MGI Research

Forward Thinking on what deep history might tell us about today’s turbulent times with Alan Taylor

In this episode of the McKinsey Global Institute’s Forward Thinking podcast, Janet Bush talks with Alan M. Taylor. Taylor is C. Bryan Cameron Chair in International Economics and distinguished professor of economics and finance at the University of California, Davis. He’s also a research associate at the National Bureau of Economic Research in the United States, and a research fellow at the Centre for Economic Policy Research in Europe. He covers topics including:

  • The very long-term economic impact of pandemics
  • Potential trends in the global balance sheet
  • The changing nature of globalization

An edited transcript of this episode follows. Subscribe to the series on Apple PodcastsAmazon MusicGoogle PodcastsSpotifyStitcher, or wherever you get your podcasts.

Janet Bush (co-host): Michael, when you undertake an MGI study, how many years of data, on average, do you think you try to gather?

Michael Chui (co-host): Ideally millennia! But seriously, I guess it depends on the topic. But really we are looking for a sufficient time period to get a solid perspective on the trends as they have unfolded. In the case of tech, where I do a lot of work and where things move pretty fast, it might be difficult to get comparative figures for more than, say, 20 or 30 years.

Janet Bush: Yes, that sounds reasonable in the case of tech. But a key study that our podcast guest today worked on has compiled data back to—wait for it—the 14th century, and that’s a study to explore the economic aftermath of wars and pandemics.

Michael Chui: That’s amazing. I was just joking about millennia, but I am really excited to hear about what they found.

Janet Bush: Welcome to the podcast, Alan.

Alan M. Taylor: Hello, Janet, thanks for having me on.

Janet Bush: You’re welcome. I want to start with a bit about you. You read maths at Cambridge and you took your PhD in economics from Harvard. How did you end up in California for your career?

Alan M. Taylor: I seem to remember in my final year at Cambridge, I went to talk to one of the tutors, and he gave me some advice. I was thinking of going to do a PhD in the States, or to study in the States, and he just said, “Go west, young man.”

And I guess I just kept on doing that. And so kept going in the same direction. But a combination of personal and professional opportunities just dragged me in this direction with my family. So I’ve ended up here.

Janet Bush: Do you think of yourself nowadays as a Californian?

Alan M. Taylor: Yeah, strangely enough. I mean, it is the place where I’ve lived the longest, so eventually it rubs off on you, and it’s not a bad place to roll into. You keep rolling downhill, and you end up on the West Coast. Looking around, very few people seem to leave. They just get stuck here.

Janet Bush: When you think of yourself as an economist, what kind of economist do you think you are? And what do you find so fascinating about it?

Alan M. Taylor: That’s a really good question. I’d list my main field, I suppose now, as macroeconomics. But that’s a big catchall term. It can mean something very narrow. You work on a particular area. I tend to be a bit broader than most, which may be to my detriment.

I do quite a lot of work that’s international, that overlaps with finance, and a lot of my approach is empirical and uses historical data. I do tend to have my feet in many different places. Which sometimes means my projects take a long time, or there’s a lot of connections to be drawn.

But I feel that I’m kind of interdisciplinary, but with a major focus on, I guess, macro and finance.

Janet Bush: You talked about going back in history. One of your very well-known works studies the rates of return on assets, actually back to the 14th century, and it focuses on 15 major pandemics and significant armed conflicts. And obviously that’s incredibly relevant to the era that we’re in now. You found that the aftereffects can last for about 40 years? Can you tell us—it’s slightly pessimistic for us now, but can you tell us more about that analysis?

Alan M. Taylor: In a way, that’s a paper that’s emblematic of the way I approach a lot of questions. Credit has to be given to the original work of others, culminating with a colleague at the Bank of England who’s been at a postdoc at Yale, Paul Schmelzing. He’d collected a lot of data on interest rates, going back to the 14th century, including, deep down, some work by my UC Davis colleague Greg Clark, and others.

Lots of people have been interested in studying that. I mean, think of Smith, or Ricardo, and Marx, and the classical economists: they were very concerned about the rate of profit and the rate of return, and how it was changing over time.

So this is an enduring question. But getting the data to be able to study the very long run, and to study rare events like pandemics and wars, you’re kind of just statistically trapped unless you can get an extremely large data set, because these events are not so numerous.

That was work I did with my colleagues Òscar Jordà and Sanjay Singh at Davis. The goal was to look at medium-term responses. We know that over time, rates of return have been falling for centuries. We think, presumptively, they can’t just go infinitely negative in the very long run. But they’ve been coming down towards zero, and maybe the real return has even nudged below zero; we may talk about that a little bit later.

But here the focus was on what happens in the decades after these major disruptions, either coming from pandemics and wars. And the interesting finding, or main finding, was after pandemics the rate of return tends to be depressed. After wars it tends to be elevated. So that kind of goes in the opposite direction. So one point was to just say, “We can’t think about these two events as being similar.”

I guess the economic intuition is, at least historically, pandemics tended to destroy the labor force; wars tended to destroy the capital stock. At least to a neoclassical economist, it would kind of make sense that after a pandemic, labor is scarce and wages are going to go up. And that’s going to be adverse for capital owners.

In fact, the very greatest pandemic of all, the Black Death—our colleagues over in history departments have written about the social and economic aftereffects of the Black Death, particularly in England, leading to a lot of political disruption, reflecting the shift in bargaining power between those groups.

It was kind of interesting to go through the data, do all these econometric exercises, and end up in that place that lined up with what the historians have been saying based on the narrative sources.

Janet Bush: On this point about labor scarcity, I guess with the Black Death, or the Spanish flu, it was that a lot of people died, a lot, and that was part of the labor scarcity story. But something different, possibly, is happening this time. Which is that people have taken stock of their lives and thought, “I don’t want to be on this treadmill anymore. I don’t really like my job, and I’m just going to just opt out.”

There seems to have been that psychological response to the pandemic. What do you make of that?

Alan M. Taylor: That’s an interesting point. I hadn’t thought about the parallels there. The economic mechanism is withdrawal from the labor force, and from that standpoint, it doesn’t matter whether you’re just exiting for a happier life or exiting for the next life. I think there may be something to that way of thinking about it.

Obviously, the response we’ve had, to, within a year, have a set of vaccines, or some vaccines that work, and we haven’t seen the potentially extremely large death tolls that were seen, or mortality rates that were seen, in prior pandemics.

There’s also been a difference in the incidence by age. Say the Spanish flu was something that affected children and young people a lot. COVID has affected elderly more. So that means differential impacts on the labor force as well.

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We’ve had some kind of a labor force effect, bigger in some countries than others. I know from listening to some policy discussions recently back in England, and others, pointing out that Britain seems to have had a particularly large exit from the labor force. It’s different in other advanced countries and elsewhere.

I think the backdrop is also different demographically. If you go back to earlier centuries, certainly go back to the Black Death, the backdrop is Malthusian: you’ve got a population that’s not growing very rapidly at all, and so it’s an absolute decline.

Today we’re against a backdrop of a still fairly rapidly growing global population. Relative to the background trend, this may have smaller effects. There’s a number of mitigating factors. We’ve got a shock that affects mostly the old. We’ve got better medical and nonpharmaceutical responses to it to contain it. And we’ve got welfare state, and so on and so forth, and we’ve got a much stronger population growth rate trend in the background.

So all of those things make it different. One of the frustrations, I guess, both doing large-scale quantitative history like this, both a frustration for me, as a practitioner, and other people listening to it, is, “Well, what’s different this time? There’s always these exceptions.” But I think that’s what makes it interesting and an intellectual challenge.

Janet Bush: Obviously, it’s very early days, and you’re looking at very long timescales. You talk about the natural rate of interest declining for decades. After reaching the nadir about 20 years later, it ends up 150 basis points lower than had the pandemic not taken place. And then four decades later, it returns to where it would have been.

So they’re very, very long timescales. What I was interested about is that you and your fellow authors say that you found this “staggering.” Why did you find that very long period of aftershocks staggering? What was surprising about it?

Alan M. Taylor: I think it was just the sheer persistence. I think perhaps that reflects the underlying biases of economists who think, “Well, we may have a recession, or change in some price or natural resource shock, but economies adjust.” We like to think, or pretend, that, “Well, those shocks are probably pretty quick because economies are resilient, and why would the disequilibrium last for years or decades?”

But I think there is a countercurrent in economic thought, which maybe is getting a little bit more traction now. Maybe it reflects, to some degree, the rise of behavioral economics. Which is that some shocks leave an imprint in people’s minds and behavior.

Some of the famous research in empirical finance shows that depending on your childhood or young adult experience, if you lived in good times or bad times, that shows up in your saving behavior as a 40-year-old or a 50-year-old.

That was the backdrop to the conclusion in our piece, that if we focused on the physical manifestations—are people alive or dead? Are they in the workforce or not? What happens to capital?—that’s only one dimension of this response that we’re seeing. And maybe the thing that will really link all of these episodes across decades and centuries is more the behavioral response. Even if today we’ve got more survivors and less disruption, it is a psychological change for everyone who’s lived through it.

If I think of my parents, they were born in the Great Depression, they had a particular attitude about debt and being circumspect with finances and thinking in certain ways about what was prudent. And so maybe that was the final message at the end of the paper: that we could have, in response to this rise—well, the pandemic, but rise in global uncertainty for other reasons, political, the war in Ukraine—we could be entering a period of more precautionary attitudes on the part of people when it comes to their finances.

That will show up in asset prices. There’ll be more people trying to save, given the same investment opportunities. That’s going to drive down the natural rate of interest for a different set of reasons. And that could be much more persistent than any technological or resource-driven shock.

Janet Bush: We’ve just been updating MGI’s work on the global balance sheet, and we’ve seen that, over the course of decades, quadruple in size. And our early findings are that wealth on paper went up by another hundred trillion during the pandemic, so in 2020, 2021, largely because of the amazing, unprecedented support that governments felt that they had to give to sort of put a floor under economies.

But interestingly, in 2022—and let’s come back to the war in Ukraine, and how that sort of plays into all of this—but in 2022 we’ve just seen the global balance sheet shrink a little bit for the first time. It’s difficult to disaggregate what’s happening now, and it’s very, very short term, from the pandemic, and the war in Ukraine, and a general rise in contentiousness in politics, and the rest of it. But what do you make of prospects of that very sustained rise in the global balance sheet and whether we might be beginning to see something different happening?

Alan M. Taylor: Obviously, there’s a lot of noise in the short run, and you’re asking me, in a way, to predict the future. I like to say, as an economic historian, “Gee, it’s hard enough for us to predict the past, let alone the future.”

Obviously, 2022 markets have gone in kind of the opposite direction, as they do tend to sort of self-correct. Now we’ve probably taken a few trillion off global wealth, on paper. In the medium term, I think the previous point I was making links into this. Which is, we do have more and more saving coming down the pipe all the time. We have inequality; rich people save. We have aging people; aging people save. We haven’t just got that trend in the advanced economies; we’ve got that trend building up in more and more developed economies.

I was just looking at one of your publications on global trends, and just looking at age, at the demography for India and China. China is going to age even beyond Europe and the US in the next 30 or 40 years, and India rapidly coming along. All of those populations are going to be saying, “Well, we need to try to make some provision for our retirement.” There may be state pensions in some places, not in others. They may not be generous enough. There’s going to be a desire to save.

But of course, that’s going to get very crowded. Because we’re going to have billions of people all trying to save at the same time, in more countries and more places. That’s an insatiable desire to hold assets, and who’s going to supply them?

So the balance sheet is, in a sense, forced to grow. Maybe there’ll be more equity, maybe there’ll just be more debt. It’s hard to make a prediction there. But that’s why I think when you see rising debt, you have to ask, “Why is it rising?” There is obviously a supply of debt. So is it just crazy borrowing? But there’s also a demand for it. Someone is willingly holding this. And there’s a tension between those forces, historically and going forward.

I think it will trend up. In just the last year or two, it’s been a lot of whipsaw. The state had to step in during pandemics and take action. We’re now going into a global, maybe, economic slowdown, so there’s going to be different trends in emerging markets who maybe need to release or use their reserves and sovereign wealth funds, so they’ll be selling assets to smooth out a different shock. And other countries are doing temporary things to deal with the energy price shock.

A lot of that feels like short-term noise. Whereas, medium to long term, I’m thinking, “Where is the demand and supply for savings coming from?” I think it’s clear there’s going to be a lot of supply for savings, whether you think that will be offset by an increase in demand for savings.

Are we going to have more expenditure on new technologies, on a green transition, on infrastructure that will soak that up and then some, and perhaps bid up the interest rate? That’s harder to say. I’m not seeing it yet, but we could end up there.

Janet Bush: If there’s a lot of precautionary saving, and partly this psychological shift that we saw possibly in the pandemic, but going forward, with a lot of noise and turbulence in the world, what does that say for growth?

Alan M. Taylor: The baseline is that growth is going to be in a more sluggish position. It does feel like, with political conflict, both national and global, and living with the—again, we’re back to hysteresis, or persistence—the drag of the global financial crisis, the austerity, the sense that there was missed opportunities there to get the economy going fast enough. Maybe we’ve forgone some learning, some innovation, some investments we could have made, the effects on people out of the workforce, and now, with the pandemic, children out of the classroom.

There are going to be scarring effects from these major negative shocks that are completely out of proportion to what we’ve seen in the 2001 recession, ’91 recession, ’81–’82 recession, ’73 recession. I mean, we’d love to go back and have those recessions.

Those were tiny little blips that didn’t leave the same kind—maybe ’81–’82 was a bad one; we thought that was awful at the time—but they didn’t leave anything like the scarring effects, and maybe in some communities, some particular areas, like where I grew up, in a coal-mining area of Yorkshire, in particular places you could see that. But when the pandemic hits, or the global financial crisis hits, it’s like Yorkshire everywhere. That’s really bad, right?

And so it feels like we’re on a different scale here. And we can’t fully see how quickly that will heal in the future. If it does, then maybe that will go side by side with government investment in the green technologies or in the infrastructure, or whatever.

Then we might see a more optimistic outcome. Aside from that, we just don’t know what human ingenuity will produce. We didn’t know the steam engine was coming, or the silicon chip. But they came, and suddenly, boom.

Janet Bush: One of the thoughts that came into my mind about the aftermath of pandemics was that something quite different is happening this time, and it’s how fast and furiously digitization is spreading across our world and our economies and the way we live.

I don’t know how that might affect things. Clearly, during the pandemic digital technologies enabled people to work and businesses to run in a way that just wouldn’t have been possible before, in a pandemic like that. So I wonder whether digitization and advanced technologies and all the technology in our world changes the equation.

Alan M. Taylor: It’s hard to say. Obviously, we’re here on this podcast, and we’re on different sides of the planet, and the audio is incredibly good, and we can do our Zooms and so forth. I think all of that is probably an offsetting benefit from what was otherwise a very negative event.

How it’ll play out in helping us reorganize? I’m sure it’s got to have a net positive benefit. But it may take some time for us to see where it will show up.

There may be some big realignments going on economically, in terms of how the global economy is organized. There’s a lot of stress right now, and political uncertainty about, are we leaving behind the mythical “Earth is flat” world, where globalization was driven by economic arbitrage, and less by concerns about politics and resiliency.

Now it seems like, “Oh, well, you know, can we rely on that energy supplier?” And “Is Russia really going to be reliable for gas?” Or “Is China going to be reliable in terms of political risk, or COVID risk, or some other issue that could disrupt these supply chains?”

So we had it fine-tuned for efficiency, but not very well thought out in terms of resiliency. So if all of that has to be rearranged, our technologies, like the digitalization you’ve spoken of, will facilitate reorganizing our supply chain world in better ways, I would think.

It doesn’t erase the difficulty of resetting all of those connections. That may still require investment in new plants and so on, and that’s potentially a source for new investment and growth going forward. But it’s at a cost. We’re having to rethink. We’re absorbing costs now to defray uncertainty in the future. It’s not an investment necessarily for growth, per se. It’s an investment for reduced risk. Which is important.

Janet Bush: MGI recently published a paper which asked, Are we on the cusp of a new era? We looked at postwar history to try and ascertain what today’s turbulence means, and what might come ahead. And we found three similar periods that we call “earthquakes.”

That was the immediate aftermath of World War II, the oil crisis in the early ’70s, and then the breakup of the Soviet empire in the late ’80s. And like an earthquake, each one changed the global landscape with a sudden release of powerful underlying forces that had been building up around a fault line.

They had the effect of sort of changing the rules of the game, if you like, the key features of our world. And then they were followed by very stable, relatively stable periods during which a great deal of progress happened.

You and your colleagues have taken a very long view of history. And I’d be fascinated to know whether you think that the combination of the pandemic and the geopolitical situation, the war in Ukraine, the energy shock—is this an earthquake that could change the game, change the rules, leading to a new era with different characteristics?

Alan M. Taylor: I think that’s a distinct possibility. In addition to those three postwar earthquake examples, I think historians would think maybe going even further back, to the Great Depression or 1914. Maybe 1914 is the scarier one to use as a counterpoint.

In a way, the thought is, “Are we coming to the end of an era of globalization that has gone on for 50-some years or longer? And are we coming to the end of a unipolar kind of moment?” You know, so now we’re thinking of globalization 2.0, and the US as the hegemon; then it was globalization 1.0 and Britain as the hegemon.

Those seem like even bigger earthquakes, relatively speaking, than some of the events in the postwar period. There was a Cold War, and the Soviet Union had a great deal of military capacity, but economically, it was never on track to be a threat to the US.

That kind of fizzled out in a way that maybe we didn’t fully appreciate at the time. And now we’re sort of seeing—again, Russia’s military capability is capable of causing disruption out of proportion to its economic significance on the world stage.

The parallel, the worrisome parallel, is that in 1914 people just had no idea that all of the things they took for granted about free trade, and the movement of capital, and organizing production on a global scale in the most efficient way, and ignoring any risk of those links being severed by geopolitical events, all of that was a huge shock to the elite.

If there had been a Davos in 1913, they would have been very surprised by that turn of—I mean, there was an equivalent to Davos. You can go back and read that famous passage from John Maynard Keynes, or any kind of writing of the political and economic leadership of the time. It’s very clear how unanticipated that was.

To the historian or the economic historian, that’s the parallel. But it also feels like we’re a bit more wise about it this time. At least we’ve had five or six years of people worrying about, “Has offshoring gone too far? Are we going to reshore? Friendshore? Blah-blah-blah-shore?”

It’s out there. It’s understood that there are trade-offs. Maybe we have learned something from the events of the early 20th century, that we understand that even if there are economic benefits to changing the way we do transactions and the way we organize our system of production, there are risks.

There are diversification benefits, and putting all your eggs in one basket can be very, very risky, even if sometimes people, organizations, countries inadvertently do that. But that’s the disruption going forward that potentially has growth implications, political implications, implications for markets and interest rates, and everything.

Janet Bush: We’ve just, at MGI, published an updated view of global integration. And while there’s a lot of speculation that the world is decoupling or deglobalizing, it seems to us that globalization is actually evolving rather than retreating.

Trade intensity has definitely stabilized, trade in goods, but other flows of intangibles, of services, of people, what we’re calling flows that are tied to knowledge and know-how, are really growing quite a lot. And there isn’t a single major region in the world that is not dependent on others. So there may be some recalibration, but it’s going to take time, and it’s going to be quite difficult. Do you buy that argument?

Alan M. Taylor: I do. There’s partly almost an arithmetical feature of this. Which is over time, economies do become more focused on production and consumption of services and more intrinsically nontraded things.

So it may seem like, “Well, why is trade not zooming up to infinity?” Well, it sort of physically can’t. There was always going to be that kind of likelihood, the potential for it leveling off. And we may be entering that stage where trade relative to GDP is at some high but sustainable level.

The more interesting feature of what’s going on now in response to some of these shocks, and maybe for the next decade or two, is the sense that we’re going to see the structure changing. The aggregate volumes may not leap the way they did in the ’50s or the ’60s or the ’70s.

But we’re going to see big shifts for political or economic reasons, as new countries enter the globalization era for themselves, countries that were maybe previously very poor, very landlocked, in some kind of political trouble, or otherwise not engaged in the global economic system.

It seems to me the East Asian Tigers, those famous economies that embraced outward-looking development in the ’60s and ’70s, and Japan: that set the stage for China and other middle-income countries in Southeast Asia and elsewhere to follow that template.

But it’s not like the list of countries is exhausted. There’s a massive number of countries—still in Asia, but also in Africa and Latin America—where that potential hasn’t been fully realized. In particular, for the last 20 years, the entry of China into that competition for global markets has maybe set back the aspirations of lots of other countries.

That could be about to change for all of the political and economic reasons that people have been talking about as we come into this new era, post-COVID, post-Xi. What will China’s role be in terms of economic globalization going forward? Could be very different.

Janet Bush: You’ve mentioned green technologies. And in order for us to make the net-zero transition a reality, we really do need the global flows to flow smoothly around the world. Because the minerals that are needed for, say, electric vehicle batteries or solar panels are found in very few places, sourced in very few places, and processed in even fewer. That, to me, sounds like the interdependency will continue at least for a while. And that we have to keep working together to make net zero a reality.

Alan M. Taylor: I think that’s the right way to think about it. In the short run, it’s very difficult to just dig a hole in the ground and find new sources of lithium or rare earths or whatever it is. Whether it’s having enough energy now, based on our carbon dependence, or finding new sources of energy in the future, or just developing our technologies, open markets, global free markets for certain key goods, are going to be central, absent new sources in preferable or safe locations. They’re not going to magically happen right away. They might come online, but you can’t take that for granted.

So that is a political risk. If you think back, again, economic history is sitting on our shoulder here. If you think about the tensions leading up to World War I, but especially World War II, a huge background force in World War II, for multiple combatants, was access to resources. Whether it’s Germany trying to push into the Caucasus to get to the oil fields or Japan feeling like it’s stretched in terms of its access to energy. Lots of other factors, too.

That showed up in the way the world responded in the ’40s and ’50s, in the, to use that hackneyed phrase, “the international rules-based order.” That actually is a thing that we built in the ’50s and ’60s to say, “Look, we had these wars. And we realized that one of the major drivers of conflict”—and it goes back to colonial times and way back, millennia—“one of the major drivers of conflict has been fights for resources.” You know, 1870s, or Franco-German wars over who’s going to have the coal mines and things.

It’s a central tenet of the last 75 years that we may have our political disagreements as states, and we may have rivalries, but we’re still going to play by those rules and not start saying, “You can have coal; you can’t”; “you can have oil; you can’t”; “you can have lithium; you can’t.”

Because we’ve always understood that if you cross those red lines, then people are starving, or freezing, or whatever they are. That’s going to cause major conflict, no matter what. So I think that is one of the pessimistic takes, if you like, of the current moment. Are we going to forget that lesson and go back to rivalries over commodities and vital resources?

I guess I’ve just made it sound worse than what you said. For you, it was like, “Is this going to hold up our transition to green technology and a happy future?” I’m just worried it’s going to take us back to the medieval period or something.

Janet Bush: Well, I needn’t ask you what makes you pessimistic, because I think you’ve answered that one.

Alan M. Taylor: On the whole, I’m not a pessimistic person. But I do think our politics, globally and nationally, are probably the one factor where we’ve sort of had rules of the game about how we interact with each other as countries, as states, and also how we interact with each other as individuals within the states. And it’s not clear, though, that the center’s going to hold there. But that indeed is my source of pessimism. But let’s get that out of the way and talk about optimism.

Janet Bush: What makes you optimistic in this current rather difficult time?

Alan M. Taylor: I think the main source of optimism now is what’s carried us forward for the last 50 or 200 years to a better place than where the human race began. Which is human capital and our knowledge, our education, our scientific and other nonscientific learning about not just how to manage the world and the physical environment, but understanding our economics, our politics, and social and biological things—the just phenomenal advance in knowledge.

When you see where we are now, in the last couple hundred years versus the previous millennia, you have to think, “Well, I’m really lucky to be alive now.” If we can just understand that basis for what we have, and build on that, there’s a huge source of optimism.

Because we have by no means made the best use of all of the things that people on this planet could do in terms of achieving the highest levels of education and understanding. We’ve got so much upside there, if we can only find a way to harness it.

Janet Bush: Speaking of human capital, you became an economist. Do you have anything else in your mind that you would have been if you hadn’t been an economist?

Alan M. Taylor: That’s a good question. I’ve obviously jumped around a bit. I started off in mathematics and moved to economics. I kind of have a nerdy bent despite having played sport and done other things, and dreamed of playing cricket for England. But those were probably not realistic things.

I guess in my old age now, I’m reading a lot more stuff—encouraged by a friend, who’s also into this—about intelligence work and security. And certainly my intellectual ancestors at King’s College, Cambridge, and elsewhere, who went down that path, another famous Alan [Turing]; they seem like inspiring, heroic figures, maybe working in the background, but doing important work. So maybe something in intelligence, something like that could have been really, really an interesting way to apply my nerdy skills in a different way.

Janet Bush: Well, I have to posit the possibility that you are actually working in intelligence, but you can’t tell us about it.

Alan M. Taylor: Oh, yeah. “I couldn’t possibly comment.”

Janet Bush: My final question, which we like asking, is, if you had one piece of advice for our listeners, what would it be?

Alan M. Taylor: That’s a really good question. I’ll try to condense some wisdom from economics, from history, even mathematics, which is, “It’s really hard, but try to ignore the noise and focus on the signal.” And I think that’s really good life advice in a lot of ways.

Whether it’s investing in markets or the consulting work of McKinsey, in trying to see through the fog of data, it’s important in our personal lives not to get disturbed out of equilibrium by some short-run event or so on. I feel like I’m constantly clinging to this idea, during COVID and these times of political disruption. And saying, “What’s really the long-run picture here versus all of this extraneous stuff?” And I think I’m going to be trying to hold on to that advice in the years ahead.

Janet Bush: Absolutely. Well, Alan, it’s been absolutely fascinating, and thanks very much indeed for joining us.

Alan M. Taylor: Thank you, Janet. It’s a pleasure.

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