147: Big Picture Economic Themes in Wine Production

There has been a big surge in wine consumption on a macro level in recent years. California production is down due to both the removal of acres and climate challenges. Because national production cannot keep up with demand, imports have increased. Dr. Christopher Thornberg, Founding Partner at Beacon Economics and Director of UC Riverside Center for Economic Forecasting looks at big picture economic themes in the wine industry. From differentiation with sustainability, to an economic perspective on pricing water use, to the need for regional marketing efforts. Collaborating with the industry, local partners, and government can bolster the success for all people coming together to make great wines.

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Transcript

Craig Macmillan 0:00

My guest today is Dr. Christopher Thornberg. He is a founding partner of Beacon Economics and he's the director of the UC Riverside Center for Economic Forecasting. Dr. Thornberg, thank you for being with us.

Dr. Christopher Thornberg 0:11

Great to be here.

Craig Macmillan 0:12

You are an economic forecaster, macro economic forecaster. And you have a lot of experience in all kinds of things. This is a wine show, obviously, wine and grapes. How do you see the role of wine in the bigger kind of economic picture in the United States?

Unknown Speaker 0:29

Yes, you know, is interesting. I'm a macro economist, I'm based here in California, I spend a lot of my time talking about big things, interest rates, inflation, consumer spending. But at the same time as a California based guy is a guy who's done lots of talks in wine country, I've also become relatively cognizant, shall we say, of the ebbs and flows of Ag and the wine economy in general, right here. In California. Obviously, when you think about places like Sonoma or Napa, it's incredibly important part of not only local production, but local tourism. And as such, you always have to walk, you know, sort of watch what's happening in these spaces in these industries. Now, of course, when you think about California wine, when you think about US wine, from a macro perspective, there are two things that are happening simultaneously over the last couple of years. The first thing has happened is another big surge in wine consumption, you think about the history of wine, we saw big gains and consumption in the early part of the century, it plateaued for a number of years. And all of a sudden, over the last few years, yet again, wine consumption on a per person basis is going up, people are buying good wine. So we know from a consumption standpoint, demand is strong. The other interesting part of this, of course has to do with the fact that California wine production is down. It's down, in part because of the removal of some acreage. But it's also of course down because we've had not exactly the best weather over the last couple of years. And so you do have this interesting situation whereby California production has not been able to keep up with, if you will, national demand. One of the results of that, of course, has been an enormous surge of imports into the United States. So so times are good from an external standpoint, but obviously producers here in the state are facing some substantial headwinds, whether we're talking about land, whether climate labor, and of course, the real question is, is how does this thing shake out? Where does this thing hit?

Craig Macmillan 2:25

That's what everybody's wondering, you know, the investment in vineyards and wineries is substantial. Everybody wants one I've discovered in my consulting career, everybody wants to get in not always such a great idea that takes a lot of capital. And it takes a long time. Many wineries are losing money for 10 years or more before you even get close to breaking even depending on the product and the place. I have had many conversations about well, what can we do to kind of protect us, you know, what can we do to kind of, you know, get it get ahead of imports? What can we do to make our product special? So that can we be protected from some of this? And I would love to know your thoughts on how can a producer of a good like wine or wine grapes goes into wine? What things can they do to try to gain a bigger market share, again, something like imports or how to protect themselves against losing more of the marketplace.

Unknown Speaker 3:16

I don't think California wines are losing market share. Like if you look at the numbers, for example, crop prices, they're way up, they're doing very well. Sonoma's prices are very high Napa's prices are very high. I mean, to give you a sense, remember I get I focus on the entire state. And I always have to point out that there are more acres of wine grape production in Fresno by a good margin than there are in Sonoma, Napa combined. Now a lot of people outside the state are shocked by that. But then I have to point out you know, California box-o-wine on some the bottom shelf there in the supermarket. That's all made in Fresno. It's a perfectly reasonable part of market as the case may be. But it's a different kind of situation. It is a commodity product, as opposed to the name brand products that are made, of course in the vintage regions. And so when we have this conversation, the question is which part of the conversation are we going to have? Right? Are we talking about the prestige dub? Are we talking about the commodity stuff? Obviously, where you're located, you'd say the prestige stuff is, is more important, in a lot of ways. The prestige wines are doing fine, but the prestige wine industry in general has a problem. And the problem is you already said it that people want to be in the industry. It is a an ego industry. Everybody who makes a gazillion in finance wants to have a winery. That's how you impress your friends. Correct. You're in Wall Street. And so you do have a lot of guys coming in. Primarily guys, I appreciate the sexism involved there but I think we know that the guys are coming in buying these. These ego wineries, if you will, are predominantly men. What they're doing is flooding the market with a tremendous amount of great products in a very odd way, because they don't care as much about profit margins. Now what happens, of course, is, if you are that small winemaker who doesn't want to go commodity, you're the small one winemaker who wants to make a quality product, you suddenly find yourself between the rock and proverbial rock and the hard place. The rock are the commodity guys, and the hard place are those rich guys who don't care about a profit, and how you navigate in between those. And, you know, as a macro economist, I'll be the first person to tell you I don't have any clue.

Craig Macmillan 5:36

Business Strategy thing there.

Unknown Speaker 5:37

It obviously is a narrow path you have to walk in, and in general, they do I know enough small, high quality wine growers, you know, you can do it. But you got to be modest in terms of your ability to, shall we say, have great success here, you're going to have to be very careful as you navigate that.

Craig Macmillan 5:55

You know, this actually, this reminds me of a conversation I've had many, many times, and that is how do we make ourselves stand out? Yeah, we need people to know us, we need people to respect that we do. And there's different kinds of ways you can do that. You can try to get people to say, oh, this is the best quality product, everybody jumps up and down. But how do you communicate that that's tough, you need scores, reviews, things like that, that you have no control over. Or you can say it's a price based thing. So we're going to try to be a bargain brand, we're gonna have this level of quality at this lower price, right? Makes sense. But there's also lots of other kinds of signaling something called virtue, virtue signaling, where you can say, hey, there's this other thing about us, that makes us really special. And some of it has to do with maybe family, a lot of wineries really focus on the fact that it's a family business. And you know, we're we're kind of the working class heroes, even though we have this amazing property in this edifice, winery bootstraps and that's great. There's also virtue signaling around sustainability, I have kind of wondered whether that signaling how effective that is. So for instance, this organization Vineyard Team has a sustainability certification called SIP sustainability in practice, and lots of folks have gotten certified folks who are making really good quality wine, folks whose farming practices I am familiar with, and we also certified wineries and they're doing a great job. One of the things I've always wondered is how responsive are consumers to things like virtue signaling? Do you have an idea how how people respond to that kind of thing?

Unknown Speaker 7:21

Yeah, no, no, no, listen, there's a whole literature on this in economics. We know virtue signaling is incredibly important in more industries than just wine. I mean, whether your whole foods, pretending you're organic, because they're not really in hand, or, or in so many other places. virtue signaling is a singular part of business, particularly today in this era, where there's a lot of concerns about the environment where things are going. So to me, I think it's something that the industry continues to need to invest in, along with what I would call the other kind of branding items. One of the things that got me into wine in general was my explorations of California wine country, which again, we all have to keep in mind. I think a lot of wineries find their best clients are often the ones who wander into their winery for that tasting. And one of the questions is, is Nomad as a region, making sufficient efforts on making wine tasting available to folks on a more regular basis? How are they going about especially now in the post COVID area, when if people suddenly have a myriad of potential attractions available to them? How is the region standing out there among all these other things that are now available to people after a couple years of closure and say, Hey, no, no, no, you still need to come back here. You need to come to Sonoma. Get up here to Healdsburg get out there to, you know, and Russian River products and how do you encourage them to be there? So I think that aspect right now has to be heavily in the minds of, of local development.

Craig Macmillan 8:59

So one of the things that I've observed, certainly on the Central Coast, and I think it applies in other areas as well, definitely, you have vineyards that are really production oriented, and selling their grapes out of the area, places like Napa Sonoma, for the Central Coast as an example. Then you have a couple of pioneers that try and say, hey, we're gonna keep some of this, they do well, that brings other people into the game. And then eventually, there's a need for other kind of other auxillary businesses and activities to come along. So you need hotels, you need restaurants, you get horseback riding and balloon rides, and then people start to come for a variety of reasons, as well as not just wine or even if they come for wine, they start to enjoy other things. How important do you think that is for creating a stable marketplace for the wine industry or encouraging the growth of the market for wine?

Unknown Speaker 9:46

Yeah, it listen, it's incredibly important for a number of reasons. Obviously, ultimately, your best customers are the customers who come to the winery who join your wine club who get that every three months case of wine. Every winery wants those direct people and the direct people are the ones are going to show up in a room. So you say you need to be part of a concerted effort locally to build the wine tourism industry. And yes, by the way, that means you have to have other attractions as well, as anyone who's gone wine tasting can tell you, after about four or five wineries, you're not tasting much of anything anymore. Yeah, yeah, you really need to have other things to do for the rest of the day. And that means having again, an economic development strategy locally that tries to build up the entire tourism industry, it's the restaurants, it's the hotels, secondary attractions, and how do you tie them all together? And how do you build those regional collaborations that benefit everybody? How do you build the money necessary for that? The other thing, of course, ultimately, is that by doing that, you're driving the long run brand. You know, everybody knows Napa, you go anywhere in the world, you say Napa, people know Napa, you get to Paso Robles, there's some awareness, certainly better than it was 20 years ago, but nowhere near that of Napa. But over time, as you get more clients, high end clients who were serving the local wine at a dinner party, other people get aware of it. And it builds up until the point that you to have, if you will, almost that international reputation of a place like Napa. Now, what's interesting is, you know, when we think about this, particularly here in California, there is what I would call those those organizational outreach efforts. How do we make this all work for everybody outside, but here in California, we have an interesting problem is we don't make it very easy for local governments to do these kinds of things. Because here in California, for example, we don't build enough housing. You know, the Paso Robles region, for example, is shockingly devoid of multifamily housing, but it's multifamily housing you need for those young folks who are just trying to break into the industry, for the folks who are going to work in your wine tasting room or work in these restaurants. If you're not building multifamily, how are you going to build your labor force and able to be able to man, all these tourist operations, it has to be really a combined vision, because there's a lot of things that go sideways in these efforts. And ultimately, if you will diminish the the all you know, it's interesting, I'm an economist. And so at some level, I always come to the conversation with a big role to be played by the market, right. That's what economists are all about the market. But what we're talking about here is a brand reputation, which is a social product, we own it jointly, if you're in Pasco, if you're in Sonoma, if you're in the Finger Lakes, if you're in, in Walla Walla, Washington, you all own commonly that brand, and you have to have a local conversation to make sure you're all doing the right thing to support that brand. And that means you desperately need local, some sort of local cooperation. Typically public doesn't have to be could be a nonprofit, or public private partnership, whatever it is, but you need to have those institutions there to drive the whole thing forward. The good news is yet again, wine is one of those things that kind of attracts everybody's attention. It's almost like Hollywood, but slightly less evil. And if you can get people interested, because it's fun, it gets people to the table. But you have to have that regional collaboration, you got to make sure people are there. And it takes these kinds of community conversations.

Craig Macmillan 13:31

Are there organizations, people positions, that should be could be leadership in that process? And what role did the producers themselves have in this process, because like you said, I need to have folks who can work for me at a wage that I can afford to pay. And quite frankly, I need it to be stable. I don't want to put a year of in training, and it's very specialized thing, and then have them bail, and have to start all over again. I want to have employees that are happy, and they're confident they're settled. So what role does something like the grower community having this effect? I mean, do you go to meetings and say, hey, we need housing? Do you go to the politicians and say, hey, we were gonna lobby you to take this seriously? What's the strategy?

Unknown Speaker 14:13

My personal advice on that is, again, every region should have some sort of public private partnership, right? You build up some sort of local wine tourism chamber, if you will. And you bring in public plank, private clients, you put money into a kitty and use that to push forward the kind of conversations necessary, whether it's about branding, tourism or local, if you will, development needs, you got to have everybody at the table for that kind of coordination and cooperation, for better or for worse. The nice thing about government in this particular case is they can enforce if you will, some sort of fairness and supportive such an organization. One of the things I always worry about when it comes to the strictly private nonprofits I get like a Chamber of Commerce is the tendency for free riding, you're always gonna have two winemakers who are going to be very happy to, shall we say, take advantage of making money off the name brand, but they're not going to participate in the in that social efforts. And it's good to have a little authority, if you will, to make sure everybody's contributing at some level to ultimately, what's good for the social good. So that's helpful as well. And of course, that one of the bigger issues here has to do with how such organizations deal with whatever called some of the broader pressures we're dealing with. Because like, when you talk about housing, it's not just ag, right? It's everybody. And they have to be there to bring wines point of view to the table, when you have planning meetings, when you're discussing the lack of multifamily that has to be the voice of the community at those particular tables. That's, of course, particularly profound here in California. But there's been a big decline in wine production state over the last couple of years. And it's because we've had some pretty hideous weather, incredibly dry. We know we are in a big water shortage, the ag industry in general has got to be part of the solution to water shortages here in the state. And by the way, it behooves the wind industry to be part of the process to get ag to the table. You know, it's interesting, when you think about the water shortages that we're dealing with right now, a lot of folks point at, say, for example, nuts, there's, that's a big enemy. No, until we're growing nuts, how dare we grow nuts in this state,.

Craig Macmillan 16:30

So many gallons to produce a pound almonds, that was the big one a couple of years ago.

Unknown Speaker 16:33

But what's the value of that pound of almond see, you have to think about the dollars coming off the trees coming off the vine or treesout of the ground, it's not gallons per pound that matters, it's gallons per dollar that matters. And the problem you have with water in the state of California, is this just allocated on the basis of 120 year old agreements, there's no economic logic used to assign where that water is used. It's not just oh, take it away from the farmers to get into the cities, we have to understand that high value crops suffer as well. So it behooves everybody in the ag industry to come to the table to have these conversations. Because if you're not there, if you're if you're part of this, what's almost seems to me to be a boycott of negotiations over water, that's what ag is, right now, we're just boycotting this, if you even if you even bring it up, we're gonna we're gonna ask you, do you think people should stop eating eventhough that's a ridiculous question, you can't do that. You got to be at the table, you got to acknowledge the problems, acknowledges solutions and work towards a compromise. And again, I think the wine industry, the wine grape industry, here in the state has a lot to say about this. And they should be part of that conversation that should be part of pushing that conversation.

Craig Macmillan 18:02

So this is a really interesting division they've seen philosophically amongst growers, and also other areas. If I have pumps, if I have wells on my land, the water that comes out of that, well, is that a private good? Is that benefits me, and is not somebody else's property? Or is it a public good, that I'm taking advantage of and we're all going to hit a tragedy of the commons? Well, okay, I'm using a bunch of terminology that and that's where a lot of conflict comes from is if I'm treating it as a private good, or am I being quote unquote, responsible. You hear people say that, and this treating it like a public good, then what kind of benefit am I getting for what I'm doing? So I very much get your point, I would love to hear a little bit more about if I am drawing a public good and much like grazing sheep on the commons, where it came from, but I'm contributing to the economy. I'm hiring people, I'm paying wages and paying taxes, protecting this land from some other use. That's another thing.

Unknown Speaker 18:58

I don't I don't like that term at all.

Craig Macmillan 19:00

Okay, go ahead. Hit me.

Unknown Speaker 19:03

You're protecting the land from another use. What does that mean?

Craig Macmillan 19:06

Oh, it's an open space argument. If you if you consider vineyards to be open space, then I'm keeping this land in open space, as opposed to letting a big housing development go in.

Unknown Speaker 19:15

Okay, well, first of all, we have more wealth, way more wind acreage, and we have need for new housing in California at the moment. So I'm a little dubious of that specific argument. And I think that the whole idea of market economics is it allows whatever scarce resource to be used at its greatest possible potential. If a hunk of land is more valuable as houses than it is winegrapes, then we should be building housing there. That's the logical economic outcome. Unless there's some sort of externality we can point to and there may well be there's a value to open space that often doesn't get priced into these conversations. That's a completely different debate for a completely I think different show is as the case may be. But in general, look, let me put it this way. Water is a public good. It just is. We know that. All right, nobody owns the water, the water under your land is part of a massive aquifer. It's not just under your land is sloshes over the place, just like the river running by your farm, it has people upstream and downstream. And you don't want the people upstream of you taking all the water before it gets to you. I don't think you should be allowed to take all the water for gets the next person down the way, we again have to have a cooperative solution for how to deal with this water question. Now in general, if we acknowledge it's a public good, there should be a public price for the product. It's as simple as that people should be paying for the water they use, which they don't do in this state. At any real level, our water agencies charge people on the basis of cost, which is not a market price, it's not the relevant figure, we need to price water at a level that will basically constrain usage to a reasonable sustainable amount. Now guess what? The good news for wine grape growers, particularly for higher end wine grape growers, is you'll be able to afford a higher price. Why? Because you're producing a high profit margin usually, sometimes water is not your cost, you could do it. Whereas folks would probably get pushed out as yeah, I would anticipate that some hay farmers may no longer grow hay. Now, by the way, before we feel sad for the Hey, farmers, remember, if I'm talking about using a market, that, hey, farmers are going to get paid for not using their water. And by the way, they will almost assuredly make a hell of a lot more money selling their water than they are selling the hay. Yet again, we end up with a good social outcome all the way around. This is a win win win proposition that I'm suggesting here. But again, it's amazing the mental lock we have when it comes to having conversations about applying even basic market mechanisms to water consumption. When as a quote unquote capitalist economy, we seem to rely on markets to supply most of our basic day to day goods. It's interesting. Yeah.

Craig Macmillan 22:14

So this is just my perspective. I'm curious, would you agree that there's a lot of resistance to the idea of paying for water?

Unknown Speaker 22:19

We already pay for water. I mean, everybody pays a little bit, but obviously, the are wildly different. What I pay for my water at my house in Los Angeles is completely different than what the guy's paying for water for hay in Imperial County, which is different than what the winegrape farmer in Fresno is paying for his water. So we all pay completely different prices. For the most part, those prices are way below what they should be. Really all ends up being some bureaucrat out there saying okay, well you're paying under so you can only consume X amount. Again, that's the wrong way of doing things. We really want prices to be more equilibrated. It means allowing the market to set some sort of price, and then allowing the various market participants to purchase what they can economically do at that price level. Is it complicated? Not to go off topic here. But let me just your typical, I've done some of these calculations, your typical hay farmer Imperial County makes about from best case scenario, 15 to maybe $50 per acre foot of water, they used to grow hay, right? There is debate going on in Orange County right now about opening and desal plant, that desal plant to be clear will produce water at something on the order of 2000 to $2,300 per acre foot. And of course, that doesn't even include the environmental damage such plants create because they are bad for the oceans. We know that. Why would we do that? Why is it Orange County's paying those farmers in Imperial I don't know. let's give them $400 An acre foot that's roughly 10 times what they're making growing hay. By the way, that still leaves you $1,600 An acre foot to do environmental remediation. Move the water to Orange County. Economic remediation if you think parts of the Imperial County will suffer because there's less hay being grown. I'm not sure what it would be but maybe there's somebody getting hurt their. To me there's so much money being left over how can this state be anything but better off with that transaction taking place? The only as far as I can tell the only agents who suffer are the cows and horses in Korean and Japan are going to be denied their lunch.

Craig Macmillan 24:42

You do have to put the frame on you do have to put on the box. You know what area are we looking at and what's a rational box to draw? And then who are the players in that box and what's the resource and how much resources there right here are you talking about the making a market for Wwater. Aren't markets, volatile, unpredictable, potentially dangerous? I mean, that's a value loaded word. I know, but.

Unknown Speaker 25:09

What does that mean? Exactly? We have markets for apartments and market for home and markets, gas markets for milk. They work everywhere. What really were afraid of a market. Since when? This is a market economy. There are places that markets don't work very well. I agree with that, by the way, health care markets horrendous. We don't we don't need markets running health care. That's a separate conversation for a different podcast. I'd you know, I just opened up a massive can there. But when it comes to this, isn't this isn't healthcare, water is water. And markets make sense.

Craig Macmillan 25:44

Again, how would a group of growers engage that? Can you see wine grape growers being leaders because their crop is different. That's again, one of these things we've had danger in a multi-ag, in multi crop counties is like the wine folks, you're gonna like, hey, we don't use anywhere near what these guys use. But you don't want to throw that out there. You want to throw that stone because we need to get them involved right in the plan. And yet winemakers have a couple of things going for them. Number one, they have prestige. So I think that they get attention. They have a commonality that I think holds them together better than other crops, because everybody's in the same boat. And yeah, commodity growers are in the same boat. But I've seen this in wine where people are a little bit more willing to get together. There is a lot of conflict within the group, obviously. Can you see growers being proactive towards this process and saying, hey, we think this is a good idea, we think this will not only help us we'll have everybody else does the sustainability aspect here because people want to be sustainable. So they're going to be looking for things that say, Hey, this is going to help us have water and also we're gonna be able to use it equitably. Can you see the movement there? What does that look like? Or have you seen examples of this kind of thing in other situations?

Unknown Speaker 25:44

listen, where your hometown Paso Robles, the classic case of this, right, because we know there that there's our growers and buyers who are heavily involved with local water conversations. They can have an they should have a seat at the table, whether it's local, or statewide, or national. The industry's sustainability, at some level is ultimately tied to the sustainability of overall agriculture in the state, just like your sustainability, as a brand is going to be tied to your local branding and tourist efforts. You have to understand the broader macro nature of the world you exist in and be part of those broader processes. By the way, what I just said is true, not just for conversations about water, or housing, it's conversations about politics in general, not to go too far off into left field here. But a lot of Americans right now feel completely alienated from politics as it exists right now in the US, you look at both parties who are talking about topics and conversations that seem almost completely bizarrely foreign to your actual day to day living your world. And you wonder how we got here. And again, it's a function of a lack of participation. We are social creatures, we exist within a community. And when the community starts going directions, we don't understand, then we have to look in the mirror and ask, is it because I'm not being part of those conversations? And if so, how do I become part of those conversations? How do I get involved? And the answer is being a leader yourself, or supporting organizations that are going to go out and lead on your behalf. It's about being involved, which, again, when you're trying to build a brand, when you're trying to make sure you have enough workers on the wine farm and in the wine tasting shop, I appreciate how hard that is. If you're relying on somebody else to make the right decision, well, then you're not going to be able to, shall we say have a moral high ground to complain when the decision is not what should happen have happened. We have to remember that we have to remember that the that the broader ag community, wine producers wine grape producers can be part of this broader conversation. And indeed they should.

Craig Macmillan 29:16

And perhaps they need to be.

Dr. Christopher Thornberg 29:18

Yes, I think so.

Craig Macmillan 29:19

We're talking about an imperative here. Yeah. Yeah. And that probably applies to lots of other things. We've seen it with habitat. We've seen it around pesticide use. We've seen our worker equity, and a lot of really positive things have happened in the last 20 or 30 years. This is the next one. I go back and I look at sustainability reports. And it was from various companies and I see lots of stuff about habitat. I see a lot of stuff about workers, electricity starting to show up more and more. They almost never touch on pesticides. That's like the third rail, which is too bad because the industry has been doing a much better job last 30 years than they did but then the one thing that I always noticed is missing is water. There's nothing about really what are we doing about water in some cases they do, don't get me wrong. Some folks are very out there saying, Hey, look at what we're doing, but a lot of them are not. And I think that may have to become, like you said, part of the identity and big focus for how people behave, and getting involved at different levels.

Dr. Christopher Thornberg 30:11

And now more than ever, because we all know that California is drying out as part of the climate change that's around us. We still have lots of water. You know, I keep saying I've always say that we don't have, if you will, a drought in as much as we really don't have enough water to go around. We do if you actually sat down and applied basic water conservation efforts, you would actually see we have plenty of water in this day, we just have to use a smarter, that's where we just fall over. Because we don't seem to be able to get to that conversation that ag can change, they can continue to thrive through this process. You we got to stop the whole, every time there's any kind of conversation about change. The first place we go is existential threat, you know?

Craig Macmillan 31:05

Yeah, exactly. Oh, yeah. Threat to my life. That's a tough one. That's a tough one. It's a very basic kind of socio sociological, psychological reaction. You know, the change is like, Oh, my lifestyles threatened. Me, and my family has done this for 1000 years, whatever, which completely aligns the fact that you okay, your people been on the land for 150 years, but they weren't wearing sneakers. You're wearing sneakers now. They weren't wearing blue jeans, you're wearing blue jeans. They didn't have diesel powered tractors, you have diesel powered tractors now. And all of those things, some of them are about just changes in society and the way people dress and and culture, but also a lot of it's about efficiency.

Dr. Christopher Thornberg 31:42

And you didn't have 40 living in California, and you didn't have a 20 year drought behind you. The world is not same nor should your life be.

Craig Macmillan 31:53

And it's not gonna be Yeah, well, that's great. This is pretty much the time that we've got, I would love to just sit down and like have a beer with you. This is I was gonna, I was gonna ask you about Veblen goods. But I think that might be a totally different show, not a different episode. What is what is one thing you'd recommend to our listeners just in general.

Dr. Christopher Thornberg 32:13

I exist in a world as an economist right now, where there are economic realities. And then there are public narratives. In the 25, 30 years, I've been studying the economy, never have I seen such a massive gap between public narratives and the economic data. How many times does the newspaper use the term cliff were at the cliff edge, we're on the constantly right, and we have panicked ourselves to ridiculous point. And as a result of that, we paralyzed ourselves for fears that don't actually exist. So my one advice to everybody out there is turn off the crisis mode, you got to turn it off, let it go. The world changes, we all have to sit down and understand that. And from a community standpoint, we could figure out the best way to move forward, if we can have conversations about how we all adapt together. But if everybody's screaming under the world, everybody's screaming crisis, everybody's creating an existential threat where it doesn't exist. Again, we're paralyzed. Thus, we cannot respond to crises. Thus, the crises become that much worse. By not allowing that mentality to exist, we can actually take these things on, and all be better off, but it means Yeah, it means taking a step back and being a little less selfish and, and a little more willing to hear other people's opinions and outputs and and moving accordingly. We live in and I think we live in a period of time where people are having a tough time with that. And that's we again, you gotta look in the mirror.

Craig Macmillan 33:48

That is great advice. Very insightful. Where can people find out more about you?

Unknown Speaker 33:52

Yeah, well, Beacon Economics, beaconecon.com. We do all sorts of stuff. You'll find some stuff I write on a regular basis, which goes around to a lot of these topics we touched on here, so www.beaconecon.com.

Craig Macmillan 34:05

Our guest today was Dr. Christopher Thornberg, founding partner of Beacon Economics and director of EC UC Riverside Center for Economic Forecasting. Dr. Thornberg, thank you so much. This has been a real pleasure. This has been really really fun for me.

Unknown Speaker 34:18

Absolutely. Me as well. I enjoyed the conversation.

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