#8 Debunking the Big Myth - Free-Market Radicalism, Governance, and Sustainability with Naomi Oreskes

Discover how deeply entrenched beliefs in the free market's supremacy have shaped our society, often to our detriment. Today, we sit down with Professor Naomi Oreskes to discuss her latest book, "The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market," where she unravels the historical and contemporary implications of this ideology. From climate change to the opioid crisis, Naomi explains why understanding the balance between market strengths and the necessity of effective governance is crucial for future business leaders.

We journey back to the economic debates of the 1930s and 40s, exploring Keynesian economics versus the Austrian School led by Ludwig von Mises and Friedrich von Hayek. Naomi sheds light on how American business leaders initially failed to overturn New Deal policies, only to find their arguments gaining traction in the economically turbulent 1970s. This sets the stage for Milton Friedman's influential ideas and sparks ongoing debates about government's role in markets.

As we look to the future, Naomi delves into contemporary issues like corporate sustainability, the fossil fuel industry's impact on climate research, and the ethical complexities of AI technology. Her insights on corporate social responsibility call for a return to community-focused business practices. Concluding with a reflection on ethical leadership and the shift away from shareholder value maximization, this episode is a must-listen for anyone invested in the intersection of business, governance, and societal well-being. Join us for a thought-provoking conversation that challenges conventional wisdom and advocates for a more balanced and socially responsible economic system.

More inspirations from Naomi Oreskes:
Link to her latest book: The Big Myth
Link to her TED Talk: Why we should trust scientists?

If you want to follow this podcast, please subscribe to the Business and Society with Senthil Nathan on Apple and Spotify. We welcome your comments and suggestions at bspwithsn@gmail.com.

Chapters

• 1:13 What is the Big Myth?
• 2:43 Why this book?
• 8:15 American economy and free markets
• 9:56 Business influence
• 19:05 Shocking examples from the book
• 25:41 Corporate sustainability initiatives
• 29:12 On Artificial Intelligence
• 33:40 The ultimate goal of institutions
• 34:41 Managing differences of opinion and setbacks
• 36:22 Book recommendation
• 38:06 Essential skills for business leaders

Transcript

Senthil

00:03

Hey, it's Senthil here. Welcome to the Business and Society podcast. Every fortnight, we speak to a world-leading thinker to better understand the role of business and society. Joining me today is Naomi Oreskes. Naomi is a professor of the history of science at Harvard University and the author of nearly 200 scholarly papers and popular articles, as well as the books the Big Myth and Merchants of Doubt, both co-authored with Eric Conway. Her opinion pieces have appeared in the New York Times, the Washington Post, the Times of London and many others. Her TED Talk “Why we Should Trust Scientists” was viewed more than a million times. She is an active participant in the World Economic Forum in Davos. I sat with Naomi to discuss some of the ideas in her latest book, “The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market.” Professor Naomi, thanks so much for joining me today. Congratulations on the book. 

Naomi

01:10

Thank you very much and it's a pleasure to be here with you. 

Senthil

01:18

Could you explain the central idea of your book, The Big Myth to our listeners? 

Naomi

01:19

The central thesis is that we have been stymied in addressing many serious problems that we face, such as the climate crisis or affordable housing or, in the United States, the opioid crisis, because too many of us have been persuaded that the solution to our problems lies in the free market and that we not only do we not need the government to quote intervene in the market, but that if the government does get involved in the marketplace, that it's a threat to our personal freedoms. 

01:48

History does not support that idea. History amply shows all the many different ways in which we need governance on many levels - federal governance, state or provincial governance, and also corporate governance to ensure that markets function efficiently, to ensure that markets function fairly and to address market failure and protect workers, consumers, children and the environment. But many of us have bought into this myth, what we call the big myth, the myth of the magic of the marketplace, because we have been saturated with this message for nearly 100 years. And so, the book steps back from the present, brings us back to the early 20th century, when debates about the appropriate role of government in the marketplace were first getting started, and shows how, over the course of the 20th century and right up to the present day, a group of business leaders worked hard to indoctrinate us with this big myth. 

Senthil

02:43

I believe this book is so important that it should be a recommended read for all business school students. However, I'm also afraid that it may undermine society's faith in businesses, which I believe have the capacity and resources to solve some of the sustainability challenges, such as climate change. Why did you write this book and what was your goal? 

Naomi

03:09

Well, I'm so glad you asked that question because I really want to stress that this book is in no means anti-business. Both Eric Conway and I totally recognize the important role of the private sector in doing many, many things. We recognize that markets are important tools for solving many problems, for producing goods and services, and so this is not an attack on business, nor is it even an attack on capitalism in any kind of broad sense. But we want people to understand, and particularly business school students. So, I'm so glad you said what you did is that markets are tools. They're human institutions. They're created by people. Just like any other institution like universities, museums, hospitals, the institution of marriage and like any tool or any institution, it has its strengths and weaknesses. So, history shows markets are very, very effective in helping distribute things like food, for example. They're also good in giving consumer choices about things like what kind of clothes you might want to wear. So we can in most countries in the world today many, many countries you could go into a store and have a choice of many different kinds of clothing, but markets are really, really bad at dealing with external costs, that is to say, costs that accrue to people who are not engaged in the initial transaction, and Eric Conway and I got involved in this issue because of our work on climate change, because climate change is a massive external cost. 

04:31

Nick Stern, the former chief economist at the World Bank, has called climate change the greatest, most wide-ranging market failure ever. So why is it a market failure? Because the globe, the world, is now facing tremendous costs, trillions and trillions of dollars in costs, and not just monetary costs, but also social costs People who lose their home to wildfires, people who lose their homes to floods, communities that get disrupted and may never recover from certain kinds of extreme weather events. We saw just recently the hottest day ever in history, and these heat waves, these droughts, these wildfires have very, very severe costs. And they're a market failure because they arise from people doing perfectly legal things buying and selling fossil fuels and yet somehow those perfectly legal transactions have led to the climate crisis. And so, it was our work on the climate crisis that led us sort of back into this question of the economics of external costs. 

05:29

As we dug more into this story, we realized it isn't just climate change. We see market failures across the globe. I live and work in the United States. We have massive problem of affordable housing in this country. We've had massive deaths to the opioid crisis from insufficiently regulated drugs. 

05:47

Across the globe, many countries have various challenges that they're facing of their own, and all of these are examples where markets have not worked well, where external costs accrue or where markets have not been efficient. And if you think about affordable housing, people want a place to live. Everyone wants a place to live, and everyone would like a place to live that is safe, that is clean, that is basically comfortable and that they can afford. And yet across the world, we see literally billions of people who do not have homes. So why is that? Why doesn't the market respond and why don't people build the homes that these people want? So that's a market failure. The markets are not responding. So, we all learned about supply and demand. So, there's a huge demand for housing and yet the supply isn't happening. 

06:39

That's a market failure, and so we wanted to better understand, not why the market failures happen that's a problem in economics and we're not economists, and lots of economists have written about that but why it's been so hard for countries like the United States but not just the United States. All across the globe, countries have really failed to deal with these market failures, particularly the climate crisis. Why is it so hard for us to say look, it's kind of obvious, this is a market failure. So what? What can we do about it? 

07:08

And in this book, we argue that at least part of the answer to that is well, when a market fails, what do you need to do? You need to remedy the market failure with an exogenous force, something outside the marketplace, and in most cases not always, but in most cases that exogenous force is governance. So, we need governance to remedy market failure, to address inefficiencies, to address imbalances in supply and demand, to supply things that people need that markets aren't giving them. Also, affordable health care is another good example. So why isn't that happening? 

07:43

And we argue that because many, many people have come to believe that markets can solve all our problems, and so we wanted to know. Well, why would anyone think that when the evidence is so clearly against that? And so, what we discovered was this very long and deep story. It begins in the United States, but it spreads to other countries as well. I mean, actually, it sort of begins in Europe, then comes to the United States. We focus on the US, because that's where we live and where we work and it's also where we think the problem is worst, but it's relevant really across the globe. 

Senthil

08:15

Yes, there are many market failures in the United States - opioids, health crisis, life expectancy but the American business or economy remains one of the most successful. Do you see it this way? If so, what has been the role of free market radicalism in this? 

Naomi

08:35

Yeah, that's a great question and there's no question the American economy is still dynamic, and I think you know the answer is these things are all a question of balance. The American economy is dynamic, I think, in part because America is a dynamic country. We're a country in which people are willing to move much more than they are in some other places in the world. We're a country with a high level of education. But this is a very interesting point. 

08:58

If you ask yourself the question how did America develop a highly educated workforce that can be innovative, that could develop Silicon Valley? That was not done by the private sector. That was done by a very robust program of first public education, which was opposed by people like DuPont, public education that was supported by progressive reformers who were seen as the opponents of the captains of industry, and the development of a widespread public university system that goes back to the mid-19th century. And many of the advocates of neoliberal policies have not supported public universities, have said that no, that should be a private sector function and in recent years we've seen public universities really struggling to hold on to the position that they have historically held in the United States. But I would argue that a huge part of the dynamism of the American economy, is this really well-educated workforce that was largely educated through the public purse? 

Senthil

09:56

You argue that businesses influence Hollywood, academics, churches, governments and media to drive a certain narrative. Could we also see it as a problem of responsible use of power rather than an issue with a specific institution? Don't we also have examples of how power led governments to dismayed societies? 

Naomi

10:17

Yes. Well, of course, and again, this is where these kinds of issues are complex, and so we don't want to oversimplify or overgeneralize, but what we see, what the sort of core narrative of the story is really, how the neoliberal narrative came to dominate in the second half of the 20th century. And so this is a story that actually begins in Europe with debates in the 1930s and 40s in the face of the Great Depression, and again the Great Depression, market failure on a massive scale, stock markets collapsing around the world, economies collapsing around the world, and then domino effects, so that the Great Depression, which starts in the United States and Europe, then spreads across the globe and people are out of work, losing money across the globe, and the world doesn't really recover from the Great Depression until World War II or, some people would argue, even later. So in the face of this massive market failure, it seemed obvious to many economists the most famous is John Maynard Keynes, but of course he's not the only one to say look, government has to get involved, government has to put people to work, government has to do a better rate job in regulating securities and financial markets, because a big cause of the stock market crash of 29 was poorly regulated or unregulated securities. You need government and you need government spending to stimulate the economy in the face of a depression, and Keynesian economics became the dominant economic model in most of the world in the 1930s in the face of the Great Depression. 

11:44

But there were many people who disagreed, and some of them disagreed extremely strongly for a particular reason, and the reason was that they feared that if Western governments became too involved in the marketplace, it would put them on a slippery slope to Soviet-style communism, to totalitarianism, to dictatorship, that if the governments moved to control the economies, it would only be a short matter of time before they moved to control everything. Now, this was not, in my opinion, a crazy thought. I think it was a legitimate concern, and some of the early work that was written on this topic is not unreasonable. It's not crazy. But what we see happen is the development of a school of thought, sometimes referred to the Austrian School of Economics, in which a couple of key leaders emerge who take this idea to an extreme. And these two key leaders are Ludwig von Mises and Friedrich von Hayek, and basically, we'll focus on Hayek because his book the Road to Serfdom, then becomes a bestseller. 

12:47

It was very widely read, and he basically takes this argument and says it's a slippery slope, it's what he calls the road to serfdom and therefore, and he says, look, nobody wants to live in a Soviet-style dictatorship. But then he backs up and says well, but the road to communism begins with socialized medicine or begins with Keynesian economics. And so, he makes the slippery slope argument to say you should not intervene in the economy at all. Now the interesting thing is he actually doesn't quite say that. He says it, but then he backs off and he says well, actually that's not entirely true. We do need things like Social Security, we do need things like regulations to prevent deforestation, we do need things like regulations to ensure workplace safety. So he's not an extreme ideologue, but, like often happens in life I think this happened to Marx as well his accolades take it to an extreme, and so his work gets picked up by a group of American business leaders, very famous names in the history of American business, names like DuPont, names like Sloan, Alfred P Sloan, the head of General Motors, really famous people in the history of American business. And they take this idea, and they run with its absolute 

14:04

most extreme form and they use it to try to fight back against the New Deal. They use it to fight back against unionization. They use it to fight laws protecting children from child labour or limiting the number of hours that workers can have to work so many of the basic protections that we in Western countries take for granted today, they use this argument to fight and, frankly, they don't really succeed. They do a lot of things. They spend a lot of money as you suggested in the book, we'd look at a really wide range of activities. So, they become involved in writing children's books, they become involved in Hollywood film, they support the University of Chicago School of Economics. They do a whole lot of things to try to get this message across. They create a cartoon version literally a cartoon version of the Road to Service and they distribute over a million copies to the American people. They hire Ronald Reagan to run a television show for General Electric Corporation. So again, big names in American history General Electric, Westinghouse, DuPont. But it doesn't really work. 

15:10

The interesting thing about this story is that for about the better part of 50 years, from the 1930s to the 1980s, they keep making these arguments, but actually the American people are not persuaded. The American people understand that these are laws that we want. We want workers to be protected. We don't want children working in factories. We do want workers' compensation so that if a worker's injured on the job he or she gets compensation. But that begins to change in the 1970s and it's a very complicated question how and why this argument that has failed for almost half a century begins to succeed, and some of it, I think, really proves the power of persistence. If you keep saying something long enough in enough different ways to enough different people, you know eventually the message may get through, and we definitely see that in the story. 

16:05

But in addition, there's a set of things that happened in the 1970s. So many of your listeners may know about the stagflation of the 1970s. So, there's a period in which the post-war economic growth really comes to a halt, and we begin to see inflation with a stagnant economy and traditional economics had said that shouldn't happen. Either you have a booming economy with inflation and lots of employment, or you have a stagnant economy, with not a lot of employment but also not a lot of inflation. But now you get the worst of both worlds’ inflation and unemployment. 

16:35

And Milton Friedman says well, I have an explanation for that. The explanation is that the market is overregulated and, particularly in Europe, the European governments you know, it's now the European Union, although this is before the European Union these countries are spending too much money, the public sector is spending too much money and crowding out the private sector. And in the face of no other really good explanation I mean in reality there were some good explanations like the inflation was mostly exogenous, mostly caused by rising oil prices because of the role of the OPEC cartel, but it's still… I mean… Economists still argue about exactly what happened in the 1970s and we don't claim to know the answer. But in the face of this big problem that didn't seem to have an explanation, the idea that the markets were overregulated seemed plausible to a lot of people. And so, beginning with Jimmy Carter in the United States, Margaret Thatcher in the United Kingdom and then later people like Nicolas Sarkozy in France, you begin to see this movement to embrace neoliberal arguments and to deregulate marketplaces. 

17:44

And well, I think you know we argue in the book that that was a really, really bad choice. 

17:49

Because here we are now, 40, 50 years later, you know, particularly again in the United States massive increase in unhappiness, lack of affordable housing, huge numbers of opioid deaths, enormous numbers of COVID-19 deaths that could have been prevented by better public health interventions. And to me, what is the most telling proof of all is that life expectancy in the United States, after a century of increasing life expectancy, steadily increasing life expectancy, life expectancy in the United States in the last several years has fallen. So, I think we have very clear evidence that these policies have not worked. They haven't made people happier, they haven't made people healthier, and they haven't made us freer and they've contributed to the climate crisis. So, we argue in the book that, for whatever reasons, people embraced an ideology that wasn't true, that served the self-interest of the ruling classes, the very wealthy, the captains of industry like Alfred P Sloan and Pierre Dupont, and didn't actually serve the needs of the vast majority of people. Not in the United States, not in Europe and, to the extent that these policies were embraced elsewhere, not in those countries either. 

Senthil

19:05

One of the shocking examples in your book is about how the Reader's Digest version of Hayek's book the Road to Serfdom and Stigler's version of Adam Smith's Wealth of Nations selectively edited out ideas to present a narrative that supported free market radicalism. Do such practices exist today? 

Naomi

19:26

Oh, absolutely. I mean, I don't know if the specific practices of misrepresenting people's work is still a major thing right now, although I suspect it is, but I think this is extremely important and it gets back to the point we made earlier about our book is not anti-business, it's not anti-capitalist, it's not anti-Adam Smith. Rather, in fact, it's almost the opposite. One of the things we're trying to do is to actually reclaim what Adam Smith and even, to some extent, Friedrich von Hayek said, which is that it's really all about balance. You want a dynamic economy where innovators and entrepreneurs are able to develop businesses, create jobs, invent new things. That's all good. 

20:05

You know, eric and I always like to say I mean, Eric is a historian of technology. You know we're both PhD scientists. You know I love my iPhone; I love my laptop, I love my cool water bottle. Right, we like technology. But if you ask yourself, where does all this technology come from? Again, a lot of the free-market radicals will tell you oh, you know innovation. You know guys in Palo Alto in hoodies and garages. But that's not true. If you look at the history of technology, all of the major technological innovations of the 20th century aviation, television, telephone, the internet you know, the whole world that Silicon Valley depends on was actually developed either by the federal government, who did in fact invent the internet, or by effective private public partnerships. And so, what we're trying to do is reclaim a more realistic view of how you do build a thriving economy in which people are also happy and healthy. And that's the other key part, because, it is true, the American economy has been very strong, you know, through most of my lifetime, but it's also true that we've seen tremendous damage done to the climate, to the natural environment. We've seen increases in recent years in workplace injuries, you know, decreasing support for public education, which to me is, you know, killing the goose that laid the golden egg. 

21:22

And so, if you go back and look at Adam Smith, one of the most fascinating things about Adam Smith is that he absolutely recognizes the need for government. He has extensive discussions of the need for taxation to support public services. And that's really interesting, because in the United States, the American right is super anti-tax right. It's all about, it's been tax cuts, tax cuts. You know, Reagan, Trump, Bush, every Republican president since Ronald Reagan has insisted on tax cuts. And they insist that tax cuts stimulate the economy, even though the evidence does not support that. But Adam Smith, their own hero, will tell you need taxes for public goods, you need regulation of banks. Adam Smith has an extensive discussion of not just that it's a good idea, but that if you don't regulate banks, unsavoury banking practices can bring down the whole economy. He says workers need to unionize because the factory owners will always have more power. So, you know, if you read Adam Smith, you get a very, very different impression of what the father of capitalism had in mind. 

22:22

But the advocates of free market radicalism, or free market fundamentalism as we like to call it. They presented a vision of Adam Smith that was false. That took out all of his discussions of the need for constraints, the need for regulation, the need for unions I mean the need for taxation. So, when George Stigler edits the Wealth of Nations and publishes it while he's at the University of Chicago, all of those caveats are removed. And we see the same thing with Friedrich von Hayek. When Reader's Digest publishes a shortened version of the Road to Serfdom, they take out all the places where Hayek says well, you do need laws to prevent pollution and deforestation. I mean, pollution is the textbook example of an external cost. Hayek knows that. He understands it, he's not a stupid man. But that gets removed from the Reader's Digest version. So, what the American people get is a version of Hayek in which the need for government is completely effaced and you're led to believe that Hayek thinks that the private sector can do everything, even though he never thought that, and Adam Smith never thought that. 

Senthil

23:27

Another example I want to pull out from your book is a story about the National Electric Light Association, NELA, its propaganda in the 1930s against state intervention in regulating electricity markets for the benefit of few private companies. Do you feel campaigns of such scale are possible today? If so, could you give some examples, because these examples are not just history, but it's very scary to read. 

Naomi

23:55

Exactly. I know it is scary to read and yes for us the NELA example, the way in which the electricity industry, you know, paid academics to write reports supporting their position even though they knew it was false. The way they tried to manipulate textbooks, the way they tried to manipulate university curricula. We know this is going on again today. We know, for one thing, that it happened in the 1980s and 90s when the tobacco industry did the same thing and of course we came to this work partly through our work on the history of tobacco propaganda and we know the fossil fuel industry is doing the same thing today. 

24:32

We have abundant evidence. 

24:33

We don't talk about this in the book because you know we were. 

24:36

Well, the book is already 500 pages long, so we were really trying to keep things under control. But we have a lot of evidence and in some of my other work I've published on this issue that the fossil fuel industry has launched many propaganda campaigns to make us believe that climate change is a serious threat or to make us think that renewable energy isn't workable, isn't efficient. We know they've done a lot to support research and teaching programs in universities in order to skew those programs to be more pro-fossil fuel and anti-environmental. We know that, even as we speak, they're funding extensive programs on carbon capture and storage, which I believe can be part of the solution of climate change, but I don't think there's any credible evidence that it will solve the problem. But the fossil fuel industry is funding researchers to work on carbon capture and storage in order to claim that, oh, they have a solution. We're funding solutions and also because it generates goodwill among those researchers who then are reluctant to criticize the industry because their own research programs depend on their funding. 

Senthil

25:41

What are your thoughts on corporate sustainability initiatives? You talked about carbon credits. Many businesses today gets in , they have a sustainability department to cut back emissions and whatnot. 

Naomi

25:55

Yeah, this is a very difficult issue and I'm glad you asked it because I really, really hope that people listening to this podcast become involved in this conversation. So, I certainly know people who are the sustainability leaders at their corporations, this is something I've worked at in the World Economic Forum. We've been bringing together corporate sustainability leaders, and I believe that many of those people are working really hard and are very genuine and want to make their businesses more sustainable and have the potential, at least in some cases, to do that. But I think we also know that if you actually look at the track record over the last 20 or 30 years, it's not that nothing has happened. I think we've seen improvement in some areas, but the scale of the improvement and the scale of the impact is very small compared to the scale of the problem. And particularly if you think about something like climate I mean if the issue is recycling paper in your corporation, or you know a paper company that uses more than 30%, you know post-consumer recycled paper you know that's good and I think we've seen real progress in those areas and I think some of those things are important steps in the direction of a truly circular economy, which is where I think we need to end up in the end. 

27:09

But you know, if you look at climate, whatever efforts have been put in by the corporate sector have had no impact net impact overall. So, the amount of CO2 in the atmosphere continues to climb, the temperature continues to climb, extreme weather events are getting worse. So, nothing that the corporate sector has done has really made a dent in the climate crisis, and that's a very sad thing to say. I wish it were otherwise. I wish that I could say, yeah, all that good work has really made a difference, but the sad truth is it hasn't. 

27:41

And so, I think that those of us who care about what happens in the private sector, who want to work in partnership with the private sector, really have to think hard about this issue and the other piece of this… one of my good colleagues is Auden Schendler, who's the chief sustainability officer at the Aspen Ski Company in Aspen, Colorado. 

28:01

This is a very elite company living in a very elite place. 

28:05

Aspen Ski Company has been a leader on sustainability in the ski industry for decades now, and those of us who like to ski are certainly glad to see the ski industry take these issues seriously. 

28:19

But he will be one of the first people to say in fact, he has a new book coming out and you should interview him on this podcast, actually, because his book would be great, he thinks that corporate sustainability has been a complete failure because many corporations not all, but many they say they care about sustainability. They may change their light bulbs in their factories or their offices, but they don't support the political action, the political policy that would really make a difference and, in fact, worse than that, many corporations are members of the US Chamber of Commerce or National Association of Manufacturers, who actively lobby against meaningful climate policy. So, while they say they care about the climate and they may change their light bulbs the core activities that really make a difference they're on the wrong side and this is a very serious problem for the private sector and it's something that I think really needs to be broadly and deeply discussed. 

Senthil

29:12

Very rarely you see a professor of history of science, so I'm keen to understand your perspectives on artificial intelligence. What do you think will be the impact of AI on societies? Do you think government should intervene and regulate? It seems leaders in the technology space are giving mixed signals about the future of AI and its impact on human societies. 

Naomi

29:37

Well, first of all, I want to reject the word intervene, right, because the intervene implies that, like the market is over here, government is over here and the government is intervening, and that's just a false image. Right, governance and markets have been tied up together since the beginning of time, in fact, one of the things we point out in the book. If you read your Old Testament, there are rules for how markets should operate in the Old Testament. I'm not an Islamic scholar, but I wouldn't be at all surprised to find that there are rules about trade and exchange in the Quran. I mean, many, many religious traditions include rules about trade, about business, about exchange, about treating workers. So, it's not a question of intervening, it's a question of how we manage this complex set of issues. 

30:16

And I think, to me there are two things that stand out in the AI space. You know, looking at it as a historian. The first is and I've heard people in the AI space say this well, it's going to generate tremendous numbers of new jobs. True, the old, other jobs will be lost, but don't worry, because there'll be all these other new, good jobs. Well, people have said that. People said that about all kinds of past automations they said it about. You know the weaving loom, the steam engine, aviation, you know replacing cars or whatever. And it's true, new technologies do create new jobs, but they also eliminate old jobs, and the problem is that the people whose old jobs get eliminated are not the same as the people whose new jobs get created, and so there's a world of hurt and suffering that occurs when people lose their jobs, particularly if they don't have the skillset that would enable them to take the new jobs and so as a society if we’re embracing AI, which we obviously are, we have to think about the dislocations and we have to think about what do we do to keep those people whole? Do we give them social welfare benefits? Do we give them tuition credits so they could go back to school and retrain in another field? If they're over 50, do we say well, if you want to, you could retire, and we'll just give you early retirement? There are many things we can do to help address workers who lose their jobs, but the free market doesn't do it right. You need some kind of governance, some kind of social structure to keep these people whole, and I would really really like to see some leader in the tech community talk about that, because I feel like it's treated in a very dismissive way and that makes me kind of mad. 

31:53

The other thing is about regulation. It seems to me, there is no question that AI has to be regulated. We've already seen the harms that AI can do. And if you think about AI as a communication medium, I mean there's a lot of different ways to think about it. But if you think about, say, ChatGPT as a form of communication, well, I mean we've regulated telephone, we've regulated television, we've regulated radio, we have regulations even on newspapers. 

32:22

The idea that somehow this technology, uniquely among technologies, cannot be regulated makes no sense to me historically. And it was very offensive when Eric Schmidt said a few months back that government can't regulate AI, only the industry can self-regulate. Because you know, we, the industry, we're the only people who understand this. I mean that was offensive. First of all, it's not true. There are many brilliant people, some of whom are my colleagues at Harvard. My own daughter is studying AI. There are many brilliant people who are not necessarily working for Google and Meta, who actually do understand these technologies. 

32:57

Second of all, if they are being used broadly, we actually have a right to know what's in them. We have a right to demand some kind of degree of transparency. These things are affecting the economy, they're affecting our governance structures, they're affecting our health, so we collectively do have a right to understand it, and if we can't understand it, then they have an obligation to explain it to us and it should be regulated, just as many other prior technologies have been regulated in the past. I mean, if you just think about radio, radio was heavily regulated in its early years, and it didn't stop the industry from developing. Radio was fantastic. It experienced explosive growth in the early 20th century. It reached people across the globe, and it was regulated. 

Senthil

33:40

Well, I'll ask one last question before we move into the final segment. Ideas such as free markets, regulations or means to some end, aren't they what should be the ultimate goal of institutions such as businesses or governments? 

Naomi

33:55

Well, that's a great question, because I think that is the ultimate question. I think, if you ask it that way, it's pretty obvious. Most people across the globe want the same thing we want to be happy, we want to be healthy, we want to have enough basic food, clothing and shelter to take care of ourselves and our families, and if we have children, we want our children to have the same opportunities, or better, than we had ourselves. I think that's what everyone, pretty much with some exception, wants across the globe and that should be the focus of government and business policies. How do we sustain human health, human growth, human happiness? I mean, that's really what it's all about, and you know many people. It's a sort of a cliche, but you know on your deathbed you don't count your money, you count your blessings.

Senthil

34:41

Naomi let's move to the segment how I did it, where we asked all our guests three personal questions to draw lessons from their life and career. How do you handle conflicting views or setbacks? You take on very big societal challenges, big businesses, and I assume it's not an easy thing to do.

Naomi

34:59

No, it's not. But you know, I feel that I was very fortunate. I had a very unusual grandmother. My grandmother was a founding member of the National Organization for Women. She was a great feminist, and she was a woman who probably would have had a very great career if those opportunities had been available to her. You know, she was extremely smart, extremely articulate, and I remember her saying to me once, many years ago if someone is trying to shut you up, it means you have something to say. 

35:27

So, whenever I get pushback, especially if it's from, you know, some powerful institution, I always take it oh, we've hit a nerve, you know. And it means that you know you want to think hard. You don't want to offend people just for the sake of offending people. I would never, ever do that. But if people are getting ruffled, it probably means that you're onto something important, and so I take that as a kind of positive feedback and to feel empowered that you know, Eric Conway and I have had a very productive collaboration now for, you know, almost 20 years, and the books we've written together have sold very well. They've been translated into more than a dozen languages We've been invited to speak all over the world, and so, yes, I get pushed back and, yes, sometimes it's painful and, yes, people say mean things about me, but I just feel like all of the you know, all the feedback we've gotten from the world is that people really appreciate this work, and so that's the key thing that keeps me going. 

Senthil

36:22

Can you recommend a book or two to our listeners? 

Naomi

36:26

Well, you know what it's so funny. I actually hate that question because I read so much, and I often read quickly that when I'm put on the spot, I have trouble thinking. But I saw that in the packet, so thank you for giving me a heads up. I just read the most wonderful book. It's called A Libertarian Walks into a Bear. Have you come across this book? 

36:45

It's an absolutely hilarious book, but it's serious and hilarious at the same time. So, it's an investigation of the town of Grafton, New Hampshire, where a group of people, a group of libertarians, decided that they would make Grafton, new Hampshire a free town, no taxes, no rules, no regulations, a libertarian paradise. And guess what? It was a disaster. And it was a disaster for a number of reasons. But one of the reasons was because the bear population exploded because people were feeding bears, even though feeding bears is illegal. People were illegally feeding bears and there was no money to enforce proper bear management. And also, people started leaving garbage all over the streets because there was no money for garbage collection. And so, the bears came and quite happily ate the garbage and sadly attacked some people. 

37:38

So I mean it's a very serious book in terms of what the consequences were for people, but it's written in a really humorous manner which takes the serious story and just makes it so much fun to read but leaves you really thinking hard about well, how do we balance people's desire for individual freedom versus our desire not to be eaten by bears? Anyway, it's a totally great book. It's a fun read, it's not too long. A libertarian walks into a bear. I recommend it to everyone. 

Senthil

38:06

Finally, what are one or two essential qualities you'd expect to see from business leaders? 

Naomi

38:12

Well, I think, first and foremost is honesty, I think one of the things you see so clearly in our work. If you read our book, you will see that American business leaders have systematically lied to the American people for more than a century about a lot of really important things, things they knew weren't true. You know they knew better, but they told a story, a myth. I mean that's why we call our book the Big Myth. They constructed a myth that they knew wasn't true but that served their own self-interest, and for that I think they should hang their heads in shame. So, I just think that every business leader has an obligation to be honest to their shareholders, to their workers, to the members of their community, to their consumers, and not to lie about their emissions, not to pretend that they care about the climate while they're still burning more oil and gas, but to be honest. And I think that's what all shareholders and all consumers should demand from corporations. And I'd like to see a lot more shareholder activism over this basic question of honesty. Honest disclosures about greenhouse gas emissions, about their products, about their supply chains. And then the other thing I think gets back to your earlier question about, well, what is the purpose of having a business anyway. And again, one of the pernicious things that the Chicago School did and left us with was this idea that the only purpose of a business was to increase shareholder value. Well, that's not written in any constitution, it's not in the Bible, it's not in the Hammurabi's code, it's not in the Quran. I mean, the Chicago school kind of invented that idea and yet it's become so pervasive that you will see business leaders say, well, we would like to do more on climate, but you know we have this obligation to maximize shareholder value. Well, let's throw that out. 

39:54

I mean, it's an open question why a business exists. It could exist. I mean, obviously, earning profits is part of it. No one goes into business wanting to lose money, so that's fine. But what do you use those profits for? You should use them to pay your workers well, to make a better product, maybe to support a research and development lab that could decrease the environmental impacts of your work. 

40:18

I mean, there are many things a business can do, and if you go back to, say, the 1950s or 60s, many American corporate business leaders did feel that they had obligations to their workers and to the broader community in which they operated. Many businesses paid for libraries or parks or hospitals, but Milton Friedman told them no, don't do that. He said if you do that, you're using shareholders' money inappropriately. And so, the corporate sector in America really backed off a lot of the community support, the community building. That had been the norm earlier in the century. So, I'd like to see us go back to that earlier norm to reclaim that sense of community engagement, to reclaim the sense that we are actually all in this together and that we are our brother's keepers and our sister's keepers too. 

Senthil

41:08

Great. Thank you so much, Naomi, for joining me and sharing your valuable perspective. It was an honour talking to you today. 

Naomi

41:16

You're welcome and I hope all your listeners read my book and I hope they read the Libertarian Walks into a Bear book too. 

Senthil

41:25

That was Naomi Oreskes. Naomi is a treasure of our times. Her work is particularly important when misinformation and disinformation pose significant risks to business and society. I urge you to read her latest book, the Big Myth from Bloomsbury. It's crucial for us to learn from history, not just to avoid repeating mistakes, but to preserve and strengthen businesses and institutions. If you enjoyed this conversation, make sure to subscribe to it on your favorite podcasting platform. Thanks for listening you.

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