443. A Sneak Peek at Biden’s Top Economist

The 'Freakonomics Radio' episode '443. A Sneak Peek at Biden’s Top Economist' begins with a reflection on a scrapped episode about plastics, which led to the relevance of an interview with Brian Deese, who was then the global head of sustainable investing at BlackRock. Deese's background includes working in the Obama administration, where he was involved in the auto industry rescue and served as a senior advisor on climate, conservation, and energy policy. The episode explores Deese's appointment as the director of the National Economic Council (NEC) under President Joe Biden, emphasizing his expertise in climate policy and economic strategy. The host, Stephen Dubner, revisits the interview with Deese, which covers a range of topics including sustainable investing, the role of BlackRock in managing $7 trillion in assets, and the integration of environmental, social, and governance (ESG) factors into investment decisions.

Deese discusses BlackRock's approach to sustainable investing, which aims to incorporate sustainability factors to improve long-term investment outcomes. He explains the firm's efforts to create sustainable versions of indices and the importance of default offerings in influencing investment behavior. The conversation delves into the challenges of aligning market behavior with long-term sustainability risks, such as climate change, and the need for improved financial models to capture these risks. Deese also addresses skepticism about sustainable investing, arguing that it can lead to better returns without necessarily involving divestment from certain industries.

The episode also touches on the broader economic implications of climate policy and the potential for a significant reallocation of capital towards companies with strong ESG credentials. Deese's insights into the role of cybersecurity and natural resource management in sustainable investing highlight the complexity of the field. Additionally, the discussion explores the concept of a circular economy and the potential for innovation in reducing waste and improving operational performance.

As the conversation shifts to the impact of the COVID-19 pandemic on the economy and the environment, Deese reflects on the opportunity for stimulus activities to promote lower carbon outputs and more sustainable practices. The episode concludes with perspectives from various economists on Deese's appointment, noting his expertise and ability to navigate economic policy without causing drama.