined to listen to what the party establishment is telling them. The party establishment was Barack Obama and Hillary Clinton. You are seeing a Democratic Tea Party. There is energy behind the idea that Democrats need to regain the working-class voters that they lost in the Bernie and AOC faction.

It looks increasingly likely that the Michigan Senate race will go to Abdul El-Sayed in the primary. Democrats are nominating problematic candidates who could lose them seats in a reverse 2022 when it was Republican MAGA candidates who lost seats in very winnable races. It not only could have a significant impact on which way the Senate goes and what the House looks like after 2026, but we could see a Trump-like candidate of the left go far in the primary based on the mood of the Democratic primary electorate.

Larry Bernstein:

Historically in presidential primaries, the Democratic presidential candidates tack to the left and then in the general election, they tack back to the center to persuade independents to join their cause. What’s surprising here is that there are maybe two dozen congressional races in the House that are in play. And some of these candidates are very left-wing candidates. Do voters in these tight congressional races think of the national party? Do they consider that the candidate is particularly progressive? Will it affect the result of the election in such a tight toss-up race?

Patrick Ruffini:

It absolutely could have an impact. There’s been solid research that shows that the more far-left or far-right you are in your identification that those candidates tend to perform worse. There’s a penalty for perceived ideological extremism. Most of these Democratic candidates are in these deep blue districts where there’s no chance of the district going the other way. Voters there perceive why not get exactly who we want? And that is very telling about where the median Democratic primary voter is.

You haven’t seen as many progressive candidates in these swing districts win, but there have been examples of it. Notably in Maine 2 District, which is a Trump district held by a Democrat. The more progressive candidate won there. You had Colorado 8. A very tight seat. You had the candidate who was more progressive in that race win. This goes back to the Michigan Senate race where the more progressive candidate is likely to win in that primary, and that’s a swing seat where it’s pulling very tightly. Look at John Ossoff in Georgia. Look, he’s wondering who had him up by double digits. So that’s really kind of the model for Democrats of what a swing state race should be doing for them to cycle.

Larry Bernstein:

Primaries bring out a different voter than the regular election. That spells trouble for both the Republicans and the Democrats because they choose people who are much farther away from the median voter. Is there a real difference between the primary voter and the regular voter?

Patrick Ruffini:

The risk here that’s absolutely true. The primary voters tend to be more ideological. It’s been prevalent on the Republican side where you have more far right candidates win. There’s no real penalty for being more ideologically extreme. That’s going to mean more unruly House caucus on both sides. The other risk is that a progressive candidate in the Democratic primary starts at a disadvantage.

We did some polling, who’s the most electable Democrat? People are saying Gavin Newsom is the most electable Democrat, not somebody like Josh Shapiro with a track record of winning in a swing state.

They’re saying Gavin Newsom who publicly fights with Republicans and who’s adopting Trump’s social media strategy. There’s a hunger for somebody who acts like Trump, but isn’t Trump. I don’t think most people would say that the Governor of California is the right model for electability.

Larry Bernstein:

In the House, there are 15 to 20 seats in play. The redistricting ended up favoring the Republicans just by chance as Virginia lost in court. How many net seats do you think the Republicans were able to pick up because of redistricting?

Patrick Ruffini:

5 to 10. But if a normal midterm kind of wave happens, that’s a 15-seat difference between where Republicans would’ve been under the old maps and the new maps. It means at best you’re probably talking about a 225 to 210 House for Democrats. And that’s maybe being a little bullish for them. It’s a house where you have these more ideologically extreme members who hold a lot of sway because Jefferies needs to get 218 votes to be speaker. So how many concessions are they able to extract from him? We all remember what happened with Kevin McCarthy.

Even if Republicans lose the House this time, it makes it much easier for them to come back in 2028 because they don’t have as many seats they need to pick up. A lot of those seats are in friendlier terrain. This whole fight is going to largely decided by how the maps are drawn rather than the quality of the candidates.

Larry Bernstein:

You brought up this speaker issue. I’m not sure why we should care. They threw out the speaker on the Republican side. It seemed very dramatic. The Politicos were upset and how’s the House going to function? Everyone I know who’s not a politico was not paying any attention to this. And then one day Johnson was running the show. There’s technical stuff like the rules committee. But isn’t this inside baseball that away from Patrick, nobody else cares?

Patrick Ruffini:

That’s right. I don’t disagree with that analysis at all. You have an ungovernable House with these narrow majorities. If we have a third Trump impeachment, would that register politically? You would also have investigations of Trump, the Trump family, but also companies aligned with the administration.

Larry Bernstein:

A New York House Democrat, Goldman recently lost the primary. He ran the Trump impeachment trial and he’s thrown out for someone more progressive. It’s not like the more centrist Democrats were opposed to impeachment. The fact that it moves to the left won’t change that impeachment or investigation zeal. That’ll be going full throttle regardless.

Patrick Ruffini:

It probably intensifies the zeal. But you’re right that the median Democrat would be on board with that because they’re afraid to be primaried.

Larry Bernstein:

Political analysts evaluate each individual district to see if it leans more Democratic or Republican. One example is the Cook Political Report’s Partisan Voting Index or PVI. A District that is D+2 means that in a national election this district is expected to swing towards the Democrats by 2 more points than the rest of the country.

I want to look at two kinds of House races. Take a district that leans Republican by 2 percentage point like Zach Nunn’s seat in Iowa’s third congressional district. This is a district in previous presidential races, Trump tied Biden in 2020 and he beat Harris by 5 in 2024. This is a seat is one of 18 seats that the Cook Report calls a tossup.

The second seat is Colorado’s 5^th District. It is in central Colorado and includes Colorado Springs. Trump beat Biden and Harris by 9 points in the past presidential elections. The incumbent Jeff Crank is viewed to likely win by Charlie Cook. This is rated to be a R+5 district. If the Democrats improve their performance on a national basis by four points, the math suggests that the Democrats would win by 2 points in Iowa’s 3^rd district by 2 points and the Republicans would hold onto the Colorado 5^th district by one point as R+5- 4 equals R+1.

That said, national shifts don’t apply evenly. Each district is special in its own way.

There will be enormous fundraising in the most competitive seats so turnout will be high on both sides. For less competitive seats, the Democrats will be more energized to vote, and this will impact the national voting patterns. So, Democrats will improve their performance in districts that will be easy wins for either party and thus incremental Democratic votes are wasted.

Patrick Ruffini:

It’s a very astute point you’re making here, and that exact thing has happened a couple times before. First off, you mentioned a four-point shift. That’s not enough for Democrats. The median seat in a country that went Trump plus two is Trump plus four or five. Democrats need to, at a minimum, win Trump plus five districts. There are very few opportunities for them until you get to Trump plus nine based on redistricting. And that’s the foundation of why I’m saying it could be a very narrow majority for the Democrats. It’s very rare for a non-incumbent to pick up a seat that was won by Trump plus 10 or more. The math is very tough regardless of how good the candidates are.

Larry Bernstein:

The election is soon; you would think that the issues would be bombarding the airwaves already. Back to 2024, the key issues were immigration, tax policy; now we have Iran. What will be the important issues?

Patrick Ruffini:

It remains what it was in ‘24, which is inflation and the cost of living. Trump’s economic ratings decline significantly with the Iran war and the rise in gas prices. Remember 2018, everyone thought Trump was doing a great job on the economy; they still lost. Don’t think you can be going into a midterm with $4 gas and overperform.

Larry Bernstein:

Let’s go do some Senate races. Georgia Ossoff polled up by double digits, but Trump won that state. So how is it possible? Is Collins a terrible candidate? What is going on in Georgia?

Patrick Ruffini:

I don’t think Collins is a terrible candidate, but I think Georgia is a very Metro Atlanta state. Statewide success is somebody like Brian Kemp who is well-liked and can overperform in the Atlanta Metro.

Larry Bernstein:

Let’s move to Michigan. This is an Even state. Trump lost by 3 to Biden and beat Harris by 2. If there’s a national shift of four, this should be a D + 4 state right now. If El-Sayed wins the primary, he’s progressive, he’s anti-Israel, does that put Michigan in play for the Republicans?

Patrick Ruffini:

It could. And all the polling right now is tight within one or two points, but I think that’s very much the outlier. It’s tight against all the potential Democratic candidates. Now, that’s misleading because when you have a very contentious Democratic primary, you have Democrats who hold out in supporting the other candidates.

Mike Rogers, a strong candidate running against candidates who are in a divisive Democratic primary where the most left-wing candidate is likely to emerge from that primary. Ultimately that provides the opportunity. It’s still a lean D state in this environment. Historically Republicans have had a hard time in Michigan. It’s been a while since they’ve won statewide especially for the Senate. Even in good years, Democrats have tended to overperform there. This is turning into an exception to that historical pattern.

Larry Bernstein:

Let’s go to Maine. This is a Democratic state. Susan Collins is the moderate centrist candidate. Meanwhile, Graham Platner has so much negative press on his behavior and his Nazi tattoo. It’s incredible to me that this is a serious candidate. Yet in the polling, it’s even. If the Democrats put out their worst candidate, can they lose?

Patrick Ruffini:

They absolutely could lose. You have the worst possible Democratic candidate going against the best possible and most overperforming Republican candidate by far compared to virtually any other state. Will it be enough? In 2020, it turned out not to be a pro - Democratic year. She was able to get by a decent margin.

It’s looking like a strong national environment for Democrats that probably pulls Platner over the line. The candidate matchup couldn’t have been worse for Democrats.

Larry Bernstein:

My friend David Brail placed all thousand What Happens Next interviews into Claude AI. He asked who made the most accurate predictions of all my interviews? Answer was --- Patrick Ruffini. So here we go, will the Democrats take the House?

Patrick Ruffini:

I think so. They’re looking at about 225 seats, which would be a pickup of around 10 seats, which is more of a function of what Republicans did with redistricting this cycle than anything else.

Larry Bernstein:

In the Senate, will the Republicans hold Texas?

Patrick Ruffini:

Yes.

Larry Bernstein:

Will the Democrats hold Georgia?

Patrick Ruffini:

Yes.

Larry Bernstein:

The senate race in Maine is in flux after rape allegations came out against Platner. We have no idea what is going to happen about the replacement. That said if the election were held today would Collins win in Maine?

Patrick Ruffini:

I’m going to say yes.

Larry Bernstein:

Who will win in Michigan?

Patrick Ruffini:

I would tilt it ever so slightly towards the Democrat in Michigan.

Larry Bernstein:

Really? El-Sayed wins. It’s fifty-fifty down to the wire, but there hasn’t been polling suggesting that Rogers would win in this cycle. It’s as close of a toss-up as you can get.

Larry Bernstein:

Who wins in North Carolina?

Patrick Ruffini:

Democrat - Cooper.

Larry Bernstein:

The Dems pick up one seat in that scenario. Am I missing one?

Patrick Ruffini:

You could make a case for Alaska, Ohio and Iowa. There’s a chance they pick up one.

Larry Bernstein:

Alaska is funny because it’s a rank order state.

Patrick Ruffini:

The issue with Alaska is that you have this other Dan Sullivan on the ballot. The Democrats put this other candidate named Dan Sullivan to split the vote. I still think Sullivan wins.

Larry Bernstein:

Let’s go to Ohio.

Patrick Ruffini:

Ohio tilts Republican. It is Trump plus 13. The history in Ohio has been every cycle the polls are showing Democrats as they showed Brown ahead in ‘24. Ohio, Iowa are going to migrate in the same direction. It’s just going to be enough for Republicans to keep both those seats.

Larry Bernstein:

So based on that, it’s one seat pickup. 53-47 Senate. Any forecasts for any particular district in the House that you think is interesting?

Patrick Ruffini:

It’ll be interesting to see as a bellwether what happens with some of these districts that swung pretty heavily towards Trump in 2024, particularly these Hispanic districts. There was a poll out yesterday, Henry Cuellar, the very conservative Democrat under indictment, pardoned by Trump in the hope of him getting out of the race, and then he did not get out of the race showing the Republican is up 9 there, which would puncture this idea that Hispanics are moving back in a big way, at least in that part of the country. I was surprised to see a poll that saw him losing. I’m paying close attention to that as durability of this realignment.

Larry Bernstein:

In California 22, David Valadao is running to keep his House seat. This district had been a Trump plus 1 that during redistricting was gerrymandered to make this seat flip to the Democrats. Do you think Valadao can win because the Democrats chose a progressive in their primary?

Patrick Ruffini:

Normally Valadao always survived. The ultimate over-performer. That’s redrawn to be a Democratic pickup. But if anyone can survive, he can. The primary results have a Democratic progressive candidate in a general election.

Larry Bernstein:

Black male voters moved towards Trump.

Patrick Ruffini:

This is the group I’m a bullish on staying in the Republican Party because we’re moving to pure ideological sorting in the electorate. In the past, you had voting on racial identity lines that favored Democrats with Black male voters. Those ties are diminishing across the board.

Larry Bernstein:

You are a Republican pollster. How does that influence your judgment? We often see in these polls Democrats and, Republicans getting different answers. The people that pay you are Republicans does that influence your ability to forecast?

Patrick Ruffini:

When it comes to the polls we do for clients, our north star is accuracy. We are judged by Nate Silver on how close we were to the results of the election. We’ve had an A in the Nate Silver ratings over the years. In particular, the metric has almost no bias in our public polling projections. Oftentimes there is a trend towards Republican firms having a Republican bias or Democratic firms have a Democratic bias. We have no bias.

Larry Bernstein:

Is Israel an issue that will matter in the races?

Patrick Ruffini:

It’s the animating issue on the Democratic left deciding Democratic primaries. It’s provided the spark for these progressive candidates to prevail against the establishment. But in general elections absolutely not, it’s not anywhere near the top 20 issues.

Larry Bernstein:

I subscribe to your Substack, and it’s fabulous, and I encourage my listeners to check it out. One of the things that you mentioned in the New York races, specifically in the House primary races, is that the populists are winning, but the people voting for it in the Democratic Party are a college educated and not working-class voters. So normally we think of the populists garner working-class voters, but here it’s white college-educated. Comment on that.

Patrick Ruffini:

Working-class voters are moderate and not invested in day-to-day politics as your typical college educated voter. If they see somebody too far left or right, that’s a turnoff to them.

Labor has become fundamentally conservative rising into the middle class. They don’t want to overthrow the system. Maybe you have a bunch of downwardly mobile people in Brooklyn who are upset at the current economic system, but that’s not a reflection of the average voter. We need to distinguish between dissatisfied with how things are going in the performance of the system versus overthrowing the system itself.

Larry Bernstein:

Thanks to Patrick for joining us.

If you missed our previous podcast, it was The End of Meat.

Our speaker was Paul Rozin who is a Professor of Psychology at the University of Pennsylvania. Paul argued that in the future meat consumption will decline significantly because of increasing cost as well as health and moral reasons even though most of our audience enjoys meat including me.

You can find our previous episodes and transcripts on our website. Please follow us on Apple Podcasts or Spotify. 

I am Larry Bernstein with the podcast What Happens Next.

Check out our previous episode, The End of Meat, here.

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Paul Rozin

Subject: The End of Meat
Bio: Professor of Psychology at the University of Pennsylvania

Transcript:

Larry Bernstein:

Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast that covers economics, politics, and history. Today’s episode is The End of Meat.

Our speaker is Paul Rozin who is a Professor of Psychology at the University of Pennsylvania.

This discussion was held at a conference that I hosted in Philadelphia so the questions will be asked by me as well as my friends.

I want to learn from Paul about why our future may have substantially less meat because of cost, health and moral reasons despite the fact that many of us find it delicious.

Paul, can you please begin with six minutes of opening remarks.

Paul Rozin:

The title is The Future of Meat. Let’s talk about the good side of meat. It’s a complete food. You can live on it alone because we’re made of the same stuff, so we get everything we need. It’s delicious. It’s the favorite food of humans around the world. It only accounts for 18% of all the calories eaten but that’s because it’s expensive. Most people in the world would eat more meat if they could afford it.

There’s a bad side of meat. High meat diets are associated with cardiovascular disease. It involves killing and maltreating animals, which is not nice. Some don’t think about it when we’re eating a steak, but it’s true.

Meat is much costlier to the world than plants. Beef especially is an extraordinarily extravagant food. You need 30 plant calories to get one calorie of beef. That’s wasteful of a lot of plant food. You have to wait a year and a half to get a cow big enough to kill. To get a quarter pound of beef, it’s 164 square meters. For chicken, it’s 7. Chicken is a lot better for the world. If you got rid of all the beef and lamb in the world you save an amount of land that’s roughly twice the size of the United States that’s now being used to either pasture the animals or to grow food for them. Over 70% of the agricultural land in the world is devoted to feeding animals, not humans.

Meat is the favorite and most taboo food in the world. Almost all food taboos are about animals. 500 million people won’t eat meat. They can afford to eat meat but who are voluntary vegetarians and their primarily motive is compassion. About half of vegetarians live in India and are Hindus.

I want to talk about three psychological things that affect our relation to meat. One is the idea of disgust, which is the strongest food rejection. You can feel how strong it is. If a cockroach or a rat touches your food, you won’t eat it, even if it’s your favorite food. Almost all food disgusts are animal products. It’s rare for people to say something like asparagus is disgusting. And if they do say that, you say, “Suppose your favorite food touched a piece of asparagus.” People say, “Oh, that’s fine.” So, they don’t mind.

Americans eat a lot of meat, but we don’t eat many different kinds of meat. There are 4,000 mammal’s species. We eat three: cows, pigs, and lambs. We only eat their muscle. Many don’t eat the liver. Some people do but very few. We don’t eat kidneys. We don’t eat eyeballs. We only eat them cooked. Of animals we only eat a little piece of them. Most animals are disgusting.

People in this country particularly and most of the West, love natural. They think that natural is healthier, but there is no evidence for that. It’s tastier, no evidence for that.

Some favorite foods are pizza, cheese, and chocolate. Pizza is the most popular American food. They’re not natural foods. You think you can find a pizza tree?

There are volcanoes, hurricanes, heat waves, and death. They’re all natural. If you look at what people think is natural it is not what’s in it as it’s how it got there. For example, if you take mineral water out of a spring, that’s good, that’s natural.

Now take out the minerals. That’s not natural anymore. Now you put the minerals back in. Now it’s like it was originally and people think that’s really unnatural. That’s much more unnatural than when you just took the minerals out. Putting it back means you poked in twice.

The context of the genetically engineered crop is almost the same, but it’s got a different history. The corn that we eat is so far from the corn that you find in Mexico, the original corn. It’s about one-tenth the size. The opposition to genetic engineering is moral. 50% of Americans say genetic engineering should be prohibited no matter the risks and benefits because it’s wrong. Technology is the only way out of this mess and yet people are opposed to it because they think it’s not natural.

The last point I want to make is sustainability. That’s a new moral issue. People are generally opposed to genetically engineered food, but it’s pro sustainable because it increases yield and pest resistance. They love organic food, but it’s actually not sustainable because it takes considerably more land to grow organic food. It costs more but people are willing to pay more.

Lots of people believe that natural things cause sustainability. That’s absolutely incorrect. Natural is not bad. It’s just neutral. Meat is not sustainable because it’s such an inefficient use of land and it produces toxic gases. The solutions are technology and behavior change. Due to technology, meat is not necessary anymore. We can replace meat with plant products and can supplement the plant products with things like vitamin B-12 that you can’t get from plants.

There are four potential ways we have of dealing with this problem, most of which involve technology. One is eating insects. Insects are eaten by two billion people. I’ve eaten quite a few of them. They’re pretty good. They don’t taste like meat, but they are tasty and natural. It’s disgusting and that stops people from eating it. They’re not cheap because they haven’t been scaled yet. No one’s tried.

The next thing is precision fermentation. This is a modern genetic transfer. You could get microorganisms by putting animal genes in them to make animal proteins. Insulin is made like that now. You can make heme, which is a blood protein, which makes meat taste like meat. You can grow that in plants. But it is not natural to poke it in there and change the genes. So, there’s opposition.

There’s plant-based imitation meat. The idea is to make plant products often from soy into meat texture and add heme to it, which has the taste of meat. It’s more expensive than meat and it’s not the same taste, but it’s moving quickly.

The last one I want to mention is cultivated meat. We take muscle cells out of a cow and grow them in a culture. Its taste is supposed to be quite good. For many people, it’s disgusting because almost all animal products are disgusting and this one is not natural.

We’re in a situation where the technology is moving rapidly and within 10 years, I think we’ll have cultivated meat that’s cheap enough and tastes good. It’s typically an S-shaped curve where a new technology develops very slowly, then some breakthrough occurs and it goes up quickly.

Let me give you examples. There were 8,000 cars in the United States in 1900. In the mid-1920s, America produced 20 million a year. Solar panels are now 10,000 times cheaper than in the 1950s.

What can we do to get people to eat less meat? We could take a little plant-based or cultivated meat and mix it in with real meat. So, it’s only 2% and then 5%, then 10%. We in psychology know that people get used to anything. People get used to losing a leg. They get used to getting old. Old people have as much quality of life as healthy young people.

If the person next to you breathes right into your mouth, you would find that disgusting, but you’re breathing their air if you’re sitting right next to them and you just get used to it. That’s the way the world is. Your body contains a pile of shit. You get used to it. You don’t think about it.

We’re going to get to the point where meat substitutes taste as good as meat. There’s the moral issue of poking into things and making them unnatural. The answer to this is to fight moral upset with counter morals to tell people that genetically engineered food has been poked in, but it’s saving people’s lives in Africa because they get more food. You got one moral against another and you work that through.

We know in psychology that people are more moved by individual events than by statistics. Joseph Stalin once said, “A single death is a tragedy, a million deaths is a statistic.” And he was right about that. If you think about the eco value of not eating meat, the fact that it saves the earth is abstract. If you do to not eat meat, it is not going to affect the climate much. But on the other hand, you’re participating in killing an animal when you eat meat. That’s much more immediate and it’s been the main reason people became vegetarians. We can use what we know about persuasion to get people to accept biotech because they can see the moral advantages of biotech.

Mitch Feinman:

I’m curious of the journey of your interest in meat. You were my Psychology 101 teacher in 1983. My only D in academia ever on your first midterm exam.

Paul Rozin:

My daughter got her only D at Penn in Psych one too. Not mine.

Mitch Feinman:

She was probably not studying like me. You talked about disgust and persuasion. Tell us about the journey studying psychology to meat.

Paul Rozin:

I have a joint PhD in biology and psychology. I started out working on how animals choose foods that are good for them. Rats can eat everything, but they eat what they need. I then decided to work with humans like how kids learned to read.

My wife wrote The Flavor-Principal Cookbook that said that most of the world’s cuisines have a set of flavors that they use on almost all food. Like with China, it’s soy sauce and ginger root. And I said, “That’s odd. Why do they do that?” I started working on how humans deal with food, which I’ve done for the rest of my life.

The first thing I studied was why people eat hot peppers because it tastes terrible. And then, I got interested in meat because it’s the favorite and most taboo food in the world. Much of my work now has been about how we’ve perverted the pleasure of eating in the United States. I do a lot of comparisons between French and Americans. The French enjoy eating as an experience and we think of eating primarily as affecting our arteries.

I recently got back into meat. I was working with a young postdoc who was a vegan and started thinking about how there are both health and moral reasons to not eat it. Some vegetarians are health vegetarians and some are moral. For example, if a newspaper article says, “Meat is great for you.” Health Vegetarians would stop being vegetarians and it would have no effect at all on moral vegetarians. They don’t care about that.

I’ve been studying sustainability and natural. Once I found that people think that natural is sustainable, which is wildly incorrect, I decided I better look into this because breaking this belief that natural is wonderful would be a major advance in dealing with a crisis of climate. So that’s how I got here.

Hugh Nickola:

Internationally does the view of meat and disgust differ dramatically.

Paul Rozin:

Most of our data comes from the Western world. I do a little work in India and Mexico where it’s quite different. India is different because they have half the world’s vegetarians for moral reasons at birth. They’ve never eaten meat. Most of the vegetarians we encounter in this country had an early experience of eating meat and turned away from it for health or moral reasons. We are the most obsessed with the health effects of food.

We have good food in this country and we enjoy it, but it’s tempered by this worry about weight. In the third world, which is 80% of the world, they’re much more worried about getting enough food. In Brazil and China, they’re increasing their meat intake because they’re getting wealthier and that’s what’s kept them from eating meat.

The French spend about twice as much time eating as we do it a day, but they eat less. They eat slowly, they savor their food and it’s why they have half the level of obesity that we do. It’s very ritualistic eating in France. You don’t watch the Dallas Cowboys or the French soccer team during dinner because that would intrude on the food experience. The proper way to eat, proper sitting at the table, not getting up at the middle of the meal while other people are still eating. All of this is deteriorating slowly because convenience food even affects the French. The world is getting more like America. People are getting more concerned about longevity. If you love food, it’s a disadvantage.

Larry Bernstein:

One of your core points was that meat’s too expensive in its use of land and plants. But our farms have become increasingly more productive. 99 percent of Americans used to work on the farm and now it’s less than 1%.

We’re seeing increases in productivity of 3 to 5% per year in use of pesticides, genetically modified crops, ability to minimize damage by insects. The tractor gets more productive every year. When you have massive increases in productivity, the cost of meat goes down.

My inclination to go for the cockroach seems low given that we are becoming rich. Why can’t we splurge and eat as much meat as we want?

Paul Rozin:

First, we’re plateauing on the efficiency of crops. I don’t think that we’re going to be able to continue to yield that much more from the land even with genetic engineering, but we are getting more. That’s true that it is getting cheaper, but we’re not going to have enough land. Arable land is half the land in the world. And of that, half is used for agriculture and of that over 70% is used to feed animals. Converting that pasture land to forests would be good for climate change.

Larry Bernstein:

I want to talk about imitation meat. In this audience we have Howard Shainker who can’t distinguish between a real and a fake diamond. Can you tell us about the transition in how humans think about manufactured versus natural diamonds?

Howard Shainker:

We used to own the largest online diamond vendor in the world called Blue Nile. When we bought the business, the lab grown diamond market was like 0.25% of the market. Over five years that we owned the business, which was a bad investment, the penetration of lab grown diamonds went from basically zero to now 50%.

Larry Bernstein:

Why did that change?

Howard Shainker:

You can’t tell the difference between one diamond and the other. At the very high end of the market, people cared and we had the belief wrongly that there would be nostalgia, why is a diamond forever? It takes thousands of years. It grows deep in the earth. And that’s the bond that means this marriage is forever. It turns out that women want the biggest ring you can buy within your budget. Women and men at 25 are optimizing for bling and the biggest you can get is the best. That is the consumer preference over everything else. Now, the majority of the market is lab grown and the price point has decreased even more.

Paul Rozin:

This raises the issue of authenticity. With art, for example, you would pay a lot more for an original Picasso than a really good imitation, not because you can tell them apart, though experts can, but because he really touched it.

For your grandmother’s ring, she touched it. That’s very valuable to you. You’re not going to trade that in for an imitation. Why did that not work for diamonds and why does it work for great art? Nobody cares about hearing the original performance of a great piece of music as opposed to the current one. So that’s like the diamonds. For some things authenticity matters and for other things it doesn’t and we don’t know the principle that explains why your diamonds were taken over.

Larry Bernstein:

Our next speaker is Steve Zoll who is the sausage king of Chicago.

Steve Zoll:

Say, we develop a meat duplicate by using vegetables or cultures. Will people want to eat it? Will the grossness be an obstacle to getting people to adopt this manmade meat?

Paul Rozin:

People get used to almost anything but not everything. When we have a perfect imitation meat and another piece of meat that’s real next to it, how are people going to react to that? Are they going to be willing to pay more for the real meat even though the experience is the same? But we do know that people care deeply about the history of things. If beef died out because of some plague, people would go without beef for a while and they might not go back as much when that got better.

Shani Raviv:

I advised for a company that farmed grasshoppers at scale. They chose this insect because you can use 100% of it. It’s kosher and halal.

The decision was to go with dog food because this is an easier access to the market. There wasn’t success in bringing insect-based protein into real food. They mostly hide it. There are energy bars that have 1% to 5%. Do you think the right strategy is to hide it as 1 or 2% in the ingredients or to define a new category?

Paul Rozin:

Insects are so disgusting to people that it’s probably better to make insect flour. I’ve tasted it. It’s pretty neutral. It’s a little nutty, but it’s good. The insect bars that you’re talking about, which are available now, are expensive. And the reason for that is no one scaled insect production.

It’s easy to farm insects. You don’t need a lot of space and the black soldier fly has to live for three weeks and then you can harvest the larvae and grind it. They eat non-human food. They eat melon rinds. They even eat feces.

Jeff Shell:

In 2025, more meat per person was consumed in the United States than any year in history. I would propose a theory that beef is part of the culture of eating in America. July 4th is flipping burgers on the grill. A burger is about as American as it gets. You do not see a lot of people on July 4th flipping impossible burgers.

Paul Rozin:

You’re absolutely right. It is a central part of American culture. So, there are two issues. One is to give up on the hamburger, which is a problematic thing to do and another is to make the hamburger an imitation roughly as good. And if you do the latter, how many people will still be upset because it isn’t a real hamburger. I can’t predict that.

Larry Bernstein:

Paul, end on a note of optimism as it relates to meat.

Paul Rozin:

I care about killing animals, which not all of you do. From my point of view, there’s going to be reduction in the amount of real meat. It’s going to be better for the earth, but how fast that’s going to happen I can’t say. There’s so much working against meat. What’s in favor of it is that it tastes great and it’s got prestige. In the third world, the more meat you eat, the more respected you are.

Larry Bernstein:

Thanks to Paul for joining us.

If you missed our previous podcast, it was Following the Terrorist’s Money.

Our two speakers were Eyal Azoulay and Ellie who are the founders of an Israeli Not-for-profit called ColEven. Terrorists move money from their Western supporters to the Middle East to fund their nefarious affairs. This happens despite the best efforts of American and European banks who spend billions of dollars trying to stop it.

Learn about how ColEven with its staff of former Israeli intelligence professionals work with the banks to impede bad actors.

You can find our previous episodes and transcripts on our website. Please follow us on Apple Podcasts or Spotify. 

I am Larry Bernstein with the podcast What Happens Next.

Check out our previous episode, Containing the New Axis Powers: China, Russia and Iran, here.

Subscribe now

Subscribe now

Listen on Spotify

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Seth Cropsey

Subject: Containing the New Axis Powers: China, Russia and Iran
Bio: President of the Yorktown Institute and Author of Breaking the New Axis: A US Grand Strategy for Eurasia

Transcript:

Containing the New Axis Powers: China, Russia and Iran

What Happens Next in 6 Minutes - 07.27.2026

Larry Bernstein:

Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast that covers economics, politics, and history. Today’s episode is Containing the New Axis Powers: China, Russia and Iran.

Our speaker is Seth Cropsey is the President of the Yorktown Institute and the author of a new book entitled Breaking the New Axis: A US Grand Strategy for Eurasia.

I want to learn from Seth about why the Eurasian land mass is critical to American security. In addition, I want to hear about why the lack of ideological coherence of our adversaries is a weakness that we can exploit.

Seth, can you please begin with six minutes of opening remarks.

Seth Cropsey:

American foreign policy has to deal with one superpower China, another near competitor Russia, and Iran. What is our strategy?

There are three schools: the most extreme is the isolationist approach, we can simply protect our borders and we’ll be safe. The second is China is the biggest threat so our resources should pivot toward China to prevent its global dominance.

The third school, which I would include myself in, is that our security, diplomacy, economic relationships, technology rest on understanding that the threats come from Eurasia, Europe and Asia, everything from the English Channel to the South China Sea. Europe, the West Pacific and the Middle East offer different economic opportunities, raw materials and finished goods and exclusion from any one of them would be like taking away the third leg from a stool.

Larry Bernstein:

What did we accomplish the Iran war, and is it part of an ongoing Eurasian conflict?

Seth Cropsey:

We destroyed a lot of Iranian military assets and hurt the Iranian economy significantly. The long-term consequences don’t look good because of the memorandum of understanding, there’s no effective compliance requirement to maintain the status quo in their search for nuclear weapons and the question of their increasing production of ballistic missiles is not addressed.

The ballistic missile production was harmed. It was not destroyed. It’s going to come back. And against their pledge of good performance, we’ve promised to provide economic relief in terms of sanctions and an ending of the blockade. The only assurance that that agreement has of Iranian compliance is the current administration’s threat to go to war again.

The history of the West complying with agreements with problematic states is bad. Going back to the Versailles Treaty, where Germany rearmed and no one did anything about it. The anti-ballistic missile treaty required the Soviet Union not to use radars. The Russians built a radar before and during the Reagan administration, but we did nothing in return. The Oslo agreement that Israel signed with the United States required certain behaviors of the Palestinians, which they quickly failed to observe.

Larry Bernstein:

We have enemies and Iran is one. What do we do about it? We can destroy their military forces. We can try to do a regime change which may require ground forces and we can apply economic sanctions.

Seth Cropsey:

And we can also arm their population that protests against the regime.

Larry Bernstein:

Trump and Netanyahu destroyed their existing nuclear supply, their existing ballistic missiles and destroyed their naval forces.

Seth Cropsey:

The ballistic missile production was harmed. It was not destroyed.

Larry Bernstein:

It’s a whack-a-mole situation.

Seth Cropsey:

It’s going to come back, yes.

Larry Bernstein:

Years ago, Ben Gurion made a statement that what distinguished Israel’s defense strategy was that it could not employ land forces to take over Arab capitals and subjugate them. What they could do is destroy their existing military equipment knowing that they would re-arm and attack Israel again. That’s the cards they’ve been dealt.

As we describe three foes of the United States (China, Russia, and Iran), we can’t use ground forces to destroy these enemies. We have economic sanctions that we’re currently employing against Iran maybe not for long, and also with Russia, but we’re limited of what we can do.

Seth Cropsey:

I’m concerned that the current memorandum of understanding tells me nothing more than to expect another war to take place at some time in the future.

Larry Bernstein:

For sure, because that’s our only option available to us unless there’s a regime change, or they decide that they do not want to destroy the United States or its allies.

Seth Cropsey:

Greater force could have destroyed Iran’s energy infrastructure.

Larry Bernstein:

There was fear that Iran would destroy our Gulf allies’ petrochemical infrastructure. It was a mutual assured destruction strategy for petrochemicals and that would create significant economic pain in the United States that weighed in the decision.

Seth Cropsey:

Which would be worse: their possession of a nuclear weapon and ballistic missiles in the near future, or the sort of damage that you described. I think the former would be worse.

Larry Bernstein:

Do you think we’re worse off than having not destroyed their existing military capacity?

Seth Cropsey:

We’re worse off now, yes. A famous Italian political philosopher observed that if you’re going to kill a king, make sure you don’t fail. We’ve stirred up the hornet’s nest and laid the way for them to recover financially by lifting sanctions against promises, which we should know they’re not going to observe.

If they out wait Trump, they know that they have a reasonable chance of facing an American president who is less likely than Trump to use force. And with the rift in his supporters that the war has caused, it’s a reasonable calculation that Trump would not use force again.

Larry Bernstein:

You learn in conflicts, both sides. The world learned that the Strait of Hormuz is more delicate than expected because of technological improvements with drones. The Saudis are now aware of it and they’re beginning construction of additional pipelines to take oil that would otherwise go through the strait. There’s also possibility of a canal.

Seth Cropsey:

A canal would make a lot of sense.

Larry Bernstein:

These aren’t expensive compared to a carrier group. I expect that these pipelines and canals will be built and be operational probably in two to three years. They don’t want to be paying this tax to the Iranians. How will this change the dynamic of future administration’s ability to be more aggressive?

Seth Cropsey:

If the oil did not have to flow through the Strait of Hormuz that’s a good thing, but that does not answer the question of ballistic missiles, which already can reach the Gulf States from Iran with no trouble. And if their production is ramped up even without a nuclear weapon that also presents a threat.

Larry Bernstein:

UAE and Saudis are aware that they have soft targets in their petrochemical infrastructure as well as their desalination plants. They could harden those assets.

Seth Cropsey:

They certainly could and we could help them.

Larry Bernstein:

Let’s move to the Russia-Ukraine situation. How should we think about this conflict in your paradigm of maximizing US security and emphasizing the importance of the Eurasian landmass as being critical to our security?

Seth Cropsey:

Putin looks at the expansion of Russia the way the Czars did in the 16th century. He understands that without productive military capabilities that Ukraine brings, Russia remains short of being an imperial power. I take Putin’s words seriously that the dissolution of the Soviet Union was the greatest geopolitical disaster of the 20th century and he means to reverse it.

Larry Bernstein:

How has this Ukraine war influenced Putin’s position?

Seth Cropsey:

It’s not clear that Putin has an accurate grasp of the casualties that the Russian military is taking or the amount of destruction.

Larry Bernstein:

I found surprising the ineffectiveness of the Russian Navy versus Ukrainian bomb-laden jet skis and drones. The Russians have abandoned the Black Sea. If they can’t even beat a country that doesn’t have a Navy, imagine what Americans would do to them.

Seth Cropsey:

It’s a significant setback for them and the Ukrainians accomplished it through imagination and determination. But as long as Putin is willing to accept the casualties for moving the front forward, kilometer by kilometer, the West faces the possibility that the war will be resolved in Russia’s favor. If he thinks that he is successful in Ukraine, the danger that exists there applies elsewhere in Europe.

Larry Bernstein:

Imagine that Ukraine had been a member of NATO during this attack. Would it have resulted in World War?

Seth Cropsey:

The entire point of NATO, which is a defensive alliance would have been proven correct. The threat of having to face the joint efforts of the United States and the European countries would deter him from attacking Ukraine in the first place.

Larry Bernstein:

And if it didn’t?

Seth Cropsey:

Then there’d be a fight.

Larry Bernstein:

It’s also possible that Trump would have said, “We’re not going to fulfill our treaty obligations.” Would that have been worse?

Seth Cropsey:

Yes, that’s true.

Larry Bernstein:

We should never have expanded the NATO alliance to include Ukraine. It’s always been Russian. You can see Trump making these arguments. I’m not sure that there would have been bipartisan support for a major war against Russia to fulfill these obligations.

Seth Cropsey:

That’s a separate question from what the consequences would be if Ukraine had been a member of NATO.

Larry Bernstein:

I understand that it could have deterred Russia, but there’s some probability it wouldn’t have.

Seth Cropsey:

That’s true.

Larry Bernstein:

Biden did say, “Don’t do it. I see you on the border, demanding that you respect the borders of Ukraine.”

Seth Cropsey:

But how likely was Putin to take Biden’s word seriously?

Larry Bernstein:

How seriously would Putin have taken the NATO obligation?

Seth Cropsey:

Given Europe’s desire not to have a major conflagration in Europe again for the third time in 110 years, pretty good.

Larry Bernstein:

You mentioned in the book that if Ukraine gets lost, that Poland is next, but Poland does incorporate the NATO deterrence. Do you think that the NATO deterrence will work in Poland?

Seth Cropsey:

It will work. NATO would be effective against Russia now. Putin has avoided mass mobilization since the beginning of the war. He won’t go to the families in Petersburg and Moscow to have their sons go into this war.

Larry Bernstein:

It’s probably just as true amongst the Western Europeans as well. I don’t know how effective a draft would be in Spain to defend Poland.

Seth Cropsey:

Well, a draft in Spain wouldn’t produce anything. But if you look at the steps that are being taken in Germany, Poland, the Baltic states, Romania, Italy and England to increase the defense budget, those are already bearing fruit and Putin can see that.

Larry Bernstein:

Russia has been pretty bloodied by this Ukraine war. It’s lost a half a million men. More than a million people, mostly their brightest have emigrated out of Russia. They’ve lost a substantial amount of their munitions. They have to be very disappointed in their military capabilities, watching them against a third-rate armed force like Ukraine to be stalled for four years now. Is there any internal recognition in Russia that they’re very limited what they can accomplish to halt them from invading Poland as an example?

Seth Cropsey:

Russian oligarchs question whether this makes sense to continue losing money, enduring sanctions, losing men, and being an international pariah. People’s tolerance for being ostracized is limited to say nothing of having their national wealth expended on a project that in four years has produced gains that are not commensurate with the sacrifices that have been made.

Larry Bernstein:

Now having seen the Iranian memorandum of understanding, do you anticipate that the US will give up on Ukraine and they will be forced to give up their homeland to the aggressor?

Seth Cropsey:

I think a lot of that is up to us and our ability to work with allies and our strategy. If we are party to Ukraine’s loss of sovereignty, that will have effects around the world, Taiwan being the most obvious one.

Larry Bernstein:

Why are you focused on Eurasia as a single landmass as being important in the context of US strategy?

Seth Cropsey:

The question is whether we focus on China to the exclusion of everything else. That I think is a mistake because of the connections between the Middle East, the Far East and Europe. The productive capabilities of East Asia cannot be separated from the energy from the Middle East, and neither can be separated from the financial and technological advantages and the political, cultural, economic, historical connections that we have with Europe. The argument is to see Eurasia as a whole, rather than three parts, two of which can be regarded as lesser in favor of China.

Larry Bernstein:

How should we think about India as an ally as a member of the Quad, particularly regarding the defense of Taiwan and as a bulwark against Chinese aggression? What level of Indian support should we expect in a conflict with China in the Indian Ocean?

Seth Cropsey:

For the import of oil, ships have to pass through the Indian Ocean if they’re going to East Asia. And for the export of Chinese goods to Europe, the Indian Ocean is necessary transit. India is a place of significant strategic importance, and that’s why it’s not necessarily a good idea to have changed the name of what the Trump administration had originally called the Indo-Pac Command to its former name Pacific Command, PACOM.

Larry Bernstein:

I suspect that the Japanese would be brought into the war. I don’t imagine the Chinese would be able to export goods to Japan.

The Middle Eastern powers will have to choose a side and may be unwilling to export oil to China or alternatively the US Navy could prevent it.

What is the Chinese trade and export plan with a Taiwanese conflict?

Seth Cropsey:

It’s an uncertain situation because we don’t know their strategy, but when you frame it in those terms. If they went for a blockade, that’s an act of war, but nobody’s shooting things. What would our reaction be?

Larry Bernstein:

We’re going to blockade China.

Seth Cropsey:

The Chinese want to avoid counterblockades. They want to resolve a situation militarily by doing it quickly. Then it’s all over and that can be put aside while the West continues to import goods from China.

A large amphibious assault preceded by a tremendous missile barrage avoids the economic problem that you rightly point out.

Larry Bernstein:

I want to talk about demographics. The reason why the Eurasian landmass is so important is this is where most people live. Where is the world’s GDP away from the United States? It’s in the European Asian landmass.

Seth Cropsey:

The combined GDP of Eurasia is greater than that of the United States.

Larry Bernstein:

Europe and Asias populations are in incredible decline. The Democratic Republic of the Congo, as an alternative, in 1960, its population was 15 million. It’s now 115 million, expected to be 215 million by 2050 and 325 million by 2075 and by 2090 its population will be greater than the United States. GDP follows population to some extent and Africa will become a much more important part of the world. South Korea, its population is expected to fall 80% at current rates between now and 2100 and will not be a material economic power. How should we think about population driving economies and reducing the relative importance of the European Asian land mass as it depopulates?

Seth Cropsey:

I don’t see the West situation as being hopeless. I think it’s remediable, but that would take a considerable shift in the political, social, and cultural currents that run not only in Europe but increasingly here.

Larry Bernstein:

I want to go back to Taiwan. The Chinese violated the terms of their Hong Kong treaty during the first Trump administration. Trump called them out and asked for international support to push back against the Chinese and there was radio silence from our European and Asian allies. Trump said, “Nobody cares. What do you want from me? “ Is what we saw in Hong Kong a precursor of the international reaction for Taiwan?

Seth Cropsey:

I’d like to believe not, but a more vigorous reaction response requires an important nation to take the lead.

Larry Bernstein:

As an example, the United States took the lead on the Iran situation. The Europeans, the Indians, they didn’t care. They were, if anything, opposed to the US action. Could you imagine a situation where if the United States said we’re going to boycott China, that the Europeans would say that’s a violation of international law, we want our stuff?

Seth Cropsey:

If United States leadership is serious about its goals, willing to explain what they are and to back them up with the means necessary, the support of others is desirable; it’s not necessary.

Larry Bernstein:

It’s a big world and the United States has a number of foes and you’ve also mentioned that the only way to push back on that is through an alliance system. But if the allies neither arm nor are supportive with those arms during conflicts, it doesn’t allow for this interchange.

Seth Cropsey:

That’s why alliance management is so important.

Larry Bernstein:

Earlier I asked you about the Spanish if they were to tolerate a draft, you said they’re not going to show up and I believe you. Maybe the Poles will show up I could see the South Koreans showing up. Actually, maybe the South Koreans won’t show up.

Seth Cropsey:

The English, the French and the Italians deployed carrier strike groups to the Taiwan Strait within the past two years. They showed up. They understand what’s at risk there. I don’t count them out.

Larry Bernstein:

One of the aspects of your book is that countries end up doing what’s in their interests. Modi’s relationship with Trump is not critical to your prediction for Indian behavior.

Seth Cropsey:

Talk to 10 senior Indians and see what you think.

Larry Bernstein:

What I would find out is that they’re not aligned.

Seth Cropsey:

Their opinions are not held universally.

Larry Bernstein:

For sure. And that is true in the United States as well.

Seth Cropsey:

Yeah.

Larry Bernstein:

The progressive left and John Bolton don’t agree on first principles.

In each podcast, I end on a note of optimism. Seth, what are you optimistic about as it relates to the Eurasian landmass?

Seth Cropsey:

The profound ideological differences between the Iranians and the Russians and the Chinese are certain to produce fracturing in the future. There is no line through China, Russia, and Iran the way there was between Germany and the Soviet Union before the Ribbentrop deal came undone. There was a commonality of ideology, authoritarian-fascist, but the lack of an ideological connection spells trouble for the axis and we ought to take advantage of it.

Larry Bernstein:

Thanks to Seth for joining us.

If you missed our previous podcast, it was Following the Terrorist’s Money.

Our two speakers were Eyal Azoulay and Ellie who founded an Israeli Not-for-profit called ColEven. Terrorists move money from their Western supporters to the Middle East to fund their nefarious affairs despite the efforts of Western banks to stop it.

ColEven’s staff of former Israeli intelligence professionals follow the cash and then inform the banks to shut it down.

You can find our previous episodes and transcripts on our website. Please follow us on Apple Podcasts or Spotify. 

I am Larry Bernstein with the podcast What Happens Next.

Check out our previous episode, Following the Terrorist’s Money, here.

Subscribe now

Subscribe now

Listen on Spotify

Transcript PDF

102KB ∙ PDF file

Download

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Eyal Azoulay and Ellie

Subject: Following the Terrorist’s Money
Bio: Founders of the Israeli Not-for-profit ColEven

Larry Bernstein:

Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast that covers economics, politics, and history. Today’s episode is Following the Terrorist’s Money.

Our two speakers are Eyal Azoulay and Ellie who are the founders of an Israeli Not-for-profit called ColEven. Terrorists successfully move money from their Western supporters to the Middle East to fund their nefarious affairs. This happens despite the best efforts of American and European banks who spend billions of dollars trying to stop it.

ColEven uses the latest technologies in coordination with a staff of former Israeli intelligence professionals who inform the banks that bad actors are using their institutions.

I was introduced to Coleven at the Miami Beach Impact Forum. This organization has an annual Jewish charity shark tank event. At the dinner, four different charities explained what they do and then the audience picks charities to support. I was super impressed by Coleven’s mission and accomplishments and donated to them.

Ellie, can you please begin with six minutes of opening remarks.

Ellie:

Coleven is a nonprofit intelligence organization. How do terror organizations move money through the global financial system despite the enormous compliance and regulatory infrastructure designed to stop them? Most people imagine terror financing as suitcases of cash or secret bank accounts. In reality, it is often hidden in plain sight. It can look like a charity fundraising campaign, a nonprofit organization, a small company registered in London, Hong Kong or Delaware, or an online crowdfunding page collecting donations from ordinary people who have no idea where the money is ultimately going.

Our mission at Coleven is to identify hidden financial networks and provide actionable intelligence to financial institutions, regulators, payment providers, and governments to take action.

We are not a government agency, think tank, or an advocacy organization. We are an operational intelligence organization using open-source intelligence, financial analysts, corporate records, and sanctioned data. We are mapping networks, identifying risks that can be used by decision makers.

Banks are consuming our digestible product because they are not equipped to map terrorism networks as opposed to anti-money laundering. They have a gap with the intelligence and Coleven can help.

The financial system is powerful. Military action can disrupt terrorist organizations. Law enforcement can persecute them, but if you remove access to funding, you reduce their ability to recruit, operate, travel, purchase equipment and expand. Money is the oxygen that allows these networks to survive. We focus on the financial layer because it is one of the most effective points of intervention. Eyal, do you want to share how it all started?

Eyal Azoulay:

What is financial crime enforcement? When we talk about a crime, enforcement is the local police, the state police, and the FBI to enforce the laws. In finance, the regulator within the government says, “Here are the rules and best practices.”

The enforcement arms are the financial institutions themselves. They build the operation and execute enforcement including judgment and penalties. An organization is the prosecutor, the judge and the executor. All three within a financial institution who can’t see the details from the noise. It’s not scalable. If they are not doing good work, the government will say, “Here’s a big penalty and here is where you failed.”

You don’t need to go to the regulator. If you want to be effective, you need to go to the enforcement arm within financial institutions.

Larry Bernstein:

Financial institutions often harass innocent bank customers by mistake.

Eyal Azoulay:

Innocent citizens can get penalized and it’s almost impossible to get back from it. There are huge amount of suspicious alerts activities and tools that handle that at scale are bad. Everything is static about one single point. If you don’t understand something within the context, how can you make a judgment?

Larry Bernstein:

We got two different concepts: alpha error and beta error. Alpha error is when you miss the terrorist. Beta error is when you misdiagnose an innocent. Missing the terrorist is worse, but damning an innocent is also problematic. The reality is it’s like finding a needle in a haystack. In a normal day’s work for a bank, there aren’t much terrorist activities. It’s predominantly innocent people who get snagged. I am both an individual and a partner in a financial institution. KYC – Know Your Customer is a total mess.

Eyal Azoulay:

Oh yeah.

Larry Bernstein:

Their collection of information about me seems ridiculous. If my passport were to expire that is a problem as if my US citizenship is now in doubt. They want me to swear that I’m not doing business in Sudan.

Are current KYC best practices effective in achieving its goals or is it simply a nuisance for most innocent customers?

Ellie:

This is something that we’re dealing with every day. How do you identify Hakohen, which is a common Israeli name with Kahane Chai, which is a group of extremists. Terrorism is a small niche within the KYC ecosystem. It is the hardest to find because it’s about putting a lot of dots together and mapping seemingly innocent names and entities to put them all together rather than to follow actual monies and things that raise red flags. And we need the human eye to be professional to sit and map.

Banks lack the human resource to do this. As we speak, number 24 in Hamas can register himself with any US bank because he’s not part of the US blacklist.

Now the very same person, number 24 in Hamas won’t dare walk into a bank in Israel. We were managing to map the cousin of the #1 in Hamas because her family name was familiar to our researchers, but I’m not sure that every top bank in the United States can be familiar with such a family name.

Larry Bernstein:

Eyal, you mentioned that the bank is a self-regulating organization.

Eyal Azoulay:

It is extremely regulated but not on the right things.

Larry Bernstein:

The banks have been read the Riot Act that if they screw up and allow a Mexican mob to bank with them. They will get a huge fine and heads are going to roll.

There’s a check the box mentality without a vision as to the real sense of what’s going on. I saw the TV show Ozark.

Eyal Azoulay:

Exactly.

Larry Bernstein:

Tell me about the bad guys working around the check the box.

Eyal Azoulay:

First of all, I 100% agree. The top five banks in the US have 9,000 people executing this work. They are spending $250 billion every year on a system that is over-featured to make sure that the regulator is happy and is not pissed at us.

Over featured, over engineered only to that metric, not can I find bad actors and wash them out of my system? Can I reduce the amount of friction that I bring on innocent people? These are not the goals. There is a single goal and the single metric is keeping the regulator happy. That’s it. $250 billion of operation in an industry that is focused only on one thing and that’s where the problem is. It’s only checking the boxes is making it look like we’re spending a lot of money. If you go to a risk organization, let’s say with Bank of America, JP Morgan, Citibank. You tell them, “You can do A, B, C and make it better and reduce people you’re going to say, “Whoa, whoa, whoa.”

I’m not going to go back to the regulator and telling I’m spending less money because then it will be piecemeal. That’s the problem. The concept of KYC, know your person you are interacting with. Larry, you and I can go into business together. We’re acting on good faith of what’s going to happen.

But when we shake hands, there’s mutual risk exposure. I bring exposure to you, you bring exposure to me and we need to understand it. That’s the essence of what they’re trying to do in a bank in a KYC. Who is that person in front of me and what is the exposure that that person, that entity can create for me as a bank? Now because everything is superficial, everything is about checking the box, they’re looking on data out of context. They don’t go deeper to understanding why because they have neither the tools nor the people with the right skills and don’t have the motivation to do it.

Larry Bernstein:

Tell us about not understanding money movement in context.

Eyal Azoulay:

First of all, it’s a business. We spoke about the motivation towards making sure that the regulator is not unhappy with us. The goal is to push as much business volume as we can.

You have stakeholder fiduciary rights. So how do you manage that balance? You check the boxes and then the regulator is not unhappy with you. The problem with the gray area. It’s a concept that says that I can deal with 80% and they will be fine. The rest of the 20% are great people like Larry and 10% of them are number 10 in Hezbollah. They don’t care. Simple as that.

Larry Bernstein:

Ellie, how does your organization figure out who the bad actors are, and why are you successful when big banks fail despite billion-dollar budgets?

Ellie:

We are focusing on providing financial institutions with clear maps about organizations and individuals, showing the connection between an individual to a certain NGO, another company that will lead to one hop from a sanctioned entity.

When you’re sitting with a compliance officer, you start at the end. And the end is a sanctioned person or entity. Second from the end is the other guy that has a business relationship with this sanctioned entity. We are focusing on that gray area for those gatekeepers and provide them with insightful intelligence.

Now we bring our findings only from the open source, from the social media, from tax registrations. We have our secret sauce - the mapping and provide evidence that is verified and trustable. However, it’s not a level that will be required by a court. Our map backed by reports that are clickable. We save gatekeepers time and prevent huge fines and even criminal charges for senior management of these banks.

What makes us a very unique NGO is that we bring actual intelligence to the desks of those who can act upon it. KYC is about checking the boxes, but it’s about a different behavior and typologies that represent the financing of terrorism as opposed to money laundering. We know it’s because we also conduct educational sessions with the compliance and fraud teams.

Larry Bernstein:

What is your interaction like with the banks?

Ellie:

Dealing with banking disclosure, they cannot share with us certain information. Once we can bring a bank our reports, they happily respond that it received with thanks, but they will never share with us a certain individual name that came through this net.

They’ll just thank us because we help them with their potential exposure. We do have some indications because we verify that our report was opened 400 times by the same compliance department at a certain bank. A high opening rate of our materials, we know for sure they have interest with that information.

Larry Bernstein:

Your job is a whack-a-mole.

Ellie:

You couldn’t define it better.

Larry Bernstein:

There’s the bad actor who needs the cash. Cash is the oxygen for every organization. They need to get cash from friends of the bad organization. You shut down one of their bank accounts and they will open a replacement. It’s like water. Water is insidious. If you have a leak in the roof, it will find its way through your ceiling. Cash is like water. Tell us about the whack-a-mole and how you deal with it.

Ellie:

The whack-mole is complicated. It’s not only about cash finding its way through the cracks, but also that certain individuals that managed to evade the sanction list. So only their organization was sanctioned, but senior management didn’t get onto the blacklist. They managed to open the new organization and are familiar with the student groups that funded antisemitism within the universities such as SJP and AMP. They’re all about the same people that are shutting down and opening up the organization. So, it’s not only about the money, it’s also about the way they’re structuring their organizations.

It is a never-ending whack-a-mole. I’m looking at my researchers sitting in the next room putting the dots together again and again and again and mapping these materials. How come they don’t give up?

Sometimes they already know their organizations and the individuals. They know him because they met him in another case and he pops up in another case and another organization and so on. The money goes with them. However, we have our indications that we disrupt them. It’s not only about freezing and shutting down certain accounts. It is also about raising the awareness of the gatekeepers to those phenomena and to the way they behave and to the regulator list.

The regulator managed to shut down an organization we provide with the name of the five senior management of that organization, which are no less important and have their contribution to the situation.

As a nonprofit organization with a very lean operation, we cannot solve the financing of terrorism problem. We know that billions of dollars are going through the Western financial institutions and we cannot solve it all. Money will always find its way to the malicious hands. But we’re trying to interfere with this cash movement and make it less easy to operate out in the open and more difficult for those networks to collaborate to transfer the money.

That is similar to how the US government is trying to deal with drugs. Drugs will not vanish from the world, but fighting the drugs within the United States making it difficult for them to operate and extend.

It’s about sealing the cracks to make it harder for those networks to work. We read their reactions in the social media. They don’t exactly know who but they are complaining about the difficulties they are facing recently in the places we are active like with fundraising platforms. When we tackle a certain URL that is fundraising monies to fund terror. When we manage to shut down such a campaign, this is a win that we can point at because it’s just shutting down the campaign and freezing hundreds of millions of dollars.

Larry Bernstein:

I’ve given a charitable donation to your organization and I encourage my listeners to consider it as part of their active giving because your mission and impact per dollar of contribution is substantial. Ellie, can you give our listeners a reason to give money to your organization to reduce terrorism?

Ellie:

Larry, thank you so much for your kind donation. Here is a link to our donation page. We’re a nonprofit organization providing information for free and banks cannot resist to receive it.

Larry Bernstein:

They’re stuck.

Ellie:

They’re stuck when they’re familiar with this information. So here is a lean team sitting in one room in Tel Aviv, you should see our office here. They’re not elegant, very modest, best analysts we have in the country coming from amazing units in the IDF.

Larry Bernstein:

Do you have Americans with banking experience who have moved to Israel to work for your organization?

Ellie:

We have some Olim Hadashim that are here that made Aliyah to Israel and coming from the banking system in the United States. We have here someone who was in charge of fraud in one of the big banks in the United States so he can provide us with the other angles.

Speaking of our impact, one of the top tier banks in the United States stopped correspondent banking thanks to accurate information we’ve managed to provide that bank. Billions of dollars were frozen.

Larry Bernstein:

For our listeners what that means, if ColEven were to flag a terrorist organization using a Lebanese bank several times. a US Bank will stop doing business with the corresponding bank in Lebanon.

Ellie:

It is as simple as that.

Larry Bernstein:

What are you optimistic about as it relates to undermining terrorist organizations ability to move cash?

Ellie:

To collaborate with like-minded organizations that are doing amazing work and we can share our insights and shorten investigation times as well as raising the awareness of the biggest institutions and with the regulators. We will interrupt in a massive way money and interfere organizations working with Western financial institutions.

Larry Bernstein:

Thanks to Ellie and Eyal for joining us.

If you missed our previous podcast, it was Encouraging Debate with College Students.

Our speaker was Daniel Diermeier who is the Chancelor of Vanderbilt. Daniel spoke about how the administration builds a culture of political neutrality on campus that encourages free speech and allows for debate without shaming.

You can find our previous episodes and transcripts on our website. Please follow us on Apple Podcasts or Spotify. 

I am Larry Bernstein with the podcast What Happens Next.

Check out our previous episode, Encouraging Competing Viewpoints Among College Students, here.

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Daniel Diermeier

Subject: Encouraging Competing Viewpoints Among College Students
Bio: Chancelor of Vanderbilt University

Transcript:

Larry Bernstein:

Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast that covers economics, politics, and history. Today’s episode is Encouraging Competing Viewpoints Among College Students.

Our speaker is Daniel Diermeier who is the Chancelor of Vanderbilt. I want to hear from Daniel about how the administration can build a culture of political neutrality on campus. I want to learn about creating a university culture that encourages free speech and allows for debate without shaming the opposing perspective.

Daniel, can you please begin with six minutes of opening remarks.

Daniel Diermeier:

I’m the chancellor of Vanderbilt University. There are key institutions that are at the root of the success of our societies, whether that’s businesses or democracy, and rule of law. But, the trust in these institutions has plummeted dramatically. The main reason is that they’re complicated and often don’t operate in a way that’s easily for people to follow. So, if we are not able to explain clearly what the benefit of what the university is, we’re going to lose the trust of the American public.

The second important piece, is that these institutions have a particular purpose. The moment we deviate from that, then we lose the fundamental reason for why we exist and what the benefits are; we eroding trust as well. My concern is that universities have done both of these. They have not clearly stated what the purpose and benefit is for universities. And secondly, that they have drifted away from the purpose of creating and transmitting knowledge towards taking positions on a whole variety of political issues. University leaders need to address these challenges.

Larry Bernstein:

You’ve talked about keeping political ideology out of the classroom. Why is that problematic? Why does that create distrust? And how can the administration remove politics from the classroom, research, and tenure decisions if the faculty isn’t on board?

Daniel Diermeier:

Great research universities are about creating an environment for pathbreaking research and a transformative education. You want students to leave with knowledge in their particular area, whether it’s computer science or history. You want to prepare them for a meaningful career. And, you want to make sure that they can function as educated citizens in a free and democratic society. Now in most areas that works. The education is great in the sciences and the other areas. But what we’ve seen is that in some fields there are real problems where society reflects upon itself.

Those are the humanities, the qualitative social sciences, sociology, anthropology. You need to be exposed to the fundamental perspectives that are relevant. Let’s say you take a class on criminal justice and some people have argued persuasively or provocatively that the criminal justice system is biased or that it has the consequences of suppressing minority communities. You need to have both of the perspectives that are germane to the field and you then need to be discussed.

They need to be present in a syllabus. If that’s not the case, you’re only getting one side of the argument and then this particular class is not doing its job. To me, this is not about left/right balance so much than it is about the subordination of scholarly standards.

Larry Bernstein:

I did a podcast recently with John Shields who is a professor at Claremont. He looked at college course syllabi and found that there was faculty bias in the choice of what reading material was assigned. What did you think of John Shields’ analysis? See this link for my podcast with Shields.

Daniel Diermeier:

Their recent study looked at three issue areas that are domains that tend to be very controversial: criminal justice, the Israeli-Palestine conflict, and abortion. Now, in the case of the criminal justice class, they focused on a controversial but widely read book, The New Jim Crow by Michelle Alexander, which is a complicated argument that argued that the mass incarceration related to the war on drugs had the consequence of suppressing African American communities.

Now there was a lot of criticism of that as there would be when you have a provocative book like that, that people took issue with the analysis and the data of the argument. What they found is that when they looked at syllabi on this particular topic, 94% would only assign the New Jim Crow. The students would never hear the other side of the argument. That’s problematic because now students have an impression that that’s the state of scholarship in this area even though it is not.

That point of view is not driven by scholarly concerns but by a political agenda. This is not a case about balancing left versus right. This is a case about teaching a particular area of study in a way that it should be taught.

Larry Bernstein:

John Shields argued that the politics of the professor shows up in the syllabus and whether it’s by design or not, the fact is that you have a leftist author in this example, Michelle Alexander, combined with a second author who’s even much further to the left and that there’s no book assigned from the center, center-right or the right.

Daniel Diermeier:

I’m a little worried about framing the entire issues a left versus right and take the example of Michelle Alexander’s book and you have a devastating critique written by somebody who is center-left.

So what matters is not so much that we balance left versus right, that we have the relevant perspectives in a particular class on a particular area that are represented. Now sometimes these people’s research will be motivated by their beliefs and that by itself, it’s just that’s who we are as humans. That’s the great German philosopher later taught in the United States, Hans Reichenbaum always made the following distinction. He called the context of discovery and the context of justification. Context of discovery, we have ideas for why we engage with research. Some are political, some are personal, some are theological, some are moral.

But once we enter the world of justification where we have to put our research and now it has to be criticized, to be open to criticisms no matter what people’s point of view. And in a teaching context, we need to faithfully represent the particular area of research that is relevant to this area. So you can have very intense debates on economics, on regulation or crime and people are like, it’s 80% on one side, but people are interested and committed to figuring things out. They’re not putting blinders and restrictions on themselves saying, “You can’t ask that question because it’s inconsistent with my political belief.

I want to emphasize the commitment to scholarly rules here. Universities tend to limit this debate., Many areas in the humanities, for example, like how we interpret pieces of art where we have the same problems, but they don’t naturally map onto a left/right ideological spectrum. And these fields are just as problematic, it’s just as important that we are committed to rigorous scholarship and the norms and standards that support that.

Larry Bernstein:

How did the university system become so partisan?

Daniel Diermeier:

I would say 85% of the faculty now just want to do their work. Your typical mechanical engineer want to be 14 hours in the lab and be left alone. They may tend to vote Democrat on average, but their politics is not central to their work or who they are, but they tend to vote Democrat. That’s the vast majority of faculty. That is not problematic that’s working well.

The sciences, engineering are working really well. Then there’s another smaller group. These are faculty members that fundamentally believe that the world is structured in an unjust fashion, that we understand this injustice as systemic and foundational, that our responsibility is to dismantle these structures of oppression and that this struggle and this commitment become central to who they are as scholars, as researchers, and as teachers. These faculty tend to be concentrated in certain fields: humanities, qualitative social sciences, sociology, anthropology, and adjacent fields. It’s important to the way they view their role and their purpose in the context of the university. They have a very clear idea what the university should do. It should be part of the struggle and they’re organized. As a consequence of that, they tend to dominate certain departments. They sometimes dominate issues of institutional self-governance.

You have a scattered group on the conservative or the traditional liberal John Stuart Mill’s free speech group and you have an organized group on the left and the radical left. I don’t mean moderate left, I mean radical. And so as a consequence of that, university presidents have to navigate that in an environment, which it’s difficult because you constantly get pushed from one side. Some presidents like my former boss at the University of Chicago, Bob Zimmer, was very clear about the principles the University of Chicago stands for, but many presidents don’t want to deal with any drama on campus.

Muddling through and then the ship drifts for 20 years and over time it drifts in a radical direction. That’s what we’re seeing in certain fields.

It manifested itself first in the free speech controversy. So, this was like when we had speech codes like this inviting a certain speaker. We had the Halloween controversy at Yale.

That’s better now because we have a clear set of Chicago principles and groups like FIRE played an important role to put some pressure on universities to improve the free speech environment. Chapter two was institutional neutrality. That of course was critical after October 7th. And again, we had principles and then we had pressure

from alumni, also like the Jewish community. And again, universities moved in a good direction by adopting standards of institutional neutrality.

The third chapter now is what happens in the classroom, in research, and in professional associations and that’s a much more complicated problem because it needs to be done consistent with academic freedom.

Fundamentally you need to look at what’s happening in these departments, who is hired, under what circumstances, what are the principles? You have to ask yourself, are we producing the next generation of scholars? And then you have to look at institutions of certification. These are professional associations, journals, prizes, all things that be prestige and recognition of faculty. There have been problems there as well. The whole system of research, teaching, how do we educate the next generation of scholars need to be looked at and presidents need to lean in one by one to get this set back to the original purpose of the university.

Larry Bernstein:

How do we depoliticize our universities?

Daniel Diermeier:

Well, there are formal principles and then there’s informal aspects and culture. The formal side is this commitment that leaders of universities will not take positions on policy or political issues unless they’re directly and material connected to the core purpose of the university.

I will take a position as a university president on things like research funding because it’s directly connected to the university, but will not take positions on foreign policy or the Dobbs decision. Why? Because we don’t want to create a chilling effect where certain things can’t be talked about or whether we have an institutional orthodoxy. And secondly, if we do a statement, particularly if we do it in haste over the weekend, we are supposed to be the places of expertise and careful work that looks at the complexity of the world in a methodologically rigorous fashion and making a statement over as complex an issue as the conflict in the Middle East is exactly the opposite of what university should do.

Now the important thing is it’s not just about the speech by presidents. It is also about divestment. The university endowment is there to support faculty and students. It’s not there to be an op-ed page. We’re not in the business of boycotting because they have a connection with Israel. Departments should not make statements on the Israeli-Palestinian conflict for the same reason that they create a chilling effect and an institutional orthodoxy and that is particularly pernicious for junior faculty that rely on their senior colleagues to get recommendations for promotion and tenure or for graduate students or even for undergraduates. So that should just be off limits.

That’s institutional neutrality, and the second part is the informal aspects that there’s certain things you just can’t talk about or you’re going to be ostracized. It is not appropriate to shun somebody that is a great scholar just because they have a political position that disagrees with the majority of the department. That is not acting as a scholar. The fundamental principle should be is that we are hiring scholars because of their scholarly competence not because of their political orientation.

The moment you hire people or promote them because they’re in line with particular political position, you have deviated from scholarly norms and that is not okay.

Larry Bernstein:

I did a podcast on the demise of small colleges in New England like Hampshire College. We’ve seen prospective students drift away from smaller colleges towards the major universities in the United States. Students are now at Vanderbilt, the University of Chicago, UPenn and the University of Texas. These schools have exploded.

Daniel Diermeier:

Our applications in early decision went up by 20% last year. We took like 2.8% of our regular decisions. This is off the charts.

Why are students and families looking for this environment? The reason is that we’re living in the age of technology. AI is front and center for everybody, but the same is there’s similar revolutions going on in biomedical and engineering, quantum and so forth. The knowledge base in these areas turns over extremely rapidly. So, if you want cutting edge AI research, I think the estimated knowledge base turns over in like three to six months, very similar in biomedical engineering and all the areas that are core to the innovation economy, which also means that’s where career opportunities are for students.

Students want to be exposed to that. Not all the students, but many want to do that. To teach this at the frontier of knowledge, you need to have it taught by active researchers. That is not true with the traditional areas like philosophy or history or English. Yes, there are advances, but the speed is not as profound and age and experience may make you an even better teacher of Plato. The problem for local arts colleges is that it is very difficult to teach these fields at a level that is at the frontier of knowledge because you need researchers for that, but to have researchers that you need a research infrastructure, which means you need labs and federal research grants and all of that.

A related point is that a rural location is not an innovation center. An urban environment is attractive to students because many of them want to get engaged sometimes in startups, in projects, in internships, all these types of things and that is easier if you are in a large research university in a thriving metropolitan area. Those are the reasons for why there’s success.

Larry Bernstein:

The price of education has gone up significantly in real terms, it grows faster than inflation and takes a greater percentage of our economy. It’s a combination of entertainment and education and that’s why kids want to be on campus but being on campus is expensive versus online.

Daniel Diermeier:

When you look at the net tuition that students pay after financial aid, in real dollars it has gone down at least at Vanderbilt over the last 15 years. And that’s because of the very substantial financial aid commitments that we make, particularly for low-income students, but it’s on a sliding scale. I think that’s not appreciated and it’s an important thing to keep in mind. That’s an important social mission that we engaged in as university is that for no student should the financial barriers to access prohibit them from going to Vanderbilt.

The second comment I think is, isn’t there a cheaper way of producing this type of education. Isn’t there a better way to do this?

I went to a German public university and that was much cheaper. It was funded by the state and I was first generation and I got a fellowship, but that was just for my living expense because the university was free. And the problem is that the quality is much worse. The classes are totally full. If you have a TA session, there were like 90 people around. There was no career support. There was no mental health support at all. There was no extracurricular activity at all. If you are first generation students and you have no support, the dropout rates are very high.

If you are admitted to Vanderbilt and you graduate and you come from a very wealthy background and you come from the toughest background in the country these two students graduate from Vanderbilt have the same lifetime expected income. They have the same life chances irrespective of their income, of the income of their parents. That is an astonishing accomplishment and that is what we do. But in order to support the students, there has to be a lot there.

For example, they have to meet each other. They have to be networks. Living together is really valuable for social capital. The system delivers on that, but it doesn’t come cheap.

Larry Bernstein:

When I was applying to college, Vanderbilt was a sleepy Southern school. Today it’s reputation and its educational offerings are world class. What happened? How did Vanderbilt rocket ship to become one of the top universities in the world?

Daniel Diermeier:

We’ve seen a tremendous increase in interest over the last few years. It is a place that values academic rigor, but combines this with a commitment that the students would grow as a person. It’s part of who we are. We set up the residential college model all the way down to the importance of extracurricular activities and the way we provide opportunities for students outside the classroom. The second piece, we’re a very collaborative place. We say students learn best, grow best if they’re members of a community that’s supportive and challenging.

It’s a sports analogy, it’s hard to make the team. When you make the team, we want you to be the best first baseman you can be and we want to be the best person you can be and your teammates are there to support and challenge you and your coaches are there to guide you. That’s the educational model. We sharpen it. We improved it. We did more in residential colleges. That’s pillar one.

The second thing that happened was really October 7th. We talked about in the last podcast together (about expelling students who misbehave), but we took a very principled stand on that. We were very clear that we would not tolerate harassment of Jewish students on campus. When we had problems with protestors, we acted according to our principles. And then when there were violations of rules, we took a properly disciplinary action. We did exactly what we said we would do and we lived up according to our values. Because we were an outlier on that among universities, there’s a lot of media interest in that.

That positioned us as a place that’s principled, that’s committed to creating an environment on civil discourse on campus where students can explore ideas, where they’re taught how to think, not what to think, and where we treat each other with respect, we don’t demonize each other just because we have different points of view.

It particularly resonated with the Jewish community because of the stark contrast for what they saw at other universities. I was honored by Chabad International, the Lamplighter Award, and from the White Rose Society in recognition for the environment that we created for Jewish students over the last two years.

Our last Passover Seder, we celebrated in the football stadium, 600 students were there. They had a great time. They brought their non-Jewish friends along. It was fantastic. That puts you on the map.

If you were like a family three or four years ago and you were saying, “Okay, where am I going to send my sons and daughter?” And you have a student that can go anywhere, let’s say, Penn, Harvard, Stanford.. Once you’re a viable alternative, now the differences matter. Se have seen a dramatic increase in interest from families from the Northeast, especially New York and California and especially from Jewish families that are saying, “This is a place where my son and daughter can thrive.” Something right about our culture. We invest a lot in the student culture of civil discourse. When students come on campus, they sign a pledge, we have a program which we call Dialogue Vanderbilt that is how we do things around here and where it becomes a habit for the students to engage with respect and by using arguments and not demonizing each other. And when people visit on campus, they see that and when they talk to the students, they see that. In the current environment that alternative is striking to people, that’s why we see the increase in interest.

Larry Bernstein:

What makes you optimistic about the university?

Daniel Diermeier:

I am optimistic that things are moving in the right direction. I’ve been on politicization of universities for about four years. We had the drama with October 7th and then the conflict with the federal government. Seeing things like the Yale report, the Harvard report, the principles that the AAU put out, these are all movements in the right direction. I think people recognize that these are great institutions, but certain things need to be fixed.

Larry Bernstein:

Thanks to Daniel for joining us.

If you missed our previous podcast, it was How AI will Change Law Schools, Law Firms, and Users of Legal Services.

Our speaker was Polk Wagner who is the Deputy Dean of Penn Law School who has been charged with figuring out how to adapt the law school curriculum to the AI revolution. Polk discussed how law schools will adapt as their graduates’ jobs will no longer focus on document creation but will instead require complex legal analysis.

We also talked about how AI will change the structure of law firms since the by-the-hour billing practice will end and what will replace it.

In addition, we chatted about how consumers of legal services will use AI to negotiate contracts, to comprehend complex legal agreements, and to help draft documents that previously would have been delegated to their attorneys.

You can find our previous episodes and transcripts on our website. Please follow us on Apple Podcasts or Spotify. 

I am Larry Bernstein with the podcast What Happens Next.

Check out our previous episode, Curing the New Ebola Virus, here.

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Ari Ciment

Subject: Curing the New Ebola Virus
Bio: Pulmonologist and Former President of Medical Staff at Mount Sinai Medical Center in Miami Beach

Transcript:

Larry Bernstein:

Welcome to What Happens Next. My name is Larry Bernstein.  What Happens Next is a podcast that covers economics, politics, and history. Today’s episode is Curing the New Ebola Virus.

Our speaker is Ari Ciment. Ari ran the Covid Ward at the Mount Sinai Hospital in Miami Beach and is the former president of the hospital’s medical staff. He is probably best known for being my doctor.

Let’s begin.

Ebola has reared its ugly head again in the Democratic Republic of Congo. Is this a mutation of the previous Ebola virus or is this something new that has come directly from a bat?

Ari Ciment:

This is a mutation of Ebola virus, but it does have a natural reservoir which is the bat.

Larry Bernstein:

Do the bats get sick and die or are they merely transmitting the virus?

Ari Ciment:

Bats pick up the Ebola virus. The Ebola virus is a filovirus, which is an RNA virus that are responsible for all the previous pandemics because an RNA virus mutates 10,000 times faster than DNA viruses. What does that mean when they mutate? They change their surface proteins. The Ebola Zaire virus from 2014 had specific surface proteins. This one is different than that virus, although it’s in the Ebola virus family. So. the same vaccines that were used for Ebola Zaire or the same monoclonal antibodies are not going to be effective with the current Ebola virus.

So as per your question about what happens with the bats, the bats are protected. The bats pick up this Ebola virus. Then comes along a hunter making bush meat, he’s killing rodents, he’s killing bats. They start eating the meat and they become infected with the Ebola, whereas the bats won’t suffer any symptoms.

Larry Bernstein:

A major difference between Ebola and COVID is that COVID is an airborne virus. I remember at the beginning of COVID that we were like, “Don’t touch this.” It turned out that was a bunch of nonsense and we knew it early on but we still kept using our cleaning fluids and not touching the box.

But over time we recognized that for an airborne virus, it was more important to keep our distance, have the windows open so we wouldn’t catch a substantial viral load.

Ebola is not an airborne virus. So how do you catch it?

Ari Ciment:

So this is purely by contact. I don’t know if you saw the show 24. At the end of the season, if you remember, she shook the hand of the man who had Ebola virus and the implication was that the Ebola virus went through the skin into the person. It doesn’t necessarily go through the skin, but it’s very catchy in the sense that if you have an open wound, if you touch your mucus membranes, that’s what is meant by contact precautions. So that’s why you see all the HAZMAT gear

COVID is airborne. It’s easier to get. However, the mortality is much less than the Ebola virus that is going to be 30 to 50%, whereas COVID was more like 1%.

Larry Bernstein:

Going back to transmission, fluid is the key thing. So, your excrement, blood, vomit, spit, semen, carries the virus and any of those liquids gets into your body, that is how it transmits. What’s interesting is that this illness in the human host results in diarrhea, vomiting, complete and utter bodily destruction. And in that destructive process, you are just disseminating this liquid virus every which way. And you’ve got a loved one in trouble, you go over to check on them to clean up the mess. And in that process, you catch it. You touch an open wound, you touch your mouth, you touch your eye, you touch your nose, and then lo and behold, you’ve got it. This is going to most likely result in transmission in the home.

Ari Ciment:

One bodily function you didn’t mention was sweat.

Larry Bernstein:

I didn’t realize that.

Ari Ciment:

60% of the cases are women and it points to household transmission, which is key here because women are usually the caregivers. They’re taking care of the sick person.

What’s also very interesting, Ebola virus replicates really fast in the cytoplasm as opposed to COVID. The Ebola virus ends up very fast with more dramatic symptoms. The key finding classically is hemorrhaging. Young kids that have bloody noses and just nonstop blood. That will become a cycle of constant transmission and infection. And when they end up dying, the people taking care of the dead bodies are also contracting the illness.

Larry Bernstein:

Let me ask an ethics question as it relates to funeral rights. People die every day and the state does not limit anything to do with what happens next. But I could see from a health consideration that the state could say, “This dead body we are going to burn it because the dead body can spread Ebola. Have your funeral without the body. Okay. That’s over. Now that violates Jewish traditions for sure. Tell us about the ethics of state actions to take the dead body for fear of Ebola spread.

Ari Ciment:

If you watch the videos, there was a video on CNN I saw it. It’s an actual coffin that’s being handled by a healthcare worker in HAZMAT and the family want to get to the coffin and he is protecting it. He is making sure nobody gets close to the coffin. But you could see the skepticism, which is so critical to this epidemic to be going out of control.

Larry Bernstein:

Americans and other doctors who work for Doctors without Borders are going to the Democratic Republic of the Congo (DRC) and the locals are very suspicious of their behavior because their loved ones are dying from their care given the 30-50% mortality rates from the Bundibugyo Ebola virus.

Ari Ciment:

In some cases, they burn down their housing because they don’t know why they can’t see their loved ones. First of all, they don’t understand.

Larry Bernstein:

It doesn’t help that there is ongoing violence in the area between the Hutu and the Tutsi people in the DRC. You may remember that there was a genocide in Rwanda and there is ongoing fighting now between these peoples in the very place where the Ebola is running wild. Is there a relationship between civil wars and epidemics.

Ari Ciment:

Because of the ongoing friction between the M23, the Hutu and the Tutsi that is rampaging from the DRC and Rwanda, that friction is causing a lot of skepticism.

Larry Bernstein:

The medical professionals in the DRC are taking the individual patients and separating them from their families, and the families are outraged. They want to see their sick kid, they want to see their father. The families get angry and then they burn down the medical facility.

Ari Ciment:

They’re burning down in frustration; they want to see their family members.

Larry Bernstein:

Pandemics success needs a host to propagate, and then the virus will jump to the next patient and so on. The last thing you want to do as a virus is to kill the host before it jumps to the next patient. Ironically, Ebola is very successful at killing its host and that usually burns out the disease.

Ari Ciment:

Yeah. It’s great in killing its host, but the key difference is there is no asymptomatic transmission as far as we know. So the people that are spreading Ebola are the people actively infected. A super spreader like the early COVID is spread because people are walking around, they’re totally fine, they’re laughing and they’re breathing in your face, you’re getting the infection, you don’t know it. And then one week later you’re sick and then you’re spreading it the same way. Ebola virus, there is also an incubation period. The incubation period is roughly 2 maximum 21 days, but it’s probably more like seven days. That’s incubating while you’re not symptomatic, you’re not transmitting the disease. This is the real hope. The truth is the Ebola virus will not spread crazily like COVID did because you know who is the person spreading the disease. So, if you get really good at cordoning them off, blocking that transmission, then you should be okay.

The other important part to this story is the rate of infection called R0 (R-Naught) that we used to talk about a lot with COVID. If you’re infected with a virus, how many people will that one sick person infect? The R0 for COVID was about two to three. The R0 for measles is 12 which is enormous because it’s such an easily propagated virus through the air, very catchy. R0 for Ebola is something like 1.5.

It’s high but it’s not as high as the airborne viruses.

Larry Bernstein:

Years ago, with the Zaire Ebola virus an infected person traveled on a 12-hour bus trip in West Africa and nobody else got infected from him. If that had been Covid, everyone would have gotten sick because it is an airborne infection in a closed bus. But Ebola can only spread through liquids so that is a big advantage for us all.

Next topic is antibodies. What is an antibody?

Ari Ciment:

An antibody is your immune response to the illness. You develop your B-cells create a response to the proteins in the virus and then you could combat it the next time you see it.

Larry Bernstein:

Doctors have been aware of antibodies for generations. With the Spanish flu in 1918, doctors knew that the surviving patients had produced antibodies that were successful in beating back the Spanish influenza. And physicians got samples from the now healthy survivors of the flu and they injected these antibodies into sick patients who just came down with or have been exposed to the Spanish flu and it works to a degree. Tell us about the history of this. Tell us about how we’ve improved upon it in the last century, whether we can make antibodies artificially. Tell us about antibodies as a response to viral attacks.

Ari Ciment:

The antibodies live in the plasma. The very first records of convalescent plasma are WW1 soldiers who survived and they took their blood and injected it into people that were currently infected. I enabled our hospital to use convalescent plasma for the treatment for COVID here in Miami Beach, but that is not as effective as the monoclonal antibodies, which were being developed by companies like Regeneron or in this specific Ebola crisis. It’s a company called Biopharmaceutical MAP. They’re the ones that made the monoclonal antibody against Ebola virus in the previous Zaire Ebola virus. Those companies make a more modified directed antibody versus the protein that’s on that virus.

Larry Bernstein:

So, one approach is to take surviving patients antibodies and give it to an infected patient. Another approach is to look at the actual virus and build and mass produce antibodies to kill it.

Ari Ciment:

I would say the biggest one on the market right now probably is this one called MBP134, which is by that company I mentioned MAP Biopharmaceuticals. It’s basically a pan Ebola virus. It should work against all the Ebola viruses.

Larry Bernstein:

The antibodies are like magic.

Ari Ciment:

For sure. That was the most miraculous medicine I ever witnessed. That was the Regeneron and the Eli Lilly. Those monoclonal antibodies, they stopped the virus in its tracks. It would hit it and boom, your disease process stopped. But if somebody already has hemorrhagic symptoms, they’re bleeding out, they have organ failure, those things are going to correct over time if the patient could survive, but they’re going to be significant organ dysfunction if they’re not caught in time. It’s going to be everything is about timely administration. With COVID, if you got the monoclonal antibodies within the first one to three days, you were golden, but if you got it five days late, it’s not so clear it was going to be beneficial.

Larry Bernstein:

I want to expand on Ari’s point. This MBP134 monoclonal antibody therapy is a cocktail to two antibodies designed to treat multiple strains of Ebola virus and it worked on both the Zaire Ebola virus from 2014 and it is working also with the Bundibugyo Ebola that is running wild right now in the Democratic Republic of the Congo. So far in the DRC it reportedly decreased mortality by 30% but from a very high number. I suspect that if you got the monoclonal antibodies in a place like a top US hospital at the right time, you are going to survive.

Tell us about the previous Ebola Zaire virus.

Ari Ciment:

It’s named after the Zaire River, because that’s where it originated from. It caused 11,000 deaths in the Western part of Africa. It was Sierra Leone. It wasn’t in the DRC.

Larry Bernstein:

The Sierra Leone is far away from the DRC. It is 1800 miles apart which is like the distance from Denver to NYC.

Ari Ciment:

Most of the deaths from Ebola Zaire happened in the Western part of Africa. Whereas this Bundibugyo is in the Eastern DRC, which is near Uganda.

In 1994, the Hutus massacred 800,000 Tutsis, a real genocide over 100 days. The genocidal Hutus escaped to the Eastern DRC, the place right now, which is the epicenter of the Bundibugyo Ebola. And that was the Hutus’ stronghold till now. The M23 is a Tutsi group that is at war currently. They fight with the Hutus’ remnant in the Eastern DRC. That’s where they have gold mining. They have tons of metals, tungsten, and it’s a mineral haven.

Bernstein:

I want to give my audience some background information about the Democratic Republic of the Congo. It is in the South and Central part of Africa. It is a geographically a large country that borders several African countries including Angola, Sudan, Uganda, Rwanda, and Tanzania. The population is growing very quickly. In 1960, the DRC population was 15 million and today it is 115 million. It is expected to be 220 million in 2050 and 320 million in 2075.

If you compare the population of the DRC to Russia for example. Russia had 8x more people in 1960 but that gap shrank so now Russia is only 20% more populous today. By 2050 Russia will have half as many people as the DRC and by 2075 only a third of DRC’s population. This shows the power of exponential growth in the DRC as compared to zero growth in Russia.

Another metric is that the DRC will have the same population as the US in 2090.

Ari Ciment:

You also have to factor in that they lost six million people during the second Congo War, which was 1997 to 2003. So even with that their population is growing.

Larry Bernstein:

The DRC is an impoverished country that lacks suitable drinking water and a poor healthcare system. The infant mortality rate is 6% as compared to ½ of 1% in the USA. Each year 300,000 babies die in the DRC. We have been discussing the Ebola virus which as killed around 200 people this year in the DRC. But in comparison 1000 babies are dying every day in the DRC. I know Ebola is scary because it could jump the ocean and end up in our backyard. But isn’t the relevant health risk for the DRC its infant mortality?

Ari Ciment:

I think that’s a great point. 1300 Ebola cases so far, there’s 240 deaths and the fear is it going to rise above even the Zaire Ebola virus, which was 11,000 deaths.

Larry Bernstein:

What is definition of a pandemic?

Ari Ciment:

A pandemic is it’s not only crossing local boundaries; it’s crossing all over. Pandemic is all over the world, pan. Epidemic is a local out of control. You could think of it like a fire with the embers going from one room to the next, whereas the pandemic is a fire with smoke going all over all the rooms.

People who want to know about the epidemiology of the virus, it’s a filovirus, which is unique to the Ebola viruses. That’s the thread-like RNA virus that replicates really fast in the cytoplasm, causes hemorrhagic symptoms as opposed to the flavivirus, that’s Dengue fever and Zika that is spread by mosquitoes.

Larry Bernstein:

Can a mosquito transmit the Ebola virus from one human host to another?

Ari Ciment:

I don’t think so.

Larry Bernstein:

Would you take a Pfizer vaccine that’s been approved by the DRC, even though it’s not FDA approved.

Ari Ciment:

Yes. If the mortality was that high, for sure. I would.

Larry Bernstein:

I end my podcast on a note of optimism. What are you optimistic about as it relates to this new Ebola mutation?

Ari Ciment:

I think it’s a fascinating scary story. What makes it unique is this geopolitical situation and the fact that the DRC is in the World Cup for the first time after 52 years. Hopefully this Ebola will die down. I think this will be a stimulus for the DRC and for Rwanda to finally make amends.

Larry Bernstein:

Thanks to Ari for joining us.

If you missed our previous podcast, it was How AI will Change Law Schools, Law Firms, and Users of Legal Services.

Our speaker was Polk Wagner who is the Deputy Dean of Penn Law School who has been charged with figuring out how to adapt the law school curriculum to the AI revolution. Polk discussed how law schools will adapt as their graduates’ jobs will no longer focus on document creation but will instead require complex legal analysis.

We also talked about how AI will change the structure of law firms since the by-the-hour billing practice will end and what will replace it.

In addition, we chatted about how consumers of legal services will use AI to negotiate contracts, to comprehend complex legal agreements, and to help draft documents that previously would have been delegated to their attorneys.

Upcoming on What Happens Next is Encouraging Competing Viewpoints Among College Students.

Our speaker will be Daniel Diermeier who is the Chancelor of Vanderbilt. I want to hear from Daniel about how the administration can achieve political neutrality on campus. I want to learn about how to create a university culture that encourages free speech and allows for debate without shaming the opposing perspective.

You can find our previous episodes and transcripts on our website. Please follow us on Apple Podcasts or Spotify. 

I am Larry Bernstein with the podcast What Happens Next.

Check out our previous episode, How AI Will Change Law Schools, Law Firms, and Users of Legal Services, here.

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Polk Wagner

Subject: How AI Will Change Law Schools, Law Firms, and Users of Legal Services
Bio: Deputy Dean of Penn Law School

Transcript:

Larry Bernstein:

Welcome to Happens Next. My name is Larry Bernstein. What Happens Next is a podcast that covers economics, politics, and history, and today’s episode is how AI will change law schools, law firms, and users of legal services.

Our speaker is Polk Wagner, who’s the deputy dean of Penn Law School, who has been charged with figuring out how to adapt the law school curriculum to the AI revolution. I want to hear from Polk about how law schools will adapt as their graduate’s jobs will no longer focus on document creation, but instead more complex legal analysis.

This podcast was taped at a conference that I hosted so many of the questions will be asked by my friends. And in the audience was David Stellings, who’s the managing partner of law firm Leif Cabreze. I want to learn from David about how AI would change the structure of law firms as the work process will need to change and I want to find out if the by the hour billing practice will end and what will replace it.

I also want to hear from my friends who use legal services about how they plan to use AI to negotiate contracts, to understand complex legal agreements, and to draft documents that previously would have been delegated to their attorneys.

Polk, can you please begin with six minutes of opening remarks?

Polk Wagner:

This young transactional lawyer named Zach Shapiro had a small practice and he created a viral post called the Claude Native Law Firm where he described how he was able to replicate functions of a huge array of legal associates legal work, using mainly off-the- shelf Claude tools.

It does document review, it drafts, and it revises based on comments. He stays in the loop on the judgment calls, but really the work is being done by Claude. Artificial intelligence technologies are extremely good at text. Lawyers do a lot of interacting with documents and so it seemed only natural that this was going to be an area where there were significant disruption and change, but until I think this winter that was mainly theoretical. Now it’s coming more quickly than any of us thought. Giant law firms are probably 12 months behind. There’s a lot of friction involved in getting these tools to work in the real world. Scholarship by its nature takes years to get through the publication process.

And an even slower step than scholarship is the teaching. Law is by its nature a very conservative and slow profession. That is a virtue as well as a detriment, but that makes it even slower in law school. We teach people by making the students do things.

It’s the repetition, the writing of the briefs, the writing of exams, the papers is how we teach people to work through structured arguments, reasoning, judgment, assessing under conditions of ambiguity, all important lawyerly skills. We are seeing from these AI tools that the work piece is being mostly replaced. That raises a whole bunch of existential questions for a law school like mine and for law firms How should we be teaching students? We know that there are going to be a bunch of things that lawyers do that the AIs can’t, they’re not good at judgment, reasoning, analysis, people skills, all of these things that lawyers do that are important and probably going to become even more valuable in the future.

Traditionally, that’s not something we teach specifically. . Instead of producing entry-level lawyers, we need to be able to produce associates at a fifth-year level. People who can supervise the creation of work rather than doing the work themselves. They need to be able to supervise teams of AI agents and make judgment calls and choices almost from day one when they come into the firm. I’m doing a sort of a small-scale test with some of my colleagues where I have my AI bots write exams and I slip them into the pile of the exams that my faculty colleagues get and they grade them.

There have been four so far and the AIs have finished first in every single one and not by a small amount either. I’m doing it primarily as a wakeup call to my colleagues that we need to rethink how we’re assessing.

This particular study is offering AI its best possible advantages because it’s under high stress, tight time conditions, strict word limits. An unnatural situation where the AIs are going to be exceptional. It writes so much better than a law student under extreme time pressure. I don’t think that necessarily says that there will be no more lawyers. That’s interesting to think about as a pedagogical tool. Our toolkit has always been these exams and they’re not what we should be testing anymore.

Jay Greene:

Is this conversation among your colleagues about reducing the number of students you admit or perhaps eliminating your school or other schools like it? So even Education schools, there’s very little demand for new teachers relatively. I would try to convince my colleagues that we should shrink and they thought this was the most monstrous thing.

Polk Wagner:

That would not be a popular thing for sure, but you’re exactly right. There’s going to be significant displacement in the legal market. The question is timing. The roles of particular lawyers are going to become much more valuable. Those that can apply reasoning, judgment, handle ambiguity, all the things that AI can’t really do. Penn may be fortunate enough to be on the correct side of that curve, given the type of student profile we typically have. If I was predicting, I would say there are going to be fewer law schools for sure.

There are predictions about whether there’s going to be any more hiring of software coders anymore. On the other hand, there’s going to be a lot of demand for software because it becomes inexpensive and there’s going to be people who need to manage those systems. There might be more coders. We might see a similar phenomenon in law, the demand for legal services and access to the legal system is such that when the costs come down, you need more people to sort of manage that process.

Rory MacFarquhar:

Watching the guy discuss the two-person law firm, one version of it is these two people become incredibly valuable, but the other version says, fast forward 24 months and you have a zero- person law firm. The companies can do all the legal services that they need.

Polk Wagner:

One of the things that we are planning for is what we think of as legal work largely going to be done not at law firms in the future. It’s going to migrate into various places, maybe inside firms themselves where they can do versions of DIY legal work relatively straightforward. You can really harness these materials to allow a small group of in-house lawyers to run what used to require significant outside counsel. I still think there’s going to be roles for high-end lawyers at firms that are very specialized, but I do think that what we think of as legal practice is going to migrate into a whole bunch of different arenas.

We need to think about is how to teach our students to succeed in all these contexts. Whether they’re in-house or in the government where they’re not traditional lawyers, but they’re still doing legal work.

David Stellings:

My partners on the executive committee, there was a raging debate going on how we should change our AI policy. At the heart of that debate is the question of whether associates should be allowed to use AI to create a document and then check the document and improve the document or whether they should be required to draft the document themselves as lawyers have for hundreds of years. I think that they’re going to use AI regardless of whether we tell them they’re allowed to use AI. If they use AI, how are they ever going to become good writers?

As litigators our success is based largely on our ability to argue persuasively in writing and verbally and if they never develop that skill, how are they ever even going to be in a position to supervise the AI agents?

Polk Wagner:

We restructured the 1L curriculum this year for legal writing and they had no access to AI for the first two months and were taught the very beginning, how you write a brief,and then starting in the second semester they were given more and more access to use AI tools and then taught how to use them effectively. I mean, that’s where we are now, which is you got to learn how to do it.

David Stellings:

It takes so much longer than two semesters to learn how to write. I’ve been doing this for 30 years and I’m still learning how to write better, more persuasively. My wife who’s also a lawyer, we were talking about this last night and she’s like, “Well, maybe lawyers won’t need to write anymore.” What do you think about that?

Polk Wagner:

I have a colleague who does contract law whose hypothesis is that we won’t have contracts anymore. You just have your AI agent talk to someone else’s AI agent and they’ll work it out amongst themselves given the parameters that they understand about the business.

Larry Bernstein:

I had a golf outing the other day and David Brail created an app which kept score, handicap adjusted, skins, everything you can imagine. David has no skills whatsoever, period. It was amazing. How did David pull this thing off? He said it was pretty easy. I just told it what to do. Someone who has no skills to be able to get an A+ result.

Polk Wagner:

You understood immediately whether what the AI was doing made any sense or not and you understood the structure of the thing enough to know, “Oh yeah, these are the things I need to look at. These are the things I don’t.” How do we create these experts in understanding where the minefields are?

Coding is different because coding is very clear whether it works or it doesn’t. You run it and the thing crashes or it doesn’t. That’s not quite the same as what we talk about in law, particularly with long running agreements between corporations where the answer may be 15 years down the road some edge case arises that nobody ever considered.

Larry Bernstein:

Example, I have a will and a trust and these things are complicated. You sit down with a lawyer, you lay out all the conditions, they hand you this very extensive legal agreement. I’m sophisticated, but I don’t understand what’s going on in this document. I tell my parents that they should sign the same thing. And my mother says, “Larry, do you have any idea what this is? “ And I said, “Well, just sign it.”

Lawyers in general are very poor at articulating complex documents. We must take this leap of faith that this document reflects the needs and desires of this family. What AI can do is unbelievable. It’ll explain in plain English exactly what this thing does.

Polk Wagner:

AI tools make it so much easier to become familiar with subject matter areas that you’re less familiar with and it can draft simple documents. One of the roles that lawyers have always played is trust. The reason that you just sign whatever they put in front of you is because you trust that the lawyer that you’ve hired. Lawyers can provide that advice and trust to guide you and that is something I think that AI can’t necessarily replace, at least not in the foreseeable term.

We need to train the lawyers who can take the summary that you bring to them and engage with you in a way that gets to the point quickly, and gives you trust and reassurance that what you’re doing is going to meet your needs. That’s where the legal education and the practice of law need to change because traditionally, we’ve favored lawyers who can do the thing not talk about the thing. You do get the occasions where the lawyers don’t communicate well, but I think that’s going to be part of what we need to be teaching lawyers.

Mitch Feinman:

My wife is a trust and estates partner at a big law firm and a third of her job is being a therapist. If you look at the most common use of AI right now, therapist is number one on the list

and growing. I observe how my wife and her firm do things in terms of hardware and equipment and processes and I’m astounded. Talk about laggards on the technology adoption cycle and big law firms. I know you’re taking the perspective of graduating law students, but you’ve got people running these law firms who will be running them for a long time who are so behind on technology adoption. Do you believe they’re just going to have to adapt despite not being well

equipped to do so?

Polk Wagner:

That would be my expectation. I do think there’s a long transition period here. There’s lots of scholarship on the way that technology diffuses through the economy. It takes a long time. There’s an enormous amount of friction. The bots can create simple legal documents, but it’s not legal for them to do so right now because of various bar association rules. The firms are set up to maximize the amount of work because that’s what they can bill and that’s going to change. The question is how quickly and Walmart sent out a list to all their outside counsel f with things that were no longer billable because we want you to do it with AI.

If you’re a big, slow law firm and that letter comes from your major client, that is a serious wakeup call that is going to force change much more than the firms arguing amongst themselves. Once the clients start saying, “I will not pay anymore for the stuff that AI can do well,” then the firms are going to have to change.

David Stellings:

Most of these lawyers are getting paid by the hour and it seems to me like this is going to impede their ability to bill as many hours as they’re used to billing.

Polk Wagner:

100%. And this is going to dramatically force many law firms to change the way that they are doing business. How do we make it so that the students that we graduate are going to be successful in these new models? We’re adding to the curriculum a lot of courses on how to think about new models of legal practice, whether it’s contingency fee firms or modified fees or flat fees or all the different ways that don’t rely on the hours of work because that’s going to be gone.

Penn Law primarily sends lawyers to large New York City law firms. At least those firms appear to have made no changes at all in their hiring approach.

David Stellings:

Anecdotally, some of the top law firms are considering applying in the litigation context, which is where billable hours have reigned, a similar paradigm that they apply in the deal context with PE where they get a percentage of the deal amount either in a flat fee arrangement or even some hybrid with a contingent element.

Polk Wagner:

If law firms are going to survive, they’re going to have to have different business models andI do think we’re going to be seeing law being done in a lot of different places.Our students are going to end up in jobs that are not at law firms, working inside companies or for regulatory organizations, rather than at a traditional law firm.

This dramatic reduction in cost is going to ripple throughout the way that law is done.

Polk Wagner:

I think there’s enormous opportunities for truly dramatic public benefits. You could imagine landlord-tenant law. The landlords take advantage of people who otherwise don’t have access to the legal system or lawyers. You could imagine a city like Philadelphia setting up an AI system that resolves these disputes at pennies on the dollar and dramatically shifts the balance of power between landlords and tenants to the benefit of people who probably need that access to the legal system who don’t get it right now. We can’t even see yet all the ways that this is going to change the way that we think about the legal system.

I have a project right now with about 25 federal judges and my team of RAs and I work with them to explore how AI can improve litigation, and they are seeing a dramatic increase in filings because it’s very cheap and easy to file. They’re seeing this among prisoners at this point because they have access to ChatGPT in the prison library and they make very compelling briefs that sometimes make good points at a pace and scale that the system is not designed to deal with.

David Kostin:

Is there a thought process of how the sentencing process may use AI?

Polk Wagner:

There’s an enormous literature around biases in AI. AI models represent all of us and because of that they have all the good and bad parts of us. It has been documented in many cases that without significant guardrails, these models can behave in ways that are socially detrimental because there’s a lot of socially detrimental information that they’ve been trained on. The ethics of using these tools for sentencing is a big open question. There are courses at the law school right now exploring that and nobody knows the answer. The opportunities are tremendous in terms of the pace and scale at which you could resolve disputes. People sit for months waiting for their sentencing, why could we not do that in a day?

There’s the opportunity for those systems to be much more accurate than a judge guessing what the right answer is, but there’s also concern that these systems are not judgment machines. They are at best knowledge machines. What they do may look like judgment, but they’re not exercising any human judgment and where you keep the human in that loop is an interesting question.

Bryan Verona:

I take exception to your characterization of landlord tenant power structures. It’s not that simple. Time is the more valuable against landlords and the system is horribly clogged, at least in New York. Which clearly doesn’t need to be the case. his idea that criminal cases, certainly civil and/or litigation can be argued by bots conceptually overseen by a judge bot. Why do we need people? Who gets to calibrate the judgment and the sentencing? Why are theatrics in court relevant? Why are biases of judges relevant? Doesn’t this streamline these processes and certainly speed them up?

Polk Wagner:

I think that there’s a lot of opportunities for streamlining at every place in the legal spectrum. One of my colleagues is finishing up a study where he created two pools of humans, each with different political affiliations and asked them to interpret the contract terms. They gave different answers for those pools and then he asked an AI to also interpret them. These were all known terms that had been decided over many years by courts, and the AIs were always better. AIs don’t have those sorts of biases in them and obviously can be much faster. What is the role for humans? I think for a long time we’re going to need humans as trust and accountability markers.

Would you trust the outcome of a dispute you had to just pure AI over a judge ultimately making a call?

Bryan Verona:

Probably.

Polk Wagner:

Because you think that the AIs have less bias? or- Humans are

Zachary Schur:

Humans are imperfect things.

Larry Bernstein:

Our next question comes from Moira McDermott who a Math Professor at Syracuse is.

Moira McDermott:

I wanted to go back to the question of how much training do you need before you can evaluate and be a supervisor? We must have a statement on our syllabus about AI use and it can be of no use in these limited situations or go hog wild. I’ve always picked that middle one and tried to lay out when I thought you’d be able to use it. You can use it to help you study, making practice quizzes, that sort of thing. I tried to use Claude, ChatGPT to make extra practice problems for exams for my students and it was hard.

I give it my old homework assignments or old exams, and it just doesn’t do a very good job because like if you just change the numbers, either it could be very messy computationally or it misses the point. There’s a particular purpose for a question that I ask and there’s something in the problem that must work a certain way to be a good measure of the thing I’m trying to get at.

Polk Wagner:

The AIs do not have any sense of what problems they should be resolving. That is where the real skill of an advanced knowledgeable person matters a ton.

Moira McDermott:

The real thing is being able to ask the right questions, not answer them.

Polk Wagner:

Exactly. That is going to be a very durable skill for humans in the legal context. How do we get students from zero to a point where they can ask the correct questions? As someone in charge of figuring this out at a law school that is the big existential question that I worry about.

Rory MacFarquhar:

What are the legal and institutional protections on the role of human lawyers that would require actual change to eliminate?

Polk Wagner:

Various bar associations have taken various positions on the use of AI. Most end up along the lines of if you use it, you’re entirely responsible for anything that happens. Various judges have created their own local rules that apply to trials either in their venue or in their courtroom. Those range from, I don’t want to see anything that has any AI content at all to, if you use it, just don’t screw up.

The weird case by having a client ask legal questions of an AI that was deemed to be violating or piercing the lawyer client privilege, that seems like a one-off case. There’s a lot of fear around how these cases could turn out because as lawyers, unless we see something decided by a court, we don’t know what the answer is yet. There’s certainly a lot of regulations about who can be a lawyer and what you need to be a lawyer. I do think more lawyers are embracing the fact that these can be powerful assistance at this point more so than making the final decisions.

Paul Yablon:

People lie and part of the judge’s job is to determine who he believes and what is the truth. When we use AI, we are careful about the data sets we use, and we scrub the data because that is imperative to get the right outcome. If we knew that the data going into the decision making process was true, I would feel more confident that AI would make the right call. How do you deal with that?

Polk Wagner:

The more confident you are that the facts are going into the decision are the source of truth, the more confident you are that the output decision is going to be correct. The whole point of our litigation system is to surface what is as close to the ground truth as possible. Cross examination tries to prevent the lying or at least address it.

The judges that I’m working with have a lot of concern about the data getting worse. Traditionally we believed photos are compelling, or a recording of somebody’s voice. This is no longer ground truth. None of these things can be determined to be truth in the way that they were even six months ago. Lawyers and judges are seeing a lot more evidentiary challenges and concerns and incredible ambiguity about what is real, what is not real, because we have not gotten our arms around yet how to distinguish between something that’s AI created and not AI created.

It’s going to be an enormous challenge to work through that we’re not yet equipped to do. :

All of the major AI platforms have various proposals for how to tag or otherwise identify AI created artifacts as such. The judges I talk to are seeing this daily.

Larry Bernstein:

Our next speaker is Steve Kuhn who is the founder of Sportspredict.com.

Steve Kuhn:

Shani and I started sportspredict.com, where we have people predict sports events and we give rewards and status to people who are good predictors. I want to propose a potential idea for the world of law. Let’s say you have a case in front of the Supreme Court, and we’ve got tons of data on how every Justice Supreme Court has ruled on various cases before. We put all that in and we create a bot for each one that tries to mimic how they would decide a case and best predict how they would decide a case. Then as the legal team, your job is to come up with the brief and the set of arguments that maximizes the odds that you win. It becomes like law predict. How would you know whether they’re good? You would know by their ability to judge in historical cases or current cases what the odds were. We would assess them by saying, “Here’s a case for all nine justices, give us your odds.

Polk Wagner:

There’s a lawyer who has a blog that is doing something very similar\ He has a set of AIs that will write Supreme Court opinions and they are shockingly close to the ones that actually get written because it’s given enough data, it is relatively predictable how these cases turn out and the writing styles are easy because you’ve got a huge corpus of writing. So you can say, “Oh, here’s what Justice Thomas is going to write on this case.” And it’s almost always shockingly correct or shockingly close to correct.

Larry Bernstein:

One of the reasons we love arbitration is because it’s so much faster than going through the courts. I was involved in arbitration, and it ended up taking a long time, costing a lot of money. It surprised me. I have a feeling that if this arbitrator was required to use AI that this could speed up things.

Polk Wagner:

There’s a market for arbitrators, right? There’s going to be a lot of incentives and pressures for the arbitration firms to get efficient. The reasons that they are a popular option is that they can do things much more quickly and cheaply than traditional litigation. That is an area where you’re going to see rapid development. I would view the arbitration industry as a leading-edge indicator of when more automation of the law starts to occur.

One of our alums who started an entire AI law firm has identified employment law as an area of low hanging fruit for AI because the terms of those contracts are relatively detailed, straightforward and well worn. The AIs can do a good job of assessing the quality of agreements and how they’re going to play out.

Larry Bernstein:

I’m interested in how contract relationships between firms and individuals will change. With AI, we can negotiate bespoke user agreements.

Polk Wagner:

I have a browser extension in Chrome that I use that lights up different colors depending on how egregious the user agreement is of the website that you’re on. We are halfway there in having the identification of these things. Whether that makes the market much more efficient for me than negotiating with the websites to get my own version of the agreement, I don’t know. The next step would be that my browser negotiates with the server at the other end and says, “Here’s the set of agreements or set of terms we can agree on, “ and then we go from there.

Extended warranties are a version of that. People get to choose the product with the various menus, and you might have a longer or shorter warranty and pay more or less. There’s a lot of friction because there’s a lot of incentives on the part of the current incumbents to maintain this structure for as long as they possibly can. And it’s about when the market pushes.

David Stellings:

Consumer contracts almost always are contracts of adhesion, meaning there’s no negotiation. You accept their terms and conditions. I don’t see that changing anytime soon.

Larry Bernstein:

Contractual relationships are going to be in flux. The reason we have lawyers is because the businesspeople don’t really understand what’s going on, what happens is lawyers fight, fight, fight, and then they come to the businesspeople and say, “We’re fighting about this. What do you want me to do? “ And we can skip a step and just say, “Here are the issues, businessperson, what do you want to do? “ And then you can lay it out instead of having these teams of lawyers negotiate back and forth for days and just get to cut to the chase.

David Stellings:

There is one way those terms and conditions and consumer contracts change, which is through litigation. For many years had in its terms and conditions a forced arbitration provision. Forced arbitration provisions essentially prevent groups of people from gathering and suing companies and if they can’t gather, there’s no economically feasible way to stand up for themselves. But so Amazon had this arbitration provision and a smart firm said, “Okay, well, you want to go through arbitration, I’m going to market.” They got like 15 million bucks from a funder. They gathered something like 80,000 Amazon customers, all of them filed notices of arbitration.

Amazon wound up having to pay arbitration fees. Forget about whether they won or lost. Amazon was on the hook for like a thousand bucks per person who was filing for arbitration. Amazon removed the arbitration provision from its contract. Complaining’s not going to do it, but maybe that way.

David Stellings:

I was a defense lawyer for about five years and I’ve been a plaintiff’s contingency lawyer for almost 30 years. It’s so much better. I’ve always thought that the billable hour model has perverse incentives for the lawyers. Most lawyers are ethical people and are not intentionally spending additional hours doing work so that they could bill a client. But I do think that lurking in the back of their heads is the idea that if my group doesn’t bill $5 million this year, then our bonuses are going to be slashed relative to these PE guys who are making $30 million a year. I do think that it influences behavior. It makes them less likely to approach the other side even when they know that they’re eventually going to have to settle because it’s contrary to their business model.

I think this AI revolution is likely to finally push the billable hour away from the center of gravity of the legal system in the US.

Polk Wagner:

I think this is terrific because being a lawyer on a billable hour model sucks and it is a terrible lifestyle for young lawyers who feel like they’ve got to bill more hours, and the focus becomes on how much you work as to whether you’re doing a good job. I think that has a few perverse incentives, not only economic, but on people’s personal health. I think one of the interesting things about that viral Zach Shapiro essay was about how much better his job was now that Claude was doing most of the work. Because he could make the big decisions, the calls, work with the clients, and someone else was dealing with the writeups of the documents that’s so tedious and makes your job less fun as a lawyer.

Using Claude on a constant basis has made my job just so much more fun. I can do more, I can do better, I can put together a mini course in the morning instead of spending weeks on it.\ It’s a different model and frankly, I think it is better.

Law firms are going to have to change the practice of law and what we think of as law is going to have to change. There are enormous benefits both in the joy of doing what you love as well as monetary and economic benefits. I’m optimistic, but not without some clear-eyed views of the challenges ahead.

Larry Bernstein:

Thanks to Polk for joining us.

If you missed our previous podcast, it was fixing our healthcare system. Our speaker was Josh Gottlieb, who’s professor of economics at the University of Chicago’s Harris School of Public Health.

I want to learn from Josh about what are the barriers to educating more doctors and what we can do to solve the seemingly intractable problems to increase quality and productivity of our healthcare system.

You can find our previous episodes and transcripts on our website. Please follow us on a podcast or Spotify. I’m Larry Bernstein with the podcast, What Happens Next.

Check out our previous episode, Fixing Our Healthcare System, here.

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Josh Gottlieb

Subject: Fixing Our Healthcare System
Bio: Professor of Economics at University of Chicago’s Harris School of Public Health and Co-Director of The Becker Friedman Institute’s Health Economics Initiative

Transcript:

Larry Bernstein:

Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast that covers economics, politics, and history. Today’s episode is Fixing Our Healthcare System.

Our speaker is Josh Gottlieb who is a professor of Economics at the University of Chicago’s Harris School of Public Health and Co-Director of the Becker Friedman Institute’s Health Economics Initiative.

I want to learn from Josh about what the barriers are to getting more doctors and what we can do to solve seemingly intractable problems to increase the quality and productivity of our healthcare.

Josh, can you please begin with six minutes of opening remarks.

Josh Gottlieb:

As the U.S. population has gotten older and new technologies have expanded for what medicine can do, there’s increasing demand for doctors and for healthcare. From 1980 to 2025, the U.S. population above age 64 grew by 140% and above age 80 tripled and these are the groups that use the most healthcare. Over this period, the number of MD degrees awarded by US institutions grew by 34%. That leaves the U.S. with substantially fewer doctors relative to its population. As you might expect from a basic supply and demand, when you have an increase in demand and restrictions on supply, this leads to higher earnings for doctors.

If entry barriers were not a problem, we would see growth in the number of physicians being trained. We’d see increases in medical schools and residencies that would allow more people to become physicians in the U.S., but those have been restricted.

You can’t just say, “I want to open a new residency program.” Congress cut back on how much they fund these residencies in the late ‘90s and the specialty residency review committees have some control. The entry barriers are substantial and the pressure for healthcare has shown up with other professions.

There are not enough doctors to meet that demand and so we’ve seen mid-level or advanced nurse practitioners, physician assistants, certified registered nurse anesthetists do work that doctors traditionally would have done. We’re seeing massive growth in these substitutes and that reflects the demand for care when physician entry is restricted.

Larry Bernstein:

My grandfather was a tenured professor in the medical school at the University of Vienna. In 1938 days after the Anschluss, all the Jews were fired from the University of Vienna.

My grandfather was both a psychoanalyst at the Freud Institute and an internist. He escaped to Paris, but the French limited foreign doctor’s ability to practice. Even though he had been a professor at one of the top medical schools in Europe, France would not let him practice medicine.

When my grandfather arrived in Chicago in 1943, he was allowed to work immediately and had to repeat some of his residency requirements.

In your paper, you show that doctors in America make double than their peers in the G-7 and four times doctors in Sweden. Should the US be more amenable to hiring doctors who are trained at accredited foreign hospitals in the most advanced countries?

Josh Gottlieb:

We don’t make it easy for international docs to come to the US. The inference you’re drawing from that international comparison is right that if you’re a doc and trained, you’re making a lot less than you could in the US, there’s probably a lot who would like to work in the US, but it’s not easy. So first you must repeat a lot of residency training. There are some exceptions for some Canadian residencies that can count in the US, but in general, international residencies don’t count. Imagine coming to the US after having had a career somewhere else and then being told you must be the lowest trainee and work very long hours.

This means that when people look at data on international medical school graduates and what we do in our paper is we have to distinguish between U.S. citizens who go abroad for medical school, usually because they couldn’t get into a medical school in the U.S. versus people who are not U.S. citizens who are coming from abroad and trying to get in. Remember residency is the real bottleneck for practicing.

Larry Bernstein:

We had Stan Goldfarb from the organization called Do No Harm speak on the podcast a week ago. Stan was the Dean of Curriculum at the University of Pennsylvania Medical School. There are 40,000 residency spots available to be filled each year and US medical schools only graduate 25,000, leaving a 15,000 gap. What’s happened is that there’s been increasing numbers of residents offered, but medical schools have not grown. Instead, they’re filling it with 15,000 international students. And the problem with that is that oftentimes they come from medical schools which haven’t been accredited, the ones in Pakistan and Ghana may not be as good as those in the United States.

It’s the exact opposite of the story we have for university education. In the university, we have an excess supply of educational institutions and as a result, we import large numbers of foreigners who attend these high-quality American institutions. And so, when it comes to medical school, there’s a shortage of education and a glut of students in the supply/demand balance. How do you explain the inability of medical schools to expand?

My economics training suggests that markets should respond when there is demand for medical schools. Why haven’t schools opened more spots?

Josh Gottlieb:

Central planning is hard. There have been efforts at the federal level back more than a quarter century, but there were efforts to reduce the number of trainees based on the theory that doctors are expensive. The logic in the ‘80s, healthcare costs are growing. You need doctors to provide healthcare. Doctors are the ones writing prescriptions and doing the surgeries and spending all this money so we can reduce our healthcare cost growth by avoiding an oversupply of doctors. It was a centrally planned effort to restrict the number of medical school slots. I would dispute your characterization that the market was failing to respond to price signals. In fact, what we’ve seen with the rise of mid-levels are precisely the market forces saying there is demand here. But the med schools were told not to expand.

Larry Bernstein:

Bright students are ready to pay for a medical school education, but the schools refuse to accept more students.

Josh, I don’t know what you’re doing for the rest of the day, but why don’t we open our own medical school and profit from this failure? Let’s apply for accreditation, let’s figure this thing out. Why can’t entrepreneurs solve this problem?

Josh Gottlieb:

You buried the punchline, which is the accreditation. I agree with you. We don’t need a federal subsidy to open our med school this afternoon. The big deal is who controls the accreditation? This is like the old guild system. The incumbents are represented on the residency review commissions, and they impose a ton of requirements all in the name of maintaining quality and preventing oversupply and controlling costs. They’re not going to make it easy.

Residency is the real bottleneck less in primary care and more in the specialties. There’s a huge demand for orthopedic surgery residencies that are not expanding. The hypothetical Bernstein-Gottlieb med school is not going to change the number of orthopedic surgeons.

Specialists we are training that’s being restricted by the residency review commission.

Larry Bernstein:

In your paper you showed that the compensation for dermatologists and ophthalmologists was nearly as high as the workhorse surgeons even though they have much better hours and rarely have emergency procedures.

Josh Gottlieb:

I agree with you that it seems like in dermatology you would expect these rents competed away. It’s got some attractive features and so the question is why it is not compensated. One is Medicare. We have a couple of big government purchasers of healthcare, Medicare and Medicaid, and they have rules about how much they pay for different services, how much they pay hospitals, how much they pay doctors, how much they pay for each specific service, and those rules pass through into physician’s incomes in a sizeable way.

So, part of it is we’re trying to explain with market forces are also heavily influenced by payment policy, by public policy choices.

Dermatology is a special case because it’s got a sizable share that is outside of insurance. People are doing cosmetic stuff and paying privately and so that increases the dermatologists outside option whereas most other specialties Medicare plays a big role and then private insurance copies a lot of what Medicare does. So, you get a lot of comparable relative pricing driven by the public policy choices here. The other thing is we just must come back to the specialty level entry barriers, right? The dermatology association has no incentive to let people enter.

Larry Bernstein:

How do the medical schools ration dermatology residency programs?

Josh Gottlieb:

To get into dermatology requires a ton of pre-residency effort. If we’re not letting the market clear with prices, it’s going to clear with some other form of rationing. We’re seeing this with a ton of investment in research that people do when they’re med students so they can look good and get into the residency they want.

There are differences between the US and the international grads. The US grads want to go into dermatology and are much less eager to go into primary care and so we’re seeing sorting on proxies for quality that do reflect that dermatology is paid more than what you would expect based on the work hours and the training length.

Larry Bernstein:

Last week on the podcast with Stan Goldfarb, the topic was his desire to return science to the classroom. 25 years ago, there were two years of science required in medical school education and it’s been cut to one. Stan thinks that this is hugely problematic, that without a broad understanding of science and medicine, it’s going to limit the medical student to become a scientist. That doctor is trained as a technician and thus will be limited to best practices at the time they were taught in school. Biostatistics at the University of Pennsylvania Medical School is taught as a one-week program.

Josh, no one can read one of your economic papers with only a week of statistics that would be impossible.

How do you feel about the diminution of science in medical school education? And do you think that with rapidly changing medical science that the upcoming doctors need to be trained as scientists and not technicians.

Josh Gottlieb:

There’s lots of debates in the economic community about whether we’re using the right tools in PhD admissions. There’s a lot of debates over, are we asking for too much math? I don’t think economics has a unified answer on what we should be doing. I agree with you that a week of statistics would probably not prepare you to do a PhD with me.

The big question we haven’t touched on is what do we need in the AI era? What do we need the doctors to be able to do? Do they all need to be scientists or do we need a wider range of people who are good at using AI tools to figure out what the patient needs.

You probably need some basic training to critically evaluate what the AI is telling you, but I don’t know if it’s the same as what it was a generation ago. It’s currently under flux.

Larry Bernstein:

I did a podcast on applying AI to medical care with Dr. Ari Cement from Mount Sinai.

The case I gave him was that my daughter had a cough that wouldn’t go away for nine months and he said, “I’ve seen this a thousand times, here’s the top three things we should look at.”

I said, “Let’s ask AI.” And AI asked, “Has Hannah visited any nations in the last year where TB is common?” And he goes, “Wow, I hadn’t even thought of even asking that question.” Has she?

“No.”

Ari said, “That’s a less than 1% chance. It wouldn’t be on my top 20 questions, but I love the out of the box question.”

Another example, I said, “Do you think I should get another COVID vaccine?” AI said, “get the vaccine.”

This special purpose medical AI allows the user to review the medical journal articles for how AI came to its conclusion.

Ari said, “A lot of these papers are old from the beginning of COVID, and we’ve learned a lot as COVID has mutated and become less dangerous. We don’t see anybody in the ICU with COVID anymore. You were sick with COVID four times and taken four vaccine shots, COVID has mutated.”

I said, “Well, when do you change your mind?”

“Well, if you’re 85 with a history of pulmonology disease, but for you, forget it.”

AI is the best thing ever, but it can’t look in your ear. It’s making guesses based on the average and not considering the distribution. It’s a tool to be used in conjunction with a medical professional that is smart, educated, thoughtful, analytical, and emotive who can make judgments.

That said, if you’re going to read a medical journal having taken one week of biostatistics, you are not that helpful.

Josh Gottlieb:

Look, the statistics in medical journals are always mediocre. They are Crap.

I’m in favor of training doctors in statistics. I’m also in favor of training doctors in economics. You see so much bad statistics and bad public policy coming out of medical journals. There’s a lot that I would love to teach doctors. There’s a trade-off of the length of medical school. The larger we raise the entry barriers. We are back to the problem that we started with.

I find it natural to ask a question about the frictions, about are the barriers appropriate than to judge an equilibrium outcome. What economics teaches you is you don’t say, “Is the price too high?” We ask, is there some barrier that’s inhibiting entry? Is there some policy that we have that is making it harder to compete or raising the costs? It’s not that New York subways are too costly because they cost a billion dollars a mile. It’s because we know that they’re inflated by adding rules and prevailing wage union buyouts that drive the cost to be 10X European levels.

I’m not going to take a view on what is the right percentage of international grads. We should say, are these barriers useful? They’re saying, “the science in the first two years of medical schools would be a useful barrier.”

They require a certain number of English classes in undergrad before you can apply to medical school. That’s hard to believe that an extra undergraduate English literature class is making a difference for whether you’re going to be a good doctor. You would want to justify them or get rid of them.

On the technician thing, the question is what is the right level of general education that you need to let someone play with robots in your brain? In lots of examples, we send you to the generalist and then if something gets complicated, we have the specialist ready. That’s the normal approach that’s you can have a midwife supervise a birth and then if there’s a problem, they call in the obstetrician.

You can have an NP be the first line point of contact if your kid is sick and then if there’s a problem, you go to the pediatrician and if they can’t handle it, you go to the specialist. It relates to the AI point because maybe the first line of defense is someone with less training augmented with an AI and then they can call on someone more specialized.

Larry Bernstein:

Heart transplants used to be done in specialist hospitals in Houston. Should we move to a model where the best doctors in specific procedures are in a few select locations, and patients should travel to them so that our society can enjoy the benefits of scale?

Josh Gottlieb:

Having the ability to go see the right specialists wherever they are or see the person with more experience in that procedure seems valuable. In Medicare right now we allow people to go to a doctor anywhere in the country. The government doesn’t subsidize travel, but it will pay for medical care.

We have lots of subsidies to get doctors to locate in rural areas. Is that the most efficient way to take care of people, or should we just help them travel?

What we find is that you’d get a bigger bang for your buck by providing travel subsidies at least for people to the right doctor more effectively than trying to get the doctor to go locate in this smaller market.

Larry Bernstein:

I end each podcast on a note of optimism.

Josh Gottlieb:

US society is adaptable. People and organizations are entrepreneurial and not willing to accept the restrictions as they are, but it might be more efficient to relax the restrictions. We have a society that tries to work around things.

There’s so much bad healthcare out there. AI should make it easier for people to get the diagnosis and the treatment right.

Larry Bernstein:

Thanks to Josh for joining us.

If you missed our previous podcast, it was entitled Can Anyone Predict What Happens Next?

Our speaker was Phil Tetlock who is a Professor at Wharton and the author of a book entitled Superforecasting. Often, we get our news and analysis from experts who make predictions that are terribly wrong. Phil analyzed methods of forecasting and found individuals and groups who are fantastic predictors of politics, war, and sports.

Phil discussed how AI and superforecasters work together that will revolutionize the prediction process.

You can find our previous episodes and transcripts on our website. Please follow us on Apple Podcasts or Spotify. 

I am Larry Bernstein with the podcast What Happens Next.

Check out our previous episode, Can Anyone Predict What Happens Next?, here.

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Phil Tetlock

Subject: Can Anyone Predict What Happens Next?
Bio: Professor at Wharton and Author of Superforecasting

Transcript:

Larry Bernstein:

Welcome to What Happens Next. My name is Larry Bernstein.  What Happens Next is a podcast that covers economics, politics, and history. Today’s episode is Can Anyone Predict What Happens Next?

This podcast was taped at a conference where I hosted several Penn Professors on a variety of topics. The audience included my friends who will join me in asking questions.

Our speaker is Phil Tetlock who is a Professor at Wharton and the author of a book entitled Superforecasting. Often, we get our news and analysis from experts who make predictions that are terribly wrong. Phil has analyzed methods of forecasting and has found individuals and groups who are fantastic predictors of politics, war, and sports.

I want to learn how AI and superforecasters working together will revolutionize the prediction process and why that is helpful to markets and mankind.

Phil, can you please begin with six minutes of opening remarks.

Phil Tetlock:

How long are we going to need human forecasters? Will AI be able to perform all the intellectual functions that super forecasters were able to perform in assigning realistic probability estimates to a very wide range of real-world events over extended periods of time. The short answer is probably. I probably will be overtaking the top human performers. And my colleagues at the Forecasting Research Institute are estimating that’s going to happen in about eight months. I’m not sure I believe that projection.

I’ve been studying subjective probability forecasting for four decades plus. I was doing this in the middle of the 1980s during the Cold War. Reagan-Gorbachev was a big debate in the US whether Reagan was increasing or decreasing the risks of a nuclear war with the Soviet Union. I collected some early probability estimates back then, and virtually nobody in 1984 predicted how radical a reformer Gorbachev would be.

Everybody could explain what happened after the fact. So, the conservatives believed that the Soviet Union was a totalitarian system and Jean Kirkpatrick and others argued that these totalitarian systems had perfected the art of self-perpetuation. They hadn’t. And liberals said, “The Reagan policies are going to increase the likelihood of war. We’re going to have Neo-Stalinist retrenchment in the Kremlin.” Those predictions were flat out wrong. The Soviet Union did substantially pivot toward liberalization. Nobody doubts that now and it ultimately led to the disintegration of the Soviet Union. I refer to the debate in the mid-80s as an outcome and relevant learning situation because no matter what happened, everybody was well positioned to explain it. They had no skin in the game because they had too many convenient fallback positions.

I covered that in my book Expert Political Judgment. that came out in 2005, 10 years before Superforecasting. Experts had a hard time outperforming educated readers in elite newspapers. Experts also had a hard time outperforming simple linear extrapolation. There seemed to be virtually no relationship between how prestigious you were and one’s predictive powers.

There were some experts who were pretty good and we characterized their cognitive style, cognitive ability profile, and it was a predictor. What is it that predicted good judgment? It was exactly what makes you unpopular as a topic as a guest in mass media. A good pundit is stepping on the gas, generating lots of reasons why he’s right and the other side is wrong. More balanced forecasters look at the trade-offs. One of the defining features of better forecasters is that they’re boring.

The intelligence community after 9/11, after WMD in Iraq was on the defensive. Congressional oversight demands more accountability for accuracy. The Director of National Intelligence created a research branch called IARPA whose primary mission was to improve forecasting accuracy. I got to know people at IARPA because I was one of the few people in geopolitical forecasting. I designed tournaments that ran from about 2010 to 2016. We won.

IARPA wanted to improve the accuracy of intelligence analysts. The people who missed WMD, the people who missed 9/11 were on the defense. They thought we would create forecasting tournaments, and we would give them some competition. I was running one of the research teams. There were four other research teams with different methodological approaches.

What the intelligence community cared about was their people getting better. When they compared how well their analysts were performing on the same questions that these outsiders were performing. We’re paying the amateurs $300 a year to answer a batch of 100 geopolitical questions that the IC considers to be of national security relevance. And the intelligence analysts lost.

Colin Teichholitz:

And they had access to the United States’ global intelligence efforts.

Phil Tetlock:

It’s their full-time job and they’re professionals. They have access to all this classified information. You would think that they should be completely dominating the amateurs. I don’t think the intelligence analysts are as bad as this comparison is making them out to be, but the results were sobering.

Larry Bernstein:

In the future, do you think there are questions that humans will have an advantage relative to AI and vice versa?

Phil Tetlock:

My colleagues at Forecasting Research Institute led by brilliant young economist Ezra Karger from the University of Chicago created the ForecastBench, which monitors the relative performance of top human performers and frontier AI models on thousands of questions that are posted in public prediction sites. A couple of years ago, the frontier models were well behind the top human performers. It was about a 40% gap and now it’s about a 10% gap. If you do a linear extrapolation, it’s about eight months.

Colin Teichholtz:

You said in the book that one of the big knocks on prediction markets is that it’s small money. People don’t really take them seriously. And so, beating these academic prediction markets is no big deal. Obviously, things have changed. Prediction markets have become a big deal and I’m curious how the forecasters today do?

Phil Tetlock:

15 years ago, low liquidity markets had trouble clearing. Robin Hanson created a market maker that solved some of that problem, but it’s a real limitation and it’s the old line for super forecasters. If you’re so great, why aren’t you rich? It should be monetizable, right?

Some of them are rich, but many of them aren’t. You look at the relationship between intelligence and wealth. Intelligence is certainly correlated with wealth, but to differentiate people in the top 99% versus the top 99.99%, not really.

At the end of the IARPA Forecasting tournaments, the prediction markets were running head-to-head. And the only way the forecasting tournaments could match even the illiquid prediction markets was by using some fancy statistical algorithms that did some of the same functions as markets like cleaning up scale forecasts. But the forecasting tournaments with reasonable algorithms, they could do as well as the prediction markets. Would that still be true with higher monetary stakes in prediction markets? The average prediction market accuracy is in the vicinity of the average top human performers and they’re both about 10% above the AIs that are catching up on them.

Colin Teichholtz:

What traits to look for you to assess that somebody will be a great forecaster?

Phil Tetlock:

The best predictor of whether someone’s a good forecaster is their past track record. The gold standard for accuracy is quadratic scoring. You take the gap between probabilities and realities, you square it, you do the deviations, the smaller the gap, the better forecaster you are. It incentivizes people to report their true beliefs and not to fudge. So, if you say, “ I don’t want to make this mistake because it’ll make climate change look less serious. I’m going to fudge on this.” You’re going to be degrading your score. If you want to minimize your Brier Score, maximize your accuracy, you should report your true beliefs.

There are many different proper scoring rules. I just described it as quadratic squared deviation rule, but it breaks down for some problems in finance and geopolitics elsewhere when you have tail risk. So, there you need logarithmic scoring rules. If you say there’s a 1% chance of something happening and it does, you’re going to get a bad Brier score. If you say there’s a 0% chance of something happening and it does, you’re going to get a slightly worse bad score. If you say 1% and you go with this 1% to 0% error on a logarithmic scale, it’s huge. It means you incur a negative infinity scoring penalty. It means I’ll never believe you again.

If you tell me something is impossible and it happens, I don’t ever want to hear you again. With the logarithmic score, you can never recover from it. From a Brier score, you can recover from it. Brier is much more forgiving. The logarithmic scoring rule says you make an error at the extremes you’re finished. And that produces a sensitivity to tail risk you probably want in finance. I’d recommend log scoring rules as opposed to the more popular Brier.

Colin Teichholtz:

Do you draw a distinction between the elites who acknowledge that they’re as vulnerable as anybody else or is it a broader brush than that?

Phil Tetlock:

I knew Danny Kahneman for a long time, and he felt that the judgmental biases he was studying ran deep into human nature and were very resistant to debiasing interventions. When we tried to train people to become better forecasters, he thought it couldn’t work. He thought if you’re going to make people better forecasters, you must institutionalize the process. Don’t count on them to remember it from their training. You must embed it in the institutional procedures for making judgments. You protocolize it rather than train it. And there’s a good case that Danny’s right about that, but training is possible.

Even though his Nobel Prize was in economics, his background was in perception. He thought that the judgmental biases like overconfidence that he studied were analogous to perceptual illusions that are resistant to training. You’ll simply slip back into the same error over and over again, no matter how much we train you. So, we have to teach you to pull out a ruler. That’s what I mean by protocolizing. And I think that’s sound advice.

David Wecker:

You present very well-defined questions for people to forecast at a certain date, but I find there’s huge value in knowing what the issues are going to be in the future that people care about but aren’t paying attention to today. Do you find that skill to be much different from what you researched and have you done any work on that?

Phil Tetlock:

I love your question. It captures one of the major directions the work has taken since super forecasting. Yes, I find huge value in that. Is there going to be a major war between the US and China before 2050? You ask experts in geopolitics this question and some of them will say very likely because wars tend to occur in hegemonic transitions. Nuclear weapons need to be factored and there’s a school of thought that believes that. There’s another school of thought that says, no, we think for various institutional, economic and political reasons, things are going to stabilize and they’ll work Taiwan out and it’s going to be tense, but it’s navigable.

Those are two big picture views of US-China relations That’s a big question if there’s going to be a war in the next few years.

How do you break down a big question like that into smaller units that are decomposable testable forecasts? That’s the methodology we’ve been pursuing in a number of studies. We call them Bayesian question clusters. What are the things you would expect to observe by 2030, for example, if you could expect a war by 2050? What would your expectations be?

What things would happen around Taiwan? What things would happen in the South China Sea, the Chinese nuclear arsenal, Chinese naval buildup, and Chinese rhetoric? If all of them break in the direction of increased likelihood of war, you would say, this is a collective early warning indicator, the bundle. One of these questions might not be all that diagnostic of the longer trend, but as a bundle, their cumulative diagnosticity can be quite substantial.

Larry Bernstein:

We have Steve Kuhn in the audience. Steve spoke on a previous podcast about his new business Sportspredict.com that applies Phil Tetlock’s Superforecasting to sports betting. Steve, can you please explain your new company’s business.

Steve Kuhn:

Sportspredict.com is free to play, not a gambling platform for people to show their predictive skill. Why sports? It’s the top of the funnel. Four billion people care about sports. It’s 90% of the revenue of Kalshi, so people care about it. There are multiple games every day, so there’s lots of ways to test. There’s not much of an Oracle problem.

Larry Bernstein:

An “Oracle problem” in a bet means that the hard part is not the wager itself but determining the objective truth of the outcome. In other words: who decides what actually happened?

Steve Kuhn:

The leagues decide who won and they publish it. Sports crosses cultures. We’re doing a big event around the World Cup.

In an age of AI, there’s not much difference between a teenager in Nairobi to compete against a PhD student at Stanford given the amount of data. You were asking, how could you find good ways to hire people? We would run a sports contest for your potential candidates. We use Brier scores as our way of measuring talent. Instead of asking somebody, “will Italy beat Spain?” We’ll ask, “What do you think the odds that Italy will beat Spain?” We get a lot more data and more precision following the professor’s work.

We’re working on a contest partnered with a hedge fund where the winner of that contest gets a fellowship to work at that hedge fund and perhaps gets to manage a $1 million dollar sports trading portfolio for them. So, we’re trying to use prizes to award status, but even in sports, people love to play free games. There’s a game called Fantasy Premier League, the English Soccer League. They have 11.5 million people that play it actively and people care very much about winning it. Famously, one year, Magnes Carlsen, who’s the best chess player in the world, got in the top 10 at the finals of that and he couldn’t stop talking about it.

Everyone tells him he’s a genius all the time. He gets to the top 10 in Fantasy Premier League and he puts it all over the place. So, I think there’s an insatiable demand for status and to prove you’re smart.

We can look at your track record. For the World Cup, we’ll have over a thousand predictions that we’ll be able to score. We will have a good sense of whether someone’s a good predictor or not.

We hope to announce this contest soon, which we hope to get large media attention. In addition to that, we’ve also partnered with a group called the John Locke Institute. It’s a summer institute for elite high school students. They have an essay contest every year that has over 100,000 entrants. We’re creating a six-week class on how to become a better predictor. We rolled out this class for 10 students as a trial and they loved it. In six weeks, these students got a lot better at this, and they also had a great time. We’re rolling that out to 300 students this week.

Being a good predictor is something that’s trainable and valuable to know. It’s crazy that we spend a year studying trigonometry, but we don’t study how use data to make good judgments. That’s something we need to fix.

Phil Tetlock:

I think there is an opportunity there. We just created Superforecasting as a label to get the top 2% engaged and stick with us through the IARPA tournaments. It was an invention of convenience because the government refused to pay for performance. So, we had to pay people for status. But if you take it much more seriously, you can create very rich status gradation. Every chess master knows what a Grandmaster is. There’s a very clear hierarchy that people work through and even within Grandmasters, there’s the elite club of over 2,800 and so forth.

In chess, AI’s are better than human chess players a long time ago. The best human players have an Elo rating of about 2850 and the best AI programs like Stockfish and AlphaGo are rated around 4,000, which means that they’re going to win 99.99% of the games against Magnus Carlsen. Magnus Carlsen isn’t going to have a chance. Do people lose interest in chess because there’s this dominant AI force? The interesting thing is they seem even more engaged by it. They use AIs to train themselves. If you were to look at the top players now today who are trained against AIs, compared to the top players 40, 50 years ago, the top players are better.

Rory MacFarquhar:

One of the major concerns about prediction markets is insider trading. Do you know whether your super forecasters are participating in these markets so that they are able to not just get status but cash in on their ability to be better at making these predictions

Phil Tetlock:

I haven’t had a lot to do with prediction markets until recently when I became affiliated with Forecast X. They have a concern about what’s happening with the prediction market, Kalshi in particular, which they think has gone crazy with sports betting and they’re expecting a severe regulatory backlash. You can create a prediction market on whether various legal cases against Kalshi or Polymarket are going to be successful? The Supreme Court is going to hear some of the state cases. The Trump administration is blocking everything at the federal level right now, but there’s a huge pent up demand for suing Kalshi and Polymarket at the state level and there’s a pretty good chance that the Supreme Court will uphold some of those state cases, which could be pretty serious.

Prediction markets are very useful public functions. The prices are very valuable signals, but on NFL games, I’m not so sure that a valuable social good is being served there.

David Stellings:

I’m Co-Lead counsel in the nationwide class action case against Kalshi pending in New York. We have the attorney generals attacking Kalshi for participating in sports betting because it endangers their tax dollars. It endangers their ability to enforce state laws that limit sports betting, for example, to people who are 21 or older. You have the federal regulatory agency, the CFTC, maintaining that all sports bets on Kalshi are swaps and therefore covered solely by the jurisdiction of the CFTC. If this administration is correct about that it could turn gambling in the United States on its head because going to a roulette table at Caesars in Las Vegas could be considered a swap under the definition that Kalshi is using and the CFTC is using for a swap.

There are about 20 different cases pending in various federal district courts around the country and 3 of them have already gone up to the court of appeals. The decisions are all over the place. This is definitely going to be decided by the Supreme Court. It’s not an issue that falls along traditional political lines the way that people can predict or often predict successfully what the Supreme Court’s going to decide. The attorneys general who are pursuing these cases are across the board on the political spectrum.

Phil Tetlock:

That’s fascinating. I thought it was mostly the left coming after the prediction markets.

You’re causing me to update my beliefs now. The likelihood of the Supreme Court upholding at least some of these state cases increases quite a bit if there’s support at the state level.

David Stellings:

Polymarket does not operate fully in the US on the sports betting front, and they’ve done that very intentionally because they see the legal flack that Kalshi is under. As of now, even though Polymarket is technically allowed to offer sports betting in the United States for the last several months, the only people who are allowed to participate in that are beta testers. And it’s a very tiny number of people. Other sports betting apps are being sued. We’ve sued a bunch of them; they just don’t get as much media.

Larry Bernstein:

I had a podcast with Peter Grace recently and the topic was the intellectual foundations of the CIA. Sherman Kent was a Yale history professor who built the research and analysis team at the CIA. I read Sherman Kent’s book called Strategies of Intelligence, where he laid out his process for CIA analysts to incorporate probabilities in evaluating risks. In preparation for today’s talk, I reread Superforecasting and it turned out that Sherman Kent was an important figure in Phil Tetlock’s book.

Phil, tell us about Sherman Kent, why he’s important to the development of the CIA.

Phil Tetlock:

He’s a fascinating character. He was way out front about urging his colleagues to quantify probabilities. He was very concerned about miscommunication. He was concerned that estimates for the Soviet invasion of Yugoslavia. He was worried that President Kennedy was misled during the Bay of Pigs because someone said there was a reasonable chance of success. The people who said reasonable chance meant one in three, Kennedy thought it was much higher. So, you have potential for miscommunication. He thought analysts should get in the habit of making explicit judgments and scoring their accuracy. He got a lot of push back from his more qualitative colleagues, very similar to the pushback that we got 30 years later in the IARPA tournament.

It’s a very same divide between quantitative and anti-quantitative people inside the CIA. And one person said, “Take it to Sherman Kent, you’re trying to turn me into a goddamn bookie.” Prediction markets. And he said, “I’d rather be a bookie than a Poet.”

Colin Teichholtz:

You tell the story of Obama and Osama Bin Laden and getting advice from his advisors around the table and that the reasonable aggregation of those advisors was 70% probability of success and yet Obama came away saying it was 50/50 and he still decided to go and do it. What can forecasters do to better convey this information to decision makers?

Phil Tetlock:

I think Obama may have been reluctant to take the 70% aggregate and pushed it down to 50 because he didn’t want to be overconfident. Trump probably would have made the reverse call. It’s a matter of what your political values are. The forecasting process itself is supposed to be value-neutral. Ideally, you want the president to have the best estimate of the odds, whether they’re 50 / 50 or 70 / 30 or whatever they may be. You want the president to have the best estimate of the odds and then the president can plug in his own utility function. It might be an Obama utility function. It might be a Trump utility function, but that’s the division of labor. There are the technocrats and then they’re the policymakers who plug their values in.

Colin Teichholtz:

Could there also be a division of labor between the people who tend to be experts in a field and spend their lives learning lots of information versus somebody else who hasn’t committed their life to studying that particular field but is very good at consuming that information and then making predictions from it.

Phil Tetlock:

We have a lot of experts on AI, we have a lot of economists, we have a lot of biosecurity experts, we have a ton of experts now and we’re able to compare their judgments to super forecasters across many, many issues and the pattern is the experts almost always have higher estimates of risk than the super forecasters do. I’m not saying they’re always wrong, but I’m saying if you spend your life studying something, you’re probably going to think it’s pretty important, correctly or incorrectly.

My sense is super forecasters are quick to become skeptical of a source. It’s easy to lose the trust of a super forecaster. You want to use an aggregate of super forecasters. The best super forecasters in my experience use the statistical base rate evidence and they look at case specific information.

You’re at a wedding and you say to the person next to you, “What do you think the likelihood of the couple staying married is? “ Most people see the couple and they look happy, but most people manage to look happy at their wedding. The accounting people are going to say, “the divorce rate for this sociodemographic category is 33% chance of that marriage ending in the next six years.” That doesn’t mean that you ignore everything about the couple. That’s not the end of the process. You use case specific evidence to update against the base rate

Jay Greene:

Are there super forecasters who are more effective given their identity at forecasting things that they have an affinity for because of their identity?

Phil Tetlock:

I think the performance engine underlying super forecasting is very fundamentally human. Human beings have a hard time with statistical reasoning. The super forecasters are unusually good at it for humans. AIs are way better, but the super forecasters are pretty good. And the super forecasters have good causal intuitions about human affairs. The AIs don’t have good causal intuitions. I don’t if they know if AIs even understand what causality is. At least right now, that’s not how they think. We typically don’t use individual superforecaster judgments. We almost always use aggregates. The aggregate of super forecasters is better than 90% of the individual super forecasters. The aggregates work better when they’re cognitively diverse. You can put more confidence in a prediction when people who normally disagree suddenly agree. The Obama-Osama Bin Laden is a good example. You have people inside the CIA offering estimates of whether Obama is in that compound in Abbottabad.

If you have people who have human intelligence versus people using cyber code breaking versus satellite pictures and they are coming from totally different angles and they haven’t talked to each other and they’re reaching a very similar conclusion, you have much more to make an extreme prediction. If the average is 70%, but people who normally disagree are agreeing, the IARPA extremizing algorithms would tell you to turn that 70% into 90% that power of viewpoint diversity at a group level not at an individual level. People who can take many perspectives in their head do a weighted average that puts you at an advantage too.

It’s as if you’re doing a crowd aggregation. If you’re a good perspective taker that’s one of the defining qualities of the super forecasters.

Larry Bernstein:

Thanks to Phil for joining us.

If you missed our previous podcast, it was Objects of Desire.

Our speaker was Karl Ulrich who is a Professor at Penn specializing in Industrial Design and has written a book entitled Product Design and Development.

Karl spoke about inventing a new ice cream scooper that is beautiful, sexy, and more useful.

You can find our previous episodes and transcripts on our website. Please follow us on Apple Podcasts or Spotify. 

I am Larry Bernstein with the podcast What Happens Next.

Check out our previous episode, Objects of Desire, here.

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Karl Ulrich

Subject: Objects of Desire
Bio: Professor at Penn Specializing in Industrial Design and Author of Product Design and Development

Transcript:

Larry Bernstein:

Welcome to What Happens Next. My name is Larry Bernstein.  What Happens Next is a podcast that covers economics, politics, and history. Today’s episode is Objects of Desire.

This podcast was taped at a conference where I hosted several Penn Professors on a variety of topics. The audience included my friends who will join me in asking questions.

Our speaker is Karl Ulrich who is a Professor at Penn specializing in Industrial Design and has written a book entitled Product Design and Development.

Karl will speak about designing an ice cream scooper that is beautiful, sexy, and more useful than any that had been manufactured before. Karl, can you please begin with six minutes of opening remarks.

Karl Ulrich:

I taught one of the very first MOOCs, massively open online courses at Penn in 2012 and it was called Design Creation of Artifacts in Society. That entire course is now on my YouTube channel for free. So just search for me and you’ll find it there.

In the first week, I realized if I’m teaching a course on design, I better have an example that weaves through the course. I noticed my collection of antique ice cream scoops. And I said, “Everybody loves ice cream. Why don’t I use an ice cream scoop?” I picked an object that is highly evolved and very quickly around the beginning of week two, I realized if I don’t have a better scoop at the end of the course, what’s the point?

The first order of business was to define the job. It starts with the observation that scooping ice cream sucks. You all know that. You’ve got carpal tunnel. How might we create a better handheld tool for creating balls of ice cream from a bulk container? The next step in the design process was to do some observation of users. The only user I had at hand was my sullen teenage son named Nate.

At the time he begrudgingly scooped ice cream for me in front of a video camera. It is immediately evident that ergonomics are all wrong. You have this terrible wrist angle; you’re using the wrong muscle groups. It’s hard to see what you’re doing. As a product designer, I looked at this and I said, “The insight here is the ergonomics are terrible.”

I generated 10 solution concepts, but I fixated on the angle of the scoop head relative to the handle. So, if your wrist is at its natural angle, the scoop is now oriented in the direction of the container and that solves a lot of ergonomic challenges.

I worked out a rudimentary prototype of that concept, 3D printed it. The course ends after 12 weeks with the sullen teen taking dad’s 3D printed prototypes, scooping a scoop of ice cream, smiling and saying,” Nice job, dad.”

Shortly thereafter, I was having dinner with two of my friends. They happened to be the founders of one of the most famous design firms in the world called Lunar Design, now McKinsey Design. I told them that story and I showed them the early prototype and they said, “That’s nice, Karl. Would you mind if we did a little work on this?” I swallowed my pride, realized I was being asked by two of the best industrial designers of the world if they could work on my product. I said, “Of course.”

Now I need to make a slight digression and explain about industrial design. The solution was this angled scoop head relative to the handle and that core concept is patentable. We have a patent. It’s US Utility Patent 9173527.

The claim is more than a hundred words long. I’m going to read you the condensed version.

“An ergonomically designed ice cream scoop comprising a handle and a scoop head having an irregular bowl with a spade-shaped leading edge attached to the handle at an approximately 45- degree angle from a longitudinal access running the length of the handle.”

That’s the legal description of what’s functionally novel about the object. A 45-degree angle. And that functional description describes an object that very few of you in the room would buy. Function of an object is about 5% of what’s involved in creating a desirable and attractive product. In consumer goods and physical goods, the other 95% is industrial design.

What Jeff and Gerard and their team did was work out the awkward interface between the scoop and the handle. The result was the Bellevue ice cream scoop that you have in front of you.

We launched the resulting product on Kickstarter that met with some modest success. Our biggest customer is Jerry from Ben and Jerry. Our scoop is part of the portfolio that Lunar used to win the Cooper Hewitt National Design Award. It’s in the SFMOMA Gift Shop and we sell a few of them as well. We were able to create a little business.

Three lessons. First, no product category is so mature that you can’t innovate. The scoop most of you has been around since 1933. The first scoop patents are in the 1890s, and ice creams have been around almost a thousand years. This is a very mature product category and yet we were able to find a conceptual insight that led us to innovate. Second, a great product is often a combination of two things. It’s the combination of some conceptual insight in our case, simply angling that ice cream scooper relative to the handle plus some industrial design. Put together they can create a very desirable product. And then the third lesson is great product does not equal a great business.

We have tried so many things to make this a business. We have many other products. Today, my entire go-to-market strategy consists of giving talks like this, telling you, give one free, and then inform you that if you use the code Karl 25, you get 25% off. That’s the scoop. The question I want to ask is now you held that scoop, before you considered the 45-degree angle of the scoop head to the longitudinal axis, what explained your attraction of that object? And that’s the challenge of industrial design.

Zachary Schur:

I noticed right away the weight of it.

Karl Ulrich:

So, your theory is heavy products are attractive.

Larry Bernstein:

In this case.

Karl Ulrich:

Yeah, but in a camping cup, it might not be attractive. What about the heft of this product that makes it attractive?

Larry Bernstein:

Well, when you show that other ice cream scoop, which so many of us use and it always just feels like it’s not doing the job.

I read your essay. It surprised me that the surface of water is an important and attractive aspect to the design. You said it was because when we’re on the savanna and desperate for water to see it brings us great joy and this object, it’s like when Lawrence of Arabia first saw Aqaba.

There’s the water. It’s reflecting, just the way you wrote in the essay and there’s this sense of wonder.

Karl Ulrich:

The work that underscores that theory has toddlers playing with toys that are finished in matte and gloss finishes, the kids literally lick the gloss products. It’s pretty compelling. Gloss is deeply wired to have positive balance.

David Stellings:

I scoop a lot of ice cream. I don’t like to wait for the ice cream to get soft enough to easily scoop it. So, it’s always very hard. I noticed when I picked this up, it’s rounded on the back, which is the side that you would exert the most force against when you’re pressing against the cold ice cream. And the front side of the handle is flat, which is where you comfortably place your thumb to get better leverage. It provides the perfect leverage experience for scooping ice cream and I’m looking forward to using it.

Karl Ulrich:

They agonized over that because they wanted it flat for aesthetics. It’s not clear that’s what you want ergonomically.

David Brail:

In a fortuitous timing, our ice cream scoop of 30 years broke last week. What I like about this is its solid state. There are no moving parts. Our spring failed and it’s not that useful anyway. This is a single piece; no parts can fail. This will last longer than 30 years. I’m optimistic.

Zachary Schur:

It reminds me a lot of an Apple phone and it’s got the same shiny edges that that thing is made.

Karl Ulrich:

It’s funny you say that because the Apple industrial design comes out of Lunar. Steve Jobs was one of Lunar’s early clients and they did the first Powerbook 100 and the first laser printers. There’s an explicit design language, especially in that early Apple. And if you think about the first iPod you owned, do you remember it had that chrome back? It smudges and shows fingers. They did that very deliberately. Gloss is a cheap trick. Everybody loves gloss, but what we found was that people started polishing their device on their shirt, and that’s magic for a designer.

Ron Bernstein:

Why is it so weighted down? There’s very little weight in the scooper head. And why didn’t you make a thumb depression to help your thumb work the product?

Karl Ulrich:

This is made from three pieces. It’s then welded together. Originally, we made this out of aluminum because of its thermal conductivity. The problem was it was nearly impossible to get this gloss finish on aluminum without using nasty environmental processes, hexavalent chrome-plating. As a result, we went to stainless steel. The problem with that is it weighed like six pounds in stainless. And so, the reason it’s three parts is it’s hollow. It’s much lighter than it would be if it were solid and it’s about as light as it can be given the way it’s made. I have a little stash of the original aluminum ones because they perform and feel the best, but it was a practical concern that led us to stainless steel.

As to the thumb hole, we made at least 24 prototypes and quite a few of them had little thumb do hickeys. And the problem with that is it’s not as forgiving to hand size as a surface and we found it didn’t add that much, but that’s the stuff designers obsess over, iterate, look at variants, watch different size people use it and try to converge on something that works.

Julie Bernstein:

You’re skimming the surface part of the ice cream, which melts quicker. Traditional scoops are round and you must dig in deeper. So, this seems like it would skim more. I would think that you didn’t mention that, but I would think that would be like the primary focus of this design.

Karl Ulrich:

It’s more of a shaving action than a true scooping action. If you’re scooping professionally, you do need to keep this in warm water. That’s what an ice cream shop does.

The Maya principle, which if I get the acronym right, is the maximally advanced yet acceptable design. There’s fair bit of evidence that the ability to quickly process what the concept is important in aesthetics, but having this little bit of tension is also very attractive, but not too much and that’s why it’s called the Maya principle. You see it on the display and you’re like, “Well, I know what that is, but geez, that’s kind of weird. How does it work?” And it seems to hit Maya just about right.

It doesn’t work very well on Amazon where you see this thing.

Larry Bernstein:

It’s one thing to say that something sucks. It’s another thing to solve the physical engineering problem associated with extracting the ice cream from the container. Tell us about your process for fixing a thousand-year-old problem of an easy extraction of ice cream from a container.

Karl Ulrich:

I’ve built my whole career around the idea that you can apply process to get better outcomes in design. The process we teach is called the Triple Diamond Model because each diamond reflects a cycle of divergent and convergent thinking. The three diamonds are a jobs analysis, a needs analysis and concept generation.

What’s the job we’re trying to do here? Are we trying to improve the ergonomics of the scoop or are we trying to enhance access to ice cream or are we trying to provide family togetherness at home? You could frame ice cream scoops in all three of those ways. The first step is that job to be done statement. How might we design a better handheld tool for forming balls of ice cream from a bulk container? That’s diamond one.

Diamond two is understanding the user needs. First, try to exhaustively catalog what are the variables that explain preference for ice cream scoops and that’s things like it’s affordable, it forms an ice shaped ball, it doesn’t stick. It’s usually for most products, 30 to 50 of those variables. More important is the identification of what in design language are called insights. Insights are needs that are non-obvious, significant and authentic, rooted in the actual observations of users. The insight for the ice cream scoop was the ergonomics of scooping are terrible. There was an awkward wrist angle.

The third diamond is to use that insight to pull a variety of solution concepts.

So, once you recognize that ergonomics is an insight, what if I could use large muscle groups? Could I use my leg? Could I use a knife? There’s a nice technique where you cut ice cream. It’s the pyramid method. It’s easy to ideate once you have an insight because that pulls some obvious solution concepts. Those three diamonds are teachable. They’re reliable for a student facing an unstructured problem to know how to get at it. And in the end, they produce something. You look at it, you say, wow, that’s genius. But it’s the result of turning a crank on these three predictable processes.

Larry Bernstein:

I want to bring in some family lore. My wife Julie’s grandfather made a major invention. There’s a mop where you pull a handle, just a little switch, and it would squeeze all the water out of the sponge and dump it in the bucket. He came up with this contraption with a mop. In the old days, A mop had this piece of metal, and you mushed it. That was horrible design. This new mom contraption was great because it would squeeze out the water with a flick of a switch. I don’t mean to brag, but related, through marriage. Anyway, he too struggled in the marketing side of the business. Ron Propeil was one of these great marketers. You’ve probably seen advertisements when you were a kid with the Gizmo knife. Wait, don’t stop there. We’re going to throw something else in. So, he had this very active marketing campaign that went across products. By the time you were through, you were buying all sorts of goods and getting things thrown in for free. Now Julie’s grandfather could invent this mop, but he could not market on a grand scale. There are certain organizations like Oxo. I don’t know if you thought about selling your product to them because they have beautifully engineered items.

We use one for cleaning dishes. It scrubs and you can just push a button and out comes the dishwasher soap. Amazing, really. I bought one for my mom. How do you think about your next steps of taking advantage of a marketing genius with widespread distribution to take this product global?

Karl Ulrich:

Yeah, there’s so much to say there. Does anybody know the scrub daddy? Do you know what the sales of the scrub daddy are? It’s a billion dollars. It’s like the most trivial object imaginable. It was on Shark Tank. It has a smiley face on it. You can hear the bitterness in my voice. So, who knows? I have a little more respect for Oxo.

Oxo started out like the scoop. It was a marketing guy named Sam Farber, lives in New York. And Sam had an arthritic wife and he said, “I want to create some kitchen implements she can use.” His first product was called the Good Grips Peeler, and everyone told him that no one can sell a peeler for $9.99 because peelers are 99 cents at a hang tag in the grocery store. And he said, “Look, it’s only 10 bucks. It’s better. People will buy it.” He came to market with that one product he probably got to single digit millions. And then he was able to fill that product line with the idea of Good Grips, the Good Grips ergonomic angle to be several dozen.

He sold the business I think for $400 million, and Newell Rubbermaid has taken that Good Grips idea and spread it much more broadly. We were able to get meetings with Solatab, Williams Sonoma, those kinds of retailers, which is what you must do for a product because if the product costs 40 bucks, if you’re selling direct-to-consumer, your acquisition cost is 40 bucks. You just can’t make it work on a direct-to-consumer basis. So, it must go through retail. Every one of the buyers said, “We love this product. We need 12 products and we can give you a display.”

So, we designed 12 and we have a couple of others that we still sell. But when we got to three or four, we looked at the prospects of building a consumer housewares brand around these 12 boutique products and it just didn’t pencil out in terms of our effort.

Larry Bernstein:

Steve Zoll, you make chicken sausage and it’s a form of industrial design. You must make it beautiful. You need to make it look appetizing. Tell us about the industrial design of chicken sausage and the challenges that you face to make it appetizing for third parties.

Steve Zoll:

We have a process when we create new products, we’re very focused on what the consumer wants. Our products are designed around high quality, simple ingredients, and taste great. And from there we iterate with different ingredients. As far as looks go, we lean heavily into the package. So, we spend a lot of time thinking about how the package looks, what it communicates to the consumer. When I bought the company, the package conveyed nothing. It just had the name Amylu. She’s the founder of this brand. She was using great ingredients and the products tasted great. Package conveyed none of that. It had a picture of chicken on it. People want to eat products with simple high-quality ingredients and none of that was communicated on the package. We changed the package to white. We have pictures of a lot of the ingredients so you can say, “Hey, this is real food.”

Larry Bernstein:

It’s not every day that you can meet the Sausage King of Chicago. in the audience We also have an investor in sausage casings. Jeff Strong, tell me about the snap. What makes a great sausage casing?

Jeff Strong:

Well, it’s really the snap.

If you’ve seen the commercial with Rodney Savage, you snap into a Slim Jim. It’s the collagen casing that makes the snap and it’s a bit dated, but we had invested in a collagen casing company. It was listed in the UK. It fits our strategy for a high-quality company. It had 50% global market share, but it was mismanaged. They had bad incentives. The incentives were growth over value. We got involved and tried to modify management behavior to focus on value, not necessarily size and ultimately was acquired by a larger industrial food products company at a big premium.

Larry Bernstein:

Steve, we talked about the consumer side of industrial design. Tell us about the making of the sausages. How do you think about the design and the making of mass production of sausage?

Steve Zoll:

It is designed to make the product safe, consistent, eliminating risks, things like foreign objects in our products. Those are the things that we think about and efficiency, of course.

It seemed like aluminum would have been better, right? But because stainless steel was shiny, that’s form. And I’m wondering, form over function in general.

Karl Ulrich:

The aluminum had the same finish. You wouldn’t know the difference. The problem was that finish on aluminum requires three intermediate steps. You must copper plate, then nickel plate, and finally chrome plate it. You can only use trivalent chrome, not hexavalent chrome. And after about a hundred cycles in the dishwasher, we started to get some flaking of that. So, we said, “This isn’t going to work.” Now, we could have just used a bare aluminum scoop. That’s what a lot of a $2 scoop may just be bare aluminum. Problem is that is going to be ugly. By the time it gets put in the dishwasher a few times it’s going to have an ugly gray patina on it. So, if you want to call that form over function, okay, but we needed this thing to feel like an heirloom to have high perceived value and part of that is just pure aesthetic.

Larry Bernstein:

In March of 2020, we had our last Stanford day, which is exactly like this, but at Stanford. One of our guests was Bernard Roth. He created the Design School at Stanford.

This was a completely new school. There are no professors in the Design School. He just grabbed people who were interested and wanted to participate in these new phenomena, and it became a raging success. When I was at the Wharton School, there was no industrial design department. We had no attachment with anyone from mechanical engineering. And the fact that it currently exists is incredible. Design schools as a practical matter offer a completely different creative outlet and is normally unavailable in the Wharton School.

Tell us about design as a school, design as an interdisciplinary effort, what’s it doing in Wharton and engineering and how that has been created? What happened since I left Penn that this is available?

Karl Ulrich:

The Design School at Stanford, so-called D-School is a triumph of branding as there is no school there. It’s an executive education program. It had Bernie Roth, but more significantly David Kelly, who had been the founder of IDEO. For my taste, it was a little too touchy-feely in the sense it was anti-theoretical and anti-process. It was just do it, just iterate, build it, break it, and I think we can do better than that. When we set out at Penn, we started a program called Integrated Product Design and that does offer a degree and it’s a joint program with the School of Architecture, School of Engineering and the Wharton School.

We said, “The Penn way is more process oriented.” The Wharton way is to be more principal -oriented as well. That’s why we have a triple diamond model. We have various tools and methods that we try to teach our students. Having said that, that program has struggled in part because teaching a master’s degree program integrated interdisciplinary masters and to really do design education, it’s hard to scale that beyond maybe 40 students a year and 40 students a year is just rounding error for Wharton. Educational programs are viewed primarily as revenue generators, especially master’s programs at the School of Engineering. So, it’s struggled to get institutional support.

Larry Bernstein:

When I went to see your class in 2019, the auditorium was full. The enthusiasm was high.

Karl Ulrich:

As a master’s degree program, it’s struggled. As an elective that students at Penn take, it’s been fantastically successful. We have seven sections a year now of that course. 10% of all Penn undergraduates take that course. They all learn to use laser cutters and design three-dimensional objects and 3D printing and generally really, really like it. And then some small fraction of students who are exposed to those ideas become entrepreneurs or go to work in product related businesses. But mostly, people just do it because they’re curious and want to learn about design.

Larry Bernstein:

If you were going to design a school of design, how would you do that and how would it be different than what is currently done?

Karl Ulrich:

We have the Weitzman School of Design at Penn. But it’s a school that has landscape architecture, historic preservation and architecture in it. And they just one day decided we’re going to rename our school, the Weitzman School of Design. Design is a fundamental human activity. It is not confined to architecture. The other two domains aren’t even that “designy.” The biggest issue is that design has all these intellectual jurisdictional issues. And when you use that word, you could be talking to someone who designs the M1 VLSI chip at Apple or a fashion designer at Fashion Institute of Technology. They all could say they’re designers. It’s hard to say what would you do if you were to try to find the common thread around all domains of design?

At the end of the day, you must bring students in, give them a coherent professional program to survive as a school. And that probably must be more domain driven. And so maybe design should be more of an interdisciplinary, more of a row of matrices across all the schools.

Larry Bernstein:

Does Penn do too much? Why should physics be with your industrial design? When I was walking over here, there is the Curtis School of Music, and they’re very specialized in a very narrow way. They make music. Why does it make sense for these universities to do everything for everyone? What I found surprising is that almost none of the professors seem to know anybody else in any other department. They know people in their little area, but one of the speakers I invited for tomorrow said that I probably know more people in the various faculties than she does, and she’s been a professor here for 10 or 15 years. What Bernie Roth was doing so well is he was able to tap into faculty across multiple schools that had similar creative desires. Universities don’t seem to be doing that very well. Why is it failing and should it be smaller?

Karl Ulrich:

Bernie was also a polymath. He was interested in all kinds of crazy stuff. Terrific guy. I think you’re asking about organizations more generally. I get it in business because from a human resource standpoint, you need a certain amount of renewal. Growth is important and it’s the overarching logic of capitalism that creates shareholder value. Universities borrow a lot of that logic. We are thinking about getting bigger and richer and at the programmatic level about how can I get another hire in my department? Well, to do that, I need to grow my research program or whatever. I think universities share a lot of the same negative consequences of growth that other organizations share.

As to why the departmental boundaries are so calcified, I think it’s in a lot of domains, they become self-referential guilds without much external validation. I know that was true in my department within Wharton. I would say half the faculty work in domains that are entirely self-referential and they know the rules, they know the other players. It’s got a certain set of incentives and a certain set of performance metrics, and they love playing that game, but that game has no external validation, no external reference.

Jay Greene:

I would always joke that you were far more likely to have an intellectual exchange at Larry’s Book Club than at any academic conference that I had ever attended. I do think that it’s worth worrying a little bit about why universities have strayed from core missions, truth seeking intellectual inquiry. I’m not saying that no one does it. I’m just saying that it should be the lion’s share of everything. It should drive everything and it’s clear that it doesn’t.

Karl Ulrich:

I’m a little defensive about this. First, I totally agree with the academic conferences. I stopped going 20 years ago. With my immediate colleagues. We get along fine, but I’m not that interested in what they’re doing. I don’t feel like there needs to be some mechanism to force me to reach out to meet interesting people, because I feel like I do that a lot. There is a fundamental tension here between people who are more oriented towards real disciplinary and functional depth and people who are a little more eclectic in their interests.

I’m more eclectic, which means I’m not that good at my narrow focus, but I’m pretty good at bridging stuff and I think you need some of both in the university and to say you want everyone to be interested in interdisciplinary stuff, you probably give up the person who goes and invents a new state of matter.

Jeff Strong:

When reading your article about the five principles, I think the entire endeavor of translating a profound design program and answering it with a few principles seems a little hopeless to begin with. And sure enough, I think a lot of design principles over time have proven to be not comprehensive enough or interpreted incorrectly and failed in retrospect. How certain are you in the validity of these principles? How ready are you to tell your students to just throw it out of the window if they feel inspired by something else? It goes against the principles, but I’m going to do this.

Karl Ulrich:

I’m not sure I can really offer comprehensive theory of aesthetics, but these elements seem predictive of what works aesthetically and they provide some explanatory power. In the case of typicality, for example, you can always find counter examples, but that’s an empirical regularity where you look at a lot of people and how they respond to things and try to figure out why they like some things more than others. Typicality emerges out of marketing. Same with gloss. These mechanisms will get overridden for sure. So, if there’s a cultural norm to react against gloss, a trend or a fashion trend where all the youth are anti-gloss, that can override completely the more hardwired preference for gloss.

So, I’d say I’m not sure at all, but I think these are interesting and offer some explanatory value and until we have something better, that’s what we have.

Larry Bernstein:

What are you optimistic about as it relates to the future of design?

Karl Ulrich:

The AI tools are unbelievable in supporting design. I found myself being able to do much deeper technical design work than I’d done for years because of the tools. I just bought both my kids 3D printers for $300. The tools are unbelievable and they enable and democratize design.

Larry Bernstein:

Thanks to Karl for joining us.

If you missed our previous podcast, it was Using Peptides for Medical Breakthroughs.

Our speaker was Cesar de la Fuente who is the Director of Penn’s Machine Biology Group. His team uses AI with biology to create new antibiotics and improve the efficacy of other drugs that hopefully can save lives.

You can find our previous episodes and transcripts on our website. Please follow us on Apple Podcasts or Spotify. 

I am Larry Bernstein with the podcast What Happens Next.

Check out our previous episode, Using Peptides for Medical Breakthroughs, here.

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Cesar de la Fuente

Subject: Using Peptides for Medical Breakthroughs
Bio: Director of Penn’s Machine Biology Group

Transcript:

Larry Bernstein:

Welcome to What Happens Next. My name is Larry Bernstein.  What Happens Next is a podcast that covers economics, politics, and history. Today’s episode is Using Peptides for Medical Breakthroughs.

This podcast was taped at a conference where I hosted several Penn Professors on various topics. The audience included my friends who will join me in asking questions.

Our speaker is Cesar de la Fuente is the Director of Penn’s Machine Biology Group. His team uses AI with biology to create new antibiotics that hopefully can save millions of lives. Cesar, can you please begin with six minutes of opening remarks.

Cesar de la Fuente:

We have biology driven by evolution that has given rise to our brain. For a long time, I thought that if we could learn how biology works from first principles and then extract that to build technologies and biotechnologies, then we would solve problems. Not only in medicine but sustainability, and other things that affect the future of humanity.

My lab has been applying it to the problem of bacterial infections that are becoming increasingly resistant. Bacterial infections are associated with five million deaths per year in the world. If we don’t come up with new therapies to treat these infections, by the year 2050, that number is projected to double to 10 million deaths per year, becoming the number one cause of death.

I see it as this huge existential threat to humanity. A lot of the work that we’ve been doing over the past decade plus has been incorporating concepts from computational biology to change how we discover new antimicrobial molecules that we can use to confront this crisis.

We’ve had antibiotics for less than 100 years. And yet, if we combine antibiotics, vaccines, and clean water, those three pillars have essentially doubled lifespan. If you go to hospitals all around the globe, we have patients with multi-drug-resistant infections that are completely untreatable, even if we combine the most potent cocktails of antibiotics.

Going back to our research, how we’ve decided to treat it like an information theory problem. If you think of biology, you have DNA and proteins. In its simplest terms, it’s a bunch of code. DNA is a four-letter code; proteins are a 20-letter code of amino acids. It’s not that different from the code that we use to communicate with each other through the alphabet. All this complexity, you reduce it to a bunch of code, then you can devise algorithms that can explore this code and identify potential drugs.

This is very different from the traditional paradigm of antibiotic discovery, which is this physical process where scientists go around nature in these expeditions and dig into soil to find antimicrobial drugs. That’s painstaking work that relies on trial and error. Oftentimes it can take more than the time that it takes to finish a PhD to find new molecules that are preclinically irrelevant. So, it’s not conducive in an academic setting, and it costs over $2 billion to discover and develop antimicrobial drugs.

We thought that with AI, we could completely change this landscape. We started by developing machine learning models that can explore entire genomes. We found thousands of new molecules encoded in our genetic code that had never been described in science by using this algorithm.

And the vast majority of those play a role in the immune system that was previously unanticipated. We then expanded that and looked at our genetic code, the genetic code of bacteria, and different microbes. We’ve looked at Archaea as well, which are esoteric organisms. And we’ve looked at ancestral biology as a source of dysfunctional antimicrobial molecules.

If you think about history, most of the life that has ever existed on our planet is now extinct. So how can we understand anything about biology or about evolution if we don’t have access to that information that existed previously? And so, we’ve developed AI systems that can mine biology at a large scale, and we’ve done a project where we’ve explored all ancient biological data with AI systems.

We’ve done this journey through evolutionary history and identified new preclinical candidate leads in the genetic data of ancient penguins that were extinct as recently as the 50s, Magnolia trees that disappear throughout evolution, ancient Zebras, Woolly Mammoths, ancient Elephants, giant Sloths, and many other creatures that used to roam around our planet.

Larry Bernstein:

What I think is interesting is the relationship between basic science and its later application. When my grade school and high school friend Joe Thornton was first extracting mammalian DNA as a Professor at the University of Chicago, AI hadn’t yet been developed. I can’t imagine he had considered using the ancient proteins that you are using it. How do you think about the codependency of basic science and its application as it relates to the work that you’re doing?

Cesar de la Fuente:

AI is portrayed as this magical thing that can do everything. And that’s not true. Our AI models have been trained using experimental data that we’ve generated in my lab through actual biochemistry experiments. One thing that is critical to highlight is that for an AI model to be reliable and accurate, you need to feed it to apply good and accurate data.

Larry Bernstein:

So, you have this mammoth DNA chain. How did your models know that that piece was valuable because the chain is almost infinitely long. How did it know that’s the one?

Cesar de la Fuente:

That model is called Apex. So, it’s a deep learning model that was trained on a lot of experimental data collected in my lab. So, it learns what makes a particular chain be successful at killing bacteria, even specific clinically relevant pathogens, and then it can essentially run through the whole code. And once you find something that is promising, it identifies that and then it comes up with a ranking. So, what the model gives us is a ranking one to sometimes a million molecules based on statistical prediction.

The model is saying, number one is the most likely to be a successful new drug to kill these infections, and then it goes down. And then what we do in my lab, we take the recommendations made by the algorithms and human scientists look at those recommendations and then we go over them and sometimes the algorithms miss things like maybe this molecule is not good when you’re trying to develop a drug. So, we ruled that one out.

The ramification of this ancient biological work is that some of these molecules that we’ve discovered when we sequence homology with present day proteins or molecules that exist in the world today, we don’t see any homology, meaning some of these are extinct. They’re not present anywhere in the world around us today. And so, from a bioethical perspective, is it okay for us to synthesize some of these molecules.

Larry Bernstein:

I’m fine with it.

Cesar de la Fuente:

But I’d like to think about the philosophical ramifications of the work that we do. And the other interesting aspect of this work is the patentability of this. Natural molecules are not patentable. That was determined so by this legal case that was called the Myriad case. So, everything that exists in nature belongs to humanity and therefore you cannot patent it. But what about molecules that no longer exist in nature, that used to exist hundreds of thousands of years ago, and we no longer find them in the world today, are those patentable?

The truth is that nobody knows. And this has created a new sub-area of patent law where they’re trying to figure out what to do with this research.

Larry Bernstein:

25 years ago, my biggest investment was in Monsanto, and the reason I invested in it was on the financial side, it was trading for less than the last four years of R&D. And my hope was that they had not wasted their money and that this would prove to be valuable.

When I met with the CTO at the time, I asked him what they are trying to achieve? And he said, “We’ve ranked the problems. Number one is weeds, and so we’re going to have a genetic aspect that makes the plant not die from certain pesticides. So, the pesticide will kill the weed, but not the plant.” And then we were going to add additional genetics over time to deal with certain problems.

And we can compare that with the old ways in which we used to let plants evolve. So, they say, “This is a hardy plant, and this is a big fast grower.” We’ll crossbreed the two in the hope that that would combine both traits, but this new way, we’ll just cut and paste it and put it on the genome.

I think if someone had asked me before reading your papers, “What are our prospects for antibiotic creation?” I would have said, “Oh, what we need to do is send teams into the Amazon to be clipping around, looking for stuff, and hoping that we find something out there in the wild.” That’s the old school technique, or you can go the Monsanto way, which is let’s look at the genetic code and cut and paste directly the code. Is that a good metaphor for genetics in how agriculture has recently developed and how we’re going to apply that to antibiotics?

Cesar de la Fuente:

The acceleration of the process is certainly true. With traditional methods, it can take seven years to find preclinical candidates. Now with these AI systems that we’ve developed in a few hours, we can discover hundreds of thousands. And so, we’ve entered this digital age of scientific discovery that is hugely exciting. For all the negative ramifications of AI in our society, this is a good one. Its application to accelerate the process to the preclinical stage. Things still need to go through clinical trials and that takes time. But I know there are people working on how to design better clinical trials that are faster, more efficient, and so on.

Moira McDermott:

We were having a discussion at dinner last night about AI use in math research, and recently they’ve been able to solve some of Hilbert’s problems. AI was able to solve these because it could go through thousands of problems and do lots of calculations and solve the low hanging fruit. To get at the harder problems, you’re still going to be able to have AI assist, but it’s not going to knock them off in the same way. It can make all these calculations and find some technique that showed up in a paper in the 50s that you’ve forgotten about, but it’s still going to take the human. It helps humans be more creative because it’s this very efficient assistant.

I’m curious if you’re using AI, is it predominantly that it’s able to do so much quickly, or is it helping you come up with new things? How much is it interacting that way?

Cesar de la Fuente:

Primarily it’s helping us process large amounts of information that would be impossible for the human brain to process and identify patterns within those data that would be impossible for the human brain to do.

Broadly, I would agree that AI systems can learn how to play chess at superhuman levels, but they cannot invent chess. They have a hard time going out of the distribution, meaning they have a hard time creating things that are not within the training set that we’ve taught them.

The only example of artificial general intelligence that we have in the universe is the human brain, and we don’t understand the human brain. So, then I think the whole argument collapses there.

Are we going to get to general intelligence just through ChatGPT like chatbots and things like that? No, I don’t think so.

Randy Kamien:

Is this work something that can be patented? Who’s going to own it?

Cesar de la Fuente:

The university. What patent lawyers tell me is that ... So, where they’re learning is a non-obvious discovery because we had to train and develop an AI model to find molecules in ancient biological data. And then we had to synthesize them through chemistry and then we had to do tests to validate that they indeed had antimicrobial properties. So, if you combine all these different steps, it’s considered a non-obvious discovery. And so, the current thinking is that we might be able to patent some things. My dream is that something that we do in the lab can help humanity.

Larry Bernstein:

When I worked at Salomon Brothers, I created a derivatives products entity, and it had formulas that were not obvious. And so, I applied for a patent on behalf of Salomon Brothers for it. The question was, you can’t patent a formula, but you can patent a process. And so, we put it in computer models and to say we were going to calculate these formulas, and it turned out the patent office rejected that. Going back to the genetically modified food, Monsanto takes some genetic code and staples it to some preexisting genetic code and says, look at this combination is unique and novel and that can be patented. I think that’s more akin to what you’re talking about.

Cesar de la Fuente:

We can take something from nature; you can modify one single letter on the molecule and then that’s synthetic and then it’s patentable. So, there are a lot of tricks that you can do.

Randy Kamien:

I’ve written patents and there’s always the list of all the people who contributed to it. I’m trying to understand who contributes to something that an AI discovered.

What about the people who got the data about Wolly Mammoth’s DNA?

Cesar de la Fuente:

No, because that’s in the public domain. It oftentimes happens in science. We stand on the shoulders of giants. There are a lot of people that develop sequencing methods for reading and amplifying ancient DNA, which is much degraded. The pinnacle of that field was a couple of years ago, Svante Pääbo was awarded the Nobel Prize for sequencing, which is hard because typically you take DNA from a Neanderthal bone and then you’re trying to read it and amplify it in a clean room. Otherwise, you’re contaminating it with your own skin, bacteria, microbes that are in the environment. And a lot of that genetic data is in different repositories and databases that we can access.

Shani Raviv:

You mentioned that there was a spin-off of a company already based on the findings. So, is this the goal now to spin off medicine? Because it sounds like with the pace that this is happening, you can generate a lot of successful medicine companies. So, is this the goal?

Cesar de la Fuente:

We spun out of a company. We’re in the process of raising a seed round now. We work with peptides, which are small proteins, and the goal will be to take peptide design into the new era. And to be able to program and design peptides for different applications, not only in infectious diseases, but also in immunology, oncology, and neuroscience. So, the whole goal of the company will be to serve as a translational vehicle for the findings in my lab and to take them to the world.

In the lab, we do more creative research. We publish our papers, open access, so everybody has access to what we do. The company will make medicines to cure people.

Ron Bernstein (my brother):

In the AI world today, in these large language models, everything is shared, but in biotech and pharma, it’s not because Sanofi doesn’t want to share all their peptides and all their super-secret work with Takeda, right? How is that going to affect the use of AI to solve all these medical problems? And is it going to be a lot slower because people don’t want to share?

Cesar de la Fuente:

I think it would be a lot better for the advancement of science if everybody just shared everything. Of course, in companies, it’s worth a lot of money, a lot of that data that some companies are not willing to share. There are some ways of sharing data without giving away all the details. So, through federated learning, for example. So, some companies have set up consortia where they can share data without knowing exactly what the molecule is, and you can train models that way. I know other companies have AI models that they’ve trained based on their in-house and they are willing to share the models already trained, so that way they don’t have to share those drugs and the IP associated with those drugs.

Ron Bernstein:

AI is going to remove the need for wet lab space, and you won’t need to go into the lab and do chemistry, or do you think you always need the labs?

Larry Bernstein:

My brother is on the board of directors of a company that owns pharmaceutical labs. So, he’s desperate to make sure that you continue to use this space.

Cesar de la Fuente:

In academic research, you see people spending a lot more time analyzing data than 20 years ago. The other thing I’ll say is that in my lab we do a lot of chemical synthesis and a lot of experiments because we generate data sets to train our AI models. And so, we need humans to do the work. Now, if you can automate all that data generation process, maybe we won’t need humans ... I don’t tell this to my team.

But I don’t fear that future. It will be a future where human scientists will be left to do a lot of the thinking and the creative aspect of research, coming up with new hypothesis, combining concepts from different fields to create new fields. A lot of fun stuff.

Larry Bernstein:

Can you please end on a note of optimism.

Cesar de la Fuente:

We live in an incredible era. Today in my lab we can discover new things in a few minutes. This digital era of discovery was unimaginable even five years ago. Coming in the morning I know by lunchtime, I’m going to have a lot more molecules to play around with my team. Pushing the boundaries of knowledge to come up with molecules that help the world.

Larry Bernstein:

Thanks to Cesar for joining us.

If you missed our previous podcast, it was Why We Crave Stories.

Fritz Breithaupt was the speaker, and he is a humanities scholar as well as a cognitive scientist at UPenn where he is studying the relationship between narratives and empathy. Fritz is the author of a new book entitled The Narrative Brain: The Stories Our Neurons Tell.

Fritz spoke about how we experience fictional stories in our daydreams to achieve personal growth.

You can find our previous episodes and transcripts on our website. Please follow us on Apple Podcasts or Spotify. 

I am Larry Bernstein with the podcast What Happens Next.

Check out our previous episode, Why We Crave Stories, here.

Subscribe now

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Fritz Breithaupt

Subject: Why We Crave Stories
Bio: Humanities Scholar and Cognitive Scientist at UPenn, Author of The Narrative Brain: The Stories Our Neurons Tell

Transcript:

Larry Bernstein:

Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast that covers economics, politics, and history. Today’s episode is Why We Crave Stories.

This podcast was taped at a conference where I hosted several Penn Professors on various topics.

The audience included my friends who will join me in asking questions.

Fritz Breithaupt is the speaker, and he is a humanities scholar as well as a cognitive scientist at UPenn where he is studying the relationship between narratives and empathy. Fritz is the author of a new book entitled The Narrative Brain: The Stories Our Neurons Tell.

I want Fritz to talk about how we experience fictional stories in our daydreams to achieve personal growth.

Fritz, can you please begin with six minutes of opening remarks.

Fritz Breithaupt:

While you are listening to me you might drift away and find yourself in a different world. That is normal. I’m a professor I know that 50% of the time you will be somewhere else, and that’s a good thing because that ability lifts us across space to have co-experiences with other people.

Our mobility of consciousness, this mind wandering, fantasizing, is good. We share experiences. When one of us suffers or goes through something amazing, we can tell it to other people. And then retrospectively, our brain goes through the similar experience that we can learn from. That is very good for us that by means of storytelling we share an experience. If one of us does something bad and we talk about it, then others will not do it.

How do we study storytelling? In my lab, we tried telephone games. When we tell a story in a telephone game, a lot of weird things happen. It’s fantastic for academics because we can study the different versions. In my lab, we’ve played this with 20,000 people in different groups to see on a large scale what remains the same and what changes. Until now, the standard of research was there’s one clear thing that stays the same. It’s causality. Why someone did something. But when we redid these studies we noticed other patterns.

One of my favorite stories is someone finding a spider in their office and walking the spider outside. In the original story, that person tells the delicate details; how they caught the spider and used a box, carried it, let it out in the yard, but then in the telephone game it disappears. It’s not in the box; it’s not on the ground. This was the original story. We sent that through some retelling chains, and after three rounds of retelling, the story was as follows. I found a spider in my office. At first, I didn’t like it, but now we’re friends. The spider stuck around.

That is the whole story. It became much shorter. The causality changed. It’s not completely illogical, but the rescue operation that was so complicated before became just a friendship story. And what this indicates is what matters in these stories is not necessarily how it went, what the problem is, but the good outcome. A happy ending that stayed the same. These retellings the anchor of the stories is emotion, typically at the end, the rewarding emotion. We believe that when people remember a story they encode it by this core emotion that ends the story, in this case, the happy ending with the spider.

When they tell it to someone else, they start with that happiness, that emotion, and weave a story that somehow connects with that, but also invents new elements. The overall theory of this narrative thinking that I propose is that we are excited to get into story because there’s this promise of the reward. We have evolved to like these things because they give us rewarding emotion. There’s the triumph of the superhero, but it’s also sometimes the comeuppance, the punishment of the bad guys that you will find in every German fairy tale.

Larry Bernstein:

I’m interested in the art of storytelling. I practice it and I work the story. And one thing that I’ve noticed in the craft is the desire for the audience to take on the role of the lead character in the story. When I tell my stories, often I am the lead character in the story.

Fritz Breithaupt:

You don’t choose the sidekicks?

Larry Bernstein:

Invariably, it’s always me. I noticed that the audience rarely wants the lead character to do well. I’m going down and my audience loves that. They root me the whole way down. And sometimes there’s a moral at the end of the story not like Seinfeld. Tell us about why the storyteller tries to make the listener be the main character, and then why incorporate a moral lesson?

Fritz Breithaupt:

We love this feeling of being in the middle of the story where we don’t yet know what’s coming. When we jump on a character, we can choose the bad guy and try it out. Stories invite us to follow a character and it’s one of the few places where we are allowed to take risks.

That’s different in the real world. You don’t want to jump in any Uber car that is driven by a big risk taker. But in the stories, that is different. William Flesch at Brandeis University said that more than 50% of stories end in punishment of bad guys.

Myths and religious tales, there’s a drive towards punishment. All of us do something bad. We’ve crossed the line, sometimes involuntarily, but we’ve done it. So, stories let us take that ride.

The comeuppance at the end is the relief point. The attraction of morality is that even if we jumped into the car with a bad Uber driver, maybe you had a car wreck, but you are out of it.

Larry Bernstein:

I noticed that if you tell a story and it’s not you that goes down but somebody else, there’s a sense of awkwardness with the listener. They don’t want to jump on someone who’s already downtrodden. But if it’s me that goes down, now they’re ready to laugh and enjoy that.

Fritz Breithaupt:

The first principle of stories here is the co-experience. We spend four to six hours a day involved in story thinking. Co-experience is key. So, if someone is going down and you don’t like that character, it’s in the story world, that’s boring, they get what they deserve, and you jump off the ship. But if it’s you going down, it’s much more exciting but also terrifying. The question then is, what can be your exit route? You mentioned one of them, which is laughter. Laughter is one of these rewarding emotions that lets you exit and jump off the ship, If you can laugh about it, you step outside of it. You can dissolve that terrible tension and can say, “I tried this out and it didn’t work.”

James White:

Many people believe that older men don’t read fiction. Why do you think that is?

Fritz Breithaupt:

Reading is down in America and the Western world. India is holding steady, maybe the biggest reading nation in the world. We have fewer male students in the colleges for the last 30 years. There’s lots of factors going into that. I wouldn’t blame the internet or cell phones. Young male students in high school and middle school can’t sit still, they have been selected out of the school, so they don’t develop good reading habits.

James White:

Most of my male friends read but almost exclusively nonfiction.

Fritz Breithaupt:

Maybe males don’t think it’s cool reading fiction. It doesn’t have this utilitarian dimension.

Hannah Bernstein:

Why is it so hard to tell a good story and how changeable are people’s innate storytelling abilities? We crave good stories. And even if males above 40 don’t read fiction, there’s still the Netflix movies. We want that story. We are good at selecting. Each of us has a bias of this is not a story for me. I don’t like that main character.

Fritz Breithaupt:

I advise Netflix on how to analyze their stories. I tell them for a story to work; you must see more than one path for how a story could go. This excitement of not knowing what’s happening, that suspense of being in between the versions, I call that multiversionality. That is key. And that is not well taught in writing schools because you don’t see that many manuscripts coming up.

Larry Bernstein:

in our audience today is Jeff Shell an old friend of mine who used to run movie studios, Universal, more recently Paramount. One of the tasks at the most senior levels is when to green light multimillion dollar projects. Tell us about the process of the story, how executives review them and the teamwork to develop a story, to incorporate emotion, moral standing, character development, et cetera.

Jeff Shell:

A famous Hollywood person was going to use AI to write the story. He had the concept. A month ago, he used six different AI LLMs, and he interacted with these chat bots over the course of a couple weeks and had them turn his concept into a script. At the end of it, he had six different scripts, and they were all crap. It’s very hard to write a professional story. It takes a lot of talent; that’s the key to any good movie or TV show is a good script.

You never had a good movie or TV show based on a bad script. You’ve had many bad movies based on good scripts, but it must start with a good script and a good story. And that’s why the storytelling is so critical. This is a very hard thing to do.

Larry, your skill at telling stories is a unique skill set, which is why we all like hearing stories. And we like seeing you go down because your stories are generally comedy and we know you and love you. So, we like seeing, just like Jerry Seinfeld goes through all of his problems. We know him now. So, we like seeing the comedy of it all. If it was a drama, we might not feel as good about your failing.

The process of a story becoming a movie is the most tedious, horrible rote process that you’ve ever seen. It’s not sexy. It’s not like a bunch of people sitting around a room saying, “Let’s green light this movie,” and then the person’s off to make the movie. There are many reasons to say no to making a movie. The only reason you say yes is because you must make a certain number of movies a year to get your return on capital.

The hardest part is the story. I only read nonfiction. And the reason why I would not read fiction is because I felt like I was wasting time. When I read nonfiction, I felt like I was learning something. And I don’t know if that’s somehow different between men and women.

I had no problem wasting time watching a show like Below Deck or The Lakers. But when I’m reading a novel, I’m just wasting my time. I had an epiphany a couple years ago which was that fiction is the only way to truly feel empathy. And as I was reading your book, the key word to storytelling is empathy because you can get sadness, the happy ending, which most people want. They want to see a bad guy get punished.

I started reading fiction again and I can’t believe I stopped for 20 years. The short answer at the end of this is it’s very, very hard to tell a good story, which is why good storytellers are so magical.

Fritz Breithaupt:

I know this from the people at Netflix also from my friends in the publishing industry, they cannot predict the success of a movie even when it’s already made. Even with their test audiences, they still fish in the dark. So, there is something very interesting there that the right moment for the right story, I agree about empathy. That’s how I got into the narrative brain. My books before that were on empathy.

Jeff Shell:

The original ending of Get Out had the main character going off to prison. At the end, the cop car comes up, he gets arrested goes to prison, and it was the lowest testing movie in the history of Blumhouse. And all they did was change the ending, his friend saves him and he gets home and then it became the highest testing. So, you never know with these movies what’s going to be a success. Nobody has any idea what’s going to be successful. You know what’s going to be bad, you just don’t know what’s going to be good.

David Wecker:

The worst literary theorists to me are reductionists. They’re Marxists. They’re structuralists. They take some structure and apply it to this incredible area of human creativity. I’d say most of the Bible tells you who you are and that’s discomforting. I find it hard, especially when you’re talking about a telephone game, it’s very limited.

Fritz Breithaupt:

I was trained as a humanity scholar. I studied with one of the most extreme reductionists. Then I retrained and became a professor in cognitive science. So now I’m between cognitive science, psychology and the humanities. These communities don’t talk to each other. So, in the moment I bring up the humanities’ ideas to the scientists, they feel like we can’t test this. And then when I bring the scientific data back to the humanities, they feel like you’ve sold out to the hard sciences.

My lab is 10 people from the sciences and 10 from the humanities. Every project, they must have people from both sides. People of humanities learn to ask question-driven research where they don’t philosophize or have someone super structure, and the scientists have to learn to listen and do some close readings and do not say, “We have to be a reductionist in the sciences. We have to want clear numbers on all things, but we have to look for evidence. I’m trying to negotiate exactly that.

Darren Schwartz:

I recently wrote a memoir, not published. It’s hard to get a memoir published if you’re nobody.

It took me five years. It was grueling, stuck to the facts.

I’m now almost done with a novel. Fiction feels completely free. It’s fast. I’m just making stuff up, which is amazing. How do you feel about the difference between writing, sticking to the facts, where you still want to put creativity into it versus being completely unleashed?

Fritz Breithaupt:

When people suddenly go into fiction writing from the nonfiction side, they often lap onto a story mode that we call the hero’s journey where you follow the life of a hero who has to overcome obstacles, who has self-doubt, wants to back out, but then usually finds a good mentor and then overcome the obstacle. That can be facing the dragon or a harsh work environment. That pattern psychologists have now measured has some therapeutic dimensions when people see themselves as a hero.

What I learned from my own research was, stories are emotion arcs. When you tell an academic story, a business story, for example, think about it as an episode that ends in some emotional outcome.

Larry Bernstein:

I want to go back to your opening remarks about the spider. You mentioned that in the initial story, there was a lot of detail. And then when you got to the final story with the telephone experience, the story narrowed dramatically. When you tell someone a joke and they try to repeat it to somebody else, what they most remember is the punchline.

Fritz Breithaupt:

Good storytellers know the punchline, and they hide it from the audience for a while, keep the suspense going so that the punchline can come as a surprise. Many people are not so good at that part. There’s one exception to this rule that stories get shorter, and that is when people tell meaningful episodes of their own life. We’ve done studies on that. We asked people to tell us a meaningful life episode. We asked them to come back and tell us the same story again. That was the one exception where they would not get shorter. The stories are approximately the same length, but the quality is better the second time, but they would reduce the emotions. The first time, there were raw emotions positive or negative, but in their second telling, it was often a better story woven together. People do cognitive editing. Meaningful memories are the exception. That’s where every normal person becomes a good storyteller, because these things matter to us.

Stan Goldfarb:

I’ve seen Death of a Salesman many times, Why do people go back to see plays, particularly tragedies like that? Why is it so popular? It sounded in the beginning like you were talking about the emotional satisfaction you get out of it.

Fritz Breithaupt:

Netflix has data that people go back to their favorite movie repeatedly. The best explanation that I have is that people like surprises and they already know what’s coming. It’s often called the paradox of surprise or paradox of suspense that we enjoy including sad outcomes, but also surprising outcomes the most when we already know what’s coming.

You’re in the moment, but you also know where this is going. That is the golden formula. They give you little hints about what’s coming. You could guess it, but you don’t. But then when you hear it a second time, you now pick up on what’s coming, but it’s not known yet on the ground there in the story itself. So that double play adds joy.

Larry Bernstein:

There are a lot of movies you never watch again. Jeff Shell when you’re buying a portfolio of movies are you able to evaluate if you think it has a future. Like the Sinking of the Bismarck, that one’s just not coming back?

Jeff Shell:

You’re not going to watch something that’s suspenseful 15 times. There’s nothing suspenseful about Death of a Salesman. You’re not on the edge of your seat each time you watch it trying to figure out what’s going to happen. There’s nothing that’s suspenseful about Friends either. Death of a Salesman is inspirational. It’s a journey that Willy Loman overcomes. I think you watch things that give you an emotion over again that you enjoy having. The movies that people watch over again tend to be comedies. I’ve seen Superbad 50 million times. You don’t tend to watch who done it mysteries again.

The TV shows that are watched are either comedies or soaps: Grey’s Anatomy, Friends or Seinfeld, something where you get to know and feel comfortable with those characters almost like they’re a member of your family and you like spending time with your family.

Now, on the popularity of Friends, people are talking about the death of Hollywood, how production’s going down, and there’s less and less TV shows being made, which is empirically true. The reason for this is the Netflix effect and this is what’s driving the popularity of Friends and other shows. When we grew up, there was no ability to go back and watch old shows unless you happen to be channel surfing, you came across a rerun or an old movie. These days if you’ve never seen Friends before and you’re 22 years old and you start watching Friends, it’s a new show.

It’s no different than a show that Netflix might have invested in this year So there is increasingly less need for so many new shows, partially because there’s a lot of international shows now, the quality of international shows has gone up.

Larry Bernstein:

I tried to persuade my 10-year-old son to watch the movie Rambo First Blood. He’s like, “Dad, is it black and white?” I said, “No, no, it’s not black and white.” He said, “Dad, I’ll give you five minutes and that’s it.” I’ll take the five-minute trial.

The movie starts and he’s completely engrossed not by dialogue but by action in First Blood. When the movie ended, I said, “What did you think? “ And he said, “If they had just let him buy a sandwich, people didn’t have to die.

Jeff Shell:

Good story. I love First Blood. Comedy is struggling for decades now. If you talk about the best comedies on TV that have multiple episodes, the only one from the last 10 years that has been successful is Schitt’s Creek, if you look at Friends, Seinfeld, Big Bang Theory, they’re all shows from more than 10 years ago. The reason for this is dramas are what Fritz describes in his book as suspense. You don’t know what happens next. You want to see the cliffhanger at the end of the Game of Thrones episode. With comedies you must live with the characters to find them funny. Seinfeld didn’t do well in its first year. The Office didn’t do well in its first year. And in the age of streaming, you can’t like a comedy after five minutes. You just don’t know the characters enough. So, one of the big things happening in entertainment is a crisis where there are no new comedies in TV that are working.

Jeff Strong:

Why is it that standup comedy seems to be so popular right now?

Jeff Shell:

Standup’s working great. TikTok is comedy. Instagram is comedy. People want to laugh. It’s just the shows that we grew up on, which are characters creating comedy. Maybe part of the reason is that you’re getting the comedy in standup on Instagram or TikTok. You don’t have to get it in shows anymore.

Bryan Verona:

In the telephone game, can you predict what the original story is?

Fritz Breithaupt:

You could do it with an AI story. If you have the reduced version, which is like 10% or 20% of the original story, you can go back to the original somewhat. With human stories, there’s no way of doing that, because each human re-teller brings so much of his or her personality into it. Perspective jumps. When we collect stories from people, everyday stories, fiction, whatever, makeup stories, they have three or four characters in it. and we often give, lots of re-tellers the same story, tend to focus on one perspective, but it can be a different one for each one.

We had a story of an old neighbor who is lonely because his wife cares for their grandchild elsewhere. He comes to his neighbors whenever they are doing yard work and wants to talk about politics. They don’t share his political opinion, so they need to push him away. Complicated story. We give that story to a couple of people, and it works as a story. Each re-teller focuses on a different person. Some of them blame the neighbors, “Oh, they should talk to their neighbor.” Some of them focus on the wife of the old man. “She should really be there.” And others say, “No, she’s right to have left.”

Everyone takes a different perspective; there’s no way to reconstruct it. You can have likelihood paradigms. Humans are very creative. Each of us brings a lot into our stories and individualizes them in wonderful ways. That’s part of the interest in it. If we know how the story goes and would focus on the same character, it would be boring. There’s no need to tell it.

There is an interesting difference here between old movies and old books. During the pandemic, I read War and Peace again, which is fabulous.

What we see in movies is that the cuts are way too slow. The scenes are too long. It’s overdrawn on many levels. What we see, however, is that old movie plot lines are refilmed for modern audiences with good effects. Once we force them to watch it, they can get over that and then they love it, but a company like Netflix can’t get anyone to force them to watch for more than five minutes.

Larry Bernstein:

Talk about skepticism, the narrator, is he trustworthy or not? And as I mentioned in my storytelling, I’m always the lead character in the story. A lot of listeners have enormous skepticism about the narrator in my story, and they don’t really believe that at all.

Fritz Breithaupt:

Well, you are a good storyteller because everyone knows there is a possible different take on this.

Hugh Nickola:

I want to talk about stories in business. Larry’s an inspiration here. Putting a story in a business meeting. It doesn’t even need to be relevant necessarily to the subject, to recapture people’s attention or to set people at ease. Particularly if it’s a self-effacing story, that’s particularly useful. People have picked their roles in the meeting. Then the meeting doesn’t get what you need. And it’s not necessarily group think, it may simply be that they attach themselves to some idea, they have their own role and they envision it. How do you defeat that to make that meeting more productive?

Fritz Breithaupt:

I was in the role of being a dean at one point. I chair my department. It’s hard to shake people out of it. The one good thing in the university environment is that I deal with the same people. I can bring them into different environments and try to throw them into a different role. And if I kick someone a little bit and say, “Hey, can you propose this idea here?” They become the positive person and someone else becomes the naysayer.

Playfulness always gets you out of it. If people start to become storytellers, they have agency and suddenly say, “Hey, why don’t you try a different role?” That often works.

Larry Bernstein:

Thanks to Fritz for joining us.

If you missed our previous podcast, it was Returning Science Education to Medical Schools.

Our speaker was Stan Goldfarb who previously was the Dean at UPenn responsible for the medical school curriculum. Stan discussed how basic science like biostatistics has been stripped from medical education, and why we need to teach doctors to be scientists and not technicians.

You can find our previous episodes and transcripts on our website. Please follow us on Apple Podcasts or Spotify. 

I am Larry Bernstein with the podcast What Happens Next.

Check out our previous episode, Returning Science Education to Medical Schools, here.

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Stan Goldfarb

Subject: Returning Science Education to Medical Schools
Bio: Former Dean at UPenn Medical School

Transcript:

Larry Bernstein:

Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast that covers economics, politics, and history. Today’s episode is Returning Science Education to Medical Schools.

This podcast was taped at a conference where I hosted several Penn Professors on various topics.

The audience included my friends who will join me in asking questions. Our speaker is Stan Goldfarb who was previously the Dean at UPenn responsible for the medical school curriculum.

Stan, can you please begin with six minutes of opening remarks.

Stan Goldfarb:

Before COVID when a new Vice Dean for Education came to Penn suggested that our curriculum was way out of date and that we needed to focus on social justice. That led me to write an op-ed in the Wall Street Journal entitled Take Two Aspirins and Call Me by My Pronouns that led to a tremendous reaction in the medical establishment. I wrote a book and then started this organization, Do No Harm, of which Jay Greene is the director of research. The idea is that medical education and medicine should be only dominated by a meritocracy and not by political ideology. Identity politics should be out the door. The problem has been not just the push for diversity but pushing for diversity to bring in more minority students.

The rationale for it in medicine has been two things. One is the reparations argument. People were denied something years ago and we need to make it up now. The other argument is that you need diversity to have better medical care for the public, particularly for the black community that they need more black physicians to have better health outcomes. There’s a great disparity in health outcomes for the black community, and this is the way to fix it.

What that’s led to is a dilution of the quality of medical education. The first thing you have to do is make sure that everybody gets through, because if you’re going to start taking people into medical schools and you then flunk them out, that’s not going to satisfy the diversity requirements.

In law school and nursing school, they tend to throw them out. Medical school, everybody graduates. The rate of graduation from medical school is like 98.5%. When I went to medical school, it was around a 9% attrition rate. Some schools had it as high as 15%. They used to give you a lecture on first day, look left and look right. One of them isn’t going to be here when you graduate. And that’s no longer the case.

Once you say, “everybody’s going to graduate,” now you have a problem because you have to create a curriculum that allows everybody to graduate. And the way that’s been done is twofold. One is to make it easier to pass exams. The other thing medical school education needs to be shortened and simplified.

What’s happened? If you went to Duke Medical School 40 years ago, you spent two years in the classroom, and then you were introduced to clinical medicine, and then the last year, you went on electives and maybe did some research.

Duke Medical School now has one year of classroom teaching, and then one year research, and then one year clinical medicine, and then the last year in all medical schools is a big waste of time, and have a good time, parties, and not much goes on there.

It’s led to a sense that we need not be serious about the scientific nature of medical education. Zeke Emanuel is at Penn made the statement that we shouldn’t be bothering to teach the Krebs cycle. The Krebs cycle for the non-biology people here is the basic way that energy is produced in cells. And when you understand the Krebs cycle, you understand something about energy metabolism.

It becomes really important in cancer research because cancer cells use the Krebs cycle in interesting and different ways, and that has become an important therapeutic point. Zeke who’s an oncologist thought nobody needs to understand the Krebs cycle. And it’s an analog of nobody needs to learn basic science in medical school. We’re going to train technicians.

Here’s the problem with just training technicians. When clinical research is done, the recommendations are for the average. So, if there’s a thousand people in a clinical trial, the results are going to be summarized as what’s the average response has been. The two edges of the distribution of the responses that patients are ignored for what will happen to the middle of the distribution.

A really good clinician is smart enough to understand the variation. Ralph Horowitz, who was a former Chairman of Medicine at Yale and at Stanford has written extensively on this, we need to understand not the average, but the distribution. A good clinical scientist who reads a medical research paper ought to understand the variation. They need to understand the statistical modeling that goes on here. Biostatistics in most medical schools now at Penn, it’s a one-week course.

Larry Bernstein:

Oh, come on.

Stan Goldfarb:

It’s a one-week course. I fought against it, but the students hated the course because they came to medical school to play doctor. They came to medical school to get into the clinic on day one. They’re going to have fun.

We’re going to give you an experiential education as opposed to ask you to read a textbook on cardiology. There are no textbooks in medical school. The Medical School had a bookstore at Penn. It closed. What you get is lecture notes. It’s little stuff at the bottom of each slide, and the exam is on that material. You’re told at the end of the course, “This is what we’re going to test you on, go home and study it and then they all pass the exam. And the exams are pass/fail, so it doesn’t matter how hard you study.

I was running the curriculum. I’m obviously guilty of some of this, but I fought like hell to keep us having grades. Grades were gone. In the clinical years, everybody gets honors. At Harvard Medical School, 92% of the students one year got honors in medicine. Well, obviously it doesn’t mean anything if 92% of the people get honors.

There are faculty that do research and do a little teaching. Medical faculty taking care of patients. They don’t pay that much attention to medical education. And then there’s the faculty that’s the administrative leaders of medical school. They’re the course director. They sit in every lecture for one or two months. They get a stipend for that. They’re not going to make noise, frankly, because it’s going to put their leadership at risk.

Larry Bernstein:

I have a question for Randy Kamien. Randy’s my high school friend who is a Professor of Physics at Penn. What are you doing in the classroom?

Randy Kamien:

One of the virtues of academic departments is that they’re always expanding the field they’re studying. It’s always growing. The curriculum that I had to learn when I was in graduate school doesn’t serve our students anymore because the field’s grown in the last 30 years.

We all are doing different things. Students want to learn computer science, pure mathematics, and neuroscience. We have a large group studying neuroscience in the physics department. Do those graduate students need to know of the Krebs cycle probably in neuroscience. Do the people studying astrophysics need to know the Krebs cycle? I don’t know. So over time, we’ve become much more generous about what we think the curriculum ought to be.

Larry Bernstein:

You didn’t move towards social justice discussions. You moved into more abstract concepts of science.

Randy Kamien:

Social justice discussions do not come up in graduate education in physics.

Larry Bernstein:

It does in medicine.

Stan Goldfarb:

It’s a fair criticism that medicine has grown rapidly. There’s so much new information available that you have to be flexible. This idea that you need to understand the basic science that underlies the therapies that have been developed. The lack of effort to teach students that information is going to lead to students that are going to focus on if I’m going to give someone this drug for leukemia that’s the latest thing. And understanding how that might interact with response to the drug and the disease.

Patients bring so much variability as opposed to the hard sciences where it’s a very different phenomenon. This is about the variability in human biology. Students need to be able to deal with the basic information to understand that variability. And that basic information is being reduced all the time.

The other part of it is their ability to read medical literature and understand the complexities of the studies has also been reduced because statistical modeling has gotten much more complicated. Many more studies based on analysis of databases as opposed to a single human experiment. And medical students are going to have to follow these guidelines without much understanding. And that’s where we’re really going to end up.

Will artificial intelligence and medical imaging make up for all this? Maybe, but there’s still going to be such variability in what patients bring to each individual encounter that a student that’s not strongly grounded in the sciences is not going to be able to be very effective. When you add on top of that, the willingness to bring in students that are not terribly talented, which is what’s really going on in most medical schools, you have the opportunity for this rather dim picture that I’ve tried to paint, which I think is really the case of what’s coming in medicine, particularly in this country.

In the Netherlands, if you want to go to medical school, it’s a lottery. You take an exam, and then there are too many people that still want to go to medical school, and there’s a lottery. I propose that for United States medicine as well that it be based on academic achievement and intellectual capability. Yes, you should be an ethical person, but that we should try to get the best and the brightest. There are 55,000 students that apply to medical school in the United States. 23,000 are accepted. There’s plenty of brain power to fill all the medical school classes, and yet that’s not what’s happening.

Moira McDermott:

You talked about wanting to return to a meritocracy, how do you think that should be done? Is the MCAT predictive of success in medical school?

Stan Goldfarb:

The data for the vast majority of studies show that MCATs predict performance in medical school. Now there are a couple of large studies, one of internal medicine trainees, one of emergency medicine trainees that show that minority groups, which tend to have MCAT scores a standard deviation lower than Asian students, for example, that when they get into residency programs, the faculty judges them as being less effective trainees.

There was a paper that came out in The Journal of the Association of American Medical Colleges, which looked at like seven good internal medicine training programs. The faculty judged the minority students substantially lower on preparation for practice, medical knowledge, even professionalism. The authors of the article said the reason for this was that the schools and the faculty were biased against them and the school didn’t make it a welcoming place for minority students. And finally, that the tools that they use were racist and that’s why they judged them poorly. And I wrote, maybe they weren’t so good at being residents, and then all hell broke loose over that.

So, you can show that they’re doing less well. And finally, there are data that show that those who do less well on their board certifying exams, their patient outcomes are less good in terms of mortality and readmissions to the hospital, which was tested in a group of hospitals. That’s the data we have. We also know that there’s a higher dropout rate by minority students when it comes to training programs. Something like a third of the male minority trainees drop out before they complete their surgical training, even though there’s a great desire to recruit these people into surgical training programs.

Larry Bernstein:

How will AI change medical education and the practice of medicine?

Stan Goldfarb:

Imaging has been a huge issue in medicine. That’s so profoundly changed diagnosis. One example is appendicitis, very common disease. People used to come in with abdominal pain and the question is, do they have appendicitis? And we’d go through this elaborate set of physical diagnostic tools. We’d do blood tests. We’d think about it hard. And even then, we’d miss patients. They would send them home thinking they were fine. They’d come in 12 hours later, sick as hell, fever and having perforated. Nowadays, you come into the emergency room, you have abdominal pain, you go right to get a CAT scan. CAT scans are extraordinarily effective at picking up appendicitis. A good emergency room will do that, and that’s the end of the problem. All that learning about the physical diagnosis goes out the window.

They’ve had an appendectomy but they’re still febrile. Now imaging is gone as the issue. Now we need a clinician that understands possibilities. What will AI do? I think it will make a great difference. It will give them possibilities. The question is this variability that I’m talking about. AI is going to read the literature. The literature talks about the middle of the study, the average patient in the study. It doesn’t talk about the extremes, and it doesn’t talk about the variability that now this patient with appendicitis is also 87 years old, has a history of multiple sclerosis, has been on corticosteroids for a long period of time for another condition. And all the variability that that patient brings, will AI be able to capture that?

At the end of the day, there needs to be someone to talk to the family and how it’s going to all play out. Now, maybe an AI printout will be used for that. In my foundation that I’m on, we’re getting proposals from medical schools all the time about training students in AI and we’re funding those because it’s important and we’ll see where it all goes.

I don’t know that this is a good rationale for taking in less qualified students to be physicians. Since our job is to take care of patients and not to make students happy and not to solve the world’s social problems and not to get rid of any inequality that may have existed a hundred years ago, our job is to make sure patients get the best outcomes. I still think that that’s where our organization needs to focus in making sure the best and the brightest get a chance to be physicians.

Larry Bernstein:

I want to follow up with the appendicitis example. I had some lower right quadrant pain. I went to visit my doctor, and he said you need to get a CAT scan and it turns out that the radiologist on call was Renee Yap who went to Penn and my high school, and she invited me in the back to look at my scans with her. The first thing she said is, “Do you eat vegetables at all? “ I said a little bit.

She said, “I don’t think you’re having an attack. It’s over and you can go home.” So, I went home and then the following Monday she called me and she said, “We had our weekly radiology conference, and I threw your appendix up on the screen and we took a vote on whether or not we should remove your appendix.” And it was even, it was eight / eight. I said, “What do you think I should do? She said, ”It’s really your call.”

I said, “Well, what basis do I have an opinion. I don’t know anything. I didn’t take a week of biostatistics. These are professionals.”

Stan Goldfarb:

I’m so opposed. This patient autonomy is fine, but my job as a doctor is to tell patients what my best opinion of what they should do. And my line was always, “Look, if you were my mother, this is what I would advise you to do.” And to me, physicians that say, “Look, here are the options you pick.” It’s insane. And it’s been taught as if that’s a valid thing. Patient autonomy means you can’t force people to do things. It doesn’t mean that you should let them without background decide what’s best for them. It’s truly insane.

Larry Bernstein:

To follow up on that. I later got a second appendicitis attack and they say, “You should get a second or third opinion.” So, you meet the second great guy, tremendous pedigree. And the first doctor says, A, the second doctor says B, the third doctor says C. And now you must decide where there’s inconsistent medical evaluations. How is that patient who’s the same idiot as before, supposed to decide between three excellent physicians how they’re supposed to make a life determining decision?

Randy Kamien:

You’re supposed to look at their grades.

Stan Goldfarb:

Well, actually, that’s not facetious.

Randy Kamien:

That’s ridiculous.

Stan Goldfarb:

But here’s what I tell patients. If you have a complex problem, you should go to an academic medical center. The people will talk about your problem. They’ll think about it. They’ve generally been picked because of their performance in the past to have opportunities to be at a place like Penn. They’re not out at a small community hospital. You should stick with their opinion. You should not go around shopping opinions because if the situation is that complex, there’s not going to be an absolute answer that somebody can give you a probability. At some point you have to bite the bullet, and make a judgment. And that’s to me the best advice because you’re talking about biological variation.

Fritz Breithaupt:

50% of patients do not take the medicine as prescribed. This is true also for life-threatening things like cancer medicine. We know that patients are more likely to comply if they sense that their doctor has empathy, cares for them. Is that something that should be part of the medical training?

Stan Goldfarb:

Yeah. Everybody agrees with that, that if you can’t convince your patient to take your medicine, then you’re not going to be effective. When you look at healthcare disparities, the issue of what the patient brings in terms of adherence is never measured. It’s never questioned. We have no idea when you see disparities, how much of it is due to patient factors as opposed to the healthcare system or the physician’s judgment.

At Penn, for years, there was a very effective and useful activity called doctoring, where we had actors who portrayed patients so students would learn how to convince them to take their meds, how to deliver bad news, how to deal with family issues that may arise. Patient/doctor communication is critical.

I don’t think that we need a separate curriculum on social justice issues. I thought that instead of having a one year of basic information, that it should be expanded back to the two years and included in the two years ought to be a course in psychology, because that’s what we’re talking about. I was taught in medical school why patients were making decisions, but I don’t see that as learning cultural competence. I see that as learning human psychology and understanding what patients are bringing to the encounter.

And that can be taught, that should be taught, but it’s quite different from teaching that’s going on the idea that patients that poor outcomes are due to medical racism and we need to teach you all about your biases. That’s not the issue. The issue is understanding human psychology so that you can be an effective practitioner and communicator to your patients.

Jeff Shell:

I did a little Claude research before this, so I’m sure I’m wrong, but medical outcomes are determined by a lot of studies to be worse for women, black people in the United States than white males and Asians. Seems to be widespread and there’s been a lot of studies on that. And so I’m not sure this movement towards more diversity in medical schools is for only the reason of reparations or justice, but it’s to try to make sure when you walk into a hospital or a doctor’s office, regardless of your gender or race, you have the same chance of a good outcome.

How do we get better outcomes for people who have different skin color, different genders, if it’s not provided more doctors that look like them?

Larry Bernstein:

Jay Greene you work with Stan as Director of Research at Do No Harm. Can you add to the conversation.

Jay Greene:

There’s a thing called social determinants of health, which is people have adverse health outcomes because society is constructed in a way that contributes to that. There’s truth to that. And I don’t think that that’s the issue here. The issue is to what extent do you want medical training to be reoriented towards addressing that? I think what we want is for doctors to be involved in individual treatment of individual patients, that that is a personal relationship, and that the doctor is not fixing society, they’re fixing a patient. And it’s a political problem for political actors to worry about these other social forces, and they should attend to that, and they probably don’t want your doctor to do that in large part because your doctor has no tools for fixing it.

We want doctors to do what they’re well equipped to do, which is to treat the individual patients who are in front of them rather than fix society.

The race or the sex of the applicant for medical school, these qualities are very unlikely to be related to the merit of that person as a doctor, unless you believe in this claim of racial concordance that the race of the doctor on its own has an effect on the outcomes of the patients, either because of an empathy effect or some other factor that’s related to similarity of race, similarity of culture alters the health outcome.

The research on this is really not good. I know there’s the claim, people point to studies, but all you have to do is start diving into the studies and quickly figure out how it’s distorted and accepted because there’s such strong political demand to have that result. So, the Florida baby study. This is Greenwood et al. This was cited in the Students for Fair Admissions Supreme Court decision. And this was an analysis of every birth in Florida over a couple decades. And they found that Black babies were more likely to die if they had a doctor who was not black.

I know we have an aversion to discrimination, but it saved babies’ lives. You want dead babies or your principles about not discriminating, we have got to save babies. Except it wasn’t hard to figure out where they hid the ball. They controlled various factors about the baby’s health, but one thing that was obvious that they didn’t control was whether the baby was very low weight. They controlled whether the baby was low weight but not very low weight. And the information was the ones that died and very low weight babies get treated by neonatologists more often than a regular obstetrician or regular pediatrician and the neonatologist is very likely to be white because there are very few black neonatologists. It’s not that white doctors were killing black babies, it was that black babies who were going to die because they were very low weight were assigned to white doctors.

And sure enough, a Harvard economist got hold of the data, reanalyzed, introduced this control and the result goes away.

David Brail:

Every time I go to a hospital, the doctors that I have are the right pedigree. My mother lives in Central Florida. She’s been hospitalized repeatedly. All the local hospitals, every doctor she meets with it’s always an island or a foreign medical school. The big city teaching schools get the pedigree doctors and the provinces get doctors trained elsewhere. If there’s a capacity issue, why can’t we expand the number of seats in medical school? And then how do you view the relative capabilities of foreign and island trained doctors versus US trained doctors?

Larry Bernstein:

Jay Greene, you want to speak about this?

Jay Greene:

It’s true that we bring in 25% of our doctors each year from abroad, and that’s because the number of residencies far exceeds the number of MD graduates from US schools, and the gap that has to be made up by bringing in the others. Now, in the 1980s, it was under 10%, so it’s tripled in the last half century when we were cream skimming the very best from abroad. It was advantageous to us that they were paying for the training of people that we were then bringing in their very best. But as we get to a quarter, we begin to dip deeper down into the pool, and because we are not involved in the accreditation or oversight of their training, we don’t know about the quality of their training.

We need to ramp up US med schools. It’s not obvious to me that we’re making a smart trade off of saying, “Well, our clinical training isn’t good enough, but the clinical training for the med school in Ghana is A- okay.

We have to reduce our dependence on having to import doctors where the training is suspect and we can be a little bit more selective in the importation of doctors so we can return to maybe 10% from abroad as opposed to 25%.

Larry Bernstein:

Thanks to Stan for joining us.

If you missed our previous podcast, it was How Academics Shaped the CIA.

Our speaker was Peter Grace who has a recent book entitled The Intelligence Intellectuals: Social Scientists and the Making of the CIA. Peter discussed how just after World War 2 and at the height of the Cold War, American academics worked inside the CIA’s research and analysis department to forecast enemy activity, and how they set up methods and processes that have been applied by the CIA ever since.

You can find our previous episodes and transcripts on our website. Please follow us on Apple Podcasts or Spotify. 

I am Larry Bernstein with the podcast What Happens Next.

Check out our previous episode, How Academics Shaped the CIA, here.

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Peter Grace

Subject: How Academics Shaped the CIA
Bio: New Zealand Based Academic and Author of The Intelligence Intellectuals: Social Scientists and the Making of the CIA

Transcript:

Larry Bernstein:

Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast that covers economics, politics, and history. Today’s episode is How Academics Shaped the CIA.

Our speaker is Peter Grace who is a New Zealand based academic who has a recent book entitled The Intelligence Intellectuals: Social Scientists and the Making of the CIA.

I want to learn from Peter about how just after World War 2 and at the height of the Cold War, American academics worked inside the CIA’s research and analysis department to forecast enemy activity, and how they set up methods and processes that have been applied by the CIA ever since.

Peter, can you please begin with six minutes of opening remarks.

Peter Grace:

I would like to start by why you would want to read a book on CIA in the early 1950s. The world’s not a safe place right now. Our political leaders are asking their citizens to fight wars. Until recently, national security decisions have been made behind closed doors. And the intelligence that is provided to political leaders has been classified.

There is a move towards sharing that intelligence with the public that justifies the decision to send people to war. It is incumbent for us to understand the intelligence process, the mechanics of information gathering and analysis to help us become more informed.

My book is about the early Cold War and that the Central Intelligence Agency needed to be reformed in to provide better strategic intelligence. The Central Intelligence Agency was formed in 1947 with the National Security Act.

The idea of centralizing intelligence in one place became an imperative after Pearl Harbor. There was a belief that had all the jigsaw puzzle pieces been brought together, Pearl Harbor would not have happened. By the late 1940s, the CIA was at risk, its reputation was in tatters after three high profile intelligence failures: China turning communist, the Soviets getting the atom bomb early, and North Korea attacking the South.

In late 1950, the new Director of Central Intelligence General Walter Bedeel Smith set up a new type of strategic intelligence that was informed by the principles of social science: history, geography, economics, political science, psychology, anthropology, and sociology. There was hope that this new social science method would see patterns and trends that would help CIA’s analysts provide strategic warning about the intentions and capabilities of the enemy particularly when one side might use the atom bomb preemptively.

Larry Bernstein:

American intelligence took off during World War II under the direction of William Donovan. He had come from Yale and ended up hiring a lot of Yale professors to the OSS. This was the impetus for bringing social scientists into intelligence. Tell us about the role of Donovan.

Peter Grace:

Donovan had a view that to win the war, he needed to employ America’s best and brightest in what he called the research and analysis unit at OSS. The early work that was being done by OSS tended to be basic intelligence, which is getting things together like maps. If you are going to invade North Africa, you need a good map, and they would call on research and analysis to provide that.

They were reading newspapers shipped out of Europe. We had anthropologists and classicists in North Africa who knew the local tribe people and were able to sort things out logistically before the military arrived. This idea that the best and brightest were needed.

Donovan’s a maverick. He’s a man that used to turn up close to the battlefield in his own chartered plane to get firsthand information about what was going on. And the OSS was known as being a hard drinking, hard fighting organization with massive budgets for booze. Not asking for permission but asking for forgiveness afterwards was pioneered by the OSS. You just did things that had to be done.

Larry Bernstein:

What do you make of Britain being the leader? Pre-World War II, the United States was an isolationist country. It had no real offshore presence. You mentioned North Africa as an example. The British had the largest colonial power at the time. They administered Egypt. They were involved in activities all over Africa. It is no surprise that the colonial office had family that were all over the Empire. The interrelationship between the military forces, the colonial office, and academia to be mutually supportive.

This was not the case in the United States. The film Raiders of Lost Ark was more akin to what would be going on in the English Empire, where the relationship between an archeologist and the head of the military would not be uncommon.

How did the English give us a path to follow as it relates to the development of the intelligence agencies?

Peter Grace:

What we’re seeing is America’s role in the world changing after World War II being global. And that is a huge change from the pre-Second World War isolationist period with the Truman doctrine and the Marshall Plan.

To keep the peace, there needed information about the way people lived around the world, the way they thought. And the rising threat from the Soviet Union and what capabilities they had.

Sherman Kent was one of the leading proponents that social science was the window that could bring together different elements: psychological, anthropological, sociological, economic, and technological. America’s only going to keep the peace if they had that information.

Larry Bernstein:

Sherman Kent is the hero of your book. He is a historian, a tenured professor at Yale, who is invited to join the new CIA. His expertise was on the election of 1827 related to Louis Philippe in France. He had written a book on the art of writing history and is interested in process and methods to help decision makers. He believes that academics can add real value in that process and that their training across disciplines can make major contributions. Tell us about Sherman Kent and how it influenced the creation of the research and analysis division at the CIA.

Peter Grace:

I was not looking that social science was fantastic and changed the way we thought about analysis because I’m a social scientist myself and I wouldn’t believe that crap. Social science can make some major inroads. It can be the skeleton that you hang things from because it is so hard to work out why somebody does something.

Kent understood that implicitly right from the beginning. He said we can use social science to get us halfway there, but when somebody asks “I need this answer on my desk at nine o’clock tomorrow morning. Social science says, “Hold on, wait. I need to get all this information together. I need time to think about it.” There were times in the Cold War where you had to go with a gut instinct and Kent talks about that well.

Kent leaves behind this legacy of thinking about the craft. He knows right from the start that what he writes down can be used for the next few generations ahead of him.

He paints a picture of the fragility of the process. That is what makes the analysts of today so respectful of him, that he’s written it down, that he’s worn his heart on his sleeve, and that he’s shown them that there’s an awful lot they can bring to analysis.

Larry Bernstein:

What surprised me was his support of the library as being a place to look for answers, that there were answers in books. If you compare it versus G2 intelligence for the Army in North Africa, there is no library there. I do not know how they gather and apply information, but it is not from books. It is from human intel. The OSS originally had offices at the Library of Congress, and Sherman Kent argues that the CIA should get its own library so that they can have easy access to these books.

Questions that are being asked, will China invade Taiwan, or will the West face an invasion from the Soviet Union? These are not questions that are easily ascertainable from books. How do you think about using source material from the library as his primary method of intelligence?

Peter Grace:

It betrayed the prejudice of the social scientists, which is the peer review system. But what I’m reading has been double checked by leading experts. It’s a collaborative effort. And books were the place where you could have that trust in the source. He’s a historian, so he believes in an historical method. Just because somebody says, “I’ve just arrived from Moscow and here’s what’s happening,” doesn’t mean that you take it at face value. Part of that is this robustness that they were trying to impose, that if somebody said, “How did you get this information?” They could say, “Well, I can trace it through these sources, and it’s not just something that we’ve heard off the street today.”

Larry Bernstein:

There are obviously errors in every method and process, but let’s focus on human intel. Did you ever read the book, Our Man in Havana, by Graham Greene?

Peter Grace:

Yes, of course.

Larry Bernstein:

It’s the worst example of human intelligence. The Western Power Intelligence Agency has a man in Havana to get human intel, but the reality is he never leaves his hotel. He gets room service and types up reports and mails it in. And based on those bogus reports, major decisions are being made. And it highlights the frailty of this approach.

Peter Grace:

As does the Steele report in the dossier.

Larry Bernstein:

Now that we have poked a hole at human intel, let me try to defend it. In the mid-1990s, I got a new job as co-head of emerging markets proprietary trading at Salomon Brothers. My partner, Mark Franklin said, “Let’s go to Argentina and find out what’s going on in the ground.”

“Okay, when we land there, what are we going to do?”

“Well, first we probably should meet with the editors of the largest newspapers. We should meet with the heads of the largest banks and investment banks. We should meet with the current head of the Ministry of Finance. We should meet with the former head of the Ministry of Finance, the head of the Central Bank, and the former head of Central Bank.

We probably should meet with a billionaire who runs a large brewing company.”

I said, “Listen, we’re in the relative value bond trading business. Brewing is a sideshow.”

“Larry, do you have any idea how hard it is to make a billion dollars in Argentina? Do you know how plugged in you must be? We’re going to go visit the head of the brewer.”

We would go visit these same individuals every quarter and we would put in a few new people and drop a few each trip.

“Are you sure you want to go visit the same guy?”

He said,” Yes, because it’s not so much his level of concern about the finances of the country I’m interested in, but the changes. If a guy’s always saying it’s the end of the world and he’s saying it’s going to be fantastic, that’s new. And so, we can apply changes and not level as being a more important metric.”

We did this in Argentina, Brazil, Venezuela, Mexico, Thailand, wherever. We have a process of gathering human intelligence from political scientists, pollsters, journalists, government people, bankers, and traders. We could learn about what the issues of the day were. We could apply it with academic analysis. We could apply that with models, but at the end of the day, we were not getting it from books, we were getting it from people.

Peter Grace:

David Ogilvy says the same thing in Confessions of an Advertising Man.

You pick up something like a car account. The first thing you do is you go down to the car yards and ask the car salesman how the car is selling. They are going to tell you.

“Oh, people don’t like it because it’s not comfortable inside or they don’t like the new transmission system or whatever.” They are going to give you the whole thing. They are even going to tell you the advertising stinks or what could be done to improve the advertising. This idea of getting down to grassroots is a terrific idea.

Larry Bernstein:

Kicking the tires.

Peter Grace:

It is a terrific idea, but you balance it with other information. You do not do the whole thing and come back and say, I’ve solved the problem with the client, or I know which way the economy of Argentina is going just by getting that information. You are getting it with other sources.

A good social scientist, you are testing the value of each source and trying to work out which ones you’ve put more emphasis.

Larry Bernstein:

In reading your book, what surprised me was the breadth, depth, and quantity of academics working for the CIA in research and analysis. And they were not random guys. It was like the Sterling Professor at Yale, which is their top guy. One of the economists on staff is Charles Kindelberger. He wrote a fabulous book on the role of tariffs causing the Great Depression. I also read one of his books about European economics and what I didn’t appreciate was that he had worked at the CIA on the European economies. Now that makes total sense that he would write that book. I was baffled why he had written it previously, but now I know.

Our great social scientists working for the CIA would be untrue today. I do not know any social science community academics who freelance or work for or take a sabbatical to go work at the CIA. Since maybe the Vietnam War, academics have pushed away from the military and the intelligence community as being on the dark side and not a partner. Tell us about this inclusivity of academy and the CIA, and then if there has been a divorce.

Peter Grace:

I talked to somebody at Yale recently to this professor of history, “Would you have worked for CIA?” And he did not hesitate. He said, “It was an option. I would quite happily have gone to work at CIA if I hadn’t stayed in academia.”

So, there is something about service which seems to trump some of the question marks, particularly after Vietnam War, about whether you’d worked for CIA or not. This is a recognition of the greater good, that there are things that we can bring to promote peace in the world.

One of the reasons why I wrote the book. I had done Russian foreign policies since 2014 as my master’s. I asked my supervisor at the time, “What do you think the impact of social sciences is on foreign policy making?” And he said, “Well, I was trained in America.” He said, “I went to Columbia for my PhD. I went to Johns Hopkins for my master’s and my undergraduate was at the University of California.” And he said, “All of my professors at some stage had something to do with CIA.” And most of them, he said, were consulting.

Ernest May is one of those people who crops up a lot. And if you start to Google CIA documents, and people like Neustadt, Kenneth Arrow, Thomas Schelling, Robert Jervis come up again and again.

There is a link between academia and intelligence that has never gone away. And that is why I called my book The Intelligence Intellectuals, because it’s an uninterrupted link that starts at the Second World War and continues right up until the present day.

Larry Bernstein:

I had Ernest May speak at my book club years ago. He’s passed away now, and the topic was the 9/11 report. I asked him why he drafted the 9/11 report the way he did. He said, “Well, I broke it up into parts and the first part is history. What happened here? Why did these terrorists behave in this manner? How did this happen? And then I’ll explain what they did and what we can do about it. “ Ernest May was a Harvard historian. I thought his approach made an effective commission report.

I would have thought that if you went today to Harvard’s history department and said, “Would you consult for the CIA?” I think the answer would have been no. And if my colleagues found out, I would have been ostracized. It is also possible that the nature of historical study has changed. There are not military historians at Harvard like Ernest May. I read one of his books Strange Victory on the failures on why France lost in World War II. Military history as a discipline has collapsed among the major history departments in the United States and historians now study other topics like the history of Chinese Americans and their relationship to civil rights. It is less applicable to the questions that the CIA is interested in.

What do you think of the nature of study and its applicability, as well as the leftward leaning nature of the academy, which is opposed to military defense and the Central Intelligence Agency?

Peter Grace:

Why do they bring historians in? Because historians can give you an interpretation of what happened using the facts. They can show you also the psychic nature of history that history often repeats itself and they can use analogies to help you see that more clearly. Why would CIA want to use historians? What is happening now on the ground? Is there an historical comparison that we can make?

When I started writing this book, most of the books that were available that were of a similar nature to mine were left wing perspectives. And the view tended to be that anybody that worked for CIA, and particularly the people like Kent, were either deluded or wrong, imperialist, evil. I did want to present a more impartial view of that.

We need people who are interested in the challenges of democracy. We need people who have an ethical view on waterboarding. Without that picture that the left brings, we would be probably in serious trouble. If you went to Harvard today and asked somebody if they wanted to work for CIA, there would be a resounding closing of doors, but one or two doors would still be open.

Larry Bernstein:

I took a class in the History of American Foreign Policy at Penn, and one of the assigned books was The Best and The Brightest by David Halberstam. The underlying thesis of the book is that the best and the brightest contribution was negative, that they were overconfident in their philosophy and in their application…

Peter Grace:

Worldviews

Larry Bernstein:

Yeah, the whole thing. There were many people involved: the Rostow Brothers, McGeorge Bundy, and they had been advising Kennedy and then Johnson as it relates to policy and that their advice turned out to be poor. I think Kennedy fell in love with the best and the brightest as it related to their successes during the Cuban Missile Crisis, but that same team that applied it to Vietnam resulted in a catastrophe and Halberstam lets these guys have it.

Since then, there has not been this group of the best and the brightest held up by any administration as being critical to decision making. Tell us about the demise of the academic generalist as it applies to policymaking and why the best and the brightest are no longer at the center of power.

Peter Grace:

Ernest May and Richard Neustadt talked about presidential styles of decision making. And they mentioned that in Kennedy’s case, it was collegial. Kennedy liked to do a round-robin of opinion before he decided. There is also another story of Isaiah Berlin, the English philosopher who was in Washington during the war, he’s at a cocktail party and Kennedy asks him what to do about the missile crisis. The best and the brightest are an example of the collegial system that Kennedy was using.

There is a danger in believing that you have recruited the best and the brightest, because if your recruitment process is to say to get the A+ students from the best universities with the best degrees, that doesn’t necessarily mean that they’re going to be able to think on their feet when in a crisis situation.

Larry Bernstein:

There is a large literature on the CIA. I remember the first one I read when I was in high school, A Man called Intrepid by William Stevenson that begins with the story of the OSS. And then I read Alan Dulles’s book The Craft of Intelligence, which gave you background of Alan’s work originally working for the OSS out of Switzerland and then how he developed his own operation. And then Richard Helms book A Look Over My Shoulder, Director of the CIA. from an intelligence and operational standpoint.

And then most recently, Tim Weiner of the New York Times, who covers the FBI and the CIA, gave a behind the scenes of the success and the failures of the CIA. Mostly failures, frankly, comes out of that book Legacy of Ashes. And yours is a completely different approach. You’re not trying to defend the existence of the agency or slap it down because of its failures. You’re more interested in process. Explain how your book fits in and what it contributes to that discussion.

Peter Grace:

It’s not an overview of the history of CIA. It’s only a snapshot in time. It’s 1950 to 1953 where the professors are brought into CIA away from the universities to affect change and put down rules about the way analysis should work. We can learn about the history of the organizations, but what we want to know is how do they arrive at the conclusions? And are those processes good processes? If I sat down with somebody from CIA, would they explain it to me in a way that was credible? And that’s increasingly important because decisions are being made around the world that either ignore the input of intelligence agencies or twist it. And we are expected as citizens to take at face value these conclusions.

Larry Bernstein:

I end each podcast on a note of optimism. Peter, what are you optimistic as it relates to the gathering of intelligence?

Peter Grace:

Well, AI is the big question, and most of the intelligence analysts that I spoke to in the UK and in America recently said this was the thing that was worrying them the most.

Larry Bernstein:

When I was thinking about the questions that Sherman Kent highlighted in his book, Strategies of Intelligence, they were questions that AI would have a very easy time answering. Example, can we move wide trains with military equipment through Bulgaria? AI would be able to figure that out in seconds. You want maps of North Africa? No problem. You want to understand what languages are spoken on the coast of Algeria and in areas of Iran, no sweat. Interpret the newspapers in Casablanca for the last three months as it relates to American foreign policy, and give me an analysis, boom, done. And then when you ask follow-up questions, would you be interested in hearing more about this? The feedback loop that the decision makers can get it in a rapid formula.

If anything, if you believe in Sherman Kent’s view that if all I really need is a library, AI can read the entire library and get you the essence of what you want. And if you want more detail like what sources, no problem, AI can do those things.

Peter Grace:

40 years ago, we did not have the internet, so the ability to get information required driving to the library. We’re not talking about speed up, we’re talking about the ability to judge it and to critique it. AI is getting better at doing that, but there is a problem, and if you don’t know the process of how you got there, then it’s hard to know whether the quality of information is good or not.

If AI takes that process out so that it’s not transparent, then how can you trust that information has been good? The questions that you were asking were the basic intelligence questions, but they’re not the ones that Kent moved on to, which was, will the Soviet Union invade Western Europe and when and how? At what point should we have our armies prepared for that invasion? Will they attempt a preemptive strike using nuclear weapons to knock us out before we even start? And at the moment, AI can’t deliver that.

Larry Bernstein:

Thanks to Peter for joining us.

I am doing a series of podcasts on the war in Iran. If you missed our last podcast the topic was Why Did We Attack Iran Now. Our speaker was Eitan Shamir who previously was the head of the National Security Doctrine Department for Israel’s Prime Minister.

Our prior podcast was Why Does the Press Think We Lost the War? Our speaker was Mark Penn who was a senior advisor to President Clinton and was Hillary’s chief strategist for her senate and presidential campaigns.

Also Iran’s Rope-a-Dope Strategy with Anthony King, a Professor of War at Exeter University.

Previous to that, we had a podcast Allies Fighting Together with Yaakov Katz and a podcast on the Opening of the Strait of Hormuz with James Holmes from the US Naval War College.

We started the series with former Trump National Security Advisor John Bolton about what steps we need to take to win the war.

You can find our previous episodes and transcripts on our website. Please follow us on Apple Podcasts or Spotify.

I am Larry Bernstein with the podcast What Happens Next.

Check out our previous episode, Why Did We Attack Iran Now, here.

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Eitan Shamir

Subject: Why Did We Attack Iran Now
Bio: Political Science Professor at Bar Ilan University, Former Head of the National Security Doctrine Department at the Office of Israel’s Prime Minister

Transcript:

Larry Bernstein:

Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast that covers economics, politics, and history. Today’s episode is Why Did We Attack Iran Now.

Our speaker is Eitan Shamir who is a Political Science Professor at Bar Ilan University, and he previously the head of the National Security Doctrine Department at the Office of Israel’s Prime Minister.

I want to find out from Eitan why we attacked Iran and have we achieved are primary war aims.

Eitan, can you please begin with some opening remarks.

Eitan Shamir:

I would like to address the three major questions regarding this war. First, why are we going to war against Iran versus using diplomacy? Second, why did Israel and the US decide to attack Iran now? What was the urgency? And then the third, has the war achieved its objectives?

Larry Bernstein:

Start with your first point, why did we choose war versus diplomacy?

Eitan Shamir:

Diplomacy did not derail Iran from pursuing its nuclear capability. No matter what we did Iran refused to change its behavior.

Larry Bernstein:

The Americans used diplomatic efforts for 47 years with the regime. The Obama administration felt that it had been successful negotiating nuclear restraint with Iran. Was Obama successful or were the Iranians cheating?

Eitan Shamir:

War is not a desired course of action. We all know that war has risks. You lose men and material. There’s human suffering that is involved. So, war should be regarded as last resort.

What Obama did, not wanting to make war, we reached an agreement that kicked the can down the road. Every American president promised that Iran would not have a nuclear weapon, but none of them did much.

Trump is the exception. JCPOA, the agreement that Obama did, froze the situation for 10 years, so the Iranians could continue to enrich their uranium at a low level that is accepted for civil purposes from 2015 to 2025, but Iran didn’t dismantle their facilities. It did not take away their knowledge, capability, and learned experience.

The Iranians were not open and transparent about their nuclear facility at Fordow. There was nothing in the agreement that addressed the issue of proxies, terror activities and the missile program.

I don’t think Iran’s strategy was to make a nuclear device and then bomb Israel. But if the likelihood that I was wrong even by 1% means that the nuclear threat is existential.

Remember that the Iranians surrounded Israel with the Houthis in Yemen, Hezbollah in Lebanon and Syria, Hamas in Gaza with a missile capability in these nearby locales and ballistic missiles from Iran.

This gave Iran a hegemonic position in the entire region against the Gulf states and Israel.

In 2025, with the nuclear agreement no longer in place, what was next? They lifted the sanctions; they had a lot of advantages in economic terms. They felt immune because under this agreement nobody could attack them militarily. Even Israel would not dare attack them while there was an agreement with the US.

Larry Bernstein:

I understand that diplomatic solutions may not have been an effective means of controlling Iranian ambitions and power, but what motivated the war now? What was the triggered the United States and Israel to do a surprise attack? And how was it possible that it was a surprise?

Eitan Shamir:

Edward Luttwak defined the Obama law that Iran can hit everyone, but nobody can hit Iran. President Obama believes that Iran is a force that could stabilize the Middle East and the consequence is that Iranians learned to believe that they were untouchable.

We must consider the religious factor, which we as Westerns sometimes misunderstand, This notion that the West is weak and decaying. There was no reason to believe that Trump was bluffing. I think the Iranians simply miscalculated.

But going back to the why now? In 2021 Israeli intelligence became aware that the Iranians were enriching uranium from 20% to 60%. This is the famous 400 kilograms.

The only reason to enrich uranium to this level is to make a bomb. With the Biden administration, the law of Obama still applied. Iran was immune. We were not going to attack Iran. The Israelis came to Biden after he lost the election and told Biden, “Look, you don’t have to get elected again.” Let’s do something militarily. And Biden disagreed.

Now, what happened on the 7^th of October from the Iranians perspective is that Sinwar jumped the gun and undermined the Iranian plans. From their point of view, Hamas is destroyed as a military force.

Then Hezbollah next. Hezbollah is finished as a fighting force. The next disaster was Syria. Assad was literally under Iranian control. Now, Assad is gone and has been replaced with their Sunni enemies who were oppressed and killed during the civil war in Syria. These guys now control Syria, a total disaster for Iran.

Larry Bernstein:

In June 2025, the Israelis fought alone initially. They destroyed Iran’s aircraft defense systems, and so it created an opportunity for US B-2 bombers to drop massive bombs on Iran’s nuclear facility.

Eitan Shamir:

Exactly.

Larry Bernstein:

There was a lot of disagreement about whether the US attack on the nuclear facilities at Fordow were successful. How much did this undermine the Iranian nuclear program?

Eitan Shamir:

We don’t know for sure. I don’t get access to Israeli intelligence. But from what I hear, the strikes were successful. Those facilities are not operational.

Israel killed many nuclear scientists, took out their leadership and destroyed most of the missile sites and launchers, which was one of the objectives of this operation.

In June 2025, Trump stopped the and demanded that Israeli fighter jets make a U-turn and go back to Israel. Trump knew that the next wave of Israeli fighters was going to inflict heavy damage on Iran. And he stopped it because he wanted to give room for diplomacy. Since June 2025 the Iranians were negotiating but as usual this led nowhere.

They were stalling and stalling and stalling while they rebuilt their offensive and defensive weaponry. Israel intelligence estimated that Iran produced an additional 1,000 missiles per day.

And they transferred a billion dollars to Hezbollah so that they could recover. And today in Lebanon, this fighting with Hezbollah is the direct result of that.

To those who criticize the decision to go to war against Iran, I never heard arguments for what the alternative was. I suspect that the Iranians would reject the previous Obama agreement.

Why did Trump decide to go to war? He was influenced by the embassy crisis in Tehran. Iran tried to assassinate him, so it got personal. In addition, in Trump’s negotiations with a nuclear North Korea, that he had no leverage.

Iran is much more dangerous than North Korea because it has a hegemonic ideology in combination with religious radicalism. This was a big part in his decision to make war.

Larry Bernstein:

The Americans and the Israelis have not considered a ground invasion.

Eitan Shamir:

No.

Larry Bernstein:

And why is that? What is it about Iran’s geography that makes a ground invasion ridiculous?

Eitan Shamir:

Iran is protected by mountains. You have a few passageways like you see in Switzerland.

The Iranians have a historical memory of a glorious Iranian empire, the Persian empire before that, and they believe that their destiny is to be hegemonic in the Middle East. Shia is a minority in the Islamic world, and they were always the underdog. And the Iranian revolution in 1979 was supposed to change this historic relationship.

The struggle is multilayered. They are fighting the West because it is everything that they hate. The West is corrupt, anti-religious and colonialist.

Israel is a forward post of the West, and many radical Jihadi Sunnis say the same thing. The Jews under Islam were always second-class citizens. The Islamists are in shock that the Jews have an independent state in the heart of their Middle East. The plan is that after they kill off the Jews in Israel that they will continue the struggle against the West in Europe and against Sunni Islam in the Middle East. That’s core to their world view.

Larry Bernstein:

What are the Saudis thinking?

Eitan Shamir:

The Saudis are playing a sophisticated game. If you remember, they were trying to use China as a wedge to provoke the Americans to do what they wanted. But the Saudis have a lot to lose, and they are not risktakers. They want to stay low and hope that the fighting stops soon. But they are pushing hard on the Americans to be tough on the Iranians now to win the war.

Larry Bernstein:

How widespread is the view among the Gulf States that they want Trump to keep hitting the Iranians? It seems counter to these other points of making peace.

Eitan Shamir:

The Middle East is full of contradictions. And that is why most commentators in the Middle East have no clue what is going on. When Israel was fighting in Gaza, a lot of Middle Eastern experts in Britain and the U.S. were saying, “Because America is supporting Israel it’s going to alienate the Arab moderate countries.” People who actually visited officials in Riyadh and in the Emirates heard, “Don’t stop the Israelis. Let them finish Hamas because Hamas is our enemy. Hamas is the Muslim Brotherhood, and we are not afraid of Israelis. We are afraid of the Muslim brotherhood.”

Larry Bernstein:

What is the Iranian military plan and what was the purpose of their performative act of firing ballistic missiles that they knew would be shot down?

Eitan Shamir:

Their original strategy was to create deterrence by having a missile wall. We can attack everyone in the Middle East with this unprecedentedly large missile arsenal that is protected underneath the mountains. In addition, Iran will make their proxies fight for them. They had Hezbollah, the Houthis, militias in Iraq and Syria. Whenever Israel retaliates, it will have to retaliate against the Iranian proxies.

The next phase for Iran to get immunity was to be right on the threshold of obtaining a nuclear device, the threat to have the ability to make a bomb in a few weeks.

Since October 7, Iran has seen its global strategy fall apart. They were under enormous stress, and they responded by firing missiles at Israel. I do not think they had a choice. They were trapped. They had to do something because their proxies looked to them to provide leadership.

Now, the Iranians are being humiliated. Their proxies are defeated. Their plan to fire 100 ballistic missiles at Israel and thousands of smaller rockets from Hamas and Hezbollah each day for weeks to be combined with a proxy land invasion was expected to bring Israel to its knees. If Iran got a nuclear weapon, then Israel had no way to deter Iran. I think this was the Iranian plan. And everything went bad for them starting on 7^th of October. We should award the Israel security award to Sinwar for changing the whole military dynamic in the Middle East.

Larry Bernstein:

How is Trump different than previous presidents for the Middle East?

Eitan Shamir:

After the Gulf War, using force in the Middle East was taboo. I was sitting in a conference in the Israeli Foreign Ministry and there was a consensus that the Americans were unwilling to use military force in the Middle East after the Iraq war. And I disagreed. There is a reluctance in this Trump administration for certain kinds of military intervention, but Trump is not opposed to all military force.

Larry Bernstein:

Why didn’t the Saudis build a bigger pipeline to handle all the 22 million barrels out of the Persian Gulf and instead of a partial solution of a pipeline that could only ship 7 million?

Eitan Shamir:

There is inertia in the status quo in the Middle East. Being properly prepared for war is only obvious in hindsight.

You know the story of the scorpion and the frog. That the scorpion stings the frog in the middle of the river and the frog asks him just before they drown, “Why did you do it? You killed us both. “Well, I’m a Scorpion.”

Gulf countries are the frog and Iran is the scorpion. Iran is also dependent on sending oil tankers through the Hormuz Strait. Why would they do it? It is this cruel game where no one wins. That is my only explanation.

Why didn’t the Saudis invest more in their defense? They expected that the American security umbrella would protect them and that neither the US nor the Iranians would initiate a war.

Larry Bernstein:

The American and European media believe that the American-Israel alliance is losing the war. That their war plan is ineffective. There was an article recently in the Wall Street Journal that said that killing off the top 40 leaders was a bad idea because they will be replaced by even more horrible people. Some say that the threat to the Strait of Hormuz was not thought through, and that the Iranians are winning the war in every dimension. What do you think?

Eitan Shamir:

I don’t know where it is coming from really, but it’s more of a psychological problem. Foreign Affairs magazine has five articles explaining why the US is losing the war in Iran. I think this perspective comes from people who believe that military force does not solve anything. This is an ideological problem.

We saw the same response with the war in Gaza. All the experts in the media that quoted retired military officers, academics, and analysts said that Israel would surely lose the war in Gaza. And yet Hezbollah and Hamas were completely defeated. And now it is Iran’s turn.

The critics completely ignore the chaos, despair, and problems of the other side. There is a famous story from Israel’s Independence War in 1948, soldiers were complaining to their commander about the rain and the cold and why they cannot go on. And the commander said, “It is also raining on the other side.” Meaning you are suffering, but the other side is suffering as much as you are. Hold on because they will crack first.

Larry Bernstein:

The Europeans have opposed the war in Iran, and they are angry that the United States is not aiding Ukraine in the Russian-Ukraine war. How do you explain the European’s perspective on making war?

Eitan Shamir:

Where you sit is where you stand. The Europeans view Russia as the aggressor. So, this is a no choice war. Russia attacked Ukraine. If Russia wins it will border EU countries. Europe directly is under threat, therefore it’s a “just war,” therefore they must do something about it. But they don’t see a reason to go to war with Iran.

Larry Bernstein:

The Iranian Revolutionary Guard has said they will shoot their domestic opposition on sight, how does that impact regime change?

Eitan Shamir:

We don’t know. Maybe it’s going to get worse before it’s gets better. If you put full pressure on Iran by keeping the sanctions and bombing them, then it might trigger a severe economic crisis. If you remember an economic crisis triggered the previous demonstrations.

The alternative is to do nothing, which means at the end, Iran will get nuclear weapons and dominate its neighbors in the Middle East. This is not something we can afford. So, the military escalation is the best course of action. It’s not perfect. There are obstacles. Our enemy is shrewd and capable. The Iranian people are capable and educated. So this will be a struggle.

Larry Bernstein:

I end each podcast on a note of optimism.

Eitan Shamir:

What we see here is an evolution between Israel and the U.S. and a wonderful joint operation between the two armies. We also broke the taboo that Iran is immune from attack.

Larry Bernstein:

Thanks to Eitan for joining us.

I am doing a series of podcasts on the war in Iran. If you missed our last podcast the topic was Why Does the Press Think We Lost the War in Iran? Our speaker was Mark Penn who was a senior advisor to President Clinton and Hillary’s chief strategist for her senate and presidential campaigns.

Also Iran’s Rope-a-Dope Strategy with Anthony King, a Professor of War at Exeter University.

Previous to that, we had a podcast Allies Fighting Together with Yaakov Katz who is the former Editor in Chief of the Jerusalem Post and I also did a podcast on the Opening of the Strait of Hormuz with James Holmes from the US Naval War College.

We started the series with former Trump National Security Advisor John Bolton about what steps we need to take to win the war.

You can find our previous episodes and transcripts on our website. Please follow us on Apple Podcasts or Spotify.

I am Larry Bernstein with the podcast What Happens Next.

Check out our previous episode, Closing Small Colleges, here.

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Geoff Baird and Robert Zemsky

Subject: Closing Small Colleges
Bio: Geoff: Founder of Enroll ML, Robert: Professor of Education at UPenn and Former Chief Planning Officer

Transcript:

Larry Bernstein:

Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast that covers economics, politics, and history. Today’s episode is Closing Small Colleges.

Our first speaker is Geoff Baird who is a very close family friend. Geoff recently co-wrote a book entitled The Signal Solution: How Smart Colleges Stop Chasing Applications and Start Converting Students.

Geoff founded Enroll ML, higher ed's first AI thinking engine to guide and improve new student enrollment. Geoff is particularly excited about using AI to figure out who the admissions committee should focus on in their marketing efforts.

Our second speaker is Bob Zemsky who is a Professor of Education at UPenn and the university’s former chief planning officer. He is also the Co-Founder of College-in3- Exchange and is the author of 14 books including The College Stress Test.

In the past couple of weeks, Hampshire College and the Chicago Theological Seminary announced that they are closing. This is part of an ongoing trend that small colleges fail to attract enough students to survive. Bob will discuss what these schools need to do turn things around including experimenting with new programs like a 3-year degree.

Let’s start with Geoff Baird, can you please begin with six minutes of opening remarks.

Geoff Baird:

In the book, The Signal Solution that I wrote with Teege Mettille starts with higher education is struggling and in a state of disruption. The reasons are changes in demographics and pressures on delivering ROI and outcomes. What do we do about this? How do institutions change their enrollment? The environment in which higher education operates has fundamentally and permanently changed.

If we agree that it’s fundamentally changed, why would we expect our enrollment playbooks built for a previous era to work the same way? The signals on enrollment decisions, forecasts and investments that we spent a decade building up are not delivering the level of predictability that they did in the past. An enrollment environment where there are no longer pools of students and untapped pools of scholarships. In a world where there are fewer students, fewer dollars, competition is rising, what does higher ed do?

What do they do with enrollment? The answer is to shift strategies from the top of the funnel focus, which is where the playbooks have been centered. Estimations are that higher education spends between $10 and $15 billion acquiring students. That is a lot of money not going to the education of students. And so, institutions must change the way they are thinking about enrollment.

They have to shift from the top of the funnel to the movable middle, those students that are interested, but not all the way in. Institutions have got to compete harder for that smaller group of students. This is the big transformation particularly for the thousands of institutions that are not in the top hundred that do not have endowments to fall back on, where every student enrolled matters to the future of the institution.

The yield is the percent of admitted students that choose to enroll. For highly selective institutions the yield rate might be 50%. But for an average college in the United States that number might be 15%.

Of those 85 who were accepted, if you can get three more to say yes, you’ve grown your enrollment by 20%. For most institutions in America, that is a grand slam home run. That might be the difference between sustainability and survivability.

Larry Bernstein:

For every hundred kids the college accepts into the school, only 15 enroll. Most of those kids are excited to attend that college. They’ve done the work, they thought it through, it makes economic sense, they’re signed up. And those 85, some of them are on the edge and some of them are going to better schools or not going to school at all. If you can convince three more students who were accepted to enroll people, you go from 15 to 18, it’s a 20% increase. Tell me about these edge cases and how you can use tools to ascertain who those edge cases are so that you can provide resources to persuade them to join your student body.

Geoff Baird:

The analytics of enrollment are very complex regression models. They factor in geography, distance from the institution, other demographic and profile characteristics, and essentially students are put into groups.

When there were plenty of students that worked, and we were able to identify students by geography, by grades, by all sorts of things. And then when they visit their probability rises. Enrollment is now incremental. It is on the fringes.

What it requires is that we shift from looking at students who were admitted to now looking at them individually. The problem was we physically could not do that because there were so many applicants and data that all we could do was group them to make it manageable. That’s where AI opened up the door to change how we operate and how we think about the enrollment funnel because we now have the raw compute power of machine learning and AI, to look at every single student individually and to look at their deeper behavioral patterns that signal intent.

It is so easy to apply to college now that you can press a button and apply to 20 schools. The problem is for the institution whether this student is serious or not. They have checked all the boxes. They’ve come on a tour. They’ve done the traditional metrics measure, but someone is 22nd on that list of schools and someone is first. The signals that we’ve relied on have been diluted.

Larry Bernstein:

Applying to college for my children was a family project. It wasn’t like we let them go off half-cocked. We worked with them for years to make sure that they had the preparatory knowledge and capability to do well on the exams and get the grades. We tried to make it look like the decision was the child’s, but it was in combination with the parents. When you say that the school hadn’t contacted the child, it also means probably the school hasn’t contacted the parent either. There are lots of touch points. There’s the high school counselor, there’s the student, there’s the parents. Is there a coordinated attack plan?

When I worked at Salomon Brothers and there was a big deal, we wanted to get the business. There were many touchpoints at the company level where we spoke to the treasurer, the CFO, and the CEO. There were lots of different touchpoints to encourage them to give us the business. How can colleges get the business?

Geoff Baird:

When you are talking about a college decision, which is one of the big three decisions in someone’s life: buying a house, picking a spouse, and college. For parents that’s been a real focus. Where it becomes a challenge is there are big swaths of students in America that do not have that parental support.

We still have a problem of volume and scale. And when there are 10,000, because it is so easy to apply, you can’t talk to all of them. But the bigger challenge has been resource and prioritization. And the result of that is genericized messaging. And we are at a point now where students growing up in the Netflix - TikTok world, their expectation is that the system understands them. I am presented with the options on what I like to listen to or watch on my feed. It knows me. We hear our own kids saying that this is the world they expect and yet Higher Ed still lives in a world of simple communication.

Larry Bernstein:

What I noticed in my college visits with my children is that the schools were using one size fits all strategies. After my daughter was accepted to Northwestern, we went to their college visiting weekend, and it opened with a talk from the Vice Dean of the College of Arts and Sciences who gave a lovely speech to several hundred kids. We went to a lunch and sat next to a young girl who had just been accepted to Holy Cross. She was going in a completely different path than my daughter, yet they were lumped into the same pool.

As I was walking around campus, I got lost and I asked for help. It happened to be the head of the theater department and my daughter wanted to be a theater major. He asked her, “Tell me where else you’ve been accepted.” And she said, “Penn.” And he said, “Well, if you’re really interested in theater, Northwestern is far superior. Penn may have two shows a year. We have two shows a week. We have tons of different content and relationships with local theaters. This really isn’t comparable.”

That’s what you want. You want an individualized discussion between the student and the greater university.

It seems like universities have decided to engage using almost exclusively the admissions office as their center for marketing. They are not using their full tool set, and as a result, they miss students who are on the edge of accepting but need a push. These are the most important students to touch, and yet to your point, they are not talking to them and they’re leaving it to chance or worse, they’re leaving it to other universities to recognize that they’re also an edge case and then can close the deal.

Geoff Baird:

That is a great example of the challenge and the opportunity. In one of our partner institutions that we have done some AI work with we found the following statistics. The group of students who visited campus enrolled as a group at a 755% greater rate than those who did not. So, the natural conclusion is we need to get students on campus to visit. And when they visit, we’ve got to focus on those students because it’s such a tell.

But here’s what’s interesting. When we peeled back the onion, the percent of students who visit who enrolled from the same institution was only 30%. So, the ability to predict who will enroll based upon the visit alone was worse than a coin flip. And here’s where it became even more interesting. We started building more complex AI models to predict enrollment based on the last three years of data and our models we’re predicting at 94% accuracy. We cracked open the models to ask them, “What are you looking at to predict?” You know where the campus visit was? The college visit was 170^th best indicator.

This is mind blowing. What it’s really saying in plain English is it’s not that the visit isn’t important, it’s that the visit is not the same for everyone. Your daughter might visit because she is in serious consideration of Northwestern and it is one of our top choices. I might be visiting because my parents are making me. And historically, we have treated both of those as the same. The mission has always been to try and connect individually. It’s just we haven’t been able to because there’s been too much data and too much time that it requires. But what AI has opened the ability to look at each student individually based upon the entirety of their behavioral pattern.

Larry Bernstein:

Morty Schapiro is the former President of Northwestern University, and he had been a senior administrator at Williams and Penn. And I had him speak on my podcast and my book club, and he said a couple things I want you to comment about. Making a campus visit is a tell. When Northwestern thinks about their financial aid package, they offer more financial aid to those that don’t come for a campus visit than those that do, because he knows that if they go for the campus visit, they want this extra financial aid package can kick someone who didn’t bother to visit because maybe cash will talk.

When I attended Penn as a student, it was not anyone’s first choice to attend. Schapiro realized that if we want to get better candidates, we had to change the incentive structure. He was an early adopter of we will give legacies and others an edge but only in the early admission process. That forced people to say, “I’m going to use this silver bullet to apply to Penn, and I won’t do my Hail Mary for Harvard or Stanford.” It dramatically changed the entire dynamics of the admission process for highly selective schools. Each school doesn’t act in a vacuum. It’s a competitive environment for those marginal cases, and you’re competing in an ever more complicated, more aggressive situation. When the game is changing, what can these colleges do?

Geoff Baird:

It was game changing for the highly selective colleges. I have a story of an institution that was not highly selective that tried to replicate that because this worked at Penn. What the data concluded was that for their institution they were losing students by forcing that early admissions decision. Even though the faculty and the administration said, “We want to be this.” That was not the dynamic of their students. And so, it is a challenge to be able to find the right model for your institution. Someone says this worked but in this case, we could show statistically that it backfired and they lost students trying to replicate this.

The top large institutions, the flagship state systems, they are going to survive, but hundreds of other institutions will not. When an institution closes, it is catastrophic for the student body. Half of those students never complete their degree. So now you have got student debt and years lost and no degree to help you.

Larry Bernstein:

I applied to Stanford four times and was rejected four times. I applied to undergrad, PhD, and MBA twice, zero for four. I hosted an event at Stanford, and one of the speakers was the former president of the school, John Hennessy. And I said to him, “Who got fired over that? “ He said, “What are you talking about? “ I said, “Well, in any business, you should evaluate your decisions and you can look and say, Oh, it’s so interesting. The top 10 kids at Penn and top 10 kids at Princeton or Williams, they were all rejected by Stanford. They would have been great contributions to the school. What did we get wrong? And we can see those people who made those decisions, and we can say those people should be let go.”

He said, “That’s not how it works around here. Nobody got fired because we didn’t let you in.”

I said, “Why not? “

“Well, you don’t understand what we’re trying to accomplish. We are not looking for the smartest kids. We’re looking for a diversified pool. We have an orchestra. We need a French horn player, maybe the tuba. You don’t play the tuba. We have to consider that. We’ve got all these different majors. We got to fill needs across gender, interests, sports, the whole thing. It’s complicated to put together a university and no one is going to evaluate the fact that we missed the valedictorian at the Wharton Business School. That is not even a consideration. We wish you luck. We hope you do, but no, we don’t care.”

I noticed in your conversation, when you are trying to get from 15 to 18, you did not consider Hennessy’s objectives of creating a diversified class.

You are looking for bodies. Maybe you are trying to get the gender ratio close to 55/45 girls to boys. But away from that, I’ll take them. Describe the difference in the admissions process as it relates from a non-selective versus selective school and their desire to have a diversified class.

Geoff Baird:

They’re not mutually exclusive. Even the smallest, most niche institutions, ones that maybe fighting for survival every day, and I’ve sat in those rooms, the makeup of the class, and it’s referred to as the shaping of the class, is still paramount. There are institutions out there that have the luxury of saying we have so much demand that we can make these decisions focused on shaping the perfect class, but that is not the reality for a majority of colleges out there.

Larry Bernstein:

Going back to college visits, when my child and I, visited the college, what they showed us was bizarre. We saw a typical room. the cafeteria, and sporting facilities. What they didn’t talk about was median income after graduation. They didn’t highlight the rankings of biology versus computer science. They didn’t compare the economic decisions of attending Northwestern versus Holy Cross.

When you go to buy a car, they break down decisions. This car, you can lease it for three years for $450 a month. You can put it back. The residual values for these automobiles are pretty good. You should see the seats and the pickup. Would you like to go for a ride? There’s none of that.

It’s peculiar how they sell the school. We hear more about the economic consequences of these degrees and the importance of choice of major (see podcast Does Your College Major Matter), why is the selling points relevant for students?

Geoff Baird:

All institutions are going to be pivoting towards outcomes. Why come here? Because this is what you’ll get. Why isn’t it there now? We send out surveys and ask, “What are you interested in? “ And they say, “Tell me about the dorms or the recreational facilities. Do you have a climbing wall?” And that led to the facilities arms race that took place. That’s not to say campus and facilities aren’t important. It just consumed a lot of capital.

Larry Bernstein:

When I was 17, I decided to apply to the University of Illinois. I grew up in Glencoe, Illinois. I went to New Trier High School and 100 of the 1056 graduates from New Trier attended the University of Illinois campus at Urbana. My mother was making dinner and I was filling out the application. And as I was reading the materials, I said to my mom, “Ma, I made a decision not to apply to the University of Illinois.” And she said, “Larry, what are you talking about? “ I said, “Do you remember a few weeks ago we went to Highland Park to that Greek restaurant and I ordered some gyro.” Yeah, I remember that. “Do you remember that I threw up?” “Yeah, I remember that too.” “Now I can’t stand the smell of gyro.

I find it unbearable and so I can’t apply to the University of Illinois.” “Larry, what does that got to do with anything?” “I’m reading the materials.” It says that the University of Illinois leads the United States in Greek life. I mean, there must be gyro cooking on every corner.

17-year-olds are ignorant of the world. How do we deal with that fact when you are trying to persuade a consumer who doesn’t know what he’s talking about?

Geoff Baird:

It doesn’t surprise me that you would’ve not understood at 17 years old Greek life at a major university. But your point is very interesting, and this is hard. This is a big decision of someone’s life in many cases, and you’re dealing with 17 year-olds and they don’t necessarily understand the ramifications of the decisions. And why it’s easier to lean into the emotional component of college life as opposed to the outcome and what you’re trying to drive and deliver.

Ultimately, it still comes down to being able to drive a deeper connection with students. It is certainly tough to communicate with potential students is through mass email or campaigns that look exactly the same as they’re getting from five other schools, because everyone has hired the same firm to go put together their yield campaigns. It’s a real challenge. T It’s a unique situation with this level of stakes and decision. And you are talking about Larry Bernstein at age 17. This is why institutions can’t just follow the pack and have to find their own unique path to sort of break through the noise.

Larry Bernstein:

Thanks Geoff, I would like to turn to our second speaker Bob Zemsky who is a Professor of Education at Penn and the Co-Founder of the College-in-3 Exchange.

Hampshire College just announced its closing. Is this the canary in the coal mine?

Robert Zemsky:

You better believe it is. Hampshire was the ideal small liberal arts college nestled in New England with small classes. They were sure they knew what they were doing. They really did. The market is rejecting the Hampshire product.

Larry Bernstein:

What is it about the product that is unattractive?

Robert Zemsky:

The product is what the faculty want to do. It’s not what the students want to learn or do. This is a different student market than when I left Yale. The students who go to places like Hampshire are gamesters. They like problem solving of gaming. If you have a curriculum that has not fundamentally changed in 40 years, you are missing that revolution.

When a quarter of your freshman class checks out during the freshman year that is not an equation for success. You cannot lose a quarter of your market when you are a small market to begin with.

The biggest institutions are doing the best. They have variety and that they don’t trap students in endless rounds of Gen Ed in which the faculty get to teach exactly what they want to teach. There in a nutshell is the problem.

Larry Bernstein:

You have been an advocate for changing college education from four years to three years. Tell us about that.

Robert Zemsky:

There are 120 institutions that are ready to do this. They’re not going to swap their entire curriculum and go three years, but they’re going to find small groups of faculty to do the experiment who do not want to be trapped by the old shibboleths.

They want to do it their way. They don’t want to have to pass a vote of the faculty. If they can get 10 of them who will do it together, that’s great. What we know in college in three is higher education is on the brink of a major experimentation with an alternate curriculum.

Larry Bernstein:

Why do you want to cut the number of courses in college to get kids out faster to the working world?

Robert Zemsky:

I was looking at Gen Ed and I came to the conclusion that a lot of this is wasted energy. College in 3, what is attractive to it is not the time, but that you get to recast the entire product and that’s what’s needed.

Larry Bernstein:

You get your bachelor’s degree in three years and not in four.

Robert Zemsky:

The easiest way to do it is that you have a 90-credit degree, not a 120-credit degree, though it is possible to teach 120 credits in three years to go to summer school.

The idea is what can we do without? And what you can do without is the Gen Ed nonsense which is what the faculty want to teach. It is not what the students want.

Larry Bernstein:

Can you give me an example?

Robert Zemsky:

It turned out, institutions were experimenting with alternate degrees because that was the easiest to have a blank slate. They do cybersecurity or an AI degree. Degrees that didn’t exist before. So there are no hard and fast rules of what you have to do. You can truly experiment. College in 3 turned out to be a massive experimental mindset.

We have 82 institutions who think of themselves as members of our organization. A typical college in 3 program may be 40 students. It is a thin slice with 10 faculty members experimenting with what they want.

Higher Ed is consumed by diversity battles, by Trumpism battles, and by financial woes. You’ll need students for three years, not four, but that’s not the answer. They’re not going to stick with you because they want to save the money. They’re going to stick with you because you are offering them something different. This is one of those rare moment where the academic has said, “It’s an experiment.”

Larry Bernstein:

Why are small colleges less adept at providing what students want as compared to larger universities?

Robert Zemsky:

This is purely a question of scale. The big universities have lots of things hanging out the door. Big places aren’t susceptible to purity tests. Small places are.

Larry Bernstein:

And the purity test means you have to take in the first year these eight classes?

Robert Zemsky:

That’s what it boiled down to.

Larry Bernstein:

There are a lot of colleges that offer two-year degrees.

Robert Zemsky:

The community college business is shrinking. They were going to be for financially strained people who weren’t ready for college, whatever that meant. When you’re designing a two-year degree, what you’re designing is a set of pre-learning experiences that students need to do the real work. When you’re designing a three-year degree, you’re designing the whole thing. It turns out the first year is a lot more important than you realized, and that you have to be very purposeful about exactly what happens in the first year.

Larry Bernstein:

Small colleges have a retention problem. What is the dropout rate after a year?

Robert Zemsky:

Typical is 20%.

Larry Bernstein:

What do those students do? Do they transfer to a different college? Or are they dropping out of college entirely?

Robert Zemsky:

The evidence tells us they go to work.

Larry Bernstein:

What do the students want that would make them stay in college?

Robert Zemsky:

I think what students want is what you get from sophisticated gaming. That means you get a problem, you scope it, you scale it, and you test solutions to see if you have got a solution. That’s not the nature of college curriculum.

Larry Bernstein:

Do you think that a critical purpose of a college education is to teach values?

Robert Zemsky:

That just doesn’t resonate anymore. College does values, it does skills and it does problem solving. The values part is being overwritten, in part because it’s dangerous. It’s DEI and all of that, but the value part is losing traction. Students, as best I can tell from our experience, is they want puzzles to be solved. That’s not what I did in college. Is that what you did in college?

Larry Bernstein:

I was an undergraduate in the Wharton Business School at the University of Pennsylvania.

Robert Zemsky:

The Wharton School’s a good example. They actually teach problems.

Larry Bernstein:

That’s exactly right.

Robert Zemsky:

The Wharton School’s not losing enrollment, let me tell you.

Larry Bernstein:

Not only did it not lose enrollment, but there were enormous transfers from Penn’s liberal arts school to the Wharton Business School.

In the Wharton curriculum, if you take a management class, there will be a case study of a problem that needs to be resolved.

Robert Zemsky:

You got it.

Larry Bernstein:

But how do you do that in an English class?

Robert Zemsky:

Ah, now you’re getting to what the problem is. English or philosophy is the hardest. If you are in English, what you want is a population who can distinguish between pieces of the literature, and its things that young people do not like to do, but that is what it is. It is bibliographic work. Big surprise that it is the pure humanities that are the biggest problem, because they do not have what the market recognizes as learning problems to be worked through.

Business has learning problems. Engineering has learning problems. Healthcare has learning problems. Sociology has learning problems. The social sciences are doing much better, but you must have a recognized problem that you then say to the student, “Figure out what the problem is and give me back a solution.” Can you see that said to an English class?

Larry Bernstein:

Why are colleges and universities incapable of change? Why are they so inept at trying to listen to their customers and give them what they want?

Robert Zemsky:

Because that’s not why they learned what they learned. They believe they were following the truth and once they’ve got the truth, they want to give the truth to other people. That is not problem solving.

Larry Bernstein:

When you said kids are quitting to go to work, does it reflect a value judgment that college is not worth the money they are charged.

Robert Zemsky:

That is not the way the kid processes that. It’s money I do not have, and I can get a job and have money.

Larry Bernstein:

I want to go back to your previous point about gamification. That students enjoy games as a means of problem solving and that they find this entertaining and relevant to problem solving in the real world.

Robert Zemsky:

Yes. It’s all games. I say games, not pejoratively. Games are a good thing. Games are one of the nice achievements of the last 30 years. We’ve gotten better at games.

Larry Bernstein:

When kids come home from school, the first thing they do is play video games because it’s fun. It’s a challenge. It’s something that their peers are doing.

Robert Zemsky:

It’s confidence building.

Larry Bernstein:

They see a problem. They don’t get it the first time. They get to a one level. They’re so happy. They go to the next level. And on and on it goes. They’ll burn out sooner or later on that game. They’ll switch to a new game. The parent walks by and says, “Turn that off, enough already. Go do your homework.

Robert Zemsky:

No, the game is their homework. That’s the problem with gaming is we have a parental generation that still believes gaming is silly.

Larry Bernstein:

You mentioned that skill building is one of the reasons to go to college. An English professor would say that there is a benefit how to read analytically and critically, and write cogently and persuasively. And those are real skills.

Robert Zemsky:

It’s the writing skill that’s the most important, not the reading. Reading they do well. It’s the writing. And that’s why all this argument about AI, nobody’s going to write anymore, that’d be terrible.

Writing is not literary criticism. Writing is you write the solution to the problem. People who are good writers tell you, “Well, I don’t know what the answer’s going to be. I’ll tell you at the end when I get there.” That’s what a good writer says. A scholar says, “I’ll let you know when the proof is solved.” It is a totally different mindset.

Larry Bernstein:

Most Penn professors create scholarship, and that scholarship is written in a way meant only for other scholars to read. The language used is unappealing or unavailable to the laymen outside of their field. And it’s written in a way purposefully to be meant for a very select group. The scholars, as they teach their classes, are trying to teach this approach so that they can have another generation of scholars. But the student is not interested in being a scholar.

Robert Zemsky:

He’s not interested in that. That’s right.

Larry Bernstein:

He wants to be an applied person in the practical world away from the Ivy institution.

Robert Zemsky:

I’m a storyteller. My father is the one who showed me the power of storytelling telling stories rather than making proofs. Scholars write papers that make proofs. People understand stories. Let the story dictate the language, not the discipline. That’s a really important insight.

Storytelling is coming to a fore. Though he’s not my favorite president, Trump gets some credit for that. How often do we say he’s all over the map? Well, if you’re a storyteller, by definition, you’re all over the map. That’s just the nature of the beast.

Larry Bernstein:

Going back to problem solving as being the core principle.

Robert Zemsky:

I’m going to make you stop there. It isn’t problem solving as the core principle. It is finding problems that need to be solved. You discover problems. That’s the other part of gaming is that you don’t make them up. They must come up naturally out of the game. It is the recognition of the problem as a first step to solving it.

Larry Bernstein:

Voltaire said judge a man not by his answers but by his questions. I think the essence is if you are answering the wrong questions, you’re nowhere. So you got to figure out what question to ask to move forward.

Robert Zemsky:

You keep wanting to make it purely academic. We’re going to discover what a question’s to ask. That’s the scholar’s way of saying it.

The gamer says, “I’m going to solve this game whether it kills me or not. “ Wholly different way of looking at it.

Larry Bernstein:

There are many universities that are getting more selective and are excelling, and there are a substantial number of colleges that are shrinking that will go out of business. This is creative destruction. What is the problem with saying thank you very much, goodbye?

Robert Zemsky:

That’s what we’re doing.

Larry Bernstein:

But we’re doing it in a way where we feel bad. You read the article in The Wall Street Journal and the New York Times about Hampshire College closing.

Robert Zemsky:

They are mourned.

Larry Bernstein:

It’s a great loss for the faculty, students, and for the town it was in. It reflects something sad that is an emotional, moral and ethical loss.

Robert Zemsky:

What they are really saying is, this shouldn’t have happened. It’s sad.

Larry Bernstein:

Yes. And I’m saying it’s not sad. We are reallocating resources to institutions that provide products that the consumers want to pay for.

Robert Zemsky:

This current cycle, I think will go on for another 20 years, and we’re going to have a lot fewer colleges.

Larry Bernstein:

Thanks to Geoff and Bob for joining us. If you missed our last podcast the topic was Can Congress fix the Trump tariff refund problem? John McGinnis, a constitutional law professor at Northwestern was the speaker.

The Supreme Court decided that $165 billion will be refunded to importers—money that, in many cases, could be seen as a windfall. I think there may be room here for a bipartisan solution to give money back to consumers and John explained how Congress can fix it.

I am doing a series of podcasts on the war in Iran.

Our most recent podcast was Iran’s Rope-a-Dope Strategy with Anthony King who is a Professor of War at Exeter University in the UK. Previously, we had a podcast Allies Fighting Together with Yaakov Katz who is the former Editor in Chief of the Jerusalem Post and the author of While Israel Slept about the 10/7 massacre. Before that What Will Define Success and Failure in the Iran War with Hal Brands. I also did a podcast on the Opening the Strait of Hormuz with James Holmes from the US Naval War College.

I had a podcast on Fine Tuning the OODA Loop: Observe, Orient, Decide, Act Loop to Win the War in Iran with Israeli Brig. Gen. Eran Ortal. We started the series with former Trump National Security Advisor John Bolton about what steps we need to take to win the war.

You can find our previous episodes and transcripts on our website. Please follow us on Apple Podcasts or Spotify.

I am Larry Bernstein with the podcast What Happens Next.

Check out our previous episode, Why Does the Press Think We Lost the War in Iran?, here.

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Mark Penn

Subject: Why Does the Press Think We Lost the War in Iran?
Bio: Senior Advisor to President Clinton and was Hillary’s Chief Strategist for Senate and Presidential Campaigns

Transcript:

Larry Bernstein:

Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast that covers economics, politics, and history. Today’s episode is Why Does the Press Think We Lost the War in Iran?

Our speaker is Mark Penn who was a senior advisor to President Clinton and was Hillary’s chief strategist for her senate and presidential campaigns. Mark is now the CEO of Stagwell which is a advertising and marketing company.

I want to learn from Mark why the press thinks that the military campaign in Iran is failing and why the Democrats are not supporting arm sales to their Israeli allies at this critical juncture.

Mark, are the Americans winning in Iran or are they losing?

Mark Penn:

Well, as of this morning, the Strait of Hormuz is open to all vessels. Anything can happen over the next few weeks, but it seems that major progress has been made. What the president has been saying that the new regime is thinking over its position seems to be true.

Larry Bernstein:

Why do you think that the press has portrayed it so far as a loss?

Mark Penn:

I think the press’s position has been simple. Donald Trump crosses a street. The article: Donald Trump disrupts street. Street lights may break. Budget may not be able to cover street repair.

Rhey take every single aspect of the policy and look for everything that could go wrong. They write an article about it and then they call up favorable NGOs or favorable Democratic former administration officials who will say that everything is going wrong.

It has been remarkable in a war in which we decimated the Iranian military and regime leadership and lost almost no soldiers. In terms of the way that this has been depicted in the media is really shocking.

Larry Bernstein:

Why do you think they did that? Is it just pure partisanship or is it more complicated than that?

Mark Penn:

Well, it’s a combination of partisanship and Trump hatred. There was this New York Times writer who many years ago, when you’re dealing with Trump, I guess it’s okay to distort everything.

In this conflict, Tom Freedman said it best, which is they would rather Iran and Hamas won than Donald Trump be right. That absurd perspective, which is so counterproductive to the country and frankly putting soldiers more in harm’s way because it so undermines the effort.

As I like to say, the Iranians read the New York Times too.

Larry Bernstein:

Now, I can understand if a couple people behave that way, but there is no ombudsman above the media to put people in line. Why would the media behave in aggregate like this given what you’re describing it is absurd on its face?

Mark Penn:

It is hard to fathom. The media was trying to make this into Trump’s Afghanistan. And the truth is that the Biden presidency really fell apart over the actions in Afghanistan, which were, I think, fairly reported at the time.

The media was saying, “It can’t possibly work that he’s using extensive bombing and military actions.” They took their cues from the Democrats. The Democrats had a choice here. They could have sat quietly and then picked things up if it were unsuccessful.

What they did was they started illegal unconstitutional. Then even when those arguments fell apart, because after all Obama ran a seven-month war against Libya in a similar fashion, when those arguments collapsed, they clung to the idea that they should use the War Powers Act and try to stop the president.

It did not have any rationality behind it. They also knew they were never going to win. So, what they are really trying to do was keep their voters in line, not let a single voter who is a Democrat believe that the President or the administration, or the country, could do anything that was right here. I cannot think of anything so similarly distorted as what we have seen here in terms of the coverage of the Iran conflict.

Larry Bernstein:

You worked for the Clintons and for Hillary in a senior capacity during her 2008 Presidential Campaign, and her Democratic Party was very pro-Israel.

Mark Penn:

Having worked very closely with the President Clinton and Hillary, that there was a seminal event in terms of changing her opinion about the Israel-Palestinian conflict, which were the negotiations with the Palestinians that occurred at the end of the Clinton administration.

President Clinton was doing his best to do one more thing as he wound down his two terms as president, and that was to try to get a peace agreement. He got the Israelis to give everything. And then they both realized that the Palestinians were not negotiating in good faith, that there was nothing you could give them, that they just wanted to destroy Israel or had forces behind them that made it impossible for them to make any agreement. And that fundamentally changed Hillary’s view.

In recent times while a lot of Democrats defected or waffled or took various positions, the Clintons have stood fast because of that experience and because of that firsthand knowledge. President Clinton right after October 7th, recounted this experience that he had. And that changed their understanding entirely of the situation.

Larry Bernstein:

There was a recent vote in the Senate related to arm sales and bulldozer sales to Israel, and 40 out of 47 Democratic Senators voted against selling arms to Israel during a war. How do you explain the loss of over 80% of the Democratic senators to the Israeli cause? This is not just the progressive wing; this is nearly everybody.

Mark Penn:

Yes. And it’s up from the previous vote that was about 19 senators. This was a Bernie Sanders sponsored resolution. So, do you think all these senators change their mind that Israel in the middle of fighting a war against terrorist forces and being hit with thousands of missiles and drones should not have weapons?

Or do you think that what we have here is that all the moderate Democratic senators have become so frightened of the left and their potential ability to primary them and throw them out of office, that they’re going along in a vote that they knew would fail anyway.

In a choice between being on the record of supporting Israel or supporting the left, were they intending to support Iran and the other forces? No. They wanted to show that they should not be primaried.

They will fall in line. Even AOC has fallen in line when she voted for the iron dome to defend Israeli citizens. Clearly the left has asserted its power within the Democratic Party and Senators are falling in line. And that is a real problem for the party, for the country, and for people who care about Israel.

Larry Bernstein:

There is some theory in political science that the Congressmen or Senator votes reflect the view of their constituents. Do you think that this change in vote reflects their own belief that there’s been a switch in their local constituents’ views on this matter, or does it reflect what you described as a decision to fear a primary?

Mark Penn:

It represents a change within Democratic primary voting electorate. There is not a lot of change in the overall electorate. If I ask a question, for Israel or Hamas, it is like 75/25. If I ask the question, do you favor cutting off aid for defensive weapons? And in this case, including bulldozers for Israel, you would find a majority supporting it. The swing voters in America continue to support Israel. And what you have seen is a real change with young people who did not really have opinions before and have limited knowledge.

Within the Democratic Party this bizarre alliance between the Islamicists and the left that is changing the positions within the Democratic Party and particularly because of the perceived strength within the activist Democratic primary electorate. There are some changes. Israel is not as favorable as it was as a country, but people do not put that in perspective.

Right now, both parties are negatively perceived. The president is negatively perceived. All our institutions are negatively perceived. Hamas and Hezbollah and Iran are 30 or 40 points more negative than Israel is. When you look at the relative choices that people must make, Israel comes out way ahead of the choices between which you support Iran or Hamas.

What you see is a very unhappy electorate that is satisfied with no one. And Democrats may be winning, elections, but they are not winning because of anything that they are doing or that people support.

I would not want to be in power now until this electorate is significantly calmed down because right now, they are very pessimistic. They’re grumpy.

Larry Bernstein:

You mentioned that the progressives and Islamists are allies and that they’re mutually supportive, but who are these Islamists? I don’t think I know anybody who is an Islamicist. It’s more just anti-Israel. Who is a pro- Islamicist and what are their views?

Mark Penn:

Ilian Omar, Mamdani. The Democrats are not willing to stand up to Hasan Piker. Somebody who is not an Islamicist, he’s a full-blown anti-American, right? He says, “America deserved 9/11.” You would think it would be easy to disown people like this.

Larry Bernstein:

I don’t understand when you hear stuff like Gays for Hamas, I just assume that the individual who’s waving that banner is ignorant and doesn’t reflect a broad mandate. Am I missing something?

Mark Penn:

No, you’re not. What you see is social media, highly partisan environment in which information that particularly younger people receive is selective and tailored.

24% of the country would consider themselves liberal. Maybe half of that would consider themselves very liberal. And that change and their hardened position against Israel and willing to call it apartheid and genocide is what is creating this transformation within the party. And that is where they have come together here with the forces as you see.

There is no one saying that Ilian Omar should not be on the Foreign Affairs Committee anymore. No one’s saying that she’s someone who’s unfit really to serve and advance US interests.

The Democratic Party, as its DNC Chair said, is a big tent, and they are willing to take in this tent and even further it. It is tragic, but you see that when you look at that vote where they got 40 out of 47 senators, you see that it’s quite powerful and effective.

Larry Bernstein:

When you get 40 out of the 47, that is not letting someone in the tent, that is the tent.

Mark Penn:

Yeah, fair enough. But we are looking here at some real extremist movements that are not being condemned. Look at what President Trump did where it took a while, but he firmly blasted Tucker Carlson and Candace Owens.

You see Speaker Hakeem Jeffries moving away from mainstream Democratic positions day by day, becoming somewhat more hysterical and strident in tone. He is someone who previously would’ve been considered a moderate, quite reasonable. He’s going to be an incredibly effective speaker, and clearly he thinks the road to becoming speaker is to abandon a lot of his previously held positions and shift both left and sound somewhat more hysterical in tone.

Larry Bernstein:

The Republicans currently in the House have a very small majority, and there was a lot of fights over who would be speaker. It is very possible that when the Democrats win the House, that they would have an exceedingly small majority and Jeffries would need to get every single vote to go his way. How does that influence ...

Now, it may be obvious that the only way to win would be to go hard left, but then he may lose some moderates as part of that and then won’t have sufficient votes. How does that all work, the dynamics of a political system where you need to get everyone on the same page? How do you tailor it just to the progressive wing specifically versus say your more moderate side?

Mark Penn:

He has taken the steps recently to assure that he would become speaker without some intraparty brawl. The left has successfully asserted itself. And the question is whether the moderates are going to be able to do the same and win some concessions on their side. Let us see if they can get organized and come up with compromise like seats on the rules committee or other aspects where they don’t give complete control of Congress to the left. Of course, this election at the end of the day, what are the Democrats going to do with most of the House, do impeachments or investigations? They’re not going to pass any legislation. This is just an interim election for the big one in 2028, which will determine the flow of power within the country.

Larry Bernstein:

Impeachment has been used multiple times since the Clinton administration. It has been ineffective, mostly because they don’t have the two-thirds requirement in the Senate. It has been performative. Is that something that speaks to voters in a performative way or after a period it gets tiring and ineffective and not even successful as a performative act?

Mark Penn:

It went from an extremely serious, solemn event, which happened in Watergate and how the president resigned under pressure after the tapes came out and would not have survived an impeachment.

The Clinton impeachment we won, and I was working with President Clinton during that, and it was ultimately seen as an overreach by the Republicans. You see though that the impeachment has become almost like a ceremonial joke. It’s not serious in which real witnesses are called, in which evidence is put on. Let’s impeach the president and win some public relations points. It is a tragedy.

It will be a mistake for the Democrats to go down that path. It did not get them much of anything since the result is that they have none of the branches of government having gone down that path.

I doubt however, they will be able to resist that.

Larry Bernstein:

Going back to the first impeachment, which was President Johnson just after the Civil War, and the Senate by one vote failed to convict. And the Senator who changed his mind said that he thought it was bad to remove the president for policy differences and not for actual criminality, but that idea does not seem to resonate with the Democratic Party right now. If they had the votes, they would do it. Why is that? What reflects that change in heart?

Mark Penn:

Politics in Washington has taken a turn for the worse. In the Clinton years, you may remember, what we did was the House was Republican and the president made a few great legislative deals that got to a balanced budget and many other advances.

The president’s rating soared to 74% approval, even as they made the mistake of impeaching them, although they thought they had a good case against him. What has happened now is that this has become, is the word you used before, performative. Performative in nature as opposed to serious. They know they’re not getting the votes. They know that it’s not passing. It’s just a question of kind of airing their frustrations.

The most humorous thing is the 25th Amendment stuff. It’s like they’re holding congressional seminars on how we can use the 25th Amendment. Anybody who reads the 25th Amendment knows that it is a vote of the cabinet led by the vice president. Congress has nothing to do with the 25th Amendment. Giving voters the impression that they do to raise money is even more comical than what they are doing with impeachment.

Larry Bernstein:

So, why do that?

Mark Penn:

Clicks, dollars, anger. We are a victim of our social media world now, and I don’t know how we overcome that. I always like to say that everything that we would develop or innovate, you would find either in Star Trek or the Jetsons. When I go through all the science fiction movies that became true, the one thing that no one ever predicted was social media and the power that it could have to fragment communities and stir passions. We’re a long way from dealing with the dilemmas that are being created by this medium.

Larry Bernstein:

I had a book club with former Senate Majority Leader, Trent Lott, and I asked him about his relationship with Bill Clinton after the impeachment trials were finished. He said that immediately after the vote, Bill Clinton sent him a box of cigars and he called the president, and they had a good laugh and they moved on.

In other words, it was not personal. It was political, and they were ready to work together to resolve public issues. This Congress and the executive branch do not seem to be friendly. I can’t imagine Chuck Schumer picking up the phone and having some laughs with President Trump. What does that reflect, the lack of friendship across the aisle?

Mark Penn:

It is the growth of partisanship, the ideological sorting of the parties. When the parties were more ideologically diverse, each of them, it was the parties themselves would have to come up with compromises rather than compromise with their opponents. I think the social media world that we live in where the more extreme and hysterical they are, the more it seems to be their ability to raise funds or get clicks online. We have also had a breakdown of the committee process and that central leadership took over control.

That got rid of the horse trading that would go on at the committee levels to come out with legislation. So, we have seen a real breakdown.

Now, in fairness, could more legislation have been passed now with a Republican majority in both houses and the need to get seven Democratic senators across the finish line on some substantial legislation? That was certainly no more difficult to what President Clinton did, with Newt Gingrich. And I think more could be done here and we will see what the next president does. We have had a lot of presidents who talk in the campaign as though they’re going to bring the country together and work across the aisles. And when you get in, that’s just not what we see happening these days.

Larry Bernstein:

And why is that exactly?

Mark Penn:

Again, part of it is they start out or have several years in which they have all the branches of government, and then when they lose it, rather than say, okay, which I think President Clinton did. President Clinton tried during the first couple of years to get things like healthcare reform and ran into more problems that almost sunk his presidency. He did a lot better making deals with the Republicans whether it was welfare reform, the crime bill, the balanced budget that catapulted his popularity to 74%. That is just not the strategy that the presidents ... I think Obama said when he lost, he did not say, “Now I have an opportunity to roll up my sleeves and make deals across the aisle.” No, he didn’t say that. He said, “I have a pen and a desk.” And he said, “I’ll go do everything I can, “ basically contrary to that.

We have not seen anyone since Clinton take that on as their strategy for accomplishing things in the country and working to overcome what you see as the partisan resistance.

There are two presidents: Reagan and Clinton, who really broke through and had approvals in the ‘70s and even ‘80s, because they did work across party lines unifying the country behind an agenda.

Other presidents have failed to do that. Instead, they worked on their agenda and passed legislation during the small period when they had majorities that could sustain or pass the legislation or use reconciliation that only requires 50% to get it done.

Will another president come along and do the work that both Reagan and Clinton managed to do that genuinely unified the country instead of pointed fingers? That is a big question.

Larry Bernstein:

I want to give a case study example to you. I did a podcast about can Congress fix the tariff refund problem. As you know, the Supreme Court recently announced that the Trump tariff was inappropriately applied and therefore the government will have to refund $165 billion in tariffs. But the money can only go to those with standing and those are the people that paid the tax. That in most cases is the importer. And very often the importer merely passed on that tax to the consumer and therefore will get a windfall. In fact, I know someone who’s going to make nearly a billion dollars in the refund that he otherwise would not have received. And this seems like an unfair result. You would think that there could be a bipartisan solution to either giving money to some of the voters or paying down the debt, but currently giving the money to this importer does not fit the needs of either the Republican or the Democrats.

Just as an example of where the two parties could both agree on policy and decide to come up with a solution. Is that something that is possible or in the current setup is inconceivable?

Mark Penn:

Sorry. I would say the idea that the Democrats are going to agree with Trump to give every American a $500 check.

Larry Bernstein:

Yeah, exactly.

Mark Penn:

Is never going to happen because to go back to square one here, the Democrats do not want to do anything that appears like a victory for Trump on anything. A $500 check to everybody signed by Donald J. Trump is not something ... Now, Trump may be able to come up with this on his own and/or be able to do it. That I don’t know. But I don’t think Democrats are going to go for something like that.

Larry Bernstein:

Totally agree that they don’t want to give Trump a victory. So can you imagine that Democrats would come and say, “Let’s make a deal.” That’s how I imagine how it usually starts. There are things that Democrats want. They think that Trump has overplayed his hand on the tariffs. Could they somehow tie his hands, come up with some aspects of the legislation to make it better or give the money to Democratic Pet projects? Is there really no way to allow Trump to have any victory? I understand your instincts on that, but that reflects a complete breakdown. If we can’t allow the president to sign any piece of legislation, then you’re stuck.

Mark Penn:

Well, we are stuck because of that. That is the problem. Take something like the Iran war. If Democrats are not going to give fighting the evilest regime on earth that recently killed tens of thousands of its own people who are unarmed protestors, if Democrats are not going to rally for that, or they’re certainly not rallying for tariff refunds, okay?!

Larry Bernstein:

Mark, I end each podcast on a note of optimism. What are you optimistic about as it relates to the war?

Mark Penn:

Look, I’m optimistic. If you go back on December 31st, I put out a few predictions on my X. My first prediction was that Maduro would be taken out of office. My second prediction was regime change in Iran. And we do not exactly know who is heading Iran now. We do know it’s not the same people as were heading it before. We do know that there’s an opportunity for change no matter how it looks. And there’s tremendous pressure from 90 million people who must be fed, clothed, and watered. There is tremendous underlying anger about the killings. Imagine for a moment if 10,000 college-aged kids were killed in this country, the anger there would be among the parents and the communities.

They closed the internet, they have the guns, you do not see that anger, but it is there, and it is not going to go away. A new Middle East can emerge from this. The Gulf countries have seen the enemy, and Israel and America are not the enemy. And that is a sea change here in terms of the potential for the region.

Larry Bernstein:

Thanks to Mark for joining us. If you missed our last podcast the topic was Can Congress fix the Trump tariff refund problem John McGinnis, a constitutional law professor at Northwestern was the speaker.

The Supreme Court decided that $165 billion will be refunded to importers—money that, in many cases, could be seen as a windfall. I think there may be room here for a bipartisan solution to give money back to consumers and John explained how Congress can fix it.

I am doing a series of podcasts on the war in Iran. We had Iran’s Rope-a-Dope Strategy with Anthony King who is a Professor of War at Exeter University.

Previously to that, we had the podcast Allies Fighting Together with Yaakov Katz who is the former Editor in Chief of the Jerusalem Post and What Will Define Success and Failure in the Iran War with Hal Brands from Johns Hopkins.

I also did a podcast on the Opening the Strait of Hormuz with James Holmes from the US Naval War College.

We started the series with former Trump National Security Advisor John Bolton about what steps we need to take to win the war.

You can find our previous episodes and transcripts on our website. Please follow us on Apple Podcasts or Spotify.

I am Larry Bernstein with the podcast What Happens Next.

Check out our previous episode, Can Congress fix the Trump tariff refund problem?, here.

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John McGinnis

Subject: Can Congress fix the Trump tariff refund problem?
Bio: Constitutional Law Professor at Northwestern

Transcript:

Larry Bernstein:

Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast that covers economics, politics, and history.

Today’s episode is about the question: Can Congress fix the Trump tariff refund problem?

I’m joined by John McGinnis, a constitutional law professor at Northwestern.

The Court has decided that about $165 billion will be refunded to importers—money that, in many cases, could be seen as a windfall. I think there may be room here for a bipartisan solution, and John helps us think through what Congress can—and can’t—do.

Thanks to John for joining us.

John, in the recent Learning Resources court case, the Supreme Court ruled against Trump’s tariffs arguing that he lacked the authority. I want to delve into the aspects related to the refund and the ability of Congress to rectify what Judge Kavanaugh called the upcoming mess.

Let’s start with the basics. What were the facts in the case, how and why did the court make its determination?

John McGinnis:

The president relied on the International Emergency Economic Powers Act, which is an extremely broad statute that allows him, once he declares an emergency, to interdict and to prevent any transactions with foreign nations. The problem for the president was that while it had broad language, it did not mention tariffs. And moreover, Congress has a variety of other permissions to the president to impose tariffs, but under more constrained limitations. And so, what the court said was that given the language of the statute that does not mention tariffs, given the other statutes that do mention tariffs, the president did not have authority over tariffs with respect to this statute.

The majority was split in its reasoning. The three conservative members of the majority relied on the Major Questions Doctrine, which suggests that when Congress gives the agencies, or in this case, the president, the executive authority, that is going to have a very substantial effect on the economy or the structure of powers between the states and the federal government, Congress must do so clearly. And those three justices concluded it was not a clear enough statement to meet that hurdle.

The other three liberal justices do not like the Major Questions Doctrine because they see that as constraining the administrative state generally. And they found under straight-up statutory interpretation, particularly relying on these other adjacent statutes about tariffs, that the president lacked authority under IEPA. There was a 6-3 majority to declare that the president for these tariffs were, to use the legal word, ultra vires outside of the president’s authority.

Larry Bernstein:

It seems to me that John Roberts believes that his adaptation of the Major Questions Doctrine is one of his most important contributions to our legal canon. The six conservative justices agree.

What was bizarre was that his group of 6 was split on whether the Major Questions Doctrine applied in this tariff case. Tell us why the Major Questions Doctrine is so important to Roberts and why he thinks it is critical to the separation of powers.

John McGinnis:

The Major Questions Doctrine has been most written about in administrative law in the Roberts Court. I think the reason that John Roberts likes it is it is a statutory substitute for something called the Non-Delegation Doctrine. The Non-Delegation Doctrine is a constitutional doctrine which says that Congress cannot delegate its powers unless it gives sufficient detail. Previously, that doctrine has not had much bite since the New Deal. The Court has never struck anything down because of the non-delegation doctrine. And yet it seems to many observers of the administrative state to allow Congress to essentially abdicate its responsibilities and give unbridled discretion to the executive. And so that threatens the separation of powers.

The problem is that if you really reinvigorated the Non-Delegation Doctrine, I think the conservatives and John Roberts suggests that this might upset settled regulatory law. So instead of having that constitutional doctrine, it suggests that the Major Questions Doctrine solves that problem because it applies to new powers. So, it is prospective.

It does not upset the apple cart, and yet it forces Congress to speak clearly, at least to say, “Oh yes, we really do want to delegate this substantial authority to the executive branch and therefore has accountability, less so than actually filling in the details that the non-delegation doctrine would require, but still a move to accountability.”

That is the understanding of the Major Questions Doctrine as a poor man’s Non-Delegation Doctrine, a way of trying to go back to principles of the separation of powers in a world where we operated against those principles for a very long time.

Larry Bernstein:

Justice Kavanaugh in his dissent articulated why he thought the Major Questions Doctrine did not apply in this case. And specifically, he thought that this existing statute was sufficiently defined, and that Congress historically had delegated a substantial amount of power and leeway to the president in foreign affairs. What did you think of Kavanaugh’s dissent?

John McGinnis:

I think he is right that in general foreign affairs as a constitutional matter, the president has greater powers than in domestic affairs, and perhaps that suggests the Major Questions Doctrine should not apply. The question for him is, what is foreign affairs? Because this is a question about tariffs, and it is quite clear in the Constitution that the power to regulate foreign commerce is in Congress. That is part of Article One powers that is expressly stated. So, it is a little odd to say for tariffs that the president has any peculiar powers in that respect. There is a case called Curtis Wright and other cases where it suggests that previously the Supreme Court had been somewhat open to larger delegations in the context even of tariffs.

He has some precedent on his side. I do not think he’s correct as an original matter that foreign affairs encompass imposing tariffs. What it does encompass is speaking on behalf of the United States, deciding what countries to send ambassadors to, and therefore what countries to recognize. The hard question for Kavanaugh is what are the contours of foreign affairs? And there the majority has the better argument, or at least the plurality in the opinion written by the Chief Justice.

Larry Bernstein:

I thought the most interesting opinion in this case was written by Judge Gorsuch because he goes after everyone. He attacked the three liberal judges by saying, it’s peculiar that you rely only on the statutory interpretation instead of the Major Decisions Doctrine, because previously you allowed for an expansive understanding for Biden’s executive order to write-off $190 billion of student debt.

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About his conservative colleagues who decided the Major Questions Doctrine did not apply in this case, he was also very tough on them saying, “You can’t be serious. This is clearly the greatest use of powers by the president without direct delegation to anything I have ever seen. So, what are you talking about?

What did you think of Justice Gorsuch’s concurring opinion in Learning Resources?

John McGinnis:

It was his greatest tour de force as a justice, although one wonders whether it will make him friends going forward.

Larry Bernstein:

Or not

John McGinnis:

It was an especially important opinion, and he did make some excellent points. With the liberal justices, it’s absolutely true that with respect to things like student loans, they gave a very expansive reading. I think the most extraordinary example was they allowed in a statute that gave some authority for the CDC to regulate diseases, they allowed it to declare a nationwide eviction moratorium, which seemed extremely peculiar because the language seemed to be connected to diseases. I think he did call out correctly the liberal justices on that.

With respect to the conservative dissenters, his point was essentially the one I gave before, which was, this is really in Congress’s bailiwick. After all, this is regulating foreign commerce, and this is an extraordinary breach of power.

With respect to Barrett, that is the most interesting debate intellectually. Barrett is a strict textualist and says we should not consider any values other than those in the text of the statute. And you might wonder, “Well, where do you get the Major Questions Doctrine?” And her argument is it is a matter of ordinary language, that when someone is given a lot of power, you would expect people to be clearer. And she gives a homely example in another case. Let’s say you told a nanny to go have fun and gave her a credit card and that would not authorize the nanny to go on an extended trip in hotels, right?

So that is her argument and Gorsuch says, “Well, that’s not right.” The roots of the Major Questions Doctrine, he says, “Go back to agency law before the Constitution.” The idea of that there is some substantive value of trying to constrain agents is very well established in the law. And we should reflect that in our law. It’s not just a matter of ordinary language, and that I’m sure is going to get a lot of attention from academics. In many ways, I think this is his best opinion since he joined the court, best analytically and of academic interest.

Larry Bernstein:

I read a few opinions each year, and so I do not understand what is typical. Were these opinions and argumentation typical of the court, or do landmark decisions see this kind of disagreement?

John McGinnis:

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This is atypical of the court. There is often a concurrence, but this is quite unusual. Barrett responded to Gorsuch as well. There were only two judges who did not write opinions: Sotomayor, and Alito. And so that is very unusual. And it is a testament both to the importance of the case but also to the centrality of the Major Questions Doctrine going forward in administrative law.

A lot of them wanted to get in their positions about its scope or justification. What I do think it suggests beyond the question of tariffs is how central the Major Questions doctrine has become and how entrenched it is in the law. Because even the dissenters seem to completely agree that it applies domestically, and we have three members of plurality who agree. So there seems to be a strong six-member majority for the Major Questions Doctrine even if they do not entirely agree on its justifications.

Larry Bernstein:

Immediately after the Learning Resources case was decided, Trump announced new tariffs applying other statutes. These new tariffs appear to fit the criteria required by this Supreme Court decision. The problem for Trump is that the powers delegated to the president in these other statutes are narrower and if implemented these tariffs would be for a short period of time before Congress would have to approve it going forward.

John McGinnis:

Because the other statutes would be more specific about tariffs. They would have met the clear statement rule. Congress clearly gives the president and some of his subordinates’ power to impose tariffs. So, I do not think any of the other statutes would run afoul of the Major Questions. There may be other questions about those tariffs, one of the statutes the president when he’s implementing it for balance of payments reasons. But as you say, these statutes are much narrower in scope and in time. And that is a problem for the president. What the president wants to do is impose tariffs and then negotiate good deals according to him with other nations. And things that are limited in time undercut his ability to threaten other nations and get them to the bargaining table.

Larry Bernstein:

In Kavanaugh’s dissent, he said, “We haven’t spent a lot of time talking about refunds.” And he says, “This is just going to be a mess. “ And since then, the tariff refunds got pushed to the Court of International Trade. Judge Eaton was put in responsibility for these collections, and he wants fast refunds.

Now we are getting to what I most want to discuss today which is the fact that the current process does not allow for a fair return of the refunds and what we can do about that.

I met someone the other day who personally owns an importer, and he told me that he paid the US Treasury over $1 billion in tariffs from his firm. And as a result, he will get a windfall of a billion dollars in tariff refunds.

I was just flabbergasted, but the courts are limited on who has standing on such a matter, and therefore the individual or corporation that paid the tax would be the one to get the refund.

Typically, the importer would have been the one to pay the tax, and the consumer would ultimately be the one who would pay the economic effect of the tax along with the foreign manufacturer. The importer would maybe have his margins fall slightly but probably not materially.

Kavanaugh said that this refund process will be a mess because even if contractually the importer had agreed to refund the consumer, that it’s difficult to properly refund, and in any case, it will be impossible to pay fair compensation to those individuals who were harmed by the tariff.

I believe that there is a bipartisan consensus that we should not enrich the importers. There might be a better result to give the tariff refunds directly to the consumer or for the government just to keep the money and treat this money as a tax. And I wonder what the constitutional limitations on a bipartisan legislation that would allow some other result other than the importer to receive a windfall profit.

John McGinnis:

Congress would have a lot of authority to make those decisions. I do not think it would work to give money to the consumers because it’d be very hard to identify who those consumers were. Moreover, there would be huge transaction costs given the small amount of money that would be due many of these consumers. Keeping the money, given our fiscal deficit, would be plausible. I do not think this would be afoul of any legal doctrine. Congress has a substantial authority to impose taxes retroactively. The only restriction of the constitution is a Bill of Attainder, and this would not be.

Larry Bernstein:

A Bill of Attainder is when a legislative act punishes a specific individual or group, and here this bill would tax people who import goods and that is nearly everyone. Do you think the judiciary will tolerate a bill that retroactively approves Trump’s tariffs ex post?

John McGinnis:

The court has some restraints on it, but the restraints I think would give way when there are these kind of good government reasons that you suggest.

So, I think this could be done. It certainly could be done for everything that has already been paid. As I understand it there is a lot of tariffs that are due but have not yet been paid and may already have been passed on to the consumer, I think that might be a little harder.

Larry Bernstein:

It is problematic to tax activity from years ago. But here, the President said there was going to be a tax, the money was collected, and then after the judiciary concluded that the President overstepped his authority that Congress then says that is what it wanted all along. That seems to be a reasonable result. The new law could then also handle transactions where the importer has yet to pay his taxes as well.

John McGinnis:

I think that’s quite plausible. There are equity arguments made, and the retroactivity doctrine is quite squishy and is open to those kinds of arguments.

Larry Bernstein:

There is a lot of money involved here like $160 billion. As I think about possible bipartisan legislation, neither the Republicans nor the Democrats want the importers to earn a $160 billion windfall. The Republicans would like to keep the money and the Democrats would likely want to give money to the lower and middle class. I can also imagine that the Democrats would want to include a provision that limits Trump’s ability to create additional tariffs and there may be the rub.

John McGinnis:

Plausible and incredibly, you might say the coalition is going to come because of the fairness question, but also because our fiscal imbalance, it’s extraordinary how indebted the United States is at the moment. The debt to GDP ratio is getting up to 100%, which is the largest in peace time.

I guess the only reason you might not think it might happen is political polarization.

Larry Bernstein:

I totally agree that our politics are polarized, but what is unusual and what may allow bipartisan support is why would either party want to enrich in the importer who really did not pay the tax relative to the consumer who is their voter constituent?

John McGinnis:

It just is not practical to give it to the consumer.

Larry Bernstein:

Let’s say the idea that the federal government keeps the money may sound to some partisans as being unpalpable. What you could do is say, we are going to give $500 to every person who has adjusted gross income less than 50,000.

John McGinnis:

That is a very creative solution. Because it gives money out and with the cap, it would satisfy Democrats and giving money back would satisfy Republicans.

I have not heard anyone suggest this.

Larry Bernstein:

Congress passes lots of laws that are vague, and the courts may interpret them in a way that is inconsistent with Congress’s wishes. This must happen frequently and then the statute is amended accordingly.

John McGinnis:

It certainly has happened. The Congress does not overrule the court but changes the statute when the court has said it is not clear. Congress comes back and says, “Well, this is actually what we want.” It certainly has done so. The difficulty is that that is more likely to happen the greater the bipartisanship you have because without some bipartisan buy-in, it is rather difficult to move. There is a lot of inertia in Congress, and there is the filibuster in the Senate. There is a tradition of bipartisan fixes that is likely to work. But even with bipartisan matters, people can hold this up strategically in Congress and say, “Well, we actually want something else or otherwise we’re not giving this bipartisan fix.”

I would suspect that that kind of behavior is on the increase today. And so, this may be easier said than done.

Larry Bernstein:

With that John can you please end this podcast on a note of optimism as it relates to the Supreme Court’s tariff decision in Learning Resources.

John McGinnis:

I think the tariff case is going to be good for protecting the Supreme Court, precisely because Trump hates it so much. He is going to denounce the Supreme Court. And that is especially important for the Supreme Court today because the Supreme Court is very unpopular with Democrats. You may remember the last campaign, President Biden were considering statutory term limits to the Supreme Court, essentially kicking people off the Supreme Court and to pack the Supreme Court with additional justices when there’s unified Democratic government. I think this would be a huge danger to our constitutional system.

What makes me optimistic is that Trump, oddly enough, has given the Supreme Court a chance to show its real independence from the president, even while not departing from its own jurisprudence, and that is going to help insulate it from the most dangerous attacks that I could foresee might happen even beginning in 2029, if we see as is quite possible, a unified federal government controlled House, Senate, and President by the Democratic Party.

Larry Bernstein:

If you missed it, John previously spoke about How the Rich Improve Our Democracy..

I am doing a series of podcasts on the war in Iran.

Our most recent podcast was Iran’s Rope-a-Dope Strategy with Anthony King who is a Professor of War at Exeter University in the UK.

Previously, we had a podcast Allies Fighting Together with Yaakov Katz who is the former Editor in Chief of the Jerusalem Post and the author of While Israel Slept about the 10/7 massacre.

Before that What Will Define Success and Failure in the Iran War with Hal Brands.

I also did a podcast on the Opening the Strait of Hormuz with James Holmes from the US Naval War College.

I had a podcast on Fine Tuning the OODA Loop: Observe, Orient, Decide, Act Loop to Win the War in Iran with Israeli Brig. Gen. Eran Ortal.

We started the series with former Trump National Security Advisor John Bolton about what steps we need to take to win the war.

You can find our previous episodes and transcripts on our website
whathappensnextin6minutes.com. Please follow us on Apple Podcasts or Spotify. Thank you for joining us today, goodbye.

Check out our previous episode, Iran’s Rope-a-Dope Strategy, here.

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Anthony King

Subject: Iran’s Rope-a-Dope Strategy
Bio: Professor of War at Exeter University

Transcript:

Larry Bernstein:

Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast which covers economics, politics, and history. Today’s topic is Iran’s Rope-a-Dope Strategy.

Our speaker is Anthony King who is a Professor of War at Exeter University in the UK.

What do you observe about the Iran War that the rest of us miss?

Anthony King:

It is a classic case where two states’ strategy is based on opportunity, not on a realistic assessment of what will happen. So what is the opportunity? The 12-day war last year and the uprising against the Iranian regime in January suggested an opportunity to Israel and U.S. They could, with limited military attacks, topple the regime that has been manipulating the Middle East and avoid that regime getting a nuclear weapon. The opportunity is significant. The problem is they have not thought through the downsides.

Is it possible to destroy an entrenched regime from the air? It has never happened before in history. It is like similar decisions that states make. Putin goes into Ukraine in 2022. Bush goes into Iraq in 2003. Opportunity exceeds actual cost assessment.

Larry Bernstein:

There have not been many wars that have been solely from the air. So, there is not tons of examples. What is unusual is that it is coterminous with a natural uprising. There is an angry but ill-equipped population that opposes the regime. And they were seeking outside help to accomplish this overthrow. The question is, can local rebels combine with the greatest force ever without ground forces?

Anthony King:

My answer would be no. It is worth looking at examples here. Attempts at changing regimes purely through air power: Kosovo, Libya, and the Taliban in 2001, in each case air power alone doesn’t do it. You need actual forces on the ground. Kosovo eventually worked because NATO began to send in K4. Libya, the regime fell apart. Taliban, air power is crucial, but the decisive element with that Northern Alliance supported by U.S. special forces. So, the idea that one can easily depose a regime from the air, there’s little empirical evidence for it.

A popular uprising is not enough to displace a regime of the scale, size and authoritarian nature of the Islamicist regime in Iran, where you have around 13 million security force. You need an extremely large and potent political party with an extremely capable military force.

Larry Bernstein:

Is there any way to split the Iranian army?

Anthony King:

The regime has shown over 40 years to be extraordinarily robust and unified. We don’t see massive fissures opening up in the regime. It can kill 30,000 of its own civilians and nothing happens. It’s ruthless and capable of doing that and that doesn’t engender a civil war.

Whatever you think of the strategic, legal, or moral elements of it, the strike killing 40 regime leaders with dynamic targeting, putting bombs through office windows, from a pure military operational point of view, it is absolutely extraordinary. But it’s not enough to depose a regime.

The Taliban fell apart very easily, but that is because the Afghan polity, even under the Taliban, is a centrifugal patrimonial system of alliances of convenience. And if you take the center of gravity away, which in 2021 was the Americans leaving, all of the warlords just side with whoever they want to do.

Iran is a unified civilization for a millennium. Its state is embedded into the system. The notion that you could get rid of a few leaders like you could with the Taliban and the whole thing would collapse. It’s a completely different social political edifice.

Larry Bernstein:

It seems like one of those Muhammad Ali fights where he stands in the corner and the other guy keeps punching him. And you may not topple the guy, but it seriously hurts him. How should we think about not knocking Iran out but only weakening it?

Anthony King:

They have already achieved that. The problem is war is a dynamic process. I am profoundly opposed and critical of the Iranian regime. I absolutely do not buy the commentary that is common that the Ayatollah and his Islamic regime of Iran are strategic geniuses who have everything planned out. Their decision making over the last five years has been disastrous.

The problem with Iran’s strategy is that the Israeli-US military campaign has been extraordinary. There is no Iranian Navy. The leadership has been severely decimated, but because there is no follow on, there is no connected political military movement inside Iran to replace the regime, you’ve ended up in this weird place where the Muhammad Ali rope-a-dope works. Iran is the rope-a-dope, and the U.S. and Israel can pummel it, but in Round 10, Iran comes out.

What has Iran regime has got to do is not collapse and threaten, does not even have to strike, the Strait of Hormuz and that puts massive pressure on the U.S. That is the critical vulnerability of the Trump administration and Iran have taken a course of action, which is effective. The problem is, how do you stop the regime from being in power? How do you stop it from closing the Strait of Hormuz?

You would say you have to have an opposition. And obviously the U.S. have been running around looking for Iranian Kurds to do the job. But they are a minority ethnic group with little political and military power. The trouble with this strategy, is that it puts the victim, Iran, into a position where paradoxically in strategic terms, it holds the upper hand. And it is not easy to see how to change that dynamic.

Larry Bernstein:

The U.S. has shipped the Marines to the region and are ready to go. What could they accomplish, and could they tilt the needle in a significant way?

Anthony King:

Last week they said they had a Marine Expeditionary unit of about 2000 or 3000 Marines.

Larry Bernstein:

That is not many men. Why were there so few Marines in the region when the war started?

Anthony King:

Yeah! It indicates a strategy that if you wanted a land force element, why weren’t the Marines stood up? 600 combat Marines what could they do? Something to do with the Strait of Hormuz, could they land on Kharg Island and secure that? Possibly, but that mission would be of huge risk and would escalate the war and would potentially put pressure on China in ways that might not be brilliant. And certainly, you would not want to put 600 Marines on Kharg Island and not have another 6,000 to support them.

Larry Bernstein:

What is your central case for how the war proceeds?

Anthony King:

Pessimistic, I’m afraid. The Israelis will keep bombing and pursue a strategy of decapitation. No doubt that they will kill quite a few more senior regime leaders. But they will not destroy Iranian military capacity nor bring down the regime.

What will Iran do in response? They will keep the Strait of Hormuz shut. They will continue to rocket, missile and drone strike Gulf states where U.S. bases are, and they will simply endure and we’ll get to a position, in three months’ time where maybe some deal worked out, but I don’t see what that deal would be. Certainly, the Iranians now are not going to remotely offer any nuclear guarantee.

Larry Bernstein:

The US and Israelis rejected the previous Iranian nuclear guarantees, how will the Iranians respond now that we have attacked them?

Anthony King:

Iran has a complete rationale to develop nuclear weapons as fast as possible. So, would their deal be that the Israelis and US stop bombing so that Iran opens the Strait of Hormuz? Yeah. You can see we end up with a strategy that doesn’t get us very far ahead of where we were beyond a regime that has been weakened, they have shot off 3,000 rockets and their arsenal is another 4,000 rockets, and they will be able to produce quickly long-range drones. The pure military resilience of the regime is way higher than anyone than the U.S. and Israel anticipated.

I would anticipate a much longer conflict. I struggle to find the down ramp. Why would Iran stop fighting?

Larry Bernstein:

What about the economic pressure that they face internally?

Anthony King:

That is not new.

Larry Bernstein:

They are more limited. Their export market is shut down other than oil. If they are bombing Tehran every day, it must impact the local populations willingness to invest and manufacture materials.

Anthony King:

The thesis here is that the bombing would have a military and an economic strand of your campaign and together they would lead to regime collapse.

Larry Bernstein:

There is an opposition that we can arm and train.

Anthony King:

I remain skeptical because historically and empirically, economic pressure works on such a long wavelength that it typically has not generated the political military response that you need for a regime change. Look at Putin, four years down the track, everyone thought that the economic pressure of Ukraine and the sanctions, the cost of it, the regime is bound to implode. Not at all, it looks stronger than ever. The U.S. and Israel will not bomb infrastructure. The Israelis tried it two weeks ago, and the U.S. said, rightly, you can’t do that because the Iranians will bomb the gas field in Qatar. And at that point, all sides drew back from infrastructure. Those broad economic pressures just don’t create the kind of crux points that you need for regime change.

The parallel for me that is closest to this is Kosovo, where NATO in 1999 starts bombing. They basically think they’ll just do a quick punitive series of raids, and the Serbian army will withdraw from Kosovo and Milošević will give up Kosovo. Doesn’t happen. Months later, they’re having to expand the bombing to Serbia and infamously hitting the Chinese embassy in Belgrade. And this campaign feels more to me like that.

Larry Bernstein:

To paraphrase Israel’s first Prime Minister, David Ben-Gurion that whenever there is a war against the Arabs, it is just a temporary victory, because Israel can destroy their military forces, but they will rebuild. They are not removing the regimes. The Arab countries are not going to be occupied. It is a series of temporary wins trying to prevent another Holocaust.

The goals and objectives for the Israelis are different from the United States, which is unconditional victory. The Israelis do not expect that. They got to be reasonable in their expectations. Can a reasonable result come out of this?

Anthony King:

I totally agree with it. The idea that somehow you fight a war and there’s victory and everything’s perfect, absolute nonsense. You apply military power, war violence, and the whole thing is messy. I agree that there is not a beautiful victory at the end does not mean that the whole thing was irrelevant and flawed. I am sure that is why the Israeli support for this operation is so high that it is weakening Iran.

But the problem is that does not seem to be the case for the U.S., despite all the greenery and fracking, oil going through the Gulf is still damn important. And it bears an international influence, and which means that its strategic goals are different. The problem is that if you don’t replace the regime entirely, you’ve still got a regime that can shut the Strait of Hormuz.

Larry Bernstein:

Next topic is the future uprising by opponents of the Iranian Regime.

Anthony King:

There must be an organized opposition with a military capacity. Organic uprisings simply don’t happen.

Larry Bernstein:

We had some organic uprisings in Eastern Europe just before the wall came down. The Eastern European militaries were unwilling to kill their civilians. The Iranian military seems willing to do that. Is that the distinguishing feature?

Anthony King:

Yeah, absolutely. Analogies with the collapse of Eastern Europe, you had a Soviet regime that collapsed from the inside and the popular uprises against it were in line with movements inside the regime. Gorbachev himself effectively recognized that the Soviet Union didn’t work anymore.

With Iran, that’s not what we’re talking about. To remove a regime that is powerful and entrenched is going to require an equal and opposite force, and I don’t see that. And the geographic accident of Iran bordering the Gulf and having the whip hand over the Strait of Hormuz makes it tricky.

Larry Bernstein:

Another weird aspect of this war was Iran’s decision to attack neighboring neutral states. They’ve hit UAE, Saudi, Turkey, and Cyprus. It has awakened those Gulf States as to the enemy nature of the Iranian regime. How does that change the long-term political and military aspects of Iran living and operating in that neighborhood?

Anthony King:

Well, this is the bit where I might be more optimistic. Over the last 25 years, it’s had puppet regimes in Lebanon, Syria, and now with the Shiite leader in Iraq. Since the 7th of October, that has gone into massive recession. Syria has collapsed. Hezbollah has been defeated. There is an opportunity in Lebanon. Hamas has been seriously weakened as a force. So, from a position of extraordinary military and proxy alliance strength, Iran has gone into serious recession, which offers up a real potential for the Gulf States led by Saudi.

Why haven’t the Gulf States gone to war? Some of the Gulf states have made a rapprochement with Israel, with the Abraham Accords. They are not going to fight against other Muslim states, even Iran, on the side of Israel. That is a bridge they are not going to go over.

Larry Bernstein:

I disagree that they do not want to join this war because their infrastructure is easily destroyed and that the upside/downside isn’t worth it.

Anthony King:

True enough and the vulnerabilities have been exposed. But at the end of the war with an even more weakened Iran, the opportunities for those Gulf states, especially Saudi, may be beneficial.

Larry Bernstein:

I want to use a metaphor with the Russian-Ukrainian war. Putin will not live forever, and the war in Ukraine is going to end, but Russia will remain an enemy of the West and Europe. The Europeans are going to have to contain Russia going forward. Because it is a nuclear power, the Europeans will not be able to mow the Russian grass, but they will have economic sanctions and military tools to cause trouble. Russia is not going away. Geographically Russia shares a border with Europe, and they want European territory to expand the Russian empire.

The Iranians also want a large and successful Iranian empire. How do you contain our enemy’s power in a way that is consistent with the tools available, the political pressures, and the moral and ethical guidelines that operate within the Western nation states ecosystem?

Anthony King:

You are in normal history, which is your enemy does not go away. I’m convinced that the successor of Putin will be from appointed within the Court of Putin, and therefore Kremlin policy and strategy will remain entirely the same, i.e., Hostile to the West. And from their perspective, and the West frankly is a threat to them.

European countries need to develop military capacities and political unity to ensure that they are countering Russia and that every so often there is likely to be friction points, maybe even conflicts. And the issue for me is keeping those conflicts within a limited non-nuclear frame.

Larry Bernstein:

It is very unusual where at the end of the fighting, your opponent becomes one of your strongest allies and not one of your foes. At the end of World War II, Japan and Germany become the crux of the American alliance. The expectation that somehow Iran would join hand in hand with us after the conflict is wishful thinking or remote. They will remain a foe to the extent their ideology, religious fervor and empire desires are inconsistent with our worldview.

Anthony King:

Yeah, agreed. I think exactly that is what will happen. The Second World War is so extraordinary, it really should be expunged from,

Larry Bernstein:

the historical record.

Lebanon is a failed state currently, but if Hezbollah loses, it’s possible that Lebanon could become a normal state. Israel could have a normal border and the people of Lebanon could have a normal life. I mean, it’s possible.

Anthony King:

Completely possible because the Israelis can exert enough military power on a contiguous state, and there are significant ethnopolitical groups in Lebanon to form a new regime, which excludes an extremist Hezbollah group. I agree with that. That is a great example of the normal realities of politics and strategy, limited successes in smaller areas, but it would be amazing if that was the case.

Larry Bernstein:

Iran it is split between a secular Iranian population that wants to be part of the world and a religious militaristic authoritarian segment of society that wants to undermine its neighborhood. It was not obvious 47 years ago that this would be the outcome. Is there any way to revert to that previous Iranian secular governing coalition away from using U.S. ground troops?

Anthony King:

The regime in Iran is not an inevitability, but it shows that political power is not wielded through organic popular sentiment. It needs organization and a political wing allied with a military. I can’t see the current regime standing aside without a civil war.

Larry Bernstein:

Iran has been defending itself with Chinese made or Chinese copied weapons, and it has not been successful in staving off the American and Israeli onslaught. What lessons do the Chinese take from this war?

Anthony King:

The Americans think that China, the People’s Liberation Army will be ready for an invasion of Taiwan next year. The Pentagon is preparing for a war with China next year, which puts this war with Iran in an interesting context as a strategic decision.

What China will take from it is two things. One, it’s really hard to achieve your military objectives by clinical strategic strikes. Taiwan strategically is a much easier fight. It’s a much easier strategic objective than Iran, but it suggests that if it comes to a fight, it’s going to be much more uncertain than you think it’s going to be. And second, the implications for the global economy and China are unpredictable, and probably not particularly auspicious.

China will look at this thinking if they can take Taiwan without military force, that would be massively the best option because once the rockets start flying, issues become difficult.

Larry Bernstein:

Thanks to Tony for joining us. If you missed it, our last podcast was on How the Rich Improve Our Democracy with John McGinnis who is a constitutional law professor at Northwestern.

I am doing a series of podcasts on the war in Iran.

I did Allies Fighting Together with Yaakov Katz who is the former Editor in Chief of the Jerusalem Post and the author of While Israel Slept about the 10/7 massacre.

Before that What Will Define Success and Failure in the Iran War with Hal Brands.

I also did a podcast on the Opening the Strait of Hormuz with James Holmes from the US Naval War College.

I had a podcast on Fine Tuning the OODA Loop: Observe, Orient, Decide, Act Loop to Win the War in Iran with Israeli Brig. Gen. Eran Ortal. He explained how the American and Israeli military have moved their command center to the battlefield so that the Iranian targets can be destroyed before they have time to react.

We started the series with former Trump National Security Advisor John Bolton about what steps we need to take to win the war.

You can find our previous episodes and transcripts on our website
whathappensnextin6minutes.com. Please follow us on Apple Podcasts or Spotify. Thank you for joining us today, goodbye.

Check out our previous episode, How the Rich Improve Our Democracy, here.

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