December 7, 2020 BARRON’S 31
games, football games, and casinos? How quickly do they
start traveling? Even after we have a vaccine, how long
will it take? My view is that within two years, things will
be back to normal, but the impact will differ by company.
Some companies went from making a dollar to making
10 cents and borrowed a lot of money. How long will it
take them to get back to making a dollar?
What will the best investment opportunities be,
postpandemic?
There will be huge opportunities in technology, and in
travel and leisure and gaming. There will be huge invest-
ment opportunities in the industries that were hit excep-
tionally hard by the pandemic.
What is the most important public policy issue the
U.S. will face?
Restoring trust in government and authorities. In the
past two years, our trust in systems has been hurt
tremendously. If you are told that a Covid vaccine is
95% effective, are you going to take it?
Certainly. Aren’t you?
Yes. But polls indicate that a third of Americans won’t
agree to be vaccinated. How do we restore trust in our
government and medical community? Will we come to-
gether as a country, or will people stay in their own lane?
This will be a challenge for President-elect Biden.
What is the biggest geopolitical threat?
Alliances have been frayed. Will countries want to start
working together again? I don’t know what the new world
order will be. China wants to become the world’s economic
superpower. Russia and North Korea are creating issues. It
is going to be a challenging time. The rise of nationalism is
the biggest challenge. Are people going to be willing to
sacrifice for the common good, or will they want to tear
down the systems they don’t feel are helping them?
What are the best opportunities in the world of
distressed investing?
Again, the opportunities are in industries that have been
hit hard—energy, retail, leisure, travel, gaming. Bank-
ruptcy filings will increase because of the amount of debt
that companies have taken on. At first, everyone thought
things would be back to normal by the summer. Then it
became the fall. Now it is next summer.
The Federal Reserve has said it will keep short-term
interest ratesnear zero at least until 2023. Do you
expect the Fed to stick with that plan?
Rates are going to be low for a while. I don’t see them
moving up. One issue with rising rates would be the
amount of money the U.S. government would have to pay
in interest expense. The U.S. budget deficit has grown
dramatically in the past four years. We haven’t felt a great
impact from this because interest rates have gone down.
Rates have to stay low if we are to avoid a recession.
You’re an owner of the Milwaukee Bucks basketball
team. Sports teams have been playing in empty sta-
diums, and television viewership is down. What
does the future hold for professional sports?
People want to see live games. Once we have a vaccine,
things will go back to normal, although it may take some
months. People who have been vaccinated will probably
have to show some proof of that. Somehow, we will figure
all that out.
What is the one place on Earth that you’d most like
to visit once the pandemic ends?
It’s not just one place. I would just like to be able to get
back on a plane. I would like to go back to Europe and
visit the places I used to visit. I would love to go back to
Florida—just go and relax. We all complained about trav-
eling. We didn’t realize how much we would miss it.
Has the stock market’s recent strength surprised you?
Yes. There seems to be a belief that everything is going to
get better. There will be a resurgence in the economy in
the next year or two; there is a lot of pent-up demand.
There are reasons for the market’s strength. But the mar-
ket is a bit overexcited about where things are today.
Thanks, Marc.
—Lauren R. Rublin
STEPHANIE KELTON
Professor of Economics and Public Policy,
Stony Brook University
Stony Brook, N.Y.
Barron’s: What will be the major investment
opportunities in the aftermath of the pandemic?
Stephanie Kelton:Greening economies is a huge oppor-
tunity for profitable investments in the private sector.
Governments can lead on climate, but there are a lot of
profit opportunities that will come from that.
What are some of the big long-term consequences
of the pandemic for society and the economy?
We’ll have big changes to how we live and work. Some of the
things people anticipated early on, such as mass migration
from cities, were overblown. But how we work is definitely
changing. I did a panel with Gary Cohn [former COO of
Goldman Sachs and head of the National Economic Council
under President Trump] the other day, and he wondered
whether he would ever get on a plane again to do a one-hour
meeting. I agree with him that businesses are having differ-
ent ideas about how to do meetings and whether we need
people to be in the office every day. That could have long-
term disruptive effects to air travel, commercial real estate,
downtown restaurants, and such. We also know we’re going
to lose potentially half of all small businesses. That’s going to
have a big impact on everything from corporate concentra-
tion to the makeup of local communities.
One of the encouraging things is that Americans
have saved an extra $1.3 trillion since the pandemic
began. How will that affect the economy, especially
once a vaccine is distributed?
We are kind of fooling ourselves with the accumulated
household-saving story. We have this toxic set of events
unfolding: first, the withdrawal of income support, so the
savings available to many households are now depleted.
You turn on the news and you can see vast lines of cars of
people lining up at food banks. You can tell by looking at
the cars that these people have never been to food banks
before. A quarter of Americans are now food insecure.
You have mortgage- and student-debt forbearance and
eviction bans all ending at the end of the year. If this leads
to a wave of missed payments, defaults, and evictions, it
could eventually spill over into another financial crisis.
The other hopeful data point has been the strength
of the jobs recovery. What do you make of that?
The recovery in jobs surprised many of us in terms of
how quickly we clawed back the 36 million jobs that were
lost, but we’re still down about 10 million. The concern is
that without around $1 trillion in aid for state and local
governments, there could 5.2 million job losses, accord-
ing to the Economic Policy Institute. We have been living
on borrowed time with the money from the Cares Act,
but that’s coming to an end. The question is how many
of the jobs that have been recovered remain in place as
the savings that were accumulated dissipate. State and
local governments are just getting going on budget cuts.
What are some of the potential policy responses
that the Biden administration could do even without
the cooperation of Congress?
Canceling some portion of student-loan debt, if that can
be done, would free up some cash flow for more than
40 million Americans. You can do some things through
executive action, but I don’t know if you can do enough
without action from Congress. Again, if all you’re doing
is deferring rent and then expecting people to make all
the missed payments, that won’t work.
People are asking, “how can the Fed get more creative?”
I hate to see it. I don’t want to see the central bank “get cre-
ative” because it shouldn’t have to. Congress should do its
damn job. But in the absence of Congress doing its job, you
take advantage of every institutional tool that you have.
Imagine we’re two years in the future. Everyone has
been vaccinated, the virus is gone, and the economy
has recovered either completely or most of the way
back to where it was. What should be the big policy
priorities for the U.S. government in that world?
When you have a crisis like this, you have two options: go
back to normal, or “build back better.” One of the things a
lot of people have recognized since the pandemic began is
that there are structural deficiencies in the way we have
organized health care, global supply chains, the distribu-
tion of income, and such. Once we get past relief and onto
recovery, then you can focus on investments that lead to
real reforms. The $2 trillion that Biden wants to spend on
climate change is both recovery and reform. Same with the
$700 billion on manufacturing. That’s recommitting to the
importance of manufacturing and research and develop-
ment. Then there’s the $775 billion on education and care.
Those would go a good distance to fundamentally trans-
forming part of the labor market, trade, and climate. One
shouldn’t be dissuaded from staying focused on an agenda
that includes those things on the other side of Covid.
Finally, where would you like to go once the
pandemic is over and it’s safe to travel again?
My kids are still young enough that places like Hogwarts
are superexciting for them. So, going to Universal Studios
in Florida would be the thing for them—maybe not the top
choice for me, personally, but giving them a family vaca-