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Well folks, it looks like due to a surge in COVID-19 cases across America, there’s a high chance that many states will implement a second lockdown. Even though the coastal states are fairing better than the heartland states, it seems like an inevitability that the virus will spread everywhere again. It’s kind of sad that

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The sociologist Sudhir Venkatesh spent years studying crack dealers, sex workers, and the offspring of billionaires. Then he wandered into an even stranger world: social media. He spent the past five years at Facebook and Twitter. Now that he’s back in the real world, he’s here to tell us how the digital universe really works. In this pilot episode of a new podcast, Venkatesh interviews the progressive political operative Tara McGowan about her digital successes with the Obama campaign, her noisy failure with the Iowa caucus app, and why the best way for Democrats to win more elections was to copy the Republicans.

Listen and subscribe to our podcast at Apple Podcasts, Stitcher, or elsewhere. Below is a transcript of the episode, edited for readability. For more information on the people and ideas in the episode, see the links at the bottom of this post.

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Welcome to this special bonus episode of Freakonomics Radio. As you probably know, we’ve been expanding the Freakonomics Radio Network, adding new shows now and again. You’re about to hear the pilot episode of what we think might be another new show worth adding. We’d love to hear what you think, so when you’re done, drop us a line at radio@freakonomics.com.

The first thing you’ll hear is a brief segment in which I interview the host of this new show — a person you may recognize if you’ve read his amazing book Gang Leader for a Day or the chapter in Freakonomics called “Why Do Drug Dealers Live With Their Moms?” That was based on research done by the host of this new show, Sudhir Venkatesh, who during graduate school in Chicago spent several years embedded with a gang whose main business was selling crack cocaine. Hope you enjoy this special episode — and, again, we’d love to hear what you think.

Sudhir VENKATESH: I’m Sudhir Venkatesh and I’m a sociologist at Columbia University. 

Stephen DUBNER: So, you’re a sociologist, but you also call yourself an ethnographer. What’s the difference?

VENKATESH: An ethnographer is that fancy academic term. And all it really is, is that I hung out with people for a long period of time.

DUBNER: So, in addition to the crack-selling gang in Chicago, name some other groups that you’ve hung out with over the years.  

VENKATESH: I studied sex workers and I studied gun traffickers. And in New York City, when I came here to get a job at Columbia, I began studying the wealthy, the children who were inheriting lots of money — for me, a secret world.

DUBNER: And then around five years ago, if I have the timing right, you wound up embedding yourself in a very different kind of ecosystem, yes?

VENKATESH: I was very surprised to find out that Mark Zuckerberg put Gang Leader for a Day, the book that I wrote, on his monthly reading list in 2015. And that led to a conversation between me and Facebook. And eventually I went over and went into another world that was really pretty secretive for me.

DUBNER: And what did they want from you?

VENKATESH: I was in a part of Facebook called PAC, Protect and Care, and the team there — which is made up of designers and product managers and engineers were there to help deal with the 27 or 28, at that time, problems that caused negative experiences on Facebook. There are some areas where we were better and some areas where we didn’t do so well. So, bullying, harassment, hate speech — I’m not sure we really moved the needle. But we were pretty good at spotting terrorist activity, and it was really quite amazing.

DUBNER: If you were to rate Facebook on its intentions to address these systemic problems with the platform, and the scale went from zero to 10 — zero being “We want to do some really serious hand-waving about addressing these problems,” and 10 being, “We care deeply about each of these problems and we actually want to solve them,” — where do you put them? 

VENKATESH: You know, the view from that bubble is always, “We can do it. We’re the smartest people in the room.” And as soon as they find out they need other smart people or this is a lot more complicated, then you start to see their interest wane a little bit. They also are at a place where the business model makes it very hard for them to admit vulnerability once they get that big. There’s just too much working against doing the right thing for society.

DUBNER: So, you went straight from Facebook to Twitter. How would you describe Twitter’s main problems compared to Facebook’s main problems?

VENKATESH: On the one hand, it’s a very simple ecosystem. But it’s an awfully difficult place to try and really effect change because you’re dealing with one of the core issues, which is I think how nice do we really want to be with each other?

DUBNER: There has been pretty sizable backlash against social media in particular, but really the entire digital universe. How deserved would you say it is overall?

VENKATESH: I think it’s necessary because for 20-plus years, the entire industry has gotten away with very minimal oversight and regulation. And I think that’s a real problem. So, I’m really happy that we care. On the other hand, I sometimes feel like a lot of the voices out there — whether scholars, activists, journalists, etc. — are shouting in the wind. And I think they could be helped and empowered by having their cries be a little smarter. 

DUBNER: Now that you’ve essentially left that virtual world and emerged back into the real world, you had this idea for a podcast that, I guess as I see it, is a bridge between the two. Why would you say this podcast is particularly important right now?

VENKATESH: There are so many ways in which technology has impacted our life. I mean, it’s everywhere. It’s dating. It’s crime fighting. It’s how we pay for the bus. And I actually think a lot of us can be helped and be empowered if we understand a little bit about how tech works. I think those kinds of companies created platforms, tools, and products that are just out of their control.

DUBNER: Tell us a bit about what kind of people you’ll be speaking with for this podcast.

VENKATESH: Some folks, probably, we may know their name and we may have read their book. I also want to get behind the scenes and talk to the folks that we may not think about. So, the person who’s managing what’s called “trust and safety” in a company, how do they create the policies and enforce them? The designers and the engineers who try to shape our experiences, how do they think about what we want?

DUBNER: The episode we’re about to hear is an interview with the Democratic political operative Tara McGowan — and as much as I personally try to avoid politics and political operatives, I found it absolutely fascinating. Tell us why you chose to interview her for this episode.

VENKATESH: I first met Tara when I left Facebook and I wanted to try to figure out how technology is reshaping our political system. And I was a consultant with Tara. And I thought she would make a really good person to kick off a discussion of politics and technology because on the one hand, she was really good at listening to the opposition and getting insights, and she was simultaneously very critical of her own team. And I wanted someone who had that level of awareness, because I think she might be able to help us not only see the past, but where we’re heading into the future of democracy as well.

DUBNER: A lot of listeners won’t know Tara McGowan by name but if you followed the 2020 presidential election even a little bit, you’ll know about one of the chief mistakes she was involved with — the app that was used to tally Iowa caucus votes, yes?

VENKATESH: Yeah. There was an app that was supposed to magically transform the political experience, and it just didn’t.

DUBNER: And when you say “transform the political experience,” that includes just counting votes, which it also failed to do, yes?

VENKATESH: Yeah. There was a lot of promise there — which is another hallmark of modern technology, is outsized expectations: that it’s supposed to do the ordinary things great and supposed to do the extraordinary things as well, and sometimes it just doesn’t do either. If there’s one thing I could change inside a lot of these companies, it’s a sign — literally a sign — that appears on the wall when you walk into their offices, which says, “Move fast and break things.” I think that’s okay if you’re playing Legos. I’m not sure that’s really what we want if we’re talking about families and democracy and society in general. 

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Sometimes what’s new about our digital technology is that it makes even the oldest part of human life feel like uncharted territory. Take politics, as old as human civilization itself, and yet in the last few years, you can’t help but feel we’re in the middle of a revolution, as though we’ve been transported to another planet where the game and the rules of that game have been rewritten. Tara McGowan has been at the center of this revolution — in the U.S. anyway.

She cut her teeth as a journalist working with 60 Minutes and then she grinded away on various political campaigns. Some think of her as the real brains behind Obama’s digital strategy, what catapulted him to victory. In recent years, Tara started a multi-headed political hydra, an organization called Acronym. Acronym’s reach is everywhere, though always on the left side of the spectrum. Tara has built out a massive PAC that executes social-media campaigns in key swing states. She’s got another consulting group in there somewhere. I asked Tara to help us understand how politics have changed, where democracy is heading, and how she got into politics in the first place.

Tara MCGOWAN: I wanted to effect change. Initially I believed that journalism was the best way to do that and to hold great powers accountable. I went to N.Y.U. for journalism and political science. I started interning at 60 Minutes, and then they hired me full-time. I was helping to cover the 2008 presidential election. And I just became fascinated and very swept up in that election. And it was, of course, nothing like political science — learning about game theory and learning about the Electoral College and everything. And I felt so detached from having the impact that I got into journalism to have. And I made a decision after that race to pick up and move to D.C.

I interviewed for the most entry-level position on the Hill as staff assistant for my congressman, Jim Langevin, from Rhode Island. And the chief of staff was really wonderful. I remember her saying, “Look, you’re really overqualified, but Jack Reed, our senior senator, is looking for a deputy press secretary. Would you want me to put your name in the hat?” And I worked in the Senate for about a year and a half before I got offered a job on President Obama’s re-election campaign in Chicago in 2011. And because President Obama’s campaigns were storied for their digital prowess I was suddenly a “digital strategist,” which absolutely has guided the rest of my career. 

VENKATESH: When did you start to feel like this is what’s on the horizon, this is what we have to pay attention to? Was there an epiphany moment?

MCGOWAN: There were a number of epiphanies about how my understanding and relationship to digital media, social media, the Internet, was quite different than a lot of people I was working with. But it all stems from the fact that I’m a digital native and probably one of the oldest digital natives. I’m 34. I was on A.O.L. Instant Messenger and in chat rooms at 10 years old.

And I would be asking questions in my role as a deputy press secretary, about why we would spend so much time writing press releases that were not in conversational language whatsoever for reporters and no one would read them, when we had these tools like Facebook and email where we could communicate directly to the senator’s constituents. Why are we going through this bubble, essentially? And it turns out President Trump is the first president we’ve had who really ignores mainstream media, frankly. He understands direct communications and leveraging the tools and channels available to him in very profound ways. And we see the impact of that, which can be good and bad. 

VENKATESH: So, you were reporting on Obama’s 2008 campaign, and then you worked on his 2012 campaign from the inside. And at that time, there was a lot of talk about the Democrats having this amazing digital strategy. Were they as good and as innovative as they tended to get credit for, or were they just the first out of the gate?

MCGOWAN: You know, as early as Deval Patrick’s race in Massachusetts, and Senator Kerry’s race, and Howard Dean’s race, all of the stories that I heard always credited Democrats with being the first movers in terms of really leveraging the Internet and email. And so, online fundraising, I think, is the most important piece because that legitimized — at the time it was called “new media,” as a new team and a new department worthy of resourcing on political campaigns because they could earn their keep. And so, that was really what first, I think, got digital into politics.

And Democrats were definitely the first adopters to take advantage of that. And the common thread with all of the largest, most successful digital-first campaigns, it’s that it’s bred out of necessity. There was no clear path to victory for a guy named Barack Obama and I think that’s also true with the really powerful digital-first campaigns of Senator Bernie Sanders and Donald Trump. And so, really, when I came onto President Obama’s re-election campaign, the digital team was the largest team from day one, the most well-resourced. And years later, when I went to Priorities USA — which is the largest Super PAC on the Democratic side — there really was a stark difference. They had been a traditional media Super PAC, only investing in television and direct mail until they hired me.

VENKATESH: I think a lot of people would grasp what you mean by digital-first. But could you just explain a bit more what this means on a do-or-die political campaign?  

MCGOWAN: For a very long time, television consultants who write television ads tend to be the chief strategists of different advertising programs and campaigns. And they had an immense amount of power and influence. That put digital folks like myself at a kid’s table. And the most cost-effective way to deploy your message at scale has shifted from television and radio to the Internet and social media — and, frankly — peer-to-peer, over text message or WhatsApp. So, that’s shifted everything in a campaign.

So, what it means to be digitally-first is when you need to get media placed in a local market, are you going to send out a press release to a bunch of journalists? Or are you going to target voters in that local community directly with your message through digital ads? When you think about fundraising, are you going to just create a phone list and send that phone list out to volunteers across the country? Or are you going to leverage Facebook to bring in millions of dollars in online donations? And I really thought that we needed to blow up this idea of a digital director in a digital department in order to infuse digital tactics and strategies throughout all elements of the campaign.   

VENKATESH: Okay, let’s fast forward to 2016. Now, you were on the Super-PAC side, not on the campaign side. But I’m still curious to know, what do you think happened there?  

MCGOWAN: There is a for-profit consultant culture that allows for a lot of failing up. It’s very driven by relationships and nepotism. And my understanding of it of deep reflection of it now is that all of those folks that were at the head of those departments and teams on the Obama campaigns went on to join or start their own for-profit consultancies to do this work on behalf of more campaigns. And in the process of professionalizing it, they weren’t incentivized to innovate anymore. There’s an extraordinary juxtaposition with creating sustainable business models and keeping up with the constant innovation of social media and technology platforms. And you just can’t do it, frankly. You end up selling cookie-cutter products or plans. And that was not good enough.

When you’re in elections this is not about just your bottom line or gradual growth of revenue or product sales. This is a very high-stakes, zero-sum game. Every single dollar matters. Every touch to a voter matters. When I got to Priorities USA, I was the chief strategist, but I had to rely on consultants to create a lot of the ads and to actually distribute them. And really, I just wanted to know that my program was effective and I wasn’t getting a lot of answers. And so I was really disappointed and unsatisfied with how the consultant culture could not really keep up.

So, you need to be on the social media platforms where the majority of people are, and you need to figure out how to communicate your message in a way that’s native to those platforms. It doesn’t mean being something you’re not. It means being yourself but understanding the new medium. Individuals like Donald Trump, but also A.O.C., they have the largest audience because they’re authentic. And the way that they use social media platforms like Twitter and Facebook is authentic to the way that they are designed to be used and how most users use them.  

VENKATESH: Could you maybe tell us a little bit about what it’s like to be on the PAC side as opposed to on the campaign side? 

MCGOWAN: When you work in Super PACs, your role and responsibility is to monitor what the campaign is doing in the public sphere — because you cannot legally coordinate — and work to fill gaps that the campaign cannot or should not be filling. Whether that means reaching voters in a state that they don’t have the budget to reach, because clearly you can tell from filings they’re not reaching voters there. Or if it means taking on harder issues or communications that would be too risky for a campaign.

And so, of course, I had access, as anyone did, to the information that was put out by the Clinton campaign in 2016. Our team was watching carefully where they were spending, on what media. And so, they did have a huge digital team and program. Facebook opened up so many different ways of thinking about running a smart digital program. And I didn’t see that their playbook for reaching voters was markedly different than it was when I was on the 2012 campaign. 

VENKATESH: It must be an almost uniquely frustrating experience to have this knowledge and you also have personal relationships with so many of the people, and yet you’re legally barred from sharing that knowledge with them. 

MCGOWAN: To add a personal element to that. My husband was very senior on the Hillary Clinton campaign and we got married during that election and our lawyers actually had a conversation — the campaign’s lawyer and the Super PAC’s lawyer — about our wedding. And it actually came up, “Should we have everyone sign N.D.A.’s at the wedding?” We thankfully did not need to do that. We just did not talk, as we never did that year, about strategy. And frankly, even if we wanted to, I never saw my husband — we lived in different states the entire campaign and very rarely spoke.

VENKATESH: I can recall some of the early discussions we had working together where you were always very sensitive and attuned to your opponent or the people who were doing things differently. Were you always borrowing from them or observing them? 

MCGOWAN: I’ve always focused on not just the other side, but what tactics have been successful in building power, whether they are something I would morally agree with or not. And I still feel that Republicans and Democrats approach building power in very different ways. I have always had a very high threshold for risk. And I really felt more — not aligned with how Republicans did it — but basically understanding that if we were ever going to really compete and win, we needed to play the game as they were playing it and not just hope that we could win playing it the way we always had.

VENKATESH: So, just after Trump’s victory in 2016, you wrote this white paper called “Rethinking Investing in Media to Build Political Power.” If I read it correctly, it was a wakeup call for the left. It’s funny because I sometimes feel like writing that kind of a paper after spending all my time in the tech industry. What were you trying to tell the left when you wrote that paper? And did they listen?

MCGOWAN: So, the very, very big idea or case that I wanted to make at that time, and that I have been working on every day since, has been to sort of zoom out and say we’re starting from scratch every election cycle. That talent disperses. The infrastructure, the technology they build, the institutional knowledge — it all gets spread out. Whereas the right had built their own media ecosystem with FOX and talk radio and Breitbart and thousands of online sites and publishers. And Democrats were relying predominantly on paid advertising, and that felt so short-sighted to me. And I really felt a huge gap on the left was a dedicated space or organization that could continually build and build upon institutional knowledge about how to communicate messages in the digital age that we live in.  

VENKATESH: One of the things you’ve been concerned about for some time is the amount of money the Trump campaign has been spending on digital advertising and basically, it hasn’t stopped since his first campaign. And spending on digital advertising also provides them with a lot of data, which they then use to refine and improve the performance of their ads. So, it seems like Trump and the Republicans almost have an insurmountable lead in that regard. As a strategist for the other team, what are your thoughts on this?

MCGOWAN: So, I was one of a number of people raising the alarm bells about Trump’s spending online because it was so unprecedented. Essentially, from the second he was inaugurated, he was running his re-election campaign and the majority of his spending online was on data acquisition. It was on petitions to collect email addresses and cell phone numbers and online fundraising, merchandise sales. And the more information any campaign or any company has of individuals, the more sophisticated their targeting of those individuals can be. 

VENKATESH: I was working at Twitter when Jack Dorsey decided to ban political ads. And people inside the company were really excited and thought it took a lot of courage. Perhaps so, but I was less sure. I mean, political ads were a small percentage of our revenue at the time, and a lot of the smaller players around the world really relied on them to get their message out. I say this because in the last year or so, it might surprise someone to hear some of the positions that you’ve been taking. Are you seeing something that some of your progressive counterparts are not? 

MCGOWAN: Political ads on platforms like Facebook and Twitter have become the scapegoat by journalists and by Democrats and Republicans alike. And they’ve really made political ads the culprit of misinformation spreading online, influencing elections. The vast majority of misinformation that spreads online is organic, which means it is not through paid advertising on these platforms. It is through individuals. It is through media outlets, especially on the right. And so, when people call for these platforms to ban political ads they’re really misunderstanding where misinformation comes from and how it spreads.

And so, I have been outspoken against these political ad bans, not because I run political ads — I do, but I do not have a financial stake or interest in the political ad programs I run. The reason that I call that out is because it is a superficial attempt by these platforms to say that they are solving the problem while they are not actually doing anything meaningful to solve that problem. Facebook recently announced a ban on any new political ads in the final week of the election. And this is something that Democrats were lobbying for. And I very quickly came out against this decision for the reasons I just articulated.

When you ban all political advertisers what you’ve done is you have ceded the platform to the largest pages and accounts on that platform. And the largest pages and accounts on Facebook are right-wing media outlets. So, when you ban political ads on Facebook and do not ban the dissemination of “news or information” from publishers like Fox News and Breitbart and The Daily Wire, you are essentially saying that right-wing media is allowed to spread misinformation in the final week of the election. But the Biden campaign is not allowed to counter that misinformation in real time. 

VENKATESH: I would agree with you that there are disparate effects. And these policy decisions inside the company, they don’t affect everyone the same way. And I could imagine someone coming back and saying, “Okay, well, we shouldn’t punish one group for having more subscribers or more followers, etc.”

MCGOWAN: The tricky part is that algorithms on a lot of social media platforms really do prioritize and scale the distribution of salacious content because it tends to get more engagement. Once your video gets 1,000 views, it’s more likely to get a million than a video that gets 100. So, that’s really the dangerous part that I think is the responsibility of social media companies and platforms to solve for. Because that does add gasoline to the fire when there is misinformation or lies that spread, because the truth can be boring. And frankly, Facebook should be able to curb the spread of lies and misinformation in a more effective way. I don’t care if it’s got money running behind it or it’s just organic. It’s the rapid spread of lies that can have real world impacts that I have a problem with. 

VENKATESH: Okay, so you’re against banning political advertising, but you’ve also noted that those who spend the most can acquire more data, which puts them at a distinct advantage. What are your thoughts then on changing the way that data can be acquired or used in the first place, perhaps making it so that ads can’t be targeted quite so finely and limiting it to just broad demographic categories like age or location, etc.

MCGOWAN: I believe that efforts should be put elsewhere simply because if you take away the ability to microtarget, which is a very controversial concept, it just means that political campaigns and advertisers will need to spend more money on the platform because they will have to reach a broader audience. So, digital advertising will more similarly operate as television advertising does, where you buy at a broader level. So, the folks that stand to gain the most by eliminating microtargeting are the social media platforms themselves that benefit financially. 

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VENKATESH: I want to talk to you about Acronym, which is the organization you founded with the explicit goal of filling some of the gaps you’ve identified on the left side of the political spectrum. Before we dive in, can you give us just a quick explanation of Acronym? Because it’s it’s a pretty complex ecosystem. It’s got a Super PAC. It’s got a number of other companies. And so, how do you explain the structure of how it all works for the uninitiated and why you decided to structure it that way?  

MCGOWAN: So, again, taking a page out of the conservatives’ playbook, I read Jane Mayer’s book, Dark Money, on the Koch Brothers, who have invested heavily for years in building for-profit companies and nonprofit organizations and infrastructure on the right. Their money and their efforts were the force behind the Tea Party movement after Obama was elected. And they’d created an ecosystem of different types of entities to do this kind of work. And so, I wanted to really create a space that looked at the world as it was, not as we wanted it to be and think about what the modern playbook was.

Yes, some things taken by what Trump’s campaign did. They really built their campaign in 2016 around Facebook, which is, I believe, the most powerful platform for information dissemination in the world, for better and for worse, and often now for worse. And so, I made it what’s called a 501(c)(4) organization. So, this is what many refer to as a dark-money organization. It’s a nonprofit. And yet, 49 percent of the work that it is able to do is able to influence politics and elections directly, and 51 percent is social welfare, charitable work.

There were three companies Acronym invested in. Now, there are two. One is a digital agency that runs advertising programs and builds out creative for the programs Acronym runs, as well as other mission-aligned progressive organizations. And the other is a for-profit progressive local news network called Courier Newsroom. And I really did that so I could preserve the mission, which is to build power and infrastructure for the progressive movement. 

VENKATESH: Clearly, you’ve been inspired by how people on the right have been able to organize discussion about politics, civic issues, and channel that into mobilization. From the spectrum of “I want to play within the rules and do it better” to “I want to change the game itself so we can get money out of politics or we can just reform in ways that we don’t have to compete in this kind of polarized way,” where do you stand when people ask you about the intentions and the motives?

MCGOWAN: The answer is both. They’re very interconnected. I want to build infrastructure and deploy the most effective tactics within the bounds of the law that build power. And with power, we can then reform. You know, I think a lot about moral purity tests, which exist on both sides, I’m sure. But I think that there is danger in focusing too much on what we believe is right or wrong and losing in the process. 

VENKATESH: Okay, I’ll get to the Courier newsroom in a bit, but I want to quickly touch upon those other companies that Acronym invests in. One in particular, Shadow, received a lot of attention this year. If I understand correctly, Acronym was an investor in Shadow and Shadow was the company that helped to design the app that was going to do all these wonderful things around the Iowa caucus, make it easier to count votes, give people a better experience.

MCGOWAN: So, we helped incubate Shadow, Inc., which was a progressive technology company. And we did that because they were essentially going to go out of business. They built a peer-to-peer texting app that was on the Hillary Clinton campaign where this team had worked in 2016, and Gerard Niemira, the C.E.O., preserved the team and rebuilt this technology to serve campaigns. And I am not a technologist. I do not have technology experience. This is my first of many rookie mistakes in this process. But what I did have was relationships with investors who believed in me and my risk threshold. I knew that they would also believe in Gerard’s vision, and so I was able to raise money to retain his team in this new company that would be owned majority by Acronym, but Acronym was not the sole investor in the company.

So, the second rookie mistake, I would say, was that because I trust and admire Gerard and his experience greatly, I did not put a great deal of oversight over the company. And really their mission and vision was to be able to — similar to Acronym on the digital-advertising side — fill gaps that other companies weren’t incentivized to fill because they wouldn’t be profitable. And that leads to the crisis that we endured with the Iowa caucus. Shadow was the only company to respond to a request-for-proposal from the Iowa Democratic Party, who, after the rules changed for the Iowa caucus, with great pressure and demand by Senator Bernie Sanders’s campaign after 2016, suddenly every caucus location needed to report three different numbers. Historically, they only ever had to report one number in terms of the vote tally, and suddenly they had to report additional tallies in terms of popular vote count in addition to delegate count.

And so, the Iowa Democratic Party wanted to have some sort of app, or solution, to help them tabulate the results in each of the caucus locations because they had never done this and understood very early on that this was going to be a nightmare. And because if anyone has been to an Iowa caucus, it’s already chaos. The question of whether or not Shadow should have applied for this R.F.P. or taken on this contract was certainly never put in front of me. And so, sure, maybe I would have said this feels like high-risk, low-reward. Maybe I would have said this is exactly why Shadow was created, was to take on the hard projects that aren’t profitable because campaigns and Democratic parties need solutions and we’re not evolving fast enough. So, anyway, most people know how the end of the story goes. There was a coding error in the app and it contributed greatly — but it was certainly not the sole factor — to the delay in the reporting of the results of the Iowa caucus.

VENKATESH: You’ve mentioned a few times that you have a strong appetite for risk and you’re okay with failure, you learn from failure. I’m curious to know how that plays out after something like this. 

MCGOWAN: I find great strength and resilience through trauma and crisis. And I certainly don’t enjoy it or wish it upon anybody. But it became clear after the fact that I had no business to have oversight of a technology company, No. 1. And No. 2, it was a really important learning moment for me that I certainly can’t solve every problem, nor should I. And that I need to do less and do it better. And so, I made the decision, along with the Acronym board, to divest from Shadow fully so it could carry on and have better support and leadership than I certainly could provide. 

VENKATESH: Okay. I want to talk about this fascinating project, Courier Newsroom. If I understand it, it publishes digital newspapers in six key swing states. And you’ve got reporters and editors and, on the face of it, the digital sites that you’ve created look like local news. But I think the intention is that the sites are helping to promote progressive candidates in those states. And so, I’m curious to know how you think about these sites. Is it news? Is it marketing? Are they political instruments? And I wonder if this is really the face of so much of modern media. 

MCGOWAN: Courier has seven newsrooms, all staffed by reputable journalists and editors, many of who lost their jobs as local news outlets have been shuttered across the country. And we have been unapologetically transparent about our progressive values and mission. The genesis for Courier Newsroom was actually that white paper about the power and influence of the right-wing media, online and off, and the lack of owned-progressive media that espouses progressive values but maintains and preserves the integrity of journalism and of fact-checking. Part of the genesis was also my frustration with the billions of dollars that are spent and largely wasted on paid advertising in election cycles.

The majority of Americans do not read newspapers. They do not watch the evening news or cable news. Their news consumption is incredibly passive. They are getting their news by scrolling their social-media news feeds or talking to their friends. And that allows misinformation to really have an impact on those Americans, because it is targeted to influence them. And we built Courier to be focused on getting stories and facts and information to voters on social-media news feeds. You know, partisan media is not new. That said, we are in a murky territory in terms of media and news. And I really prefer to live in the world as it exists, not the one that I want it to be, and fight like hell to build the power in order to build the world that I do want.

Local news continues to be where the majority of Americans say they trust their information most. And yet, we have a huge void of it in this country that is only getting worse. State government is where so many decisions that affect our lives are made. And yet, turnout for state elections is abysmal. It’s far worse than national turnout, which isn’t great in America. And there has been a lot of research to show a direct correlation between the presence of local media and civic participation. So, basically, when you don’t have local journalism or local trusted news sources, you are less likely to participate civically in your community.

VENKATESH: You’ve been through a lot of changes over three elections and Acronym has been through changes. What does the future hold for you and the organization you’ve built?

MCGOWAN: I mean, the things that I know for certain are that I personally have no interest in running political independent-expenditure programs any longer. I believe that they are too short-sighted and they do not lend themselves to building real communications infrastructure that talks to voters every day, every daywhich is what we need. I don’t know if there is a real need for Acronym to exist after this election. And that’s something I frankly haven’t had very much time to think about, and I certainly will after the election.

Do I believe that there need to be permanent institutions to drive innovation when it comes to technology and voter outreach and contact in democratic politics? Absolutely. Will the technological and media landscape look different in two years than it does now? Of course it will. So, what will the needs be? Courier is a different story. Courier was always, always built to become permanent progressive media infrastructure that, yes, will continue to evolve in the same ways that our communication and media consumption habits evolve.

It is such a critical and essential piece of infrastructure that we’ve been lacking on the left. It has also suffered from great reputational damage because of Iowa and its affiliation to me. And so, one thing I can say for certain is that I will be doing everything I can to make sure that Courier has the opportunity to be as successful as possible. And so, if that means me winding down Acronym or leaving Acronym or leaving Courier, I will do what is best for Courier. And that’s what I’ll really be ruminating on after this election. 

VENKATESH: I want to step back and ask you to think where we are headed in terms of democracy and elections in general. And the thought that comes to my mind is motivated by an essay of a sociologist named Robert Putnam that was written probably 20-some years ago entitled Bowling Alone. And the thesis is relatively simple in that, at that time, Putnam was arguing that we don’t have a healthy civic life because we don’t have what he called a healthy associational life. We don’t have healthy politics, we don’t have a healthy public discourse, because we’re not coming together as we often did.

The bowling alley was the metaphor more than the real place, I think, in his essay. We’re not forming community clubs. Some people have thought about that from the standpoint that we have to go back to a pre-digital way of engaging one another. We need to do more things in real life. Other people have said, “No, it’s just we just need to change how we think about technology and use it to foster more of those sorts of healthy interactions.” When you step back and you think about the impact of technology in general, has it been in itself a corrosive force? Or is it just— we’re just using it the wrong way?

MCGOWAN: I think with every technological revolution you see the worst possible outcomes or impacts before it sort of rights itself, or things like government regulation or accountability come into play. And there’s just not going to be a silver bullet. If you shut down Facebook tomorrow, which I think a lot of people would applaud, it wouldn’t solve the problem. There would be another Facebook or another thing. And I really do believe that social media has reinforced and rooted all of us in our existing belief systems, and made it more difficult to empathize with other people. And I think above anything else in this world, we need empathy right now more than ever in our politics and in our daily lives.

And I don’t know the solution to bring us back there, but something that personally I have been really inspired by in this past year is working with Republicans who have come out against Trump. And I certainly don’t share a number of their values or positions, but we have been able to build friendships and partnerships and work together and laugh together. And I really do believe that that’s the glue that we need to restrengthen, is the ability to see people for who they are as people and understand that we can have differences, but that we can work together. And if we can bring that into social media, we can bring that into our politics, I think that we would be in a much better state. 

*      *      *

That was Tara McGowan, the founder of Acronym. I have to say, I really like Tara’s optimism. I share a lot of it at times anyway. But it makes me think of a debate among social scientists who study democracy. There’s one school of thought that says, “Hey, let’s really eliminate hate speech and uncivil behavior towards one another.” Another says, “You know, we’re always going to have that kind of behavior. We’re always going to have conflict. So, let’s help people resolve the problems after they occur.” And as someone who works inside tech companies, I thought of this difference in approach after listening to Tara.

You need a healthy dose of optimism to make these platforms serve democracy, for sure. But Tara’s organization also faces a conundrum. She’s drawing on the same techniques that create a polarized and often uncivil environment as a means to improve that environment. Is that really possible, or is it just making things worse? Well, wherever you land on that question, one thing for certain is that we’re all going to learn a lot in the coming days and weeks ahead. There’s probably a lot of surprises in store for us.

*      *      *

Freakonomics Radio is produced by Stitcher and Dubner Productions. This episode was produced by Matt Hickey. Our staff also includes Alison Craiglow, Greg Rippin, Mary Diduch, Corinne Wallace, Zack Lapinski, and Daphne Chen. Our intern is Emma Tyrrell; we had help this week from James Foster. You can subscribe to Freakonomics Radio on Apple Podcasts, Stitcher, or wherever you get your podcasts.

The post Why the Left Had to Steal the Right’s Dark-Money Playbook (Bonus Episode) appeared first on Freakonomics.

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He graduated high school at 14, and by 23 had several graduate degrees and was a research assistant with Stephen Hawking. He became the first chief technology officer at Microsoft (without having ever studied computer science) and then started a company focused on big questions — like how to provide the world with clean energy and how to optimize pizza-baking. Find out what makes Nathan Myhrvold’s fertile mind tick, and which of his many ideas Steve Levitt likes the most.

Listen and subscribe on Apple Podcasts, Stitcher, Radio Public, Spotify, or wherever you get your podcasts.

The post “I Am Interested in Lots of Things, and That’s Actually a Bad Strategy” | People I (Mostly) Admire Ep. 6: Nathan Myhrvold appeared first on Freakonomics.

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What is the best online bank for businesses? What is the best online business checking account? How do Azlo, Novo, and BlueVine bank compare?

The post Azlo vs. Novo vs. BlueVine appeared first on The Dough Roller.

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Want to learn how to create and set up your blog email? Here’s how you can create a professional email for your blog domain.

Do you want your own custom email address for your business? For example, mine is michelle@makingsenseofcents.com.

If you want something other than yourname@gmail.com, and something more professional, this is something that you can easily do too.

In fact, I recommend that all business owners do this.

When it comes to creating your website, having a business email is important because it helps create a professional image as well as builds trust for your business.

Today, I will show you exactly how to do this, either free with Bluehost, or paid through G Suite. Either way is easy and I highly recommend choosing one of them.

If you haven’t started a blog yet, I recommend first starting with my tutorial – How To Start A WordPress Blog.

Related content on how to create a blog:

• How To Start A Blog Free Course
• How To Earn Money Blogging: Your Top Questions Answered
• How To Start A WordPress Blog On Bluehost
• 12 Free Resources To Grow Your Blog Fast
• How To Write and Publish Your First Blog Post On WordPress

How to create and set up your blog email address.

 

Step 1: Click on the Advanced tab.

If you would like to set up your free custom blog email with Bluehost, you can do so by first logging into your Bluehost cPanel, and then clicking on the “Advanced” tab.

 

Step 2:  Click on Email Accounts.

From the advanced section, you will then scroll down to where you see the “Email” section. You can then click on “Email Accounts” to add a free email account related to your website domain name.

Note: This is also the dashboard you will come back to when creating mailing lists, forwarding email addresses, autoresponders, and many more.

 

Step 3: Create an email account.

You can then go in and create the email of your choice by clicking on the ‘create’ button.

 

Step 4: Create your password.

You can then enter the information you please such as your email address of choice which with automatically be followed by your blog/websites URL.

You will also be asked to create your password of choice for your account.

Click “Create” when finished!

 

Step 5: Choose your webmail application.

After you create your email you will be directed back to this page where you can then manage your email account and choose your default webmail application that you would like to use.

 

Step 6: How to check your mail.

Based on the Webmail application you choose your email will look like 1 of these 3 examples above.

You can access this by clicking on “Check Mail”.

And, that is all that you need to do. You can now send emails from your new custom email address.

 

Setting up your paid business email address in your Bluehost dashboard with GSuite!

Now, if you would prefer to use Google, you can do that as well. For me, I use Google (G Suite). It does cost money, though. Below are the steps for this.

 

Step 1: How to create a custom email with G Suite.

Bluehost offers two different options for emails, Microsoft Office 365 starting at $4.99 per month for the basic package or G Suite for $6 per month with all the features you need.

I recommend G Suite as that is what I use.

 

Step 2: Choose your pricing.

G Suite allows you to either pay monthly or yearly. If you decide to pay yearly you will actually receive two months free.

You may also choose the amount of users you want for this email.

 

Step 3: Pay for your order.

Once you add your option to your cart, you will have the option to use the same payment method or choose a different one if desired. Once you are ready, press “process order”.

 

Step 4: Order confirmation.

Once you process your order you will see this order confirmation with your invoice number.

 

Step 5: Create your business email.

On the order confirmation page, there is an option to “manage” you purchase. You will want to click that and this where you can go to create your business email for G Suite.

 

Step 6: Press the create button.

After you enter the correct information and press “create” you will see this message while you account is being processed.

 

Step 7: Log in to your new custom business email.

Click “G Suite login” button to log into your Gmail email account. You will then enter your email and password.

 

Step 8: Send and receive emails.

You will then be brought to your G Suite Admin Console where you can access all of your data, reports, billing, domains, users, and many more.

From here, you can now receive and send emails through this email account. You are all set up and ready to go.

You now have a custom blog email address.

Do you have a blog?

The post How To Create and Set Up Your Custom Blog Email Address appeared first on Making Sense Of Cents.

from Making Sense Of Cents


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The following is a guest post from FS sponsor, FarmTogether, a leading farm investing platform. Farmland investing is one way to reduce volatility in your portfolio and generate long-term passive income. Let’s look more into investing in 2021. 2020 has been a turbulent year for investors to say the least. On February 19, 2020, the

The post Investing in 2021: Three Strategies for Managing Uncertainty appeared first on Financial Samurai.

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Trick or treat! It’s pumpkin-everything and sweater weather time. But beware, this cozy season is dressed to deceive. Here are 11 money mistakes to avoid this holiday season.

For many of us, the holidays kick off with Halloween. Let’s be honest, the beginning of October is basically the start of holiday season in my household. It’s spooktacularly fitting since the next couple of months can be the scariest of the year when it comes to your money. So what scary money mistakes should you avoid between now and the end of the year? Run from these monster mistakes like the zombies are chasing you:

1. Not having a budget

The easiest way for your finances to get out of control is to not even have a handle on what you’re spending and saving. For this, you need a budget. It doesn’t necessarily have to involve old-fashioned spreadsheets. You can use great budgeting apps to get a grip on your finances. Managing your day-to-day budget is the start of managing your money well through the holiday season, when spending is often higher than usual. So if you’re not doing that yet, get on it right away.

2. Not saving up for gifts ahead of time

Holiday gift spending is like the guy with a chainsaw in a Halloween horror special. You know he’s coming, but he surprises you, anyway. You can be smarter than the horror movie characters. You know extra holiday expenses, especially for gifts, are looming. So you can decide to be prepared and not surprised. Here’s a simple way to plan ahead. Figure out what you spent on gifts last holiday season. Decide if you need to cut back or allow more room for spending. Then figure out what you need to set aside each paycheck to get to your savings goal before the shopping season starts. Creating a monthly budget item designed to help you set aside money regularly can keep you from breaking the bank each holiday season. Open a separate high-yield savings account designed just for this purpose, earmarking the money for gifts.

3. Buying just because it’s a big deal

Black Friday is quickly approaching, and with it, all those temptingly great deals. It’s easy to spend money just because something is on sale, whether you need that thing or not. You can avoid this problem by being aware ahead of time of the things you want to shop for during holiday sales. Those things might include new tech, home cleaning tools, furniture, clothing, toys, and more. And it’s not a bad idea to get those things when they happen to be discounted–as long as you’re already planning to purchase them. But steer clear of buying things that do not already exist on your to-buy list just because the deal looks great.

4. Neglecting to make a list

One of the best ways to avoid overspending and making impulse purchases is to make a list. This works, whether you’re doing your weekly grocery shopping or buying holiday gifts. Sit down and think about what you need for the holiday season. Think about what you might need in terms of entertaining, as well as list out gift ideas for friends and family. This can help you get an idea of what you plan to spend, as well as help you avoid buying things you don’t need. Plus, having a list can help you compare your planned purchases to sales and Black Friday deals. Knowing ahead of time and being able to make a plan of attack can go a long way toward saving you money in the long run and avoiding financial waste.

5. Swiping money from your important savings goals

One thing you definitely don’t want to do during the holiday season is suck the life out of your important savings accounts. If you’re pulling money from your emergency fund or, even worse, your retirement savings for holiday expenses, you’re spending too much. These funds are available for when you truly need them. And buying additional Christmas gifts is not in that category. Luckily, if you avoid mistakes one, two, and three, you’re much less likely to feel tempted to pull from your savings goals to cover your holiday spending.

6. Forgetting about “free money” you could cash in

How often do you forget about free money you could use, especially during the holiday season? This might take the form of coupons or credits you can cash in for your holiday shopping. Or it could mean losing track of gift cards you get in the holiday rush. This year, come up with a plan for keeping track of those benefits so you can use them instead of losing them. Even just having a particular place where you put all gift cards can help you stay organized. Also, if you’re not already using a rewards credit card, check out our list of best cash back credit cards so you can earn money back while you shop. Don’t forget to sign up for cash back rewards sites as well. Websites like Ebates, ibotta and Swagbucks all offer you ways to earn cash back on regular purchases. Make those purchases with a rewards credit card and you can stack the cash back, getting even more bang for each buck.

7. Being too free with your personal information

On Halloween night, you might see some tiny cat burglars running around ready to “steal” candy. They’re cute. But actual identity thieves are not. Pay attention to how your financial and personal information is being managed. Ignoring this is a huge problem that sets you up for identity theft and major credit issues. Your best bet is to create a plan for protecting your personal information. This means being cautious about where you shop or give out information online, keeping an eye out for suspicious activity in your bank account, and checking your credit regularly.

8. Not being prepared for disasters

You know in those scary movies where the main cast of characters is just completely oblivious? Sure. We’re being chased by a known mass murderer, so let’s go hide in the garage that’s full of saws and other sharp objects. Don’t be like that with your finances. You don’t have to spend all your time dwelling on potential disasters in the future. That wouldn’t be healthy. But you should be aware of and prepared for the worst. Money-wise, this means having a decent emergency fund and making sure your life insurance is solid.

9. Missing payments

Do your monthly payments sometimes sneak up on you? Don’t get caught by payments that you didn’t see coming. Missing payments or making them even a few days late can have disastrous financial consequences. For one, you’re likely to get hit with a steep late fee. Then, suddenly your minimum payment is $35 more for the month. A few charges like that can wreck your budget pretty quickly! But late payments can also ding your credit score, making it harder to maintain financial health in the future. Set up reminders that can help you pay bills on time, or set up automatic payments so that you don’t have to worry about missing payments and taking a hit to your bank account and your credit score.

10. Paying a ton of interest

Interest is a financial vampire. You can run up a $1,000 credit card bill, but before you know it, the interest leaves you bleeding dry. You could pay $1,500 or more towards that original $1,000 bill if you’re only making the minimum payments. Those interest payments–even the ones that seem like “good” interest rates–can creep up quickly and silently. If you’re paying a lot of money in interest right now, figure out some ways to cut back immediately. This could mean paying down a debt more quickly so you pay less interest over time. Or it might mean refinancing into a lower-interest loan that you can then pay off swiftly.

11. Opening a store credit card

It can be tempting to open a store credit card for a discount or special financing. However, this can be a scary mistake, especially when you realize that you can’t use the card at other retailers. Additionally, you might not have access to a rewards program and often the APR is much higher than you’d see with more general bank credit cards and rewards cards. With a store credit card, it can become costly to maintain, without extra perks and benefits. Plus, without the ability to use the card at other locations, it limits what you can accomplish. Think twice before committing yourself to a store card. This season can be a tough one for budgets and overall financial health. But you don’t have to fall prey to these frightening financial mistakes. With a little bit of planning and the right tools, you can avoid these budgetary BOO!-by traps and come into the new year financially strong.Trick or treat! It's pumpkin-everything and sweater weather time. But beware, this cozy season is dressed to deceive. We have a list of 11 money mistakes to avoid this holiday season. Run from these monsters before they bleed your bank account dry!

The post 11 Scary Money Mistakes to Avoid this Holiday Season appeared first on The Dough Roller.

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A fine reading of most policies for “business interruption” reveals that viral outbreaks aren’t covered. Some legislators are demanding that insurance firms pay up anyway. Is it time to rethink insurance entirely?

Listen and subscribe to our podcast at Apple Podcasts, Stitcher, or elsewhere. Below is a transcript of the episode, edited for readability. For more information on the people and ideas in the episode, see the links at the bottom of this post.

*      *      *

Here’s a riddle: name something that one of every three small businesses in the U.S. bought to protect themselves in an emergency — but when an emergency happened, it turned out to be useless. Are we talking about a burglar alarm? A sprinkler system? A gun? No, none of those. This riddle is best solved by asking an actual small-business owner.

Janice JUCKER: Janice Jucker, and I’m co-owner of Three Brothers Bakery with my husband, Bobby.

Three Brothers Bakery is in Houston; it has a few shops there and also sells online. They are particularly famous for their pecan pies. And famous for something else:

JUCKER: Our honorary titles are King and Queen of Disasters, because we’ve been through four floods, a fire, a hurricane, and now a pandemic.

The first flood was in 2001, after Tropical Storm Allison:

JUCKER: It took about three days to clean up. 

Before Allison, Jucker had suggested to her husband that they ought to buy flood insurance.

JUCKER: But of course, he didn’t listen to me. 

This left the Juckers on the hook for about $100,000 of damages. But it did inspire them to buy flood insurance, which would cover property damage — as well as what’s called business-interruption insurance, which would cover lost revenues in the case of a disaster. These turned out to be prudent purchases, because, in 2008:

JUCKER: In 2008, we had Hurricane Ike, and we think a tornado came down the street, ripped off the roof, and we were closed for nine months for that one. And that was about $1.2 million. 

That’s $1.2 million, of damages. Which their insurance for the most part covered. And then in 2015:

JUCKER: In 2015, the Memorial Day flood, which we got about three-and-a-half feet of water, and that was a million-dollar event. 

And another successful insurance claim.

JUCKER: 2016, we had the Tax Day flood, but we were getting ready to close five days later to do the repairs from 2015, so we just pushed the water out and didn’t make a claim or anything. 

But Three Brothers Bakery wasn’t done being flooded. In 2017 came Hurricane Harvey:

JUCKER: It was basically a river on our street. And that was another million-dollar event. And then I think it was 2018, we had a fire in December.

So much calamity. So much property damage! But fortunately, the Juckers had continued to carry insurance.

JUCKER: If we had not had insurance, we would have been out of business.

So, Janice Jucker has come to appreciate the insurance industry — but she also understands the insurance companies are not fully on her side.

JUCKER: I mean, I think that insurance companies — and understandably — their goal is not to pay you. Getting paid is a negotiation. So, one time I got my check for business interruption with Hurricane Ike. And I noticed it was short, and so I called. I said, “Why is this 20 percent short?” And the adjuster says to me, “Well, we’re in a recession,” because it was 2008. So, I said, “That’s ridiculous.” So, I made a PowerPoint and I gave it to the insurance adjuster.  

And the company did increase the Juckers’ payout.

JUCKER: I felt pretty good about that. 

Even with all her experience dealing with disasters, the Covid-19 pandemic has been its own category.

JUCKER: A hurricane, a flood — you know, it happened and it’s over. And then you clean up and you move on. The difference with Covid is, it’s not over. 

Back in the spring, as the economy in Texas began to shut down, Three Brothers was allowed to stay open, since a bakery is considered an essential service. But essential doesn’t mean successful.

JUCKER: We saw an immediate drop in revenue. Dramatic. 

Dramatic and, again, lengthy. At least Jucker has business-interruption insurance. In fact, one in three small businesses in the U.S. have it. But guess what business-interruption insurance doesn’t cover?

JUCKER: Our insurance covers no losses from Covid. I did, of course, pull out my book, but it just doesn’t — it didn’t cover it because the kicker is, you have to have some kind of physical damage. 

That’s the same situation most small businesses now find themselves in, even if they did go to the trouble and expense of buying business-interruption insurance. No physical damage, no insurance reimbursement. Why should you care? Small businesses employ nearly half of American workers. Even before the pandemic, many small businesses only had a few weeks’ worth of cash on hand, if that. Many small businesses have already gone under, with more to follow. How will the insurance industry — and the government — respond to this crisis? And why wasn’t this pandemic insured? That’s what we’ll try to find out today on Freakonomics Radio.

*      *      *

Stephen DUBNER: So, correct me if I’m wrong, but I really can’t think of a product that more people buy even though they don’t want to buy than insurance, yes?

Bruce CARNEGIE-BROWN: Well, that might be right. One of the challenges is that people don’t buy enough insurance because they slightly resent the need for insurance. 

And that is:

CARNEGIE-BROWN: Bruce Carnegie-Brown, chairman of Lloyd’s of London. 

Even if you know nothing about insurance, you probably know Lloyd’s of London. They were founded in 1688.

CARNEGIE-BROWN: And indeed, it was really the first commercial insurer in the world. The oldest class of business in the commercial world is marine insurance — so, the transportation of cargoes and the underwriting of ships.

In more recent centuries, Lloyd’s became famous for insuring one-of-a-kind properties.

CARNEGIE-BROWN: We insured Betty Grable’s legs. We insured David Beckham — the footballer’s — legs. And Rudolf Nureyev’s — the ballet dancer’s — legs. We also have at some point insured Dolly Parton, but I don’t think it was her legs.

But Lloyd’s is not just an insurance company.

CARNEGIE-BROWN: Lloyd’s is a marketplace that is a host, as in any marketplace, to a number of market participants. And we host 85 underwriting syndicates at Lloyd’s.

So, Lloyd’s matches those who wish to buy insurance with those who wish to sell it. Some of the sellers lay off the risk they insure onto what are known as reinsurers — that is, insurance companies who insure the insurers.

CARNEGIE-BROWN: Well, we are also, ourselves, a reinsurer of other people’s risks. So, some of this can be a little bit circular.

“Circular” would be one way of putting it. For many on the outside, “baffling” might be a better term. But let’s start with some basics. There are many, many, many forms of insurance: health insurance and life insurance, of course, along with insurance against all sorts of unforeseen or undesirable outcomes. This often falls under what is known as property-and-casualty insurance.

CARNEGIE-BROWN: We do a lot of big natural-catastrophe insurance at Lloyd’s. And one of our biggest lines of business is hurricanes and windstorms in North America.  

DUBNER: Are you involved in insurance against wildfires at all?  

CARNEGIE-BROWN: Yes, I’m afraid we are. So, in places like California, these are very high-density places and places of very high economic value. And therefore, the claims that arise from these kinds of wildfires are commensurately high. 

DUBNER: So, how is it most possible for Lloyd’s to lose a lot of money in a given year?

CARNEGIE-BROWN: So, the issue would be that we underwrite in reasonably large size, very severe, theoretically infrequent events. And so, if those events come together, it can create real challenges for us. So, the most obvious examples in recent times would be, in 2005, three hurricanes went through the United States. And I reference the United States a lot because 45 percent of all of our business comes from the U.S. And in 2017, there were also three hurricanes that went through the southeast of the United States, in Louisiana and Texas, and those created very sizable claims on the marketplace. And as a result, the market made a loss. 

Lloyd’s lost money in 2017 and 2018, but returned to profitability in 2019. That was a good year for most property and casualty insurers in the U.S., with the sector earning a profit of more than $60 billion. But then, of course, came 2020, and a global pandemic. What has that done to Lloyd’s’ business?

CARNEGIE-BROWN: We think upward of 16 lines of insurance business are affected by the pandemic. The easiest ones to understand are things like event cancelation. We have a very big business in providing insurance to things like the Wimbledon tennis tournament or the Tokyo Olympics. And when these things get canceled or postponed, there are very quantifiable claims that are reasonably easy to calculate and to pay out on. We also have issues like trade credit, when supply chains are damaged, travel insurance as well.

But then, what develops over time are other kinds of claims. So, there will be claims associated with medical malpractice because people will believe patients haven’t been treated appropriately for the pandemic, for instance. And then, it feeds through into things like the directors’ and officers’ insurance, which is the insurance that companies buy to protect their officers in the performance of their business. The challenge with Covid is dimensionally more complex as a risk for the insurance industry to manage than your average hurricane.

Back in May, just a few months into the pandemic, Lloyd’s estimated that Covid losses across the property-and-casualty insurance industry would be an unprecedented $200 billion.

CARNEGIE-BROWN: Of which about half were because the assets that we hold to pay the claims were impaired by the crash in the stock market. 

Okay, we need to back up a bit here.

DUBNER: There’s one thing I’d like to explain to listeners, which is how many or most insurance companies make money, which is not just by taking in hopefully more money than they pay out in claims, but by investing. It is an investing business. Can you just talk about that for a moment? 

CARNEGIE-BROWN: Well, it is an investing business because we take premiums in the form of cash. And those premiums are then invested until claims arise. 

In other words, insurance companies take your money, in the form of what they call “premiums” — a clever idea, calling your bill a “premium,” as if it’s a wonderful thing. They then invest that money in, say, the stock markets. You may recall that as the pandemic began to spread earlier this year, most stock markets cratered. Which made sense. But many markets, including the U.S. markets, have recovered — which seems to make less sense, considering that the pandemic persists. I asked Carnegie-Brown if he could explain that.

CARNEGIE-BROWN: Well I can’t. I mean, if you strip out the technology firms, actually, the markets haven’t recovered very well. There’s been a huge concentration in the technology markets. And of course, that’s not unsurprising because I do think that the pandemic has been an accelerator of the use of technology in many traditional business lines. 

Okay, so going back to that May estimate of a $200 billion industry loss: half of that loss, Carnegie-Brown says, was expected from declines in insurers’ investment holdings. Declines which, as we just noted, were promptly recovered.

CARNEGIE-BROWN: And the other half were directly related to claims. Now, on the actual claim side of the equation, that $100 billion ranks up there with the kind of hurricane events I talked about before as a very major loss for the overall insurance industry.

Now, you may think that no one outside the insurance industry or their shareholders should bemoan this loss. Bruce Carnegie-Brown, not surprisingly, has a different view of the industry. A more appreciative view of insurance.

CARNEGIE-BROWN: If you sit looking at it from my perspective, it’s actually a great enabler. 

An enabler how? Consider the act of driving your car.

CARNEGIE-BROWN: When you look at the most frequently bought form of insurance, it’s motor-car insurance, and you have to have it in order to drive a car.

Auto insurance is one of the few forms of insurance that is mandatory in most places. What would it look like to drive a car without insurance?

CARNEGIE-BROWN: If you looked at driving a car through a different lens, you’d say that you couldn’t afford to get into your motor car, because if you happened to knock somebody over or have an accident that created a disability in a third party, the cost to you in economic terms — let alone all of the emotional issues — would be beyond your net worth. And so, actually, it enables things to happen. 

“It” being insurance.

CARNEGIE-BROWN: And we like to think of it, therefore, as enabling people to take more risks than they would otherwise be able to take. And actually, Lloyd’s has a proud history of doing firsts in this area. So, we did provide the the first automobile insurance policies, the first insurance policies for airlines, the first insurance policies for satellites, and, most recently, the first insurance for cyber-risk.

Okay, so a natural question to follow: how about pandemic insurance? This is where it gets, as Bruce Carnegie-Brown might say, a bit circular.

CARNEGIE-BROWN: Yes. But essentially, the insurance of business interruption — which is the interruption of your revenues because of an event — was essentially a property-insurance policy. 

Remember, companies like Three Brothers Bakery in Houston have what is called business-interruption insurance.

CARNEGIE-BROWN: Let’s say you run a shop and your shop is flooded. And as a result of the flood, you can’t open, you lose revenues. And the insurance was designed to cover that. 

And indeed, the Jucker family in Houston did have storm damage covered in the past — repeatedly.

CARNEGIE-BROWN: And then, customers were able to buy extensions or additions to the policy which covered them for additional risks. And one of those, certainly in the case of Lloyd’s, was for pandemic or notifiable diseases risks.  

DUBNER: When did you start writing that addition? 

CARNEGIE-BROWN: Oh, we’ve been doing that for a long time. So, there’s quite a good report on the Lloyd’s website after the SARS issue where we identify pandemic as a growing risk around the world. And we’ve been writing insurances for pandemic risks since that time. But most people don’t buy it. And as a result, do not have the cover.

Most of this is really about having your own personal risk register. And companies do the same thing. And one of the challenges for pandemic is that it fell too far down the list. So, people were aware that pandemics could happen. But they didn’t believe it could happen to them. And so, you would rightly imagine that pandemic will creep up the list. But people can’t afford to be insured for everything.

Back in July, the C.E.O. of Lloyd’s estimated that between 80 and 90 percent of businesses with insurance wouldn’t be covered for pandemic-related shutdowns, which were mandated by the government. Because what “business-interruption” coverage typically is linked to, says Carnegie-Brown:

CARNEGIE-BROWN: It was very much linked to physical damage in the property. But its label, as you suggest, is much more all-encompassing than that, which is why I think a lot of confusion has arisen. And I think in the industry, we need to think a little bit about how we label some of these products because they’re not as inclusive as they should be. 

Janice Jucker of Three Brothers Bakery would agree. When you buy a business-interruption policy, she says:

JUCKER: You get a book. It’s about three inches thick. And I do recommend that you make them print it and give it to you. And the other thing I would recommend, is to read the policy before. It is better than sleeping pills, I promise you. And read it with a highlighter. And you’ll find some things are missing.  

CARNEGIE-BROWN: And so, where you end up in dispute is with the precise wordings of the policy. You get into arguments of things like, was it the pandemic that caused the losses or was it government action through lockdown? Were your premises directly affected by this, or was the disease somewhere else, and you’re just caught as a third party? But the underlying tenor of your question is — which I absolutely support — is that the worst kind of outcomes here are where customers think they have protection and they don’t. 

Some of these disputes inevitably go to court. Carnegie-Brown says that U.S. courts have thus far been more likely to side with the insurance companies, as opposed to courts in the U.K., which are more inclined to rule in favor of the small businesses.

CARNEGIE-BROWN: One of the reasons why the insurance companies are doing rather better in the United States is because the policy wordings are much tighter in the United States. 

And why are the policy wordings much tighter in the U.S.?

CARNEGIE-BROWN: Insurance is run state-by-state in the U.S. And one of the things that most states do is require insurance companies to file any change in the wordings of their policies alongside changes in price. So, there’s a regulatory procedure to the wording. We don’t have that in most of the countries in Europe. And as a result, wordings are much looser because you don’t want to go to your U.S. regulator with something that’s marginal. So, you only change the wording if it’s reasonably material. And as a result, in the United States, there’s been more discipline in the underwriting of contracts. 

And more discipline in the underwriting of insurance contracts has meant that many business owners who thought their business-interruption insurance would cover their pandemic losses were a) wrong; and b) left with no legal recourse. So, is that the end of the story? No. It is not the end of the story:

*      *      *

As we’ve been hearing, a lot of businesses in the U.S. had insurance policies they thought would pay out when they were slammed by the pandemic. But they didn’t pay out. The typical business-interruption insurance policy specifically excluded losses from a pandemic.

Robert CARROLL: I believe the regulators on the state level were asleep at the switch.  

Robert Carroll is a member of the New York State Assembly.

CARROLL: They didn’t understand what this exclusion clause would mean. They looked at it and they looked at the plain language of it, which is how folks interpret contracts. And they said, “Oh, if your business gets the flu, this insurance won’t cover it.” What they didn’t assume would be that there would be a worldwide pandemic that would shut down the global economy.

But Carroll doesn’t blame just the regulators.

CARROLL: Insurance companies surreptitiously slipped in a vague clause — and they didn’t slip this clause into every contract. But about 80 percent, it seems like. Where they excluded viruses, bacteria, or microbes. And these clauses were approved by state regulators.  

You could, of course, argue that “slipping a vague clause” into a contract is what lawyers who write contracts are paid to do. And that it’s the job of the people who sign the contracts to understand. Carroll doesn’t see it that way.

CARROLL: When you have an actor like a small business purchasing insurance from a multinational corporation that has teams of lawyers and actuaries and provides this insurance as take-it-or-leave-it, there’s no negotiating of terms. And that’s the reason why legislatures and in this instance, the state legislature, which regulates insurance contracts, has the ability to go in. 

That is, to go in and do something about it after the fact. Carroll has introduced a bill in the New York State Legislature that would force insurance companies to reimburse businesses for pandemic-related losses even if their policies specifically excluded a viral pandemic.

CARROLL: This is about consumer protection. This is about small-business protection. 

Other states have similar measures in the works: California, Louisiana, Massachusetts, Michigan, New Jersey, Ohio, Pennsylvania, Rhode Island, and South Carolina. Carroll says this would hardly be the first time that governments have stepped in to override insurance contracts.

CARROLL: Southern states and Gulf states have passed legislation retroactively after devastating hurricanes and natural disasters to tell the insurance companies they’re not allowed to drop folks who have hurricane insurance, to require folks more time to put in claims after Katrina, etc. And these voided specific clauses in contracts. 

And American history, Carroll says, offers further guidance on undoing exploitive contracts.

CARROLL: We have tons and tons of examples where the state has come in and said we will no longer enforce restrictive covenants on the contract of sale of homes where they were discriminatory, where they said, you will not sell this home to a Black person or Jewish person or a person based on their their race or origin. And we said, no, that’s abhorrent and it’s against public policy. 

One argument against legislation like Robert Carroll has proposed is that it could bankrupt the insurance companies.

CARROLL: Bunk. They’re sitting on a trillion dollars. It’s not going to bankrupt the industry. 

Indeed, according to the U.S. Treasury, the property-and-casualty insurance industry in the U.S. had, as of 2018, total cash and investments of around $1.7 trillion, of which around $750 billion was considered “policyholder surplus,” growing at an average annual rate of 5 percent. So, let’s pretend, just for a minute, that states or even the federal government did decide to force insurance companies to bail out small businesses. How much money are we talking about here?

Howard KUNREUTHER: We are really talking about trillions of dollars of losses on business interruption. And I think the real issue is we don’t really know how long this is going to continue. 

That’s Howard Kunreuther. He’s an economist at Penn’s Wharton School of Business; he co-directs the Risk Management and Decision Processes Center there; and he has been studying the insurance industry for decades.

KUNREUTHER: Frankly, I shouldn’t be saying it. It is the most exciting time in my life because the first time that I’m here, people are really paying attention to this. 

DUBNER: So, let’s just get this out of the way. Do you and/or your center receive research or other funding from the insurance industry? 

KUNREUTHER: I appreciate your asking that. We have a sponsorship program where we do have insurers and reinsurers as well as other companies that provide us with an annual contribution. And there are no strings attached to this contribution at all. We pride ourselves, and have always prided ourselves, as being a neutral party. And our interest is not to in any way support any party, but to get the facts out on the table so we can say, “Here’s what we feel are appropriate ways to deal with the situation.”

The current situation, as Kunreuther sees it, is driven in large part by how most people think about insurance.

KUNREUTHER: The biggest mistake that I think we make on insurance — there are two. One is we underestimate the risk and we assume it’s not going to happen to me. “I don’t need insurance.” The second is a little more subtle, and that is we think of insurance as an investment. We don’t think of insurance as protection. People tend to buy insurance after a disaster, not before. They buy earthquake insurance after an earthquake. Even when they think the probability is lower that an earthquake will occur again than it was before. And then, here’s the kicker, they cancel their policy a few years later and say, “Look, I haven’t had a claim. Look at what I could have done with all my premiums.”

Kunreuther has explored these issues in a book called The Ostrich Paradox: Why We Underprepare for Disasters.

KUNREUTHER: What you have to tell people — and it’s very hard to do this — the best return on an insurance policy is no return at all. Celebrate you have not had a loss. 

The evidence that people do underprepare for disasters is quite clear. Here’s Bruce Carnegie-Brown from Lloyd’s of London:

CARNEGIE-BROWN: Every time a hurricane comes onshore in the United States, fewer than 25 percent of the people affected by the hurricane have insurance. 

At the same time, we do tend to buy other, less essential forms of insurance. 

CARNEGIE-BROWN: People insure their mobile phones, for instance. And that’s worth $500 or $600. But what they don’t do is buy enough health care if they get cancer or enough insurance for their families in the event that they die.

When it comes to buying the proper types and amount of insurance, Howard Kunreuther’s advice is — well, it’s sensible advice, perhaps, but it’s also frustrating for anyone who’s ever tried to read an insurance policy — anyone who’s not an insurance executive, or maybe a lawyer.

KUNREUTHER: People are not familiar with insurance at all. They often do not read their policies. They think that they have coverage that they actually don’t have. And as a result, I would say that most of the businesses, unless they actually had someone carefully looking at this, would not necessarily have realized that they were not covered for business interruption due to a pandemic. 

DUBNER: So, a lot of the media coverage early in the pandemic painted a picture that the insurance industry was toast. That between the stock market’s crumbling and many insurers presumably being responsible for a lot of payouts because of the pandemic. As it turns out, neither of those turned out to be accurate. So, it seems like the industry dodged a bullet, essentially. Is that accurate or am I overstating? 

KUNREUTHER: No, I think it’s accurate. I think by excluding pandemics, from coverage, they dodged the bullet. If it turns out that these states were successful in the courts by saying you have to pay retroactively, then this would cost the insurance industry huge amounts of money, billions of dollars. And this would be an enormous burden on the industry.

DUBNER: So, what happens if one state successfully legislates this? Does that become a domino that leads or forces other states to do the same?

KUNREUTHER: I would hope it would not. I would hope that each state would be independent in terms of how it would deal with this. And I would say that the insurers would make the case — and frankly, I would make the case, personally — that that would be inappropriate if it turns out that their coverage was excluded. Because we’re talking about an insurance policy and not a give-out or a subsidy that the insurance industry is responsible for. I think that most countries would say that this is a public-sector responsibility.

So far, that’s how the U.S. has seen it, as a public-sector responsibility. Through the CARES Act, the federal government directed more than a half-trillion dollars to small-business relief — to businesses with and without insurance.

CARNEGIE-BROWN: Governments all around the world have been pouring capital and cash into the economies to try to minimize the impact. 

That, again is Bruce Carnegie-Brown of Lloyd’s of London.

CARNEGIE-BROWN: And this is almost certainly helpful. That in itself has not changed whether the insurance industry is liable for its claims or not. But it raises the challenge of what to do about future pandemics. Because typically when insurers lose a lot of money on a line of business, they stop writing that line of business. What we would look at in this and what we represent to governments around the world is that they should think about this in the context of things like flood insurance or terrorism insurance, where often there’s a partnership between government and the industry. 

KUNREUTHER: The insurance industry did not charge a penny for terrorism coverage before 9/11. 

Howard Kunreuther again.

KUNREUTHER: It was surprising — they didn’t consider it as a separate aspect of insurance. They just didn’t really focus on it. 

In other words: insurers just included terrorism coverage in their business-interruption policies. It was not a separate carve-out. Probably because the risk just didn’t seem very large.

KUNREUTHER: They basically had not focused on what happened to the World Trade Center in 1993, the Oklahoma City bombings or terrorism around the world. But after 9/11, they all refused to offer coverage. They basically excluded it; it led to the Terrorism Risk Insurance Act, where the government got involved.

Carolyn MALONEY: After 9/11, New York — which I represent — could not get insurance for anything. 

That is U.S. Congresswoman Carolyn Maloney, who wrote the Terrorism Risk Insurance Act that Kunreuther mentioned.

MALONEY: Down at Ground Zero, you could not even insure a hot dog stand. The only way we could get insurance was partnering with one of our large companies, with Lloyd’s of London, and the premiums were through the roof. So, we offered a program — God forbid that we had another terrorism attack — that would be there to respond to it immediately with a government backstop.

Meaning the federal government would be the insurer of last resort in a devastating terrorist attack. This program is still ongoing; as of this year, it would be triggered after losses from a terrorism event exceed $200 million. This government backstopping allows insurance firms to offer terrorism insurance with premiums that are affordable. By now, you can surely see the parallels between terrorism and a pandemic from an insurance perspective. And that’s why Congresswoman Maloney has introduced a similar bill, called the Pandemic Risk Insurance Act.

MALONEY: According to most private insurance, they cannot provide business-disruption pandemic insurance support. So, this will allow a program to help businesses recover and react and rebuild after a pandemic.  

Here’s what she proposes:

MALONEY: First, once a pandemic is declared, each participating insurer pays out a deductible, which is equivalent to 5 percent of the value of premiums they collected in the previous year and the total amount of losses faced by insurers exceeds $250 million. Once the program is triggered and started, the federal government will be responsible for 95 percent of losses. And the insurers will be responsible for 5 percent of losses, up to a $750 billion cap.  

Maloney acknowledges there’s a lot of resistance in Congress to taking on such a potentially massive program.

MALONEY: But if we have a 9/11, if we have another pandemic, government is going to go in. We’re going to go in to help. So, we might as well set up a program that sets the parameters, the way it’s going to work, and is a partnership with the private sector who will be assuming part of the loss. 

CARROLL: It’s crazy. It’s crazy. It’s utterly crazy. So, in 100 years, when the next global pandemic happens, we’ll save those businesses?

That, again, is Robert Carroll, the New York state legislator. Just so you know, he and Maloney are both Democrats. His problem with Maloney’s proposal is that it’s not retroactive, that it doesn’t force insurers to pay out for this pandemic.

CARROLL: Carolyn Maloney had a similar bill after September 11th when insurance companies tried not to pay out claims. So, when was the next September 11th? It hasn’t happened. Insurance companies love this. It’s a great headline. People think, “Oh, they did something.” Meanwhile, everyone goes bankrupt except them. 

Bruce Carnegie-Brown of Lloyd’s of London has a different set of objections to Carolyn Maloney’s proposal.

CARNEGIE-BROWN: Rather than just create a kind of pandemic insurance product with government, our argument has been that that might be yesterday’s problem. What if tomorrow’s problem is a systemic cyber-attack? So, why don’t we create a product with government that is more flexible and can be used to address particular risks as they arrive? I think the key issue is resilience, actually. Resilience is a quality that is much undervalued by our economic models generally around the world. So, we’ve all been taught to grow as quickly as we can. We talk about lean inventories and just-in-time delivery and extended supply chains. And companies’ valuations have typically responded to that way of working. And I think we need to find ways to factor more value in to this issue of resilience.

So, interestingly, companies, when they report their business once a year, or even quarterly, make no mention of insurance, the protection that they have or do not have. And so, insurance is not yet embedded in companies’ thinking about the resilience of their balance sheets and their business models. And I think that’s a mistake. Now, I’m talking my own book in one sense there, for obvious reasons. But it does come back to this fact that I think the world is underinsured. And I think insurance can help build resilience against specific events when they happen. 

To that end, Lloyd’s has come up with three forward-looking insurance vehicles. The first idea is called ReStart.

CARNEGIE-BROWN: ReStart is very specifically about trying to provide what we call non-damage business-interruption insurance. 

In other words, the kind of business-interruption insurance that most firms who had business-interruption insurance thought would cover them for the pandemic, but which didn’t. Another idea is called RecoverRe, with the “Re” standing for “reinsurance.”

CARNEGIE-BROWN: RecoverRe is more of a banking product. Effectively, it argues that we’ll pay the claim up front and then recover it in premiums collected over subsequent periods of time. 

Sort of insurance-company-meets-mortgage-lender, if you will. And the third product is called Black Swan Re:  

CARNEGIE-BROWN: Black Swan Re is really trying to address the fact that some of these events are just too large. And so, they need government engagement. 

Carnegie-Brown, as chairman of an insurance firm, plainly is “talking his own book,” as he admits. But the economist and risk scholar Howard Kunreuther does see value in rethinking how insurance works, especially in rethinking the relationship between private firms and the public sector when it comes to future risks.

KUNREUTHER: The idea of expanding beyond pandemics is critical. And this is an opportunity for us to really reflect on what kind of risks the insurers can and cannot provide on a wide variety of different risks. Climate change is certainly one of them. And there is exponential growth with respect to CO2 emissions that will cause major, major damage on flood, trillions of dollars where there have only been billions in recent years. So, let’s take advantage of the pandemic to broaden our view of how we deal with catastrophic risk and then say what kind of a public-private partnership would we want to have for looking at all of them? 

Janice Jucker, co-proprietor of Three Brothers Bakery in Houston, is paying some attention to these bigger questions of insurance policy. But she’s more focused on the smaller issues. The issues she can actually control.

JUCKER: One thing about disasters, I tell everyone, you get one pity party and no more, because you’ve got to get to work.  

And Jucker, despite her intimate involvement with multiple disasters, remains an optimist.

JUCKER: I always say, out of everything bad comes something good. 

Including the history of her own small business.

JUCKER: So, the bakery history began about 200 years ago in Poland, and the family baked continuously, until the Nazis came and took the family — and frankly, the bakery — in 1941. And then my husband’s grandparents were murdered in Auschwitz. 

The survivors eventually made it to Houston.

JUCKER: And they didn’t speak English, but they knew the language of baking. And so, what were they going to do? So, they started a bakery. And my husband is now the fifth generation in the family that bakes Eastern European-style breads, pastries, etc. 

We asked Jucker if she is planning to sue her insurance company over their lack of coverage for the pandemic. 

JUCKER: Lawsuits are emotionally draining and you’re working backwards. And so, in the case of this, it’s probably gonna be a class-action. The lawyers are going to get a lot of money. I don’t know that it’s worth it for me. It might be worth it for a bar that’s completely closed and lost all their revenue. Then I would probably do it, because what else do you have to do? You’re completely closed. 

How about having state legislatures force payouts?

JUCKER: I would be shocked if they legislated that the insurance companies have to pay business interruption because frankly, I think they’d all go out of business. 

Would Jucker consider buying pandemic coverage now?

JUCKER: It would have to be better than when I heard about recently. I think it was $10,000, I got $100,000 in coverage. That’s just not worth it to me. 

So, what does Jucker think would actually be most helpful to small businesses like hers?

JUCKER: Vote on a stimulus package. That’s the most important thing, above all else. And you know, I’m not saying any political thing. I’m just saying that Americans are more concerned about what’s in their wallet right now. 

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Freakonomics Radio is produced by Stitcher and Dubner Productions. This episode was produced by Zack Lapinski. Our staff also includes Alison Craiglow, Greg Rippin, Mary Diduch, Corinne Wallace, Daphne Chen, and Matt Hickey. Our intern is Emma Tyrrell, we had help this week from James Foster. Our theme song is “Mr. Fortune,” by the Hitchhikers; the rest of the music was composed by Luis Guerra. You can subscribe to Freakonomics Radio on Apple Podcasts, Stitcher, or wherever you get your podcasts.

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