Locusts and Pirates: What’s Your Favorite Recession? with Tyler Goodspeed

- [Collins] Will Iran still be able to control the flow of oil?

- Be jointly controlled.

- [Collins] By who?

- Maybe me. Maybe me.

- You want the United States to be in control?

- Me and the Ayatollah, whoever the Ayatollah is, whoever the next Ayatollah is.

- It's Tuesday, March 24th, 2026, and welcome back to "GoodFellows," a Hoover Institution broadcast examining history, economics, and geopolitics. I'm Bill Whalen, I'm a Hoover Distinguished Policy Fellow, and I'll be your moderator today. And before we start the show, we have a special announcement for all "GoodFellows" fans, friends, and followers, our GFFs here in Northern California. As part of Hoover's speaker series "Dialogues on Freedom" celebrating the 250th anniversary of our country, "GoodFellows" will be doing a live show at the Hoover Institution on the campus of Stanford University on Wednesday, April 22nd at 4:30 PM, and we want you to join us. Seats will be available next week at Hoover.org/GoodFellows. We expect them to go quickly, or you can pause the show if you're watching us on YouTube and scan the QR code and get notified when tickets are available. There will be reception after the show where you can meet the fellows in person and be able to buy some of the limited edition exclusive "GoodFellows" merch you've seen on the show, like this little quarter zip that I'm rocking. We hope to see you there. Now, on with the show, and first things first, let's meet the stars of our show if you haven't been watching us for the past six years. They get an introduction nonetheless. It's my honor to welcome back to "GoodFellows" the historian, Sir Niall Ferguson, the economist, John Cochrane, and former Presidential National Security Advisor and our resident optimist Lieutenant General H.R. McMaster. Niall, John, and H.R. are all Hoover senior fellows. Gentlemen, two topics to cover today. In the second part of our show, we are going to revisit, you guessed it, Iran. Wanna get your thoughts on whether or not you think there's going to be a deal by the end of the week as the President suggested. Also wanna know exactly who we're talking to and what acceptable terms of the deal would benefit the US and Israel. But first things first, let's revisit two cornerstones of "GoodFellows," and that's history and economics, specifically the intersection of history and economics. We're gonna talk about the history of economic receptions. It's my great honor to welcome to the show our friend and former Hoover colleague, Dr. Tyler Goodspeed. Tyler Goodspeed chaired of the White House Council of Economic Advisors from 2020 to 2021 before he came west as a Hoover Kleinhinz fellow. He is the author of four books of economic history, and he joins us today to discuss his latest opus, which comes out a week from today, March 31st. It's title "Recession: The Real Reasons Economies Shrink and What to Do About It." Tyler, it's great to see you.

- Good to be with you, gentlemen.

- So I'm not gonna put you on the spot and ask you if there will be a recession in 2026, but let me put it this way. You've written a book which discusses the historical conditions why recessions happen, why they don't. So let's look at what's going on in the economy today, Tyler, and explain to us what kindling exists, if you will, for a recession.

- Well, interestingly, the kindling metaphor is one that is common in this literature on economic expansions dying of old age, that the longer an economic expansion has been going on, the more sort of poor quality contractual matches have built up, no pun intended. But basically the idea is that as an economic expansion progresses, firms are just hiring what inputs they can in order to produce to meet current demand in sort of high profit environments, and that creates a lot of so-called dry tinder, it's sort of a wildfire theory of recessions. And this view of recessions has a really long providence. I mean, most of the interwar theorists of the 1920s and 1930s had some variation on this theory, that as an economic expansion progresses, you get imbalances, fragilities, excesses, otherwise malinvestments that render an economic recession more likely. But the reality is that if you just look over the past four centuries of economic recessions in the United States and the United Kingdom, the historical evidence rejects that thesis, that essentially economic expansions do not die of old age. And contrary to some earlier work, I find that they never have. So in the book, I liken this to a Peter Pan versus a Dorian Gray view of economic recessions. So we all know Oscar Wilde's "The Picture of Dorian Gray," so a lot of people think that economic expansions are rather like the picture of Dorian Gray, that even though the subject appears to be superficially healthy and exquisite and youthful, locked away in the attic is this hideous picture bearing all of the blemishes and disfigurements of each hedonistic excess until it can only be restored to its exquisite beauty with a very instrument of those hedonistic excesses. But I find that in contrast, economic expansions are more like Peter Pan, they never grow old, although they can be killed if they lose a battle with Captain Hook.

- And Tyler, when you started writing this, you looked at the calendar, you said, "I better get this out by the middle of March because there's gonna be a war in the Middle East and an oil shock."

- I would love to claim oracular sagacity, but unfortunately, A, one of theses of the book is that recessions are fundamentally unforecastable, and I suspect that will be a view to which John is sympathetic. And secondly, the publication date was set about 12 months ago, so well before any recent developments.

- Can I start with the history before John does the economics? Because I wanna just emphasize that Tyler's book is a triumph of economic history. It takes a problem in economics, which is why do recessions happen, but answers it by looking brilliantly and insightfully at the past. And we go a long way back. There are some 18th century recessions in the book, British and American recessions, and they're all there. And I think, Tyler, you make this very compelling case that there is no kind of cycle that makes inevitable recessions happen, that they are murdered, they are killed by shocks. And these shocks come in all kinds of different shapes and sizes, not necessarily energy shocks. In the earlier history, it's agricultural shocks that are often the problem. And I must say one of the highlights of the book for me was the role that locusts played in the Great Depression! And I do want you to talk about that because I learned more about the Great Depression from reading your book than I've read about the Great Depression in any book published in the last 20 years. This was really fresh and fascinating stuff. Talk a bit about agricultural shocks 'cause, I mean, for the parts of the world, these are still a very real thing. In much of the developing world, an agricultural shock is the principle cause of recession. But the role in the Great Depression of the locusts is just too good to leave out of this show.

- Thank you, Niall. And I would actually share your sentiment, that those were some of the biggest surprises to me as I got deeper into this project. And the piece of evidence that sort of led me to discover the locust story was actually just rereading FDR's first inaugural address in which among other memorable lines, and this was actually one of the less memorable, he noted that there's no plague of locusts.

- And yet, we are stricken by no plague of locust.

- This was in March 1933 that he was saying this. Well, why was he referencing the eighth plague of Egypt in March 1933? Well, because two years prior, there was a locust plague throughout much of the American West and plain states that was legitimately of providential proportion. And you had contemporary reports writing about American farmers kneeling on the very ground where back in 1873 a similarly catastrophic locust plague had descended. And if you look at the Federal Reserve regional reports at the time, they are noting the financial distress that this was causing. The farm disclosures, the forced farm sales. And then if you look, as Wicker did in his excellent book on the different banking crises of the Great Depression, because we think of the Great Depression as this single monolithic event, but really, among other things, it was four distinct regional banking crises of which three were distinctly regional in nature. And when you, just for the 1930-31 period, map those bank failures onto the distribution of locust vulnerability and the drought vulnerability that preceded that plague, because droughts tend to beget locusts because the larvae survive, it maps very, very harmoniously onto the distribution of the locust infestation. And this, as I noted, was not the first time for such a shock to descend on the American economy. It happened in catastrophic proportion in the 1870s and even earlier in 1857.

- And before John jumps in, just one other point that seems really important. Your recessions remind me of "Murder on the Orient Express." There's always more than one killer. And so you had these agricultural shocks happening at the same time as the more familiar causes of the Depression. The fact that agricultural and industrial prices had been falling for some time, the problems of debt deflation, the banking crisis that Friedman and Schwartz wrote about, the monetary policy errors, they're all there in the drama, but because recessions need to be induced by more than one cause, they're nearly always multi-causal events. You need these combinations of shocks, especially with the modern US economy. It takes a lot to stop this thing because there's so much momentum and it's much more diversified today than it was, say, in 1929. But that's probably enough for me. I think John's been very patient considering this is right up his street.

- Well, my whole point is I love to hear historians and I can't wait to hear, H.R. gets to be every man here, and explain this stuff to me, please. I wanna cheer the book for the history. Sorry, Niall. I've become a history fan in my old age, in part because I've been in this business 40 years. I started doing economics saying, "Oh, recessions. Why are there recessions? Gee, there's a good idea, something we can work on. Surely we'll make some progress in 40 years!" And it's remarkable how little progress we have made. So I'm really anxious to go back to the beginning and just delve into the facts and maybe finally we'll figure this one out. Now I do wanna frame Tyler's history and with some of how we think about these things. It is clear that recessions come from different shocks and different constellations of shocks, and so there's not a unit, same shock theory, but recessions are very similar in many other ways, apart from once we get to modern economies where you're not just looking at crop failure and everything falls apart. In modern economies, what's interesting, there is something that smells of demand, not supply, if you will, and that is that all parts of the economy fall at the same time, and many regions fall at the same time. So if it was just locusts, you'd expect Kansas to go down. But California, well, there's no locusts in California, we should be doing fine. There was a Great Depression in California as well. Investment falls more than consumption. People around the country lose their jobs. So that fact of it being everywhere in the country, and often everywhere in the world but very much more in the country, does suggest a common element that isn't specific to the shocks, which are always specific to industries or locations. So something about "demand," whatever that means, seems to be the mechanism. So that's different shocks, but I still hunger for a common mechanism. And that always seems to go through, something goes wrong in the banking or the money. So some sort of financial crisis is part of, seems to be part of every recession. Now then, is it we don't have enough money to make our transactions? Well, I don't know. I kind of sniff something about credit, something about unwillingness to take risk or inability to take risk as the central mechanism. So that's kind of my question. As you look at all these episodes, there is something common to these events that they, you plot the time series, they look very similar, and I think that's in the mechanism. But we still don't, we economists don't really have a good one on that. And what did you learn that is about that mechanism from the pattern of history?

- Yeah, I mean, to use our popular terms among economists, impulses and propagation mechanisms.

- Exactly.

- And your comments highlight two considerations that I had when I encountered a lot of these supply shocks. One is that I tend to think of supply shocks as raising the price level, whereas often during recessions we observe disinflation or even outright deflation. And I think there are several points that I encountered that helped to explain some of that. One is that, first of all, this is not a shift of a supply curve, whether it's a cotton shock or a wheat shock or an oil or coal shock moving along a static demand curve, because especially with a lot of these energy shocks, some of the industrial action in the essential coal industry, there was real activity, real production that could not take place. And in the event of that, there is hiring of capital, of people that doesn't take place. And actually one feature of the median and modal recession, I won't say of all recessions because Anna Karenina principle, every recession is an expansion that fails in its own way, but a common feature of your median or modal recession is that they are characterized in the first instance not by a sudden increase in the rate at which firms lay off workers, but rather a sudden decline in the rate at which they hire workers. And then you have workers, and you can extend that to capital and other inputs, you have inputs into production that are remaining unemployed for longer than their demand- Their income goes down, their demand goes down. So I think that's the first point, not to sound too much like Jean-Baptiste Say, but supply does have demand implications. The second feature that I highlight in the book is that there are monetary channels, both external and internal, that one observes in the event of such supply-driven shocks. One is external reserve drains, and this happens whether you're on a gold standard or not, that basically if you're a net exporter of a cash crop like cotton, and you have a bowl weevil infestation in South Carolina, and the Carolinas more broadly as happened in 1927, and there were some residual effects in the early 1930s, then your net exports decline sharply, and you get a net external drain so that can impart a disinflationary or even deflationary impulse throughout the economy. And the economic historian, Paul Roddy, highlighted, discovered, demonstrated that this was a common feature of multiple US recessions in the 1800s into the early 20th century. And in the United Kingdom, a similar dynamic was at play, although it looks slightly different. In the United Kingdom, the typical pattern would be you would have a wet summer, you would have an adverse supply shock, and the United Kingdom would have to import a lot more wheat and other grains. And so there again, you would get that external reserve drain.

- So here, you're sounding like a Milton Friedman. So you're saying the mechanism here was a drain of money and then we don't have enough money, so the supply shock leads to a demand fall. Could I'd like to follow up and then, H.R., you will get-

- No, you already set me up, John. I've got a question ready, but keep going, keep going.

- Well, I just want a quick follow-up.

- You don't need a washed up general in this conversation. Anyway, keep going.

- You did mention the what to do about them. And the other, I'm sure you have a comment on the difference between 1921 and the Great Depression. 1921, famously, there was a very sharp recession and the government did absolutely nothing about it, and it came back roaring quickly. The Great Depression, in my sense of the historical scholarship, was some sort of financial, money, lack of demand thing, but then made much, much worse by the Roosevelt administration's screwing around with supply basically by their microeconomic interventions that made the economy much less efficient. So back to this tension of what's supply and what's demand, that seemed like a bit both. Am I misreading the history of those two? Or do you have other comments about what do we need to fix it other than Keynesian stimulus or something else that you'll say, "No, no, no, no," I hope.

- So first, just to wrap up the previous point, you also observe internal reserve drains, particularly in the United States where you had- For domestic political reasons, you had tens of thousands of tiny undercapitalized, underdiversified, on both the asset and liability sides, banks. So in the event of even a local adverse shock, you would get depositors pulling their funds, you would get even wholesale creditors no longer extending credit, and that would bleed into the regional reserve city banks that acted as the city correspondence to all those rural banks. So you would have those internal drains as well.

- But you're saying it's a banking, monetary, financial mechanism is the crucial thing that's common here?

- Not always, because speaking of the early 1920s, I mean, the post-war US recession, so 1919, 1920, was, as you say, a very sharp recession driven in large part by wide scale post-war industrial action, because real wages had not kept up with wartime inflation, so you had widespread industrial action, particularly in 1919 but into 1920, including in then-essential coal industry. The Federal Reserve in 1920, and this is a great mistake that Milton Friedman and Anna Schwartz highlighted, was the Federal Reserve reacting to that inflation tightened monetary policy. They were tightening monetary policy in response to that inflation. And Friedman and Schwartz said that that was a mistake because subsequently in 1920, you saw a big disinflation. Well, you got a big disinflation because there was a positive agricultural supply shock and the industrial action ended. So it would've been difficult for monetary policy makers to observe that in 1920-21. In terms of the Great Depression, I think it is important to note that whatever one thinks of the actions and policies of FDR, and I have my quibbles, the recession effectively ended in March 1933. So one thing I think that is important to keep in mind when one considers the 132 recessions that I cover since 1700 on both sides of the Atlantic is the scale and scope of the state has risen over time, particularly in the 20th century on both sides of the Atlantic. And yet, to your point, John, the average duration of a recession has been remarkably constant over time. The average depth of a recession has been remarkably constant over time. The volatility of macroeconomic variables over the course of expansions and contractions has been, has declined since 1945, but it has merely declined to levels that were pervasive in the 18th and 19th century. So the real deviant here was a highly volatile period from 1914 to 1945.

- Hey, hey, Tyler, I've gotta tell you, I mean, you're one of the few, economic historians, you and Niall, that I can understand. And John makes economics understandable too. And I think you write kind of in the spirit of Carl Becker, who during the Great Depression gave this famous speech at the American Historical Association, John Cochrane made me think about it, called "Everyman a Historian." And he basically said, "Hey, history is our memory of things said and done." And I think you do a great job of telling the stories associated with recessions, but also the financial crisis of 1722, the financial dimensions of the Great Irish Famine. And then Becker went on in the speech, he said, "Hey, without historical knowledge," 'cause every man being a historian, "you would wake up in the morning and your today would be aimless and you're tomorrow without significance." So what I'd like to ask you, having written about these previous financial crises, times that we don't wanna repeat, what are your top implications for today, understanding the situation we're in today, and what we have to do today to make sure we have it tomorrow with significance and avoid the subjects of your previous books and this book?

- So great question, and I might even combine it with one of John's, which is, what are the implications for policymakers? And one of the lessons of the book is that, as I said, despite the changing size and scope of the state, recession duration and depth have been remarkably constant over time. There's been no structural break at a particular point in time toward longer lived expansions. And yet, so the state doesn't seem to be capable of attenuating or shortening, truncating economic recessions, yet there is evidence that the state can make recessions much worse. So the prime example of that would be 1929 to 1933 with a combination of contractionary, monetary, and fiscal policy. You referenced the Great Famine of Ireland, and that was contractionary, fiscal, and monetary policy in the United Kingdom that had really devastating consequences in human terms. I would say that despite writing a book on such a gloomy subject as recessions, I actually concluded-

- Well, it beats famine. I mean, you're starting to move toward the optimistic part of the fact-

- Compared with my book, "Doom," this is a very cheerful read.

- Well, and incidentally, when one reads about some earlier energy supply shocks, the word famine does appear quite frequently with reference to coal and turf. But the reason for optimism is that expansions have been living longer and recessions have been becoming less frequent. And as I noted, that is a long run structural trend. You can test for trend breaks with the establishment of the Federal Reserve. You can test for trend breaks with the election of FDR. You can test for trend breaks in the United Kingdom with the Beverage Report. And you can reject with confidence that those are trend breaks. The only potential break toward longer lived expansions that I can find is in 1785 in the United States. Now, what happens after 1785 in the United States? Well, you leave behind you the turbulent colonial period and a really devastating Depression magnitude recession during the American Revolution. And thereafter, after the Articles of Confederation period, you do seem to have some evidence of US expansions living longer. So as Niall noted earlier, it does take a lot to push a large diversified economy into a period of outright contraction that spread across sectors, that spread across regions of the economy, lasting more than a few months, and that involves outright job losses. As Adam Smith said, there's a great deal of ruin in a nation.

- Hey, Tyler, that sounds pretty optimistic to me. I just wanna mention Niall and I both know this guy, he's a fantastic Irish tenor, I'm thinking of Dennis McNeil. Niall, he once told me that he was engaged by a group of older women to sing for them, and one of the women said, "Hey, a lot of the women here are widows, can you think of a song that doesn't have to do with death?" And he said, "Madam, I'm an Irish tenor. Maybe I could do one about famine."

- Tyler, your thesis is very radical, and I just this'll be good for your Google book sales. I mean, the standard mantra that we are taught is first of all, that recessions got milder during the post-war period. I think you're gonna say that was data errors. But then the great wisdom of Keynesian countercyclical policy and learning how to manage the Fed meant that we add fiscal stimulus at just the right moment plus automatic stabilizers and so forth, and that's how we learned to conquer the horrible recessions of the pre-World War II era. You're saying that's all wrong, which I'm just cheering, but I want you to say that out loud and pound your fist on the table and sell some more books.

- It is wrong. And as you said, some of that apparent moderation is due to statistical artifact in the way in which a lot of pre-1927 data was measured. A lot of it is what is the norm and what is the deviation from the norm. And something that I find is that the deviation from the norm was this highly martial period from 1914 to 1945. So if that's your baseline, then yes, it looks like things have moderated and that recessions have become shallower. But if you look over the broader sweep of history, then one observes more continuity and more trend stationarity than change.

- Can we talk about coal? Because I thought one of the most interesting parts of the book was the way you showed how coal as the key energy source of the Industrial Revolution created a peculiar vulnerability on both sides of the Atlantic to strikes. And it was very impressive to me how much a coal strike could bring an economy into recession without really there needing to be many accomplices. This was especially true in Britain, which was a very coal-powered economy, more so than the United States in the 20th century. But I think we should talk a bit about that because it's the history of energy shocks before we enter the age of oil. It's relevant and not well-known history.

- That's right. And when we talk about energy supply shocks, we tend to think of the post-war US oil supply shocks, 1948, 1953, '57, 1970, '73, '80, '90. 2001 and 2008 had very substantial roles for energy supply, energy price shocks. But when you go back farther in time, you actually see that energy supply shocks have been with us for a long time. In the 18th and 19th centuries when you would have adverse harvest events, severe winter weather events, you would read of turf famine. So peat was a fuel that was combusted for residential heating, for industrial power generation. Provender or animal feed was used to power ground transportation, the primary source of which was animal draft power. But then by the time you get to the late 19th century into the 20th century and even as late as the 1970s, industrial action, whether management lockouts or worker strikes, were perennial contributors to economic recessions on both sides of the Atlantic. And one thing that really struck me was that the United Kingdom has historically been much less recession prone than the United States, and that is fundamentally for two reasons. One, from 1926 to 1972, the United Kingdom was predominantly reliant on coal, and therefore were relatively immune to some of the post-war oil supply shocks that buffeted the United States economy. The second reason, going back to John's point about banking crises, is that essentially from 1826 to 2008, the United Kingdom went without a single major banking crisis. So coal and banking were two sources of historical resilience for the UK economy.

- Okay, and finally, Tyler, since Niall brought up coal, let's bring up oil. I'm old enough to remember the oil embargo in the '70s and living in Virginia, you can only fill up your car with gasoline depending on the number of your license plate, even or odd. Explain how an oil shock works in 2026 versus the 1970s, Tyler.

- I think one of the real value adds of the book is that it delves in great detail, including into a lot of narrative detail as well as quantitative and statistical detail about historical recessions. And therefore, it leaves it to the reader to consider the contours of those historical recessions and to consider of the types of shocks that generated recessions in the past, what probability would they assign to that sort of shock recurring in any given year? And it doesn't leave it to me to make an argumentum ad veracundium, appeal to authority, that "While I've studied four centuries of recessions, therefore...." But I would just offer that when I look at the 2020s versus the 1970s, I see similarities and differences. There are similarities in terms of the potential physical disruption of physical barrels of physical cubic feet. And at the same time, I see differences. That core OPEC production is a smaller share of global supply, and also non-OPEC production is more elastic than in the 1970s thanks to the rise of unconventional. And as Niall could probably attest, we've learned a lot of lessons. We learned a lot of lessons in the 1970s, and that's why a lot of economies maintain strategic petroleum reserves. So one can, with the book, look back on different types of shocks, whether they're energy shocks, whether they're agricultural shocks, banking shocks, and subjectively assign probabilities for any given year.

- Just a footnote for Bill. You show that these systems of rationing and price control that were used widely in the '70s didn't work and actually made matters worse. It's worth saying a bit about that just in case anybody listening is tempted to go down that path in the near future.

- And could I chime in? Europe is talking right now loudly about going down that path.

- Right.

- Subsidies to help you pay for the energy. You know what happens if you subsidize demand and there's not enough supply.

- And the Philippines.

- Price control, windfall profits tax, rationing, export controls. In fact, the standard view of the '70s was it wasn't so much the oil price shock as the bad policies that followed it that caused the recessions. I'm curious if that bears out in your historical view and really a warning for what happens now, especially when everyone's worried about affordability and whether the public supports this whole business.

- One thing that struck me looking back on past energy supply shocks, and it was perhaps most visible in the coal supply shocks of the early 20th century, was the resort to non-price rationing that as an economist kind of surprised me. But you would read about shortages and hoarding, and I recall reading one report of a woman who had just taken her weekly coal delivery and requested delivery of several more weeks delivery, and the coal deliverer asked why and she said, "Well, I can't possibly know if I'll be able to get through the winter otherwise." And we've just seen that with the pandemic, that grocery stores and retail stores were reluctant to raise prices in the face of increased demand and panic buying, whereas a lot of the smaller stores that weren't quite as high profile rationed by price. So it is kind of interesting to look- We've seen it recently in 2020 as well as farther afield in the oil coal shocks of the early 20th century. So it does seem to be a perennial thing that we observe historically, is non-price rationing of scarce resources.

- So to bring H.R. back into this. War and recession. Some people say war was great for the US economy. Most of the time war is terrible. I read Niall's book on the First World War. It was pretty disastrous for the UK economy and financial system. So war and recession. Tell us about it, Tyler.

- And transition to post-war, Tyler.

- Oh, yeah!

- So as H.R. could probably attest, not all wars are created equal. And when I look at war-related recessions, the most protracted recessions on both sides of the Atlantic were those involving World War or war that visited in a very serious way one's own soil. So the longest enduring British recessions were that began in 1943 during the Second World War and extended all the way to 1947. That was a very deep, very severe recession. The United Kingdom also had a very protracted very deep recession beginning at the end of World War I and enduring for three years, and they had a very severe recession during the Seven Years War, which is commonly known as Thee First World War, the first First World War. In the United States, outside the Great Depression, the longest recessions ever endured were during the American Revolution, during the chaotic period of the Articles of Confederation when you had armed conflict with Indigenous Americans, you had an armed uprising with Shays's Rebellion, you had financial chaos with the legacy of wartime debts and ambiguity as to who assumed those debts, and then tied for longest recession in US history was my favorite and most fascinating recession in the entire book, which was a Depression level event from 1717 to 1720, unmistakable in the historical economic data, and the source was a rather unlikely one, but an unambiguous one, namely pirates. The predation of pirates on the American coastline and American shipping that brought commerce to a standstill.

- I never thought we'd get the answer the question, "What's your favorite recession?" I gotta remember that for my next macro conference.

- What other economic history book gives you locusts and pirates? And it's so well timed. After all, it's been a long time since we had a major recession. The one that was caused by COVID only lasted two months, according to the National Bureau of Economic Research. And memories are fading of the painful 2008, 2009 recession. So it's very timely to be reminded that recessions have been around for a very long time on both sides of the Atlantic. They're not easily explained in the way that you show they're often are explained. But this notion of shocks that come out of left field and maybe come in more than single numbers, come at you, that's the thing that I take away from the book. That it takes a bunch of different adverse things to bring the mighty US economy to a standstill and to contract. Terrific book. I can't recommend it too highly. And for those, maybe H.R.'s one, who typically don't reach for economic history, this is really the exception that proves the rule. It's anything but dry, and the pirates illustrate the point perfectly.

- And speaking of timely, unfortunately our time with Dr. Goodspeed is up. Tyler, I wanna thank you for coming on "GoodFellows" today. The book's title, once again, is "Recession: The Real Reasons Economies Shrink and What to Do About It." It's already on sale in the UK, I understand. It comes out in the US on March 31st, so plenty of time to order it. Tyler, great to see you.

- Great to see you, gentlemen.

- Godspeed, Dr. Goodspeed. All right, gentlemen, onto our second segment, and that is, of course, Iran. I got a lot of questions that I hope you smart people can answer for me. On Monday, the President of the United States said that he will not bomb Iranian power plants for the time being, signing what he called "productive talks to end the war." And then he quote promptly did something very Trumpian, he offered a five-day window for Iran to come up with the deal, "or else." We don't know what the "or else" is. Meanwhile, the President said the Strait of Hormuz will be "jointly controlled by the US and whoever's running Iran, whoever is running in Iran." Meanwhile, a lot of confusion on what's going on in terms of negotiations. Iran says there are negotiations. Pakistan says it is negotiating as an intermediary. Saudi Arabia, I think I saw a report today saying it wants the fighting to continue. In short, gentlemen, I'm confused. Please illuminate me here. H.R., why don't you start?

- Hey, so it reminds me of the best in show when Arlan Pepper says, "I'm lost. I don't know what you're saying." But the problem is, first of all, President Trump is trying to, I think, trying to influence markets, trying to communicate to the American people, "All the doom that you're hearing on certain cable news stations, we have a grip on this." He's trying to reassure people. Sometimes it's not effective when he does it in a kind of a fragmented way, but also we have to recognize is, hey, the Iranian regime is fragmented. So he is talking maybe through the Pakistanis or through other interlocutors to elements of that regime, but it is an incoherent regime. So you have people like Ghalibaf, who is saying, "Hey, they're gonna pay us reparations. We have them right where we want 'em. We're gonna punish the United States and Israel." And then you have maybe this conciliatory overture. I think that the Pakistanis who are trying to work their way in to the good graces of the United States, maybe partially in recognition that, hey, China's maybe not the best sponsor. They haven't done a really great job for Venezuela, or for Iran for that matter. And so you have Pakistan trying to play a role here talking to somebody, and I think coaching whoever the Iranian is on the other end. "Hey, Iranian A," whoever it is, "President Trump is a business guy. He'll want some business concessions." So there seems to have been a promise as well for some US oil concessions maybe on the back end. So I mean, I think we just have to wait. I don't think it's clear to whom President Trump is talking through interlocutors or with whom Vice President Vance and maybe Mr. Witkoff will speak to if there is gonna be a meeting somewhere in a third location in a third country.

- Niall, what has to be the deal to justify this war?

- Well, I really struggle to see how a deal is reached when the two sides are so far apart. The only things that have come out of the Iranian regime have involved they're controlling the Strait of Hormuz, they're receiving reparations, a list of of demands that are completely remote from anything that the United States could settle for. The United States went to war ultimately to disarm Iran with the possibility of regime change, though I don't think that that was the main goal of the war. The disarmament has largely been achieved, and this is important to recognize. The capability of the regime to launch missiles has been drastically reduced, its military infrastructure has been gravely damaged. Even though there's still some uranium on the loose, it will be a very long time indeed before this Islamic Republic would be capable of building ballistic missiles and equipping them with nuclear warheads. So in that sense, much of what he set out to achieve, he has achieved. The problem is that despite such drastic military success, the Iranian regime is still capable of keeping the Strait of Hormuz closed. It doesn't need to do much to do that. It just needs to threaten shipping with drones, missiles, and potentially also mines. That deals a very heavy blow to the world economy, including the US. And so we now have a shift in the aims of the war from disarming the regime and possibly changing it to getting the Strait of Hormuz reopened before we end up in one of the recessions that we just talked about with Tyler Goodspeed. Because currently the energy shock that we are facing, if it is prolonged for really any length of time, is highly likely to lead to a recession and cause all kinds of other adverse consequences like increasing the rate of inflation and causing all sorts of damage to economies that are more exposed to oil and natural gas coming from the Strait of Hormuz. So we've actually moved away from the original goal of the war, which was disarming the regime, to now getting it to reopen the Strait of Hormuz. And that, and here I'm gonna have to throw it back to H.R., that's actually quite a tough assignment even with all the military might that the United States has at its disposal.

- Yeah, it's tough, but not impossible, Niall. And the one thing I would differ with you on, I mean, is that the campaign was by design focused initially on causing attrition on all of their capabilities to project power in the region. This is the missiles and the drones, their ability to manufacture and the ability to reconstitute them. To sink the Navy, which is, again, another element of their ability to project power into the region. Along with the regime targets. So take out the regime leadership and begin to target the repressive arms of the regime of the Basij and the IRGC. At some point in the campaign, the original plan, I don't know, I haven't seen the plan, obviously, would then shift to the reopening of this Strait of Hormuz. And it was completely anticipated that Iran would shut it. I mean, as I mentioned before, we do annual exercises with up to 30 nations on reopening the Straits. It will be a sustained effort to open the Strait and keep it open. It's tough, as you're alluding to, but not impossible, especially in this very permissive environment when you can have Apache attack helicopters and A-10s working. Will there be a role for land forces? I think that's why they're on their way there, two MUs and the 82nd Airborne Division being alerted, or elements of that division being alerted. And of course, you probably already have some elements there who are operating in a clandestine capacity. So anyway, I just think it can happen, it can get reopened. And all this reporting about, "Hey, it was a surprise," or, "It's taken us off the plan," no, the plan was sequential in this connection to accomplish these initial objectives and then shift to the opening of the Strait. And as you mentioned, there's more and more pressure building to do that as soon as possible. But when it happens, when it starts, it's gonna take another week, right? Once it starts, I think in three days or so, to really focus on the Straits, it will take about a week at least to get it back to full operating capacity. They have to proof it for mines and then there's going to be an initial escort with maybe three or four or five tankers, and then there'll be a slow path up to the resumption of normal traffic.

- But is that enough, guys? So reopen it with a lot of military investment, and with the current regime in place they will be rebuilding ballistic missiles and threatening everybody around the Gulf and the ability to reclose the Straits with very cheap methods, back to mowing the grass once a year seems like a very poor outcome for this war. It's hard to see how, with the regime in place, you have a permanent solution to the problem.

- Hey, Niall, I wanna hear what you think about this, but I don't think the war ends, Niall, or John, this is a really important point, until the regime's gone, until there's a fundamental change in the nature of the regime. Because it's a 47-year-old war, right? Which we've been talking about quite a bit. And I don't think it is an acceptable outcome to, as President Trump made a statement today, I was like, "We and Iran are gonna jointly control the Strait of Hormuz." How about Iran doesn't have any influence on the Strait of Hormuz and we make sure that's the case, because there's a regime in place that is not permanently hostile to the United States, Israel, and of course now their Gulf neighbors. But John, I think you're absolutely right about that. It's unsatisfactory until there's a change in the nature of the regime.

- It's also politically unsatisfactory. It's funny, this is the first war where it's less popular at the country doing the bombing than in the country that is being bombed. And I don't think we could sustain a continual low grade war for years and years, or at least past the November elections.

- Here's the problem that I think we should spell out. It's possible to have a military triumph and yet an economic failure. That happened in 1973-74, because Israel triumphed over the Arabs with US support. US wasn't a direct competent, but it supplied a great deal of aid to Israel, and Israel won that war, but the Nixon administration didn't foresee just how big the impact would be of an oil embargo. And the result was one of the nastier recessions that Tyler talks about in his book running into '74. And then it all happened again during the Iranian Revolution '78, '79. So my sense is that the military, the US military has delivered, along with the Israeli Defense Forces, an astonishing military success. It has defeated Iran comprehensively in every domain, in the air and sea and on land. And yet, the regime has had enough capability to do two things, which one of which was foreseen, to block the Strait of Hormuz and one of which H.R., I don't think it was foreseen, which is that it has attacked all of its neighbors and attacked them with a kind of ferocity that has greatly unnerved them, hitting one of the most important natural gas facilities in, of all places, Qatar, which I don't think anybody expected Iran to attack before this war began. And so we have a new hostage crisis, gentlemen. Only the hostages are not American diplomats, the hostages are the Gulf States, which are currently highly vulnerable to escalation. President Trump had to walk back a threat to attack Iran's energy infrastructure on Monday morning, because the Iranians said that they would retaliate by attacking the Gulf States' infrastructure, potentially including desalination plants, and they would mine the Strait. That's escalation dominance, I'm afraid. And it illustrates the limits of military victory. We won this war except that the Iranian regime still exists and is able to threaten to close the Strait completely, which it would with mines, and to attack all of its neighbors, and to attack them with really quite devastating economic consequences.

- Except, Niall, it's not over. It's not over, is what I'd say. Like, I think-

- It needs to be over, John, economically, doesn't it? Because if it carries on-

- Well, that's what I wanna get into.

- Yeah. 'Cause if it carries on for even a few more weeks, then it's hard to see, given the scale of the supply shock, which is actually bigger than the supply shocks of the 1970s, that you don't get a recession. That, for me, is one of the implications, or at least one of the inferences I draw from Tyler's book.

- So the big question is whether the economic damage in the 1970s came so much from the oil itself as from the horrendous policies that we followed after the oil price shock. Nixon quickly put in price controls and we had gas lines. The oil couldn't go to where it was most needed, the price signal to bring other stuff online was not available, windfall profits taxes, and so forth. So this is the larger debate that I hope to have with you, will it necessarily be so bad? Now, on the other hand, it looks like both us and Europe are getting ready to do all the silly policies that we did in the 1970s as well, which I think would make it bad. I also have a question for H.R.. Why is Iran still shipping oil through the Straits? We don't necessarily have to burn down Kharg Island, we could simply say, "Iranian tankers going to China aren't allowed going to go through the Straits," or are we afraid of China being unhappy about that?

- Yeah. I mean, I don't know. I don't know if it's because the elasticity in the market and the belief that hey, if you let any oil out, it's gonna reduce the economic pressure.

- Ah!

- I mean, I think that might be the reason why they're letting it go, and this is why they're unsanctioning Iranian oil that's afloat already, as well as the Russian oil. So I think this is a short-term thing, but I think of course, I don't think it's acceptable for Iran to be able to meet or who can go through through the Straits or through the Persian Gulf overall, and I don't think it's acceptable to President Trump either. And then, Niall, I would just say to you, yeah, I know there was an economic consequence, but it would've been worse if Israel had lost that war in '73, and it did lead to the normalization of relations ultimately between, or set conditions for it, between Egypt, Jordan, and Israel. And I think it would've been a lot worse to not conduct this campaign, regardless of what you think about how the President did it with alliance management, with the communications, which been all over the place. I mean, I know, I know. But if we hadn't done this, then look at the capacity that Iran was building to have an even greater threat to its Gulf State neighbors, greater threat to shipping, and really and even greater ability to hold the the global economy hostage. So I think this what we're seeing today is almost ex post facto justification for the initiation of this of this war.

- I agree with that, and I don't want to give the impression that I think it would have been a good idea not to take these steps. The rapid accumulation of ballistic missiles, the possibility of an acceleration of the nuclear program, all of this made action necessary. But I think one of the lessons of history is it's really hard to get rid of a regime like this that is both tyrannical and fanatical, capable of terrorizing its own people, as we saw, killing tens of thousands of them in January, but still capable of motivating soldiers to carry out what amount to suicide missions. 'Cause very few of those who fire missiles fire them more than a few times before they're taken out. I'm therefore hoping, I'm really hoping that the regime can be collapsed by the decapitation of leadership and the dismantling of its capabilities. With that, H.R., you and I are in complete agreement. I'm nervous, John, that the economic shock is gonna start undermining the resolve of the American people, and that is going to undermine the resolve of the Republican Party ahead of the midterms, and that's gonna start having an effect, as it always does, on the ability of the commander-in-chief to take the decisions that need to be taken. We've seen this before. I wrote a book about this more than 20 years ago, "Colossus," talking about the fundamental dynamic of American foreign policy. That you find yourself committed, there's a militarily attainable objective, but popular support ebbs away. And this has been going on since Vietnam, if not since Korea. I just read a fantastic article in "The Atlantic" by Karim Sadjadpour, one of the brilliant commentators, maybe the most brilliant commentator writing in English about Iran, and he consciously or subconsciously ends up quoting Kissinger in his 1969 article on Vietnam, which is that, in this case, Iran wins just by not losing, and America loses by not winning. That's been a problem for American foreign policy since certainly the late 1960s.

- Yeah, my objection is just that economically, it's not obvious that it has to be as economically devastating. Our economy uses a lot less oil than before, we are oil producers and exporters, so we gain in income that we lose in price, the ability to substitute to other kinds of energy sources is pretty strong, the ability to bring other sources online is pretty strong if it lasts any amount of time. So as the Russian oil price shock didn't sink the European economy quite to the extent everybody thought, despite other subsidies and other interventions, it's not obvious it has to be that bad, but the price of gas will go up, and that is a political minefield.

- All right, gentlemen, we have about two minutes left, so let's go to the exit question. The President gave Iran five days to accept a deal, so we all wake up on Saturday morning, tell me what happens.

- I'll go first. One thing that the President is deeply conscious of is financial markets and their nervousness. We now seem to be in a situation where you can only escalate when the markets are closed. I think we'll see ground forces being deployed by late Friday over the weekend, because I don't think it's possible to reopen the Strait of Hormuz without them. That's what I expect to see this weekend.

- All right John, he's calling for boots on the ground. What say you?

- Well, I don't think there will be a deal. The Iranians have made it very clear that this is not gonna go the way of Venezuela. So I'm with H.R.. The war doesn't end until they're out. And now we're into military questions, where H.R. will tell us. But I don't see how you stop speedboats and divers with mines and stuff like that without some kind of control of territory.

- Mm-hmm. H.R., last word.

- Yeah, hey, I do think it's a very high chance. But we also don't know what groundwork has been laid, no pun intended, for other options. And so I think that there have probably been, we've probably had organizations at work inside of Iran for quite some time. And I don't know with what groups they're working, but there could be options where you could see maybe cascading, gaining of control of certain parts of the country by opposition groups. But also I think there was a report today, it's not verified, I don't think, that a bombing of a pipeline. Pipelines are relatively easy to repair, but could deny around the ability to export oil itself. And I think you'll see maybe an expanded number of economic targets as well.

- All right, we'll leave it there. Good conversation, gentlemen, and onto the Lightning Round. Lightning Round.

- All right, first question for you. Let's begin by noting the passing of Paul Ehrlich, the Stanford University of Biology, is best known for his book "The Population Bomb," That book published, by the way, in 1968, posited that planet Earth would run out of resources and experience mass starvation by the 1990s. All right, gentlemen. How did Ehrlich get it wrong?

- Or how did Malthus get it wrong? We could go back even further. I think it's just linear thinking, right? I mean, it's how I think about it, is the future course of events depends on so many factors. We know as historians and economic historians and economists that there's never a single solution or a single cause for any phenomenon. And I think maybe that was the fundamental error.

- Niall, another Paul Ehrlich quote, "I were a gambler, I would take even money that England will not exist in the year 2000." He was wrong about so many things, it's hard to know where to begin, and I'm gonna stick up for Thomas Malthas who observed the world as it was in the late 18th century, and can't really be blamed for failing to foresee the Green Revolution that will greatly increase the productivity of agriculture long after he was dead. Ehrlich was one of those people that I think academia gives an unwarranted arrogance. And what I find most objectionable about his contribution was that it wasn't enough for him to make these Cassandra-like prophecies of overpopulation. He then followed it up with recommendations for forcible sterilization and other measures that ultimately led to the violation of human rights on a massive scale. In Asia, Matt Connelly's excellent history of this whole mad population control movement is well worth reading. So I don't wanna sound like President Trump who's violated the nil nisi bonum rule this week. We should always mourn the passing of men, but I'm not gonna miss Ehrlich as a contributor to public discourse, let's put it that way.

- I found him interesting. He was utterly wrong and unrepentant, as is his followers. The New York Times obituary just said, "His predictions were We're premature." Which tells you about The New York Times. There's a strain in American political thought that combines being utterly wrong about everything. Back to Stalin was such a great guy, and Mao, and we love those guys- Oh, sorry!

- Or how about Ayatollah Khamenei? How about his obituary?

- And Ayatollah Khamenei is just a performer, a nuclear power guy, we gotta get rid of nuclear power. Utterly wrong about everything. But also this desire for a millenarian, "the world is about to end" thing, which the same sort of people go into that used to be religious fanatics. And never saying, "I was wrong." Which Malthus apparently, I agree with Niall, Malthus didn't see economic growth, so he had no way to know that as we're running out of fertilizer, we'll invent art of fixing nitrogen and so on and so forth. But Malthus apparently, towards the end of his life, said, "Oh it's not working out the way I thought it would." And his later editions admitted that. And Ehrlich, never admit you were wrong, you're just premature.

- I used to work for a guy who would never admit he's wrong.

- Exactly. So if you go to the pages of the National Review, you will find- This is, by the way, the 20th anniversary of "An Inconvenient Truth," Al Gore's opus. Our friend Bjorn Lomborg has a very brutal take down of Al Gore. So let me ask this to the author of "Doom" and his two colleagues here, is there a current doom prophecy that you think is going to be proven wrong?

- Well, I think a great many of the alarmist predictions about climate change have already been proven wrong. On the other hand, I think one of the kind of curious features of human life is just as an issue begins to fade from public debate, it has a tendency to become relevant. I mean, I can't think of a better way of accelerating the problem of climate change than to have a full scale war in the Persian Gulf in which carbon dioxide and other things are emitted in vast quantities in the course of the conflict. So I'm expecting some climate issues later this year for us to talk about, mainly 'cause Bill Gates said we should stop worrying about climate change. And as soon as he said that, I thought, "It's probably time to start worrying about it, isn't it?"

- Yeah, thank you, Bjorn Lomborg and Steven Koonin, right?

- Yeah.

- Two of our colleagues.

- Climate, at least in the actual war, is a thimbleful on the scale of climate change.

- I was being somewhat ironical, John.

- Good, good. Greta Thunberg now is saying that we have to send oil to Cuba.

- "There's an embargo, there is no oil, there's no money, there's no anything." He said it like it was something to be proud of.

- Which tells you where the climate thing... No, climate is obviously the same same issue. Climate is obviously a problem, but it is not the looming end of civilization, life on earth in 10 years that everybody thought. And it captured the same motion, that "We are all guilty, capitalism is guilty, growth is guilty, we have too many people," sort of original sin that can be only expiated by going back to the economy of the 1400s. That was part of it and the looming, "It's gonna all happen now." And that is fading quickly and I also don't expect them to ever say that they were sorry and they were wrong, "This is a small technical problem," which as Bjorn Lomborg keeps pointing out, human innovation is going to solve and is solving very quickly. H.R.'s book, I think, it has that wonderful line. When you called up the previous National Security advisors who told you America's greatest problem, security problem, is climate change! Not Iranian nukes, not Russian invasions, climate change. Well, that mentality is already on its way out. But to be supplanted, we've seen some meetings here at Hoover recently. I think everybody now is worried that AI is going to come and the robots will come and kill us all! So a new faith is coming.

- I still think we should be most worried about totalitarian regimes. This was the conclusion of the book, "Doom," that the biggest threat to humanity over the last 100 years has consistently been totalitarian regimes. And I only really worry about AI when it's in the hands of one of those regimes. That's what I think we may be losing sight of as a major threat to humanity in the 21st century.

- And those regimes embraced by the same people who gave us "The Population Bomb" and the climate hysteria.

- H.R., we lost Paul Ehrlich Eric last week. We also lost Chuck Norris, the film and TV star and infomercial star. I don't know if you're a total gym guy or not, H.R.. One thing about Chuck Norris before Marco Rubio became the king of internet memes, the internet was just chock-full of Chuck Norris jokes. Do you have any favorite Chuck Norris jokes, H.R.?

- Yeah, Scott sent me some of these. So I'll share some of my favorites here. Okay, so Chuck Norris as strong. Chuck Norris doesn't do pushups, he pushes the Earth down. Chuck Norris as indomitable. Death once had a near Chuck Norris experience. Chuck Norris as efficient. Chuck Norris can kill two stones with one bird. Chuck Norris is unafraid. When the Boogeyman goes to sleep every night, he checks his closet for Chuck Norris. And then finally, Chuck Norris as the learned autodidact. Chuck Norris doesn't read books, he stares them down until he gets the information he wants.

- My favorite is Chuck Norris doesn't sleep, he just waits.

- Well, I'm gonna check with our friends in marketing to see if "GoodFellows" can get in the business of Total Gyms and send one to my house. But that's it for this episode-

- Well, I think we need to bring, I still think we should make an argument for the ThighMaster! Because all of us could be getting a workout right now and nobody would know it, right? We could brand it as the "GoodFellows" ThighMaster.

- How do you know I'm not all ready?

- Okay, let's have the three of you do ThighMaster and see how fast we get kicked off of YouTube. All right, gentlemen, great conversation. And before we sign off, I wanna remind you all one last time that we are doing a live show here at the Hoover Institution on April the 22nd. If you wanna join us, go to Hoover.org/GoodFellows for more information. And later this spring, we'll be doing another one of our mailbag episodes. So if you have a question, you wanna stump one of the fellows, submit it by going to the following website, which is Hoover.org/AskGoodFellows. On behalf of the "GoodFellows," Sir Niall Ferguson, H.R. McMaster, John Cochrane, our guest today, Dr. Tyler Goodspeed, hope you enjoyed the conversation. Till next time, take care. Thanks again for joining us.

- [Narrator] If you enjoyed this show and are interested in watching more content featuring H.R. McMaster, watch "Battlegrounds," also available at Hoover.org.