BETHANY MCLEAN: I had a perspective, from the beginning of the pandemic, that the conventional wisdom was perhaps not the right one.

Are we hoping that somehow if we lock down hard enough, the virus goes away? Well that’s just wishful thinking.

JOE NOCERA: The lockdown class, the Zoom class, kept thinking, oh, we’re so virtuous. Meanwhile, DoorDash, Amazon workers, FedEx drivers, UPS drivers, meat packers, all these people are braving the pandemic to serve you.

I think the lesson is that we need to be more thoughtful.

MCLEAN: I think we need to rediscover what leadership is. I think certainly politicians need to rediscover what leadership is. We need to remember that there are things that show us that we’re all in it together. 

BOB SAFIAN: That’s Bethany McLean and Joe Nocera, co-authors of the new book, The Big Fail, about the societal and business lessons of the pandemic.

I’m Bob Safian, former editor of Fast Company, founder of The Flux Group, and host of Masters of Scale: Rapid Response. I wanted to talk with Bethany and Joe because, as we move to a post-pandemic era, it’s imperative that we apply what we learned through the challenging times.

What Bethany and Joe are focused on is that perhaps the lessons we’ve anchored on aren’t really the right lessons at all. Whether you accept everything they say, their emphasis on a clear-eyed, fact-based approach, and on the tradeoffs involved in any high-risk situation, are instructive for any business leader. Let’s listen in. 

[AD BREAK]

SAFIAN: I’m Bob Safian, and I’m here with Bethany McClean and Joe Nocera, co-authors of The Big Fail, a new book, unpacking lessons from the pandemic. Bethany, Joe, great to have you with us.

NOCERA: Nice to see you, Bob. It’s been a while.

MCLEAN: Great to be here, Bob.

How Bethany McLean & Joe Nocera approached co-authoring The Big Fail

SAFIAN: So we all worked together at Fortune back in the day, and since then, the two of you have collaborated on several big projects. Bethany was co-author of The Smartest Guys in the Room, the definitive Enron book, which Joe helped to edit. You then co-wrote All the Devils Are Here about the financial crisis. What prompted you to take on pandemic lessons? Bethany, did you get a call from Joe at some point saying, we’ve got to do this?

MCLEAN: Joe and I have written our books about big things, big events that are at least in part economic calamities. And this was that. And I think I also had a perspective, from the beginning of the pandemic, that the conventional wisdom was perhaps not the right one.

NOCERA: I think I did call you up and say, we have to do this. Bethany’s very data oriented, and she was looking at data and she was saying, this doesn’t seem right. These numbers seem wrong. And she was actually tweeting some of this stuff. And she was getting a lot of blowback. And so I was persuaded by Bethany. We had a really good human story and we also had a really good unconventional wisdom story. It was like, oh, I’m all in.

SAFIAN: How did you guys approach looking at this differently, from the way maybe some others have looked at this landscape?

MCLEAN: One of the topics I’ve gotten fascinated with over the last couple of decades of writing about business, and it’s been a slow evolution, has been where capitalism works and where it fails. And so to me, the pandemic was an opportunity to step back and also see what was working in capitalism and what wasn’t, where it was making our society more fragile. The pandemic both highlighted and exacerbated those failings.

NOCERA: We decided to look at it through the prism of institutions that were at the dead center of the pandemic, particularly hospitals and nursing homes. And so, nursing homes have basically been taken over by private equity. And hospitals have become for-profit, the big ones anyway. And then I had a particular obsession with school closings and lockdowns — that they exacerbated income inequality, but nobody was talking about that.

Were the pandemic-related lockdowns worth it?

SAFIAN: You brought up lockdowns, which were devastating financially, required extreme government intervention to sort of restart these things in ways that were still feeling the effects all over the economy. And you’re skeptical, though, that it was worth it, right? Which seems to almost be a political argument today. You’re not necessarily making it as a political argument.

NOCERA: No, not in the least, no. Okay, so, now you got me going. There’s two things going on here. The first is that the lockdown class, the Zoom class, kept thinking, oh, we’re so virtuous locking down. Meanwhile, DoorDash, Amazon workers, FedEx drivers, UPS drivers, meat packers, all these people are braving the pandemic to serve you in your virtuous lockdown mode. So that’s one thing that drove me nuts. But the other thing is, they don’t work. And that’s what Bethany started to turn me on to very early on. They don’t work. If you look at countries that locked down versus countries that didn’t lock down, you can’t tell which is which. You absolutely can’t.

MCLEAN: I was skeptical from the beginning because of the very clear damage that lockdowns were doing in exacerbating inequality. And my sister, who’s a doctor, kept asking what I thought was the obvious question, which is, what’s the end result? What happens when you lift the lockdown? And well, as we all know, now from China, you lift the lockdown and the virus comes back. And so what’s the end goal of locking down? Are we creating hospital capacity?

Okay, if we don’t need to do that, are we hoping that somehow if we lock down hard enough, the virus goes away? Well that’s just wishful thinking.

NOCERA: I don’t blame the epidemiologists at all. I mean, their job is to say, here’s what you need to do to protect the society to the extent that you can. I blame the politicians. It’s the job of the politicians, not just to accept what they say, but to gauge risk versus reward, to say, okay, I’ve also got an economy to deal with. I’ve got school kids to deal with. I’ve got all these things that I need to balance. I don’t want to put a million small businesses out of business. What do I do to balance it? 

And, I mean, there is an answer. The heroes of our book… they’re the guys who wrote the Great Barrington Declaration. And their view was, you protect the elderly and the immunocompromised and you let everybody else live their life. When you get down to little kids, I mean, very, very few little kids truly got sick from Covid. So the idea that you try and let the society coexist with the disease, to the extent possible, is in the end, what I think, was the right answer.

SAFIAN: Reading over your book, it was bracing in some ways to go back to those days because it was so scary and painful at the time it was going through. And I think some of these decisions were made because leaders felt like we have to do something, not necessarily knowing what that something should be. The goal of your book, in some ways, is to try to get people to look at the pandemic more clearly so that next time we’re not quite panicking the same way in the moment.

MCLEAN: I have all the sympathy in the world for panicking in the moment. You’re right, we did panic in the moment, and you can argue that was the right thing to do. And maybe we could have even panicked a little more quickly. But then, as the data starts to become clear, the fact that there were still kids out of school a couple of years later, I mean, that’s where it gets insane. 

The evidence was really clear already that if kids miss school, particularly underprivileged children, the effect on them is absolutely devastating.

And so there is a obligation at some point to say, what are we doing here? Who’s suffering? Who’s not suffering? Who’s paying the price of this? And does this really make sense? And instead, we got so bogged down in political partisanship that nobody was willing to do that and we forgot how to listen to each other.

We need to remember how to listen to each other and not dismiss people with views we don’t like as crazy people. And then the other lesson is that leaders need to be leaders and that means not hiding behind other people. And our leaders hid behind epidemiologists in the crisis and they’ve hidden behind the gods of the market for the last number of decades, and refuse to do things like say, maybe it doesn’t make sense to let this hospital be sold to a private equity firm, because we understand that a private equity firm’s sole duty is to its shareholders. And maybe when it comes to people’s health, we need to have another value at work.

What business lessons were learned from the pandemic?

SAFIAN: I want to ask you guys a little bit about the business lessons from the pandemic. This podcast started in the heat of the pandemic. And there was a sense during that first year or so that the speed and urgency of dealing with the pandemic was like a model, that it was making businesses better and that business could adapt and move faster and could have better outcomes. The vibe of your book isn’t necessarily positive that those lessons have lasted. What do you think are the lasting lessons for businesses from having gone through the pandemic?

NOCERA: Well, if you’re an airline, you can lay off your entire staff and still get $25 billion.

MCLEAN: Not quite entire staff, Joe, just to play fact checker.

NOCERA: I’m skeptical as to whether there were any lessons that were learned, to be honest. The stock market started going up again. Small businesses got screwed, nobody cared. So if you were a big business or a tech company, you did great.

MCLEAN: I think some of the lessons are that the government will come to the aid of big business in any means possible when there is a crisis. And despite all the talk in the corridors of power about the importance of small business to the American economy, and by the way that’s real. It’s small business that leads the economy out of recession, small businesses as the biggest creator of jobs. But the government comes to the aid of the big.

NOCERA: I think the best example, in the book, of small businesses getting stomped on is restaurants, independent restaurants. I mean, first of all, restaurant owners all over the country really tried to help their employees, had food drives, had money drives, tried to keep them on salary as long as they could. And yet, when they did the PPP, the first and second round of aid for small businesses, restaurants were left out. 

MCLEAN: I’m going to play fact checker again. Restaurants weren’t totally shut out of the PPP, but the rules of it made it difficult for them to use it. But no, seriously, I wanted to go back to your question about things businesses should know. And I think it’s that the world moves really quickly and the wisdom of the experts is often quite wrong. In the immediate start of the pandemic, you had businesses saying, we don’t need offices. Look at this Zoom thing. Isn’t this marvelous? Wait a minute, what were we just hearing a couple of years ago about the importance of culture and investing in offices, so that people can be together and collaborate. And look, here we are a couple years later and people are like, wait, yeah, culture, the importance of being together. So I think one thing to take away from this is just be careful of these momentary things, because they change. They change on a dime. And then if you had listened to the experts about inflation, you would’ve said, we’re not going to have any inflation. We haven’t had inflation for decades. That thing is dead. And lo and behold, look where we’ve been for the last period of time… inflation. 

And so, I think I would reiterate the importance of thinking for yourself and the importance of not believing the fad of the moment. Oh, another one, right? That we’re all going to buy everything online from now on and retail is dead. And that turned out not to be true either. So there’s this constant flood of things that get reflected at you that is the conventional wisdom of the moment and a year later it’s wrong.

SAFIAN: What Bethany and Joe are pinpointing is our impulse to lean into decisions that have already been made, patterns already in place, and not rethink them in the face of new information. It’s a very human trait, but one that can limit our effectiveness.

After the break, we’ll hear about more insights on leadership and parallels to the Enron debacle. We’ll be right back. 

[AD BREAK]

SAFIAN: Before the break, we heard Bethany McLean and Joe Nocera, coauthors of the book, The Big Fail, talk about lessons from the pandemic. Now, they share insights about Operation Warp Speed, panic versus thoughtfulness in leadership, and the pros and cons of a market-based society.  

It sounds like the lessons that bigger businesses could get from all of this is like, I don’t have to worry about risks so much, because someone’s going to take care of me, in a way that smaller businesses maybe don’t have that safety net.

MCLEAN: I think that’s a really fair summary, because every time big business has gotten in trouble, the Fed has stepped in by lowering interest rates and big business then can access, even failing big businesses, can access the capital markets on incredibly good terms. That’s a luxury that isn’t available to smaller business. And yet, we don’t really think about that funding imbalance as part of the world we live in.

Why Operation Warp Speed required government cooperation

SAFIAN: One bright spot in the book was Operation Warp Speed, and the vaccine development and distribution effort may not have been optimally efficient, but it yielded results quickly. What are the lessons from that effort?

MCLEAN: So what I love about the Warp Speed story was it was people in government recognizing the limitations of the private market to fix the problem. If you were just a pure capitalist, you would say, well, private companies are going to step in and make vaccines, so we don’t have to worry, let the market function. But it doesn’t work that way because the vaccine business is not one that is attractive to modern Wall Street for a whole host of reasons that we go through. And it needs government cooperation to get the manufacturing scaled up. And people saw that. People in the government realized, no, no, no wait. You need this cooperation between government and business.

And yes, now you can point fingers at the amount of profits the pharmaceutical companies have made, but I don’t think any of that takes away from the fundamental accomplishment of Warp Speed. 

What societal lessons were learned from the pandemic?

SAFIAN: What’s at stake if we don’t learn the lessons from the pandemic? Is it financial? Is it health? Is it political?

NOCERA: I think the lesson is that we need to be more thoughtful. We need to not panic, at first, and we need to be willing to talk to various scientists who might have different thoughts about how to go about it.

MCLEAN: I think we need to rediscover what leadership is. I think certainly politicians need to rediscover what leadership is. We need to remember that there are things that show us that we’re all in it together. Because people had been suffering for decades from lack of access to healthcare and continued to suffer from that, that made the pandemic much worse for all of us. And so, we are all in it together.

NOCERA: I realize that Twitter is not America, but if you go to Twitter these days, you see the same arguments, vociferously back and forth, between the people who think all the mitigation measures were bullshit and the people who think that if you didn’t mask up, you were killing people. It’s still going on and it’s crazy. There hasn’t been enough science around what works and what doesn’t. There’s been very little science around what works and what doesn’t. And so here we are, three, four years later, arguing about whether masks work or not. 

MCLEAN: I guess I would add to that… there is no pandemic plan, in the sense that there has to be flexibility built into it. If you had argued, we should take the plan for influenza and applied it to Covid, you would’ve been wrong. Influenza is spread in schools. Schools are super spreaders. Kids did die during the 1918 flu. It’s different. So you can’t say that because we’ve prepared for that pandemic, we should take those lessons and use them for the next pandemic. You have to look at what’s actually happening. We all know the phrase, “follow the science,” which seemed to imply that science was this settled thing, that it was “Truth” with a capital T. Science is a set of assumptions that then you continue to look at the evidence that’s coming in in the real world and you say, is that assumption valid or is it not valid? And if it’s not valid, then you change your mind. And so, this idea that everything has to be settled and there needs to be “Truth” with a capital T and the plan needs to be decided on, and then we just march through that without looking at what’s happening. It doesn’t work that way. That’s not life.

SAFIAN: There is an irony that at the very start of the pandemic, there was incredible nimbleness in embracing lockdowns, even if it may not ultimately have been the ideal solution. And yet, once that one decision was made, you didn’t see the nimbleness sustained. And we didn’t continue to sort of rethink. And it’s curious why we can’t keep moving at the pace that we did at the beginning, be open in that way.

NOCERA: Well, I mean the real answer is that the initial move to lockdown was built around panic. Yes, it was important to do something. And I’m not against locking down at the beginning, because you’re trying to keep the hospitals from being overwhelmed. But if you’re thinking about it the right way, you’re saying, okay, we’re only going to do this for five weeks and then we’ll stop it.

SAFIAN: So you guys have worked on other books that were dealing with big seminal moments in American society and in business. And you pointed out things that you thought should change. When you look at this book, are you more optimistic that there will be positive changes going forward? Are you less optimistic?

MCLEAN: I actually think I have gotten more cynical over the years about the ability for anything to change. In the wake of Enron, we talked about corporate governance and we talked about short-termism and how important it was for business to have a more long-term view… that worked. In the wake of the financial crisis, we talked about the American system of financing home ownership, and how this was a silver lining that we would finally take a look at this and think about what we wanted to do. Over a decade later, Fannie Mae and Freddie Mac are still in conservatorship. That worked. So I don’t know. I’d love to say we’re going to go forward with a different view, that we’re going to take a look at private equities the next time a private equity firm is about to buy a nursing home or a hospital, the regulators in charge are going to say, huh, that didn’t pan out so well last time. Maybe we’re not going to do that. Will they? I don’t know. Your guess is as good as mine.

NOCERA: I do think that one big obvious lesson is that private equity and that the market shouldn’t be controlling what happens in the healthcare system. The market is, make more money every quarter, or if you’re private equity program, pull money out of these nursing homes for our investors. When in fact, they need more money, they need more help. The thing I’m encouraged by, I do think that the nursing home issue, the private equity issue, really came to the fore during the pandemic. And you did see people trying to claw back some money, just to call ’em on it.

And if you’ve noticed, very recently, there have been some efforts by the FTC to clip the wings of private equity. Whatever private equity used to do that was useful to society, no, not anymore. They just want to pull money out. And the nursing homes are a horrible, horrible example of that. 

MCLEAN: I actually am a little bit more of a believer, I think, in the market than Joe is. I kind of have Winston Churchill’s old mantra about democracy in mind, the worst system ever, with the possible exception of everything else that’s ever been designed. And I feel that way about capitalism too. But I do think the lesson is that you need to look really carefully at the structure of the market, because all markets aren’t created equally. So, take hospitals for example, if who makes money is being dictated by government policy. But then you’re saying that hospital closures should be dictated by a hospital’s failure to make money. Well wait, that’s not the market. That’s government incentives. And the same, I think, is true about the presence of private equity in an industry. Are their incentives aligned with those of other stakeholders? And if they’re not, then you need to think twice about that. And so, my view is just more thoughtfulness about when the market is functioning and when it’s not.

NOCERA: I don’t necessarily disagree with that.

MCLEAN: We fought a lot about this idea during the process of finishing the book. Maybe I’ve come out in a more nuanced place, and maybe you have too. So maybe we sound like we agree now.

SAFIAN: Well this has been great. Thank you guys.

NOCERA: Ton of fun. Thank you, Bob. 

MCLEAN: Thanks for having us.

SAFIAN: Listening to Joe and Bethany, I find myself torn between my own settled thoughts about Covid lockdowns, and the strongly held analysis in their book.

What I take away is a renewed imperative to check our own assumptions. Pixar founder Ed Catmull told me recently that he’s learned that half of all the things he is absolutely certain of are dead wrong, but he’ll never know which half is which.

To really grow, requires humility and openness, even to people and ideas that seem outlandish. 

I’m Bob Safian. Thanks for listening.