Economics Matters with Laurence Kotlikoff

What if the biggest investment opportunity in the world is hiding in plain sight, and the reason no one is taking it is fear of the unknown?
Theo Kocken spent two decades building Cardano into one of Europe’s most respected pension risk management firms. Then he walked away to fix something bigger: the broken financial infrastructure keeping billions of people in low-income countries from accessing the capital they need to grow.
In this conversation, Professor Kotlikoff and Theo explore currency risk in developing markets, the mechanics of risk-sharing that could unlock trillions in private investment, and what a Monty Python filmmaker has to do with explaining the next financial crisis.
What You’ll Learn In This Episode:
[00:07:00] How Cardano was founded and why Theo left to focus on development finance
[00:08:00] The Currency Exchange Fund (TCX): how it protects companies from devastating loan shocks in Africa and Asia
[00:23:00] The real state of African development: why the GDP numbers don’t tell the whole story
[00:29:00] ILX Fund: mobilizing pension capital alongside development banks for high-impact projects
[00:37:00] Boom Bust Boom: the Monty Python-produced documentary on the human origins of financial crisis
[00:43:00] Private credit and insurance risk: why today’s financial system may be setting up the next crisis
Featured Guest:
Theo Kocken is a professor of risk management at VU University Amsterdam and extraordinary professor at NWU University in South Africa. He is founder of Cardano, a leading pension risk management firm, and co-founder of Cardano Development, a not-for-profit focused on financial inclusion in low- and medium-income countries. He is also a founding force behind TCX (The Currency Exchange Fund) and ILX, and the producer of economic documentaries including Boom Bust Boom (2015) with Terry Jones of Monty Python.
Resources Mentioned:
TCX: The Currency Exchange Fund
ILX Fund: AfDB Partnership
Boom Bust Boom Documentary (2015)
Cardano Development

Disclaimer: Any opinions expressed on Economics Matters are those of the authors and guests. These are not the opinions of Boston University or Economic Security Planning, Inc.

What does it mean when one of the country's leading labor economists, a former Obama White House advisor who served as chief economist at the Department of Labor, tells you that Washington's bet on AI saving Social Security is built on a foundation of wishful thinking, and that the real numbers have been pointing toward crisis since 2017?
Betsey Stevenson studied physics at Wellesley, switched to economics because the marginal costs were lower, earned her PhD from Harvard, passed up a Michigan faculty offer to work in the private sector, wrote a brand-new job market paper from private sector data to re-enter academia, and eventually landed at the Gerald Ford School of Public Policy at the University of Michigan — where she now teaches, researches, and co-authors a leading economics textbook with her partner Justin Wolfers.
In this episode, Professor Kotlikoff sits down with Stevenson for a conversation covering the divorce law economics that launched her career, what Title IX actually proved about sports and upward mobility, how two economists navigate a two-career relationship, and a frank assessment of where the US economy is heading under the weight of deficits, AI hype, and a capital income tax structure that may be quietly turning America into a servant economy.

What You'll Learn:
[00:10:39] Why Betsey passed up academia after Harvard and what working at Forrester Research taught her about big data before big data had a name
[00:11:00] The dissertation that launched her career: how unilateral divorce laws changed women's bargaining power inside marriage without changing the divorce rate at all
[00:17:00] The surprising finding: no-fault divorce dramatically reduced spousal violence but also reduced spouses putting each other through school
[00:22:16] The Title IX paper: how giving girls access to sports improved graduation rates, college attendance, and adult earnings using a natural experiment almost nobody had thought to use
[00:36:00] How Betsey knew the Social Security formula at 16 and why she called it a pure tax on her teenage paycheck
[00:40:31] Why the fiscal gap has been unsustainable since Trump's 2017 tax cuts, and how COVID made it dramatically worse
[00:42:33] Why cutting short-term interest rates when inflation is above target pushes long-term rates up: the mechanism Washington keeps ignoring
[00:46:13] Why AI productivity gains may flow entirely to capital rather than wages, and what that means for Social Security funding
[00:47:29] The servant economy scenario: with foreigners owning most US investment, AI returns could look a lot like Jamaica's resort economy
[01:04:33] Betsey's tax proposal: tax all income including unrealized capital gains, and why the Daniel Radcliffe vs. Johnny Depp analogy explains exactly why she opposes a wealth tax

Featured Guest:
Betsey Stevenson is a Professor of Economics and Public Policy at the University of Michigan's Gerald R. Ford School. She earned her PhD from Harvard and served as Chief Economist of the US Department of Labor and as a Member of the President's Council of Economic Advisors under President Obama. She is a Research Associate at NBER and co-author, with Justin Wolfers, of Principles of Economics.

Resources:
Principles of Economics (3rd Ed.) by Stevenson and Wolfers: amazon.com
"Bargaining in the Shadow of the Law" — the divorce and domestic violence paper, QJE 2006: nber.org
"Beyond the Classroom" — the Title IX and sports earnings paper, ReStat 2010: nber.org
Betsey Stevenson's faculty page: fordschool.umich.edu/faculty/betsey-stevenson
Economics Matters Substack: larrykotlikoff.substack.com

Economics Matters: The Podcast is hosted by Larry Kotlikoff, Professor of Economics at Boston University.
Disclaimer: Any opinions expressed on Economics Matters are those of the authors and guests. These are not the opinions of Boston University or Economic Security Planning, Inc.

What if the single strongest predictor of whether a poor kid rises into the middle class has nothing to do with intelligence, work ethic, or even education, and everything to do with who happens to be in their classroom in third grade?
Raj Chetty grew up in New Delhi, came to the US in fourth grade, emailed 15 Harvard professors his first week on campus, was working as a research assistant for Marty Feldstein within weeks, graduated college a year early, and became one of the youngest tenured professors in Harvard's history. He has since used anonymized tax records covering virtually every American to build the most detailed picture ever assembled of who gets ahead in this country, why, and what we could actually do about it.
In this episode, Professor Kotlikoff sits down with his MacArthur Genius Fellow and John Bates Clark Medal-winning colleague for a conversation covering the grocery store experiment that upended tax theory, the kindergarten classroom that changes your earnings for life, the Facebook data revealing why Iowa produces more upward mobility than Atlanta, and a brand-new private capital market proposal that could finally align financial incentives with the American dream.

What You'll Learn:
[00:17:23] The grocery store experiment: do people respond differently to a price hike versus a tax hike of the same dollar amount, and what the answer reveals about policy design
[00:18:28] Why your true marginal tax rate is nearly impossible to calculate, and why that matters enormously for how much people work and save
[00:36:20] The key insight behind the kindergarten teacher paper: linking the 1980s Tennessee STAR experiment to adult tax records 25 years later
[00:39:25] How kindergarten classroom assignment by coin flip changed the course of children's lives
[00:40:09] One excellent teacher versus one average teacher: a 2 to 3% annual earnings gain per grade, compounding to a 20 to 25% lifetime wage difference
[00:41:25] Why teacher quality beats class size as a policy lever, and why Finland and Switzerland get this right while the US does not
[00:44:44] The Opportunity Atlas: type in your zip code and see what the American dream looks like in your own neighborhood
[00:48:00] Why Dubuque, Iowa, produces more upward mobility than almost anywhere on earth while Charlotte and Atlanta rank below many developing countries for poor kids rising up
[00:50:00] The single strongest predictor of economic mobility: not schools, not income, but cross-class friendship
[00:53:00] The causal proof: kids randomly assigned to classrooms with more high-income peers go on to earn more and rise higher
[00:56:00] The inventor gap
[01:00:11] The digital twins method
[01:03:31] The private capital market for opportunity: how a $10,000 investment in job training could generate double-digit investor returns while reducing inequality

Featured Guest:
Raj Chetty is the William A. Ackman Professor of Economics at Harvard University and Director of Opportunity Insights. He received his BA and PhD from Harvard and became one of the youngest tenured professors in the university's history. He is the recipient of a MacArthur Genius Fellowship, the John Bates Clark Medal, and the Harvard George Ledley Prize.

Resources:
Opportunity Insights: opportunityinsights.org
The Opportunity Atlas: opportunityatlas.org
The Social Capital Atlas: socialcapital.org
"Social Capital I" (Nature, 2022): nature.com
"Social Capital II" (Nature, 2022): nature.com
"Where Is the Land of Opportunity?" (QJE, 2014): opportunityinsights.org
Raj Chetty's publications: rajchetty.com/publications
Economics Matters Substack: larrykotlikoff.substack.com

Economics Matters: The Podcast is hosted by Larry Kotlikoff, Professor of Economics at Boston University.
Disclaimer: Any opinions expressed on Economics Matters are those of the authors and guests. These are not the opinions of Boston University or Economic Security Planning, Inc.

What does it mean when the co-founder of America's premier nonpartisan fiscal policy institution tells you that both parties have systematically abandoned the working class, the young, and the American Dream. Not by accident, but by design?
Eugene Steuerle co-founded the Urban-Brookings Tax Policy Center, earned a Bronze Star in Vietnam, taught himself economics via correspondence course while serving in the Army, and has spent five decades at the center of every major U.S. fiscal debate. He has testified to Congress roughly two dozen times, received the Paul Samuelson Award for Dead Men Ruling, and has now followed it up with Abandoned, a damning account of how both political parties locked in spending for the elderly and wealthy while leaving everyone else behind.
In this episode, Professor Kotlikoff sits down with his longtime friend and intellectual ally for an unsparing conversation about the structural forces driving America's fiscal crisis, who is getting hurt, and what it would actually take to fix it.

What You'll Learn:
[00:01:01] Why the Social Security shortfall is far worse than the headlines: a 31% immediate cut for all 71 million beneficiaries, or a payroll tax hike from 12.4% to 18.1%
[00:14:54] The core thesis of Dead Men Ruling: how permanently baked-in entitlement spending has eliminated Congress's ability to do anything new
[00:16:24] Why Social Security, Medicare, and interest on the debt already grow faster than total revenue over the next decade
[00:17:07] The difference between financing consumption and financing upward mobility, and why that distinction explains the working class rebellion
[00:32:00] Gene's CBO data: the elderly have gone from most likely to be poor in 1979 to least likely today, while non-elderly families moved in the opposite direction
[00:35:03] What Gene would do as fiscal dictator: force real entitlement growth to require annual congressional authorization
[00:39:56] The two trends dominating 50 years of policy: runaway retirement and healthcare spending, plus cuts to capital income taxes, driving wealth inequality and government dependence simultaneously
[00:41:59] Why the national saving rate has collapsed from 15% in the 1950s to 1.48% today, and what that means for who will own America's future
[00:44:00] The Jamaica scenario: capital-rich but foreign-owned, with most Americans as servant workers rather than asset owners
[00:51:26] Who is the least subsidized group in the entire US healthcare system: moderate-income workers whose employers offer insurance
[00:54:37] Why Congress is wrong to think AI will save the budget, and what we should be building instead

Resources:
Abandoned by Eugene Steuerle: amazon.com
Dead Men Ruling by Eugene Steuerle: amazon.com
The Government We Deserve  (Substack): governmentwedeserve.substack.com
Eugene Steuerle's website: steuerle.org
Urban-Brookings Tax Policy Center: taxpolicycenter.org
Economics Matters Substack: larrykotlikoff.substack.com

Featured Guest:
Eugene Steuerle is an Institute Fellow and Richard B. Fisher Chair at the Urban Institute and co-founder of the Urban-Brookings Tax Policy Center. He holds a PhD from the University of Wisconsin-Madison and has served as Deputy Assistant Secretary of the Treasury for Tax Analysis. Author of 20 books and over 1,600 articles and congressional testimonies, his most recent book is Abandoned. He publishes the Substack The Government We Deserve.

Economics Matters: The Podcast is hosted by Larry Kotlikoff, Professor of Economics at Boston University.
Disclaimer: Any opinions expressed on Economics Matters are those of the authors and guests. These are not the opinions of Boston University or Economic Security Planning, Inc.

What if solving Argentina's inflation crisis required nothing more than a single televised announcement — and the government is still not making it?

Emilio Ocampo advised President Milei during his 2023 presidential campaign, spent decades as a managing director at Morgan Stanley, and has spent the better part of his career making the case for Argentina to do the one thing almost everyone agrees would work, and almost no one in power is willing to do: dollarize.

In this episode, Professor Kotlikoff, who visited Buenos Aires in November and published his own dollarization proposal in the Financial Times, sits down with Ocampo for a frank insider conversation on where Argentina actually stands, why the Milei reform is in a race against the electoral calendar, and exactly what it would take, mechanically and politically, to end Argentina's century-long cycle of inflation, default, and despair.
This is not theory. Both men have been inside the government and believe the window is closing.

What You'll Learn:
[00:03:00] Where Argentina's inflation stands today: down from 200% to 30% annually, but the hard part is still ahead
[00:05:08] The K-shaped recovery: energy and mining are booming while manufacturing and construction, the biggest employers, are stagnant
[00:06:00] What Peronist corporatism actually is, and why half of Argentina's economy still runs on a philosophy lifted from Mussolini's Italy
[00:15:42] Why Argentina's debt ratio is technically manageable but still pays 420 basis points over US Treasuries: the price of a bad reputation
[00:18:54] Larry's Financial Times proposal: the US funds dollarization via a contingent loan, Argentina gets monetary stability, and the loan disappears unless a future government undoes the reform
[00:41:16] The Ecuador precedent: dollarized by presidential announcement in January 2000, survived a coup 10 days later, two sovereign defaults, COVID, and oil price collapses...and is still dollarized today
[00:45:00] Why Argentina is already de facto dollarized: surgeries paid in $100 bills, apartments priced in dollars, roughly four times more physical dollars than pesos in circulation
[00:48:00] The mechanics of how to actually do it: set the exchange rate at market, declare the dollar legal tender, keep the peso for small change
[00:51:32] Why December 2025, after Milei's election win and with full US Treasury support, was the optimal moment to dollarize, and why that window may be narrowing
[01:00:00] Why Ocampo says do it today: with elections 18 months away, the probability math favors moving now instead of betting on a recovery that may not arrive in time

Featured Guest:
Emilio Ocampo is an Argentine economist, author, and professor at UCEMA in Buenos Aires. He served as economic advisor to President Milei during Argentina's 2023 presidential campaign and is internationally recognized for his work on monetary institutions, dollarization, and Latin American economic history. He previously held senior positions at Chase Manhattan Bank, Salomon Brothers, and Morgan Stanley, where he was a managing director. He is co-author of Dolarización: Una Solución para la Argentina and a regular contributor to La Nación.

Resources:
Dolarización: Una Solución para la Argentina by Ocampo and Cachanosky: amazon.com
Professor Kotlikoff's FT article summary (Ocampo Substack): dolarizacionargentina.substack.com
Professor Kotlikoff's earlier dollarization piece: larrykotlikoff.substack.com
Sargent, "The Ends of Four Big Inflations" (1982): ideas.repec.org
2025 US-Argentina currency swap background: wikipedia.org
Emilio Ocampo's Substack: dolarizacionargentina.substack.com
Economics Matters Substack: larrykotlikoff.substack.com

Economics Matters: The Podcast is hosted by Larry Kotlikoff, Professor of Economics at Boston University.
Disclaimer: Any opinions expressed on Economics Matters are those of the authors and guests. These are not the opinions of Boston University or Economic Security Planning, Inc.