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Paul Thomas

Paul Thomas

Chief Economist for Intel Corporation, (Retired)

By David Zierler, Director of the Caltech Heritage Project

August 14, 2023

DAVID ZIERLER: This is David Zierler, Director of the Caltech Heritage Project. It's Monday, August 14th, 2023. I'm very happy to be here with Dr. Paul Thomas. Paul, it is very nice to be with you. Thanks so much for joining me today.

PAUL THOMAS: Thanks for inviting me.

ZIERLER: Paul, to start, would you please tell me your most recent title and institutional affiliation?

THOMAS: Yes. I was Chief Economist for Intel Corporation in Santa Clara, California.

ZIERLER: When did you step down from that role?

THOMAS: In 2016, so it's about seven years ago.

ZIERLER: Is this a full retirement for you now, are you consulting, are you staying on top of the literature?

THOMAS: It's turned out to be a full retirement. I have some other activities going on, and they may potentially be larger, but I've settled into a routine I like, and I don't need to change it.

ZIERLER: What's your routine? What does retired life look like for you these days?

THOMAS: I don't want this to be about Parkinson's, but because of Parkinson's, my life is about 20 hours a week of vigorous exercise. It can be especially hard-hitting. That includes what's called, what people call Boxing for Parkinson's. It includes singing. My voice is always the first thing to go when I'm having problems with the condition—when I'm having a flare-up. I've listened to some interviews I gave a few years ago when I didn't realize I had a problem, and I could barely understand what that guy was saying, and it was me. My voice was so raspy and low-volume. I've already done exercises today to try to get through this meeting, but I'm a little gravelly already. My routine is driving all over tarnation to do boxing and dancing, to take part in experiments, to sing, to do various kinds of stretching, sort of yoga-based. The experiments I'm part of include some genetic work that's being done. It turns out there are mutations that might be implicated in the development of Parkinson's, and I seem to have one of those genes. That made the researchers eager to get me in another study, because they're trying to get a representative sample—when they have their data about any of the mutations, they want to have that represented in the data.

ZIERLER: The idea with boxing, is it just it's good to be physically active? Is that just a good prophylactic against this?

THOMAS: No. It's specifically designed, in some cases. The first thing they have to do is they have to adjust it. Otherwise, you'll get hit in the head, and you hit other people in the head, and that's not going to happen. If you think of boxing and you think of Parkinson's, you probably at some point have the feeling maybe boxing is the way to get Parkinson's. [laugh] You have to learn to do the adjusted boxing, and not ever hit anyone. But then it's very deliberate, and you'll hear the words like being deliberate. People will talk about things like the autonomic systems not working correctly, and so you have to be very deliberate. You can't depend on doing what comes natural. I don't know whether to believe that that's the proper use of the language describing a Parkinson's situation or not. I go in for a lot of experiments, I walk out after I've done my part, wondering how much science I just experienced as opposed to how much wishful thinking I experience. It's research with a real intended outcome, and not research with an open mind about what might actually be occurring. I want to be careful. If I criticize the experiments that are going on, I could be uninvited, and I don't want to be uninvited.

ZIERLER: Don't want to do that? [laugh]

THOMAS: There's a lot of selection bias in any of the things about the disease or that involve routines that can be troublesome. People drop for a variety of reasons, and then the people who stay in form a biased sample.

ZIERLER: Paul, an overall question as it relates to your education at Caltech and your subsequent expertise and career in business economics. Did you attain that interest in business and economics after undergrad, or was that always interesting to you, even as a kid?

THOMAS: My dad was an investor and, in fact, he was a CPA. He worked for an investment firm in Hialeah, Florida. When he would talk about the various stocks that were out there for him to invest in, he would talk to me about the companies. I don't think it happened very often, but it was one of the things we would—when it was time to talk, it was one of the things we would do. I didn't plan to become a business economist until I had tried a lot of other things in academia. Then, almost by coincidence, I got a job, my first business economics job, and I loved it. It was a kind of discovery for me that I hadn't anticipated.

ZIERLER: Now, your scientific technical education at Caltech, would you say, has that been an asset to you in a very different field?

THOMAS: Yes, it has. A frequent criticism of academic economics is it's too mathematical, or as the economists who've written about it say, it's too math-y. [laugh]

ZIERLER: [laugh]

THOMAS: I've heard lots of people, when they find out that I taught in an economics department, maybe correctly anticipate that I did some things that are fairly mathematical, and usually they don't neglect to tell you how stupid they think that is, that that's how people do their economics. Certainly, there's nothing like an engineering side to science in the economics world. So far, no one has shown that they've developed better institutions or better behaved markets just because they've studied the economics and the mathematical economics of it. We're missing the engineering side, which makes the mathematical economics seem more like math than, say, physics. If you tried to do your economics as if you were doing physics, you would receive a harsh reception in the profession. But if you're doing mathematics so you'll have a more general proof, or so you'll eliminate one aspect of markets, let's say, or even institutions, then there'd be, I think, an open mind to see how it works out.

ZIERLER: Paul, having a PhD in business economics and then applying that in industry, what's been most useful in the real world? Where do you translate the theories, the textbooks, into what's happening day to day?

THOMAS: There's a literature that has been developed in the academic world that's turned out to be extremely helpful in the business world. There's a whole valuation literature in which you figure how would you calculate the price of a good or of a service, and what activities is it coordinating? What kind of measurements are available? The valuation literature and the finance literature in general has been very useful to people trying to do certain parts of the business correctly. There is something I hope we talk about—we started talking about it now, but I hope we talk about it during the interview—the issue of integrity in doing these activities in academia and consulting in the business world, because there are not only lots of temptations to get ahead by telling the executives above you exactly what they want to hear, there's a kind of self-denial that often takes place while it's happening. People don't want to admit that they gave into sometimes not very subtle threats that, for some strange reason, the latest methods, the study they did with latest methods gave the wrong answer, so why don't you put the right answer down and make life easier for everyone? At some point in your business career, at many points, you're probably going to have to defend the process. You're going to have to decide what you're willing to put up with and what you're not. In the academic world, especially if you're published, there's a whole set of institutions to question the integrity of work that's been published.

Recent headlines involving two kinds of controversies have taken place. One is what happened at Stanford with a question of whether or not the publications were as honest as they might have been, whether there was neglect if not something more malevolent going on. There's been a recent scandal, or maybe soon-to-be scandal, on the issue of whether research on superconductivity should be believed or not, when it looks like one of the authors has a predilection for making claims like that. There's nothing equivalent to that kind of watchdog process that if you're an academic, you're expected to provide service by refereeing, you're expected to defend the process, to be as honest about the process as you can be. When your job at a certain point in the business world is to keep a VP happy, you're not having anyone looking over and saying, no, that's a misuse of these statistics. You're not getting anyone else but yourself to say, no, you can't interpret the data, you cannot interpret the study we did the way you are. I think the best thing you can do is talk about it in the business world, and to some extent train people who maybe aren't used to dealing with more academic types of research in the business world. If there were a mishap, a misfortune, if someone published something incorrectly in the economics literature, I think there are a lot of people who'd be looking for that, and they would help maintain the process. But if it's something that's being done in the business world, institutions may not exist to keep it in check.

ZIERLER: Paul, because you've served as a chief economist or senior economist in a variety of corporate settings, for the outside person, what exactly does a chief or business economist do? You could think that there's so many people who would be obviously interested or charged with what's in your portfolio. What does an economist working in a corporate setting do?

THOMAS: One thing they do is lots of estimation and lots of forecasting. I think most of the good economists I know who ended up doing a lot of that are a little bit chagrined that they had to spend as much time forecasting as they did, because the forecasting process has a limited value that people are not honest about. There is a literature by Philip Tetlock that looks at how people do when they're put in a position of announcing their expectation. I think this is what's going to happen 10 years from now. I think, let's say, for example, we want to talk about electric cars and the various things that could be done, should there be driverless cars or not? Give me a moment to collect my thoughts, please.


THOMAS: Thank you. I think this is Parkinson's keeping me from speaking sometimes. [pause] Forgive me, let me just think about a little longer.

ZIERLER: Take your time.

THOMAS: This is harder than I thought it was going to be. Again, let me try to collect my thoughts.

ZIERLER: That's OK. You were talking about forecasting and the literature.

THOMAS: Yeah, thank you for getting me back on track. Oh, good, maybe we can make this work. You could ask people who are just well educated and have background—it could be history, it could be economics, it could be physics—and what you're talking about, what's likely to happen to the transportation system, the types of vehicles, and what the roads are going to be like. Somewhere we could be asked things like, tell me what percentage of cars are electric cars right now, or I'll help you out and tell you that percentage. Tell me what the percentage is going to be 10 years from now. You get a group, especially if you have a group of people who claim expertise about cars, about forecasting, about being futuristic, you could get people to give predictions. But it turns out that it's hard to evaluate what they're doing because almost no matter what happens, when you go back to them, they're going to say, "Yeah, just as I predicted," whether it's something they predicted or not. In some of this research you can say to people, "You put down a pencil on paper five years ago that this number was going to climb from 30 to 35, and it went from 30 to 25. What do you have to say about that?" A common response will be, "No one told me. There's no way I would know that Congress wouldn't spend the bills on new highways. I think I had a damn good forecast." It was completely inaccurate. It was just as people, when people were forecasting both the economy and airline industry, I heard people say, "We had a pretty good prediction. No one told us that two planes were going to crash into the World Trade Center."

A constant suggestion by people when they're being evaluated for their expertise of them saying, "I was right," when in fact they were often wrong. You have some people who know how to do it better than other people, but you can't just easily get—people won't agree. It's true, they didn't anticipate the World Trade Center, and if someone had asked them about that, they might've said, "That's an interesting thought, but it'll never happen." Forecasting, there's a tendency when forecasting or when applying your expertise to get a buy, and not actually having to be accurate with your forecast, which makes them of limited value. There's another technical issue, which is everyone has learned how to do regression theories, linear regressions, ordinary least squares. You learn it certainly in the MBA curriculum. But the economics, you learn it in science because it's good statistical background. But it turns out there are all sorts of tendencies to go through the exercise of using either simple or complicated regression models. There are all sorts of tendencies to run experiment…there are all sorts of tendencies to declare the results, and to claim that they're not necessarily based on cause and effect but the best use of the data available. Ideally, they would involve cause and effect. There's a tendency to do that, so much so that people have developed much better theories about how to correct for some of the problems of these, and people have gotten the Nobel Prize for it. Clive Granger did this, and so did other people working with him, some of whom shared the prize. When you said, you asked me what does a business economist do, I smiled because I was thinking of a joke my wife and I have, where she wants—my wife's an economist also. She said to me, "What do you do all day at work?" I said, "I run regression after regression until I find one that's not spurious." That's exactly the wrong thing to do, and everything you discover is going to be spurious—

ZIERLER: [laugh]

THOMAS: —if you're [laugh] milking the data. What you'll find—I'll tell you a true story. One of the VPs at Intel who had watched our forecast, and had lots of discussions with us about our forecast, said, "Yesterday I just got a presentation from Gartner Research," which collects a lot of data and does a lot of modeling, market modeling for the chip world and the computer world. It's one of the larger firms, Gartner. He said, "They showed me a beautiful model, which you could explain almost everything in the industry by just GDP. Why don't you do that?" I said, "I'll do something even better. I'll give you a forecast that you know and I know is garbage, and it will look better than their forecast." While I was in the office, I called up one of the people in my group and I said, "Go talk to one of the sports-oriented people in our department. I want you to find something like—oh, I don't know—Boston Red Sox outfield averages. I want you to explain the purchase of computers by regressing it on those average salaries." Salaries keep going up over time. The number of computers bought keep going over up over time. It's not an accident that you get a high correlation between the two, whether you found anything even close to cause or effect at that point. That's exactly the kind of regression you shouldn't run, and especially if you have thousands of possible explanatory variables at your disposal, even if it's 10 or 20, the fact you're going to shop for the one that's the best fit, then you're going to interpret what you discovered, and what you've done is you've created a spurious regression. There's nothing. It's not only cause and effect, it's not a good model, so we were able to do that. We were able to go back to the VP and say, "On the right-hand side of this equation, we have Boston Red Sox outfielder salaries, and on the left we have the number of computers being purchased in the United States. They're really highly correlated, about 98%, because they're both just going up over time, and anything else is in the margin, and it's being overwhelmed by what you're doing in the trends."

You have to de-trend things, and there are various methods for that. Now, what this means is that when you go to work as a business economist at any company that hires people to do economic or MBA level research, it means that you can keep your VP pretty happy by picking the variables that correlate well with the story that he's telling. You should be very, very careful what you're doing. If you're sloppy, that's one thing, you should stop it. But if you're sloppy, and you've known that, and you continue doing what you're doing, you're doing it to keep a VP satisfied with your answer when it's a bad method that's being used. One thing I did do in my profession is I was active in various groups of economists. One is the National Association for Business Economics, NABE. They're a national group with a few thousand members. They just recently released their membership policy criticism and, I should say, survey results of asking people, "How do you like the government policies on economics?" That question's asked two or four times a year. What do you think of the policies that are being used? What do you think the probability of a recession is? The thing about that method is I think most people are just pulling a number out of the air, and they're not pretending to do anything else. They may have read their history, and they may preach the, I mean, explain the history—history, for example, of whether backward-bending yield curves mean a recession is coming, things like that. It probably became boring to some of the people I lectured, but I did say to them, "You can't use the methods you're using to get a good-quality forecast. You just can't do it."

We would show them what you get doesn't have as high an R-squared. You haven't explained as much, because once you've de-trended, you've taken that huge determinant of the correlation out of the equation, so you're going to have a much lower R-squared, but it's going to be a much more valuable forecast. You're going to be wrong lots of times, and you have to figure out, if you are, if there's anything you can do to tighten it up, if it's the nature of the beast. You almost feel there has to be a way to do even better, and you're always on the lookout for one of those. One final thing I'll mention that I used when talking, I used to go to the NABE meetings, and talk about the ethics that were in play when people were working in business economics. We would talk about these things. I would say, "Raise your hand if you've been taught to run spurious regressions." People would look at me like what am I talking about? I said, "No. Raise your hand if you were taught to do regressions in an MBA program. OK. You all run spurious regressions." [laugh]

ZIERLER: [laugh]

THOMAS: There's a great book called the Exit, Voice, and Loyalty by Hirschman. If you watch the Mid-Atlantic on the internet, this program on the internet about people who go back and forth between the United States and Vichy France to rescue the exec…did you watch that?

ZIERLER: I've seen it, yes.

THOMAS: OK. One of the characters being played is Hirschman, who wrote this book, Exit, Voice, and Loyalty. After he had escaped from Vichy France and went to the US where his family was, he went back to Vichy France so he could work with people getting artists and musicians and so on out of Nazi Germany, out of the influence of Nazi Germany. This is a man who was driven to do dangerous things to help his fellow man. He was a very admirable character. He died at a very advanced age, maybe in the last five years. He was in his 90s. I met one of his students in a setting in Europe, and they just loved him, and they knew that he worked a lot worrying about the ethics of actions, including economic analysis. His argument is you have to make a decision if things—if you're not being allowed to be truthful, do you want to leave? That's exit. Do you want to stay and complain? That's voice. Do you want to stay because you like your paycheck, or you don't want people around you to have a tough time? You're expressing loyalty. If that's where your loyalty is, you probably shouldn't be doing economics.

ZIERLER: Paul, a question so many of us are asking these days, if you're following the developments, will machine learning and artificial intelligence come for my job? What do you think about AI's capacity to run spurious regression analyses?

THOMAS: It'll be really good at it. I was talking to Ken Suslick the other day.


THOMAS: He and I were talking, and we were talking about link rot. It turns out if you go try to chase down research results, at some point, you're going to have a link that's not active. It's going to be a dead end, or it's going to go off completely in a different direction, and leave you no hope that you'll be able to find what you want. A high percentage of results published in the internet by medical experiments, just as an example, are impossible to backtrack because no one is maintaining the links, and the links are rotting over time. When Ken and I were talking, I tried to ask a—I thought it would sound like a silly question. I said, "How important is the internet working to artificial intelligence?" There was a pause, and he said, "Very important. It means everything." I said, "Then what about link rot? What about the fact that the internet, from my point of view, the internet looks like it's a mess? Things that used to work 5 or 10 years ago while doing searches now take you to commercial websites where someone is trying to sell you something."

I think we shouldn't be surprised this is happening. The incentives are not there for people to keep the internet healthy. People would be annoyed if things that they might go to are removed. But this is why there's occasional hope that's expressed that maybe there could be a second internet that only academics can use, because people are aware of the fact that the internet has been stylized to meet the demand for things that go well outside of the scope that academics want. My first thought about AI is it'll be huge. It'll generate enormous amounts of data and use enormous amounts of data. There'll be lots of spurious regressions coming out of it. It'll be full of mistakes. Will it be dangerous? To some extent, I think it's a good thing that it'll be full of mistakes, so they won't be particularly efficient at doing certain things. But I'm sure that AI will be extremely popular and important to people. We can't tell the truth from a falsehood right now at all, and I'm not sure how AI is going to change that.

ZIERLER: Paul, you mentioned the importance of integrity. What about AI? How can AI detect something that has integrity or it doesn't?

THOMAS: Some of the scandals that came out recently, for example, the ones with Stanford, AI might have been the perfect way to look at a literature's worth of diagrams to say, "This diagram I've seen before, it's on a completely different topic." Now, the one where that happened, I don't—I'm going to take this back—probably is not the Stanford case. It's probably the superconductor case, where it turns out that there's a graph that appeared in someone's dissertation about five years ago, and that's the graph that showed up in a recently published article. AI should be really good at that. Whether it leads to people going around some of the measures that are supposed to protect the internet or not, or whether it will lead to people being revealed when they go outside of the accepted methods, I'm not sure. But it'll be a little bit of both, I'm sure.

We went through something. We're in the middle of another transformation that's probably not quite as large as AI, but especially for social science research is the whole big data movement with all the buzzwords about big data. The first thing I worried about when I started reading about big data methods that were being used is why wouldn't they just be used to run another 1,000 regressions so you can report on the one, and claim that's your model when, in fact, you had 1,000 competing measures, and that coincidentally one of them performed better than the other? That's what you always have to worry about. I think AI will probably—again, like any good economist, I'll say on one hand this, on the other hand that. On one hand, it could be used to keep things honest or, two, it could be used to get around some of the controls, and make things dishonest.

ZIERLER: Paul, let's go back now. Let's establish some personal history. Did I hear right? Did you grow up in Florida?

THOMAS: Yeah, I grew up in North Miami Beach, Florida. My dad worked in Hialeah which was a suburb of Miami. My parents were born, and married, and had their family in Philadelphia, and I had two sisters; no brothers. One of my sisters had asthma, so my parents wanted to get her out of the Philadelphia climate. How we ended up in Miami, I'll never know because I thought the whole idea was you go to Phoenix when you're trying to get away from asthma and [laugh] allergies and things like that. But I suspect they weren't ready to go to Arizona, and they were ready to go to Miami. They both came from Jewish homes and Jewish families. My mother was raised Orthodox; my father conservative. I think it was hard for them when they contemplated leaving the Jewish world in Philadelphia. In Miami, there's another Jewish world in Miami, which probably is from Philadelphia [laugh] and Baltimore and New York, so that's why I think they took us down there.

ZIERLER: Where did the name Thomas come from?

THOMAS: From a telephone book, I understand.

ZIERLER: Do you know what the original name was?

THOMAS: Teitelbaum, T-E-I-T-E-L-B-A-U-M.

ZIERLER: Of course. What is that, a fig tree?

THOMAS: I've heard it was a tree. I think that's the baum. [laugh] It turns out it's also the name of some luminaries in the Jewish world, and in one case in the mathematical world.

ZIERLER: Yeah, Teitelbaums are the head Chasids of the Satmar group.

THOMAS: You know about that? Satmar is very controversial. The Rebbe during the time of the Holocaust said things that people found highly objectionable.


THOMAS: Like this, "You have no one but yourself to blame. If you were truer to God, this wouldn't be happening to you," things like that. This is really funny. I was flying on an airplane from Brussels to Los Angeles, and it was an overnight flight. When I would go out to use the lavatory or to get the snacks—because they kept the plane dark, they wanted everyone to sleep—I'd see all these Hasids who'd be davening. Some of them would be davening. Some of them would be talking to each other. Some of them would be flirting with flight attendants.

ZIERLER: [laugh]

THOMAS: They were all wearing the Hasidic clothes. If you knew them well enough, you knew there were different hats that they were wearing and so on. A man who was watching me came over, and he looked at me, and I said, "The snacks are kosher. Did you see?" He said, "Huh. What's your name?" I said, "Paul Thomas." "No. What's your real name?" "I'm not sure about the first name, but Paul Teitelbaum." He said, "Ah, you look like the Rebbe."

ZIERLER: [laugh]

THOMAS: I said, "I do?" He said, "Yeah, you look like the Rebbe from Satmar." "I do?" "Yes." "OK, let me talk here." He took me around the back of the plane, and he kept saying, "Don't you think he looks like the Rebbe?" This was Mendel. He called me once a year for several years afterwards, before we lost contact.


THOMAS: He said to me, after the first time, "Go look at a picture of the Rebbe. You'll see you look just like him."


THOMAS: The picture of the Rebbe, he's got a beard down to here. [laugh]

ZIERLER: [laugh]

THOMAS: He's just hair.

ZIERLER: Put a beard on you, couldn't tell the difference. [laugh]

THOMAS: Couldn't tell the difference.

ZIERLER: Paul, you said your mom came from a frum household. Did she maintain her religiosity?

THOMAS: No, she went to Reform. My parents were glad to send my sisters and me to a Reform synagogue, where I became a bar mitzvah. My mother had come—and my father to some extent—my mother had come from an unhappy household: lots of kids, newly immigrated father. He was born in Poland. He married a woman who'd been there in the US for one generation longer, who'd come in through Reading Pennsylvania, where there was a settlement movement for a while, I think in the 1850s, something like that, maybe a little later. My mother's household involved some abuse, involved, some alcoholism. It was a routine, from what my mom said, that when their father would get home from the union meetings drunk, he'd beat the older kids. It sounded like it was a real nightmare, and my mother was very interested in getting away from that.

ZIERLER: Growing up, were you always interested in science? Was that sort of your track on the way to Caltech?

THOMAS: Yes, but more so math and science, probably.

ZIERLER: Tell me about your dad's work. What did he do?

THOMAS: He was a CPA. First, he worked for a CPA firm when he first moved to Florida, and then he went to work for a company—I don't know if it even exists anymore—Palm Springs Investment Company in Hialeah, where they did various kinds of investments, various kinds of asset management for their clients. It was a small firm. It was a partnership. He was not one of the partners. The story about him is he didn't think he was going to have to go in the army for World War II because he had a heart murmur. But by the time they called him up for service, they were no longer checking for things like flat feet and heart murmurs. They needed bodies. As time went on, he'd been working at the Philadelphia Navy Yard as a draftsman. Where he learned how to be a draftsman, I'm not really sure, but he taught himself a lot of technical things. He was surprised when he was drafted, because he had been diagnosed with a heart murmur. My mother and father—my mother became a civilian employee. She did become a court-martial clerk. She'd be typing those really fast machines that they had during court-martials in the Army. They were in Fort Bragg for part of the time. They ran into a lot of anti-Semitism there, on the base and outside. They'd been thinking about changing their family name already, and that's when they changed from Teitelbaum to Thomas. My mother went from Goldie Teitelbaum to Gail Thomas.

ZIERLER: Did your father involve you in his work at all? Did you see up close what he was doing?

THOMAS: No, not much. There's a story about my dad that may be a little bit revealing too.

ZIERLER: Please.

THOMAS: When the war was over, he got the veterans' benefits, and he could go back to school, and he wanted to be an engineer more than anything in the world. He went to his uncle—it would've been my great uncle—and said, "What should I do?" His uncle said, "Eddie, you can't go to engineering schools. Jewish boys can't go into engineering. It's not allowed. Go become an accountant," so that's what he did. He never loved accounting, and so he made a choice that was very practical, but I don't know if he regretted it or not.

ZIERLER: Tell me about how you learned of Caltech. It's far away from South Florida.

THOMAS: First of all, I'm looking for the words. What do you call it when someone starts with marijuana, and the next thing you know, it's a—?

ZIERLER: Gateway, it's a gateway.

THOMAS: MIT is a Caltech gateway.

ZIERLER: [laugh]

THOMAS: Everyone in Miami knows about MIT. No one knows about Caltech. [laugh]


THOMAS: Once you do a little more research, you start learning about the other school on the other coast. That's probably how I learned about Caltech, because I already knew about MIT. I was taking math at the University of Miami. There was an NSF program so that kids who were anywhere from sophomore to senior would go, would drop out of their school's math sequence, and do something through the University of Miami, linear algebra, algebra 2, geometry. Geometry, we did. It was the last thing we did in junior high, 9th grade. But after that, you were just at the University of Miami on Saturday mornings and every summer; not every summer but two summers I think. We were learning calculus really early. I loved it, but I thought it was really hard. It was only later that I realized, I learned that it was really simple. It's funny, it's like not knowing your way around in a town, and when you finally learn it, you can't recreate why you couldn't do it before.

It turns out there's been lots of, over the many years, lots and lots of good textbooks written, and you can learn about calculus one method or another. Also, from the time I had been in junior high, one of the math professors, math teachers, it was also a name—a guy named David Multz, M-U-L-T-Z. He was a very formative person in my history. He knew I was taking math in University of Miami. He wanted me to compete in the Miami and Florida science [pause]—there goes my vocabulary again—science fairs. It's frustrating. He wanted me to compete in science fairs. They talked me into it, and so in 8th grade and 9th grade, I competed in math, and I did very well. I won the Miami—in my 8th grade, I won the Miami fair, and then the next year, I won the state fair. He had me doing things with [pause]—in our courses in junior high, we were probably doing things about numbers and bases. He suggested that I look for some unusual bases, and I think I was going to do base 1/10th, and he said, "Try base negative 10. Let's see what that looks like." It was fun. Now, some of the judges were from the University of Miami, so it might not have been [laugh] quite kosher, but I did really well. Then the next year, he wanted to know—he suggested to me that I write about proofs about triangles, and see if I could come up with new ways of stating the proofs and proving them. I did that, and that was well received. By the time I was interested in Caltech—was in 10th grade, and looking forward to where I was going to go to college—I already had some achievements that probably helped me get into Caltech and MIT, and I finally applied.

ZIERLER: You got into both?

THOMAS: I got into both, and there's a little story about that. A friend at a nearby high school and I were both going crazy being in school. By this time, we were probably seniors, maybe juniors, and we were at two different high schools, but we were friends from being boys. We each went to our principals, our assistant principals, and said, "How would you feel about me being gone for two weeks? I'm just going to go up with a friend, and we're going to visit the college campuses we've applied to on the Northeast." He said, "To get you out of school for two weeks, I'll do it," because we were both clearly going batty, being there. We drove up from Miami on the I-95, and we visited, as it turns out, the schools he had applied to, because the only school on the East Coast I'd applied to was MIT. We went to the schools where he had applied, and we got to see the campuses, and so on. While I was there and staying in a dorm at MIT, by the time we finally got up to that part of the country, they released the admissions list for entry into MIT's undergrad program. I don't think they could do that today because of the privacy issues. I went and checked, and I was on the list. The people who were putting us up in the dorm said, "You'll be going to MIT?" I said, "No, I still have to hear from Caltech." They said, "Oh, no one gets into both schools. They're looking for different things." I said, "OK." When I got into Caltech later, little bit later on, a few weeks later, and I started mentioning this to people, they said, "Everyone at Caltech gets admitted by MIT but not the other way around because the school student bodies are too disparate for that to work." It wasn't quite true that once you got into MIT, you couldn't get into Caltech.

ZIERLER: Was it an easy decision for you, Paul?

THOMAS: It was. I had decided that I preferred the smaller school. As I told that story about the principals wanting to get us both out of the school, I was on the verge of getting into a lot of trouble. My dad had died the year before. I was going through a lot of rebellion, and I rebelled in various ways for many years. But I knew, I think I knew that I'd get more help dealing with my problems if I went to Caltech than if I went to MIT. In fact, I saw proof positive of that. When I was a freshman, one of my friends that I had made there in the freshman year didn't turn in his lab notebook for one of the labs he'd taken because he'd already decided he didn't belong at Caltech; he should be leaving. The graduate student who was the TA came over and asked people, "Can you pick his lock, and let me into his room? I want to get his lab notebook, so I don't have to flunk him," and they did that.


THOMAS: I don't think there'd be time to do that kind of thing at MIT.

ZIERLER: Paul, what were your impressions when you arrived in Pasadena?

THOMAS: It was beautiful. I love the mountains. We had a lot of smog, so you didn't get to see them every day. The first few classes I went to, it became clear it was going to be really hard. There was going to be nothing easy at Caltech. I was glad of that. I probably made friends first with other freshmen, and maybe again a somewhat rebellious group because a number of them didn't come back after the Christmas break. I might not have come back after Christmas break either. I told my mother I was unhappy Wee drove up from Miami. "Do you want to look in a new school?" "New school?" That's the one in Florida that has more or less been seized by the governor.


THOMAS: I viewed the campus, and I met some other students, some students who were there, and I met some faculty. Every time I would look at a course, I would say, "What textbook are you using?" The textbooks were either written by Caltech authors, or they should have been, the way I felt. They had Dickerson, Gray and Haight They had Apostol. I thought, "Why would I go to study Apostol's book anywhere but Caltech, where Apostol is?" I talked myself into [laugh] staying at Caltech. I'm sure that was the right decision. New College is what it was called. New College wouldn't have been that good for me, I don't think.

ZIERLER: Paul, if I have the chronology right, your undergraduate time at Caltech perfectly coincided with the first coed class at Caltech. Did that register with you? Did you know you were entering along with the first women class of students?

THOMAS: I think I knew. The first set of female students was small. We probably had about 800 undergrads, and I think there probably were about, I'm going to guess, around 100 coeds coming. Yeah, it registered for me. I had a pretty active social life when I went to college. I wasn't one of the shy guys. I had dated a lot in high school, so I don't think I would've been happy at [laugh] high school without coeds.

ZIERLER: [laugh]

THOMAS: But, as it turns out, the next year as a sophomore, when I came to—I'd been elected by my house, Lloyd, to be an upper-class up—sorry, again, words are failing me here.


THOMAS: To help introduce the new students through the program that the school had set up. Now, they used to do these orientation weeks—is what this was for—they used to do them on Catalina Island. In my year, they switched to the campus in Caltech because there was an energy crisis going on, and they didn't want to move people that far. By the next year, they were back to Catalina Island, so I got to go with an upper-class—can't cross the word in my mind. In any case, I got chosen by Lloyd to be one of the people who would help introduce the new students to the curriculum, to the campus. I think I was given about six people that I would lead in the sessions that we would do on Catalina Island. One of those six is the woman I married, Kim Cheryl Fisher and we're celebrating our 50th anniversary this year. We're doing it like the Queen. It's a jubilee year. We're doing it all year. [laugh]

ZIERLER: Mazel Tov!

THOMAS: Thank you. I only had one woman to chase for the rest of my life.

ZIERLER: [laugh]

THOMAS: That's the way I like it.

ZIERLER: Paul, was the game plan mathematics for you at Caltech? Was that what you wanted to start on?

THOMAS: No, I think I was uncertain. The option I chose was biology. You make a choice. It's not very binding at first, and you have plenty of time to reverse it. I chose biology soon after my freshman year was coming to an end.

ZIERLER: But not physics, given your math background and, generationally, everybody wanted to be the next Feynman?

THOMAS: Of course, I wanted to be the next Feynman. [laugh] No, I didn't think I was going to be particularly good at physics, once I was trying it. I think I gave up too easily. But I'm glad that I had a great education in biology, even though I changed my field to economics afterwards.

ZIERLER: Were there any professors in biology you became close with or you considered a mentor?

THOMAS: There were lots of mentors in the faculty, from my point of view. Ray Owen was an amazing human being, so I found him very influential; Seymour Benzer, same. The story about both of those men that when they were asked to submit material to the Nobel Committee so they could be in the running for Nobel Prize, they both said no. They didn't want their life taken over by the fame. That's the story I heard.


THOMAS: My advisor was Roger Sperry of the split-brain experiments.


THOMAS: A little later in my education, I became very fond of Jim and Ellen Strauss. They took me and some other students on a few field trips for bird-watching. I went away, I went to Newport Beach with them. It was a special set of courses with probably six units, and they were meant to be something that would enrich us. We put together this major, this course for ornithology. It was basically going to be bird-watching. We had a great time doing that. You opened a big compartment here, the people who were influential as undergrads. I liked Dan McMahon very much. I believe he left the institute after a while, and I heard he had committed suicide. But he was kind of a nervous wreck. He would sort of move around the floor while he was talking. He was very demanding. We weren't always up to what we needed to do to work with him. But I still remember he told us to do readings outside of the main course, so he had me read a book. He assigned reading. He assigned a book called Ecology: The Subversive Science. I went in to have a meeting with him, and he said, "How do you like the book so far?" I said, "I finished it." He said, "That's like telling me you downed a whole bottle of vintage wine. Go back and read it again, and take your time this time." [laugh] It was a beautiful book.

There were lots of other faculty that really influenced me. Tom Apostol was, again, an amazing guy. I liked Jesse Greenstein's astronomy course very much. I liked some people who were just at the institute. I liked Ned Hale, who was Huttenback's admin, who would teach you how to toss pennies. I liked Ned. I'd look in and see her sometimes. There were lots of students who definitely either I stayed in touch with them or I still remember them quite fondly, some of whom I'll mention if you ask me for suggestions. I liked Dan Kevles's course a lot, and I ended up being a research assistant for him. I got to spend a fair amount of time with Delbrück, and he was not an easy guy to get along with. He could be very, very gruff, and there was a constant chatter of people imitating him because he'd be very harsh towards people. I liked him, and I became a teaching assistant for him at one point. My wife—at that time, my girlfriend—and I went over to his house. He invited us there a few times. He took us and other people out into the high desert so we could camp, and we could try to carry on another step of his research, which was could he successfully prove the elliptical nature of the solar system? If he went out and used only data he could collect with his naked eye, could he actually find out what was going on? He said, on one hand, he used celestial stationery, which sort of prompts you to put the right answers in. On the other hand, he had to deal with smog [laugh]—

ZIERLER: [laugh]

THOMAS: —and his ancestors in this pursuit had not had to deal with smog.

ZIERLER: Paul, what house did you live in?

THOMAS: Kim and I were in Lloyd, and then after we got married, and we were still undergrads, we moved to Holliston Avenue, where the institute had some private housing, which they were renting out to the students, and to faculty too, I believe. George Zweig lived on that street too, so he was a faculty member.

ZIERLER: Paul, was there an informal enclave of Jewish undergraduates who were friendly with each other?

THOMAS: Yeah, we were all on the board of the YMCA.

ZIERLER: Oh, really?

THOMAS: Yeah. [laugh] Wes Hershey and Walt Meader ran the Y, and I think of the 12 members of the board, something like half were Jewish. But there was nothing like Hillel], so we relied on the Y. Walt Meader actually married my wife and me. We flew him up to where Kim's mother lived in Sacramento. We flew him and his wife up, and then he actually conducted the service for us.

ZIERLER: What did you do during the summers? Did you stay on campus? Did you go back home?

THOMAS: I went home exactly once, after my freshman year. Then after that, I never went home again. [laugh] I worked for various faculty, so I worked for Jim and Ellen Strauss, who were experts in virology. I worked for them at one point. I worked for James Bonner at one point. These were big, big names on the campus at the time—


THOMAS: —times past. I worked for Bill Wood, a biochemistry faculty member. He did all his work with Lee Hood. I worked for Bill Wood. Actually, he arranged for me to get a job teaching at a local alternative school, because his kids were going to that, and they wanted to get an undergrad over there to try to teach them some science. I worked for him. That was fun too. I also was the head waiter for Lloyd, because I was looking to get some spending money. I worked at The Athenaeum as a waiter too. By the way, I was a terrible waiter. [laugh]

ZIERLER: [laugh]

THOMAS: The center of gravity was always right below me—

ZIERLER: [laugh]

THOMAS: —because I dropped a lot of dishes. [laugh] Is The Athenaeum still a place the faculty go to all the time?

ZIERLER: Absolutely.

THOMAS: I don't think anyone will mind if I tell a story about Lance Davis, from a while ago. Lance Davis and a few of the other social science faculty would proudly misbehave when they went to The Athenaeum. They would send their food back if it wasn't properly cooked. They would raise their voices. They acted very uncivilly, and it wasn't really funny, but they thought it was hilarious. Lance Davis once had just thrown a tantrum, and was going to go down to the basement to have a sandwich, because he'd given up on the restaurant. I went over to him and said, "Dr. Davis, why do you keep coming here if you think it's so terrible?" He said, "For the entertainment, my boy, for the entertainment." [laugh]

ZIERLER: [laugh] Paul, of course, Caltech's campus, it wasn't Columbia or Berkeley, but this being the early '70s, was there any politics going on? Were people talking about civil rights, the Vietnam War, that kind of thing?

THOMAS: They were. There was a famous story, and some of this has probably been written down by now. Huttenback wrote a book called Confessions of a Genial Abbot. Have you ever found it or read it?


THOMAS: OK. I know it's certainly not in print anymore. I don't know how we'd get it. But he may have told these stories. The students wanted to make a protests to the board of directors who were meeting in that room at the base of Millikan. I'm not sure what kind of pod that was, what kind of room that was, but that's where the board of trustees would hold their meetings. The students wanted to protest to show their opposition to the war in Vietnam. But they didn't want to hurt anyone's feelings, so instead of holding an anti-Vietnam riot, they held a vegetable riot, in which they threw vegetables at each other. [laugh] I'm sure that that story probably came from Huttenback. We could bring in speakers often into the Y, and you could use the student union to have a place to sit. I think a lot of that's been torn down, but I'm not sure.

The politicians would come in. Julian Bond came in. I got to introduce him, and that was thrilling. I was very interested in politics. Before I went to college, one thing I had done is I'd worked—and this is going to sound funny—I worked on the Rockefeller campaign in '68. You had Nixon versus Reagan versus Rockefeller. Obviously, Nixon won the primary and the election. [pause] That, I really enjoyed. When we'd bring politicians in, they would talk to us. We brought in people who would've been considered progressive in those days. I can't remember some of the names, but they had written books, decrying the overall system. I've always been more of a centrist in everything I did, even in the one time after Cambodia was bombed. During the Vietnam war, there was a bubbling up of protest at the high school where I was a student, and I got on the stage and said, "We need to calm down." I gave a message of moderation. "If you just yell at each other, no one's going to listen to anyone what anyone says." I even said, "I know that you're quiet now. You're paying attention. I know as soon as I step down, you're going to raise your voices, and we're not going to make much progress. But here's hoping you don't." Of course, the voices went way up, and people were yelling at each other again. I was interested. I was very patriotic, no about institutions, per se, and not about people, per se, but about the ideals. The one thing, I guess, it's interesting to me that I never went into politics. I probably would've not succeeded [laugh], but I'm a little surprised, looking back, that I never tried that.

ZIERLER: Paul, when it came time to graduate, did you think about continuing on in biology, or is this sort of the origin story of you getting involved in economics?

THOMAS: Yeah, the origin story does involve politics, so I'll mention that in a moment. But when I said, when anyone asks why not go for a graduate degree in biology, I said, "I'm very idealistic. I want to save the world. I don't want to destroy it. Put me in a lab, there's no telling what I might do."

ZIERLER: [laugh]

THOMAS: Again, I wasn't particularly skilled as a laboratory student, and I had Ken Suslick as an example of what a very skilled experimentalist looked like. I'd be in the biology labs making terrible progress on my work, and I'd go to see him around 2 a.m., and he'd be working on his latest project, and he would show me the equipment he had built by hand, and the technique and the new method he was using. I would say to him, "Where did you learn to do this?" He said, "I don't know. Since I was in 7th grade, I wanted to be a chemistry professor." I haven't seen his interview yet, so I don't know if that story is in it. Is it posted now?

ZIERLER: Who's this now?

THOMAS: Ken Suslick.

ZIERLER: No, he's still working on it.

THOMAS: OK. Nudge him. Tell him to get it done.

ZIERLER: Definitely!

THOMAS: I want to read it. [laugh]

ZIERLER: Definitely.

THOMAS: How I moved to economics, even though you didn't specifically ask, how I moved from economics, from biology to economics or biology to social science—

ZIERLER: No, that was my question. When you graduated, did you know immediately that you would not continue in biology, or were there some false starts there?

THOMAS: When I was a junior, another person I'm going to suggest you think about, Dale Collins—who became a lawyer in New York, and just retired—Dale was majoring in social science as an undergrad. I saw it when you interviewed Roger Noll and Mo Forina and John Ferejohn, you were asking them why didn't the humanities grow when the social sciences were growing?


THOMAS: One of the things that happened is social science was more or less a PhD program only. It wasn't for undergrads. Dale was insisting that he wanted to do economics and politics, and he wanted to go to law school, and that this is what he wanted from Caltech. They said yes. They let him do it. He was wonderful at it. He immediately, while he was still a junior, he was taking courses from, I think, Morgan Kousser, Daniel Kevles, oh, Rodman Paul. I'm not sure if Bob Bates had arrived yet. Dale was already sampling what was going to become the future of political science, to some extent, at the undergrad level. He leaned on me and said, "You have to take Dan Kevles's"—when I was signing up for courses, he said, "You have to take Dan Kevles's course in American political history. You'll love it," because he and I had talked politics all the time. I took it. It was a wonderful course. Then in my senior year, I took Social Science 231 abc, which was the new faculty members that your interviews before sort of revealed all coming to the same class, and whoever was supposed to teach it to everyone contributed. All the grad students and any undergrad who wanted to be there would all be there. It was an introduction to economics and political science and history politics, and it was because of Dale that I did that.

By the time I was thinking of grad school, I thought it's going to be political science or economics for me. My wife developed asthma, and we wanted to get out of LA for a while. She wanted to do her junior year at UC San Diego or beautiful La Jolla. I had to figure out how to do grad school at UCSD. We didn't have a car. We took the bus down to San Diego, and we had made some phone calls and arranged for some interviews. I went to see an interviewer. I'm trying to remember. It's one of the faculty members [Don Bear]. Obviously, I'm searching for his name. I went to see him. It was already, I think, summer before grad school would start. He said, "I'm sure you can come, but we can't give you any money. It's too late." I said, "Have you looked at my GREs?" He said, "No." I said, "Look." He said, "OK, you have money." The same thing happened the next year or a few years later in Lafayette, Indiana, by which time I was teaching at Purdue. My wife decided to go become an engineer. She'd been a biology undergrad at Caltech also. She was invited to consider instead agricultural economics. They actually said to her much the same conversation. "We'll admit you, but it's too late to give you any money." I'm standing there. I said, "Have you looked at her GREs?" They said, "No." I said, "Look at them." They said, "OK, you have money." Anyway, by the time I was ready or when I went to UC San Diego and I had this interview with a faculty member there, he said, "Are you going to be coming here?" I said, "I need to go talk to people in the political science department." He said, "Ha, there is no political science department at UC San Diego. It's scheduled to start in a couple of years, so you can't go talk to them." I said, "Then I guess I'll be coming here."

ZIERLER: [laugh]

THOMAS: I spent the year at UC San Diego. Kim spent her junior year—she had missed some classes because of her asthma. In that year at UC San Diego, I competed for and won a National Science Foundation fellowship, which meant I could essentially write my own ticket, and go anywhere I wanted to go. But Kim wanted to graduate from Caltech, which I was 100% in favor of also. I took my NSF fellowship, and went back to Caltech into the social science department, where we have to note I did not graduate. I finally finished at Washington University in St. Louis.

ZIERLER: When you came back to Caltech, was it basically starting anew or were you able to transfer some of your credits?

THOMAS: No one cared about that. I was good at math. That's all they needed to know. They also realized what they were doing was revolutionary. They weren't going to teach conventional political science or conventional economics. If it was important, you would learn it yourself later on which is, in fact, what I did for a lot of economics, and I don't have any problem with that. I think that's a perfectly good thing to do, with the faculty to take the students to the cutting edge instead of more concentrating on the basics.

ZIERLER: You got as far as the master's at Caltech?

THOMAS: Yeah. It went on—I'm not sure what year I got the master's. You have my résumé.


THOMAS: I went the next year to Brookings Institute, Washington, D.C., where Roger Noll had spent some time there, and Roger was responsible for getting me in at Brookings. That's, in theory, where you finish your PhD thesis with a fellowship like Brookings. When I finished my year at Brookings, I was hired by Purdue, and I joined their economics faculty. I was there for five years. I went to Purdue where I loved being at Purdue. I taught lots of interesting classes. I'd struggled with my dissertation. I didn't want to do anything but my dissertation, Purdue kept me for five years, and they were hoping I would do what I was brought there to do. I was a good teacher, and I loved the mathematical courses especially. I was also, because of the Caltech influence, very enamored with public choice theory. Another faculty member from political science, Tom Hammond, and I put together some public choice courses for the undergrads and grads. I learned a lot teaching, but it's not the way to get a PhD done, a dissertation done. It's certainly not the way to get tenure.

ZIERLER: Was the faculty appointment contingent? They were assuming that you were going to finish the Caltech PhD?

THOMAS: Yeah. By this point, I was reaching to Caltech for direction, but they were leaving. In fact, they were the sort of department this dream team was breaking up. They were all heading, eventually, because they all ended up at Stanford. All roads leave to Stanford, but they went by way of other schools. I looked like a permanent ABD from the social science department. I went to work first, when I decided it was time to leave academia, which I thought was a call I would've made too if it had been someone like me.

ZIERLER: You left before a tenure decision was made?

THOMAS: The original contract I'd been hired under stipulated I had to have my PhD done, so they didn't have a tenure option. But I knew it was coming, and they were wonderful to me. Really good faculty. I loved the grad students. As I said, I loved it. They'd come to me—the chairman was Jim Moore—well, he wasn't chairman, but he was sort of my mentor. He'd come over and say, "How do you feel about teaching general equilibrium theory?" which is one of the more exotic things. I would say, "I'll do it if you'll lower my teaching load. I've never taught it before." He would say, "Yes," and do it. Now I'm thinking the right answer to all those questions were, "No, I have to get my dissertation done." [laugh]

ZIERLER: [laugh]

THOMAS: I don't want to leave you hanging in the air.

ZIERLER: No, Paul, I want to ask, do you regret not finishing the PhD and staying on the academic track?

THOMAS: I'll never know, I think. Eventually, I got the PhD, and it opened a lot of doors for me.

ZIERLER: Of course.

THOMAS: Then a lot of faculty members from contacting other places were very kind. They didn't pretend. What I did at Washington University was real, and they were quick to accept that. This is where my history is topsy-turvy.


THOMAS: It already is, and I'm telling you the story. When it was time to leave Purdue, because of five years without finishing my PhD, I called some friends at Washington University and said, "I'm thinking I'm going to have one last try to get my PhD. What do you think of the idea of my coming there?" They said, "That's a terrible idea. You should come through the business school instead of the economics department, and you should teach the courses. That's how we should do things." I did, I spent two or three years there doing that, again, making the same mistake, teaching classes instead of working on my dissertation. But I had a different dissertation by then, and I left with that unfinished. My next stop was out of academia. I had disqualified myself. I went to work for Douglas Aircraft Company, part of McDonnell Douglas. Douglas Aircraft was in Long Beach. I didn't know there was such a position, that there was a job like that, to be a business economist. I loved it. Let's see if I can get the years right. [pause] Maybe 1988 to 1997—

ZIERLER: I've got your résumé up. That's it.

THOMAS: —I was at Douglas Aircraft. At a certain point in 1992, two things happened. I was facing my 40th birthday, and airfares got really, really cheap. There was a big price war going on. I cleared my calendar, and I spent Thanksgiving finishing as much of the new dissertation as I could. Then the next chance I had to do it was 4th of July. I finished it, and I sent it to my advisor, Nicholas Dopuch at Washington University. Nick said, "I thought you had left us." I said, "No, I didn't leave. I've been doing other things. Will you look at my dissertation?" He said, "OK, but I don't want you to get your hopes up." He called me back the next day and said, "Son of a gun, it's a dissertation."


THOMAS: [laugh] I got it, and everyone was wonderful to me. Douglas Aircraft paid for me to go to my graduation, to be robed. Everyone was glad for me.

ZIERLER: Paul, was it more or less the dissertation that you would have written had you stayed full on through, or had your experience in industry really influenced what you were working on?

THOMAS: My research and participation in something called the Risk Theory Seminar is what changed my research. I'd always been interested in the economics of risk as part of it, and so I started working on a problem. I heard about the Risk Theory Seminar, which we had faculty members and industry and insurance people, people who were scientists, chief scientists, actuarial scientists, and so on. I asked if I could attend their workshops, and they said yes. I gave presentations, and I gradually wrote a dissertation from that work, and that's what I defended in St. Louis, in Washington University, and got the PhD in business economics.

ZIERLER: Paul, was that more about a personal achievement for you or was it really a credential in the world of economists working in industry that they should have a PhD?

THOMAS: It was personal, but it did open doors. I didn't know it would, but it opened doors for me.

ZIERLER: How so?

THOMAS: When I first went to work at Douglas Aircraft, I didn't have a PhD. One of the executives who was into humiliation liked to come over and say, "Dr. Thomas, oh, I'm sorry, you don't have your PhD." It sounds almost innocent now, but at the time, I think it was intended for him to have the upper hand. But, meanwhile, I was working for the chief economist at Douglas Aircraft who had a PhD from University of Illinois, Champaign-Urbana. His advisor had been Julian Simon, a brilliant, controversial economist, who's passed away quite a while ago now. He told me—and I repeat it for other people what he did for me—he said, "I'll hire you. If you want me to make a note that you're trying to finish your PhD, I will. But if you don't finish it, it counts against you. If you don't want me to do this, you don't have to. I'll just ignore it." I said, "No, I think I could use the benefit from the pressure." I did the same thing. By the time I was building my own group at Intel, I had some ABDs come through, and they would say, "Will you enable me to finish my PhD?" I'd say, "I'll enable you, but I can't make you. If you want that to be specified that you intend to get your PhD, that'll be one of the ways your performance will be measured. This worked for me. Maybe it'll work for you." Faculty and grad students tell all their grad students, "Never take a job until you've done your PhD." But everyone knows that there'll be the exception.

ZIERLER: Tell me about your work at Douglas. What was the day-to-day like?

THOMAS: I worked for three major corporations. I'm hoping that I'm protected by the passage of time, and the fact that Douglas Aircraft doesn't exist anymore. It was incorporated into Boeing. But it was the worst-run company I had ever heard of [laugh], and it was into lying, big time. If I don't give examples, I can't be held liable. But some of the lies were ridiculously stupid. When you buy an airplane from an air transport company, it has to be put together on the assembly line, and it can take months and, in some cases, even more than a year to build certain planes. Douglas Aircraft was always behind on its schedule, always being fined, and having a prespecified contract that if they didn't deliver by a certain date, they had to give some of the money back. Douglas Aircraft tried to lie to its customers, airplane customers about where they were in the process of putting the plane together. It was a particularly stupid lie, because whoever lied—and I think I knew who did it, whose idea it was—never stopped and asked, "I wonder why there's an office for that airline on my campus at Douglas."

The reason is the airlines all want to have someone there who can watch the day-by-day progression of their airplane through the assembly line. You don't lie to an airline that can just send someone into a hangar and say, "That's not true. He said we were two weeks from being done. Look where they are on the assembly line. The rate they're going, they're going to be two years before they're ready." That was an issue working at Douglas, that there were silly lies that were told, and there was some bad behavior. On the other hand, I loved the group I was in: Adam Pilarski as chief economist, a fellow economist, and he had hired from different universities and different industries. Adam did more than maybe anyone. Once I decided I was going to be a business economist—although I didn't decide for all time, it just turned out that way—Adam was the greatest mentor I could have. My wife was reminding me, and she was saying, "Be sure to tell David this story of Adam with the photograph." Adam Pilarski came to see me, and he said, "We have to put a presentation together in the next hour. We have a meeting with one of the VPs. You've only been in the group two or three weeks. You haven't put a presentation together to that extent, and so I'm a little worried that you're too academic. I don't have time to give you an immediate course. Can you do something to show me how you're going to present? Give me an example and present. Show me what you have." Two stories. First thing I did is I gave him, I think, a three-page PowerPoint. There's a picture of Albert Einstein on the front, and he's saying, "E = mc2." The second page shows a little mushroom cloud next to Albert, and says, "Boom." The third page is a big cloud that says, "Big boom." He said, "Is this what you had in mind? You'll do fine." The other thing, even before this, he came into my office and said, "As you put this presentation together, again, I don't want to blow the VP out of the water. Keep this picture with you." He hands me a picture of a boy. "This is my son, David. He's 9 years old. Make it so he can understand it. OK?" He walked away from my desk, came back, said, "I want to explain to you, the reason I'm giving you a picture of my son is I don't have a photo of my dog." [laugh]

ZIERLER: [laugh]

THOMAS: You can see that I was very lucky to have him as a boss.

ZIERLER: Absolutely. [laugh]

THOMAS: I left when it was clear that the merger was going to take place with Boeing, that if you were lucky enough to get a job offer, you were going to have to move to Seattle. I honestly didn't think that the person making the decision about who would go with Boeing and who would leave, I didn't think he was going to pick me anyway. I notified contacts and friends at different airlines. One of the nice things about working in the economics group at Douglas is our customers were commercial airlines. We were not on the military side. We were on the commercial side. We made MD-80s, DC-9s, before that DC-10s, MD-11s. Those are the products that the company made.

ZIERLER: Right. Paul, I'm glad you made that distinction between military and commercial. The end of the Cold War, that really did not register with you? That didn't affect Douglas in any serious way?

THOMAS: I called Adam Pilarski the other day, and I asked him, "What's your story about Douglas Aircraft, and how it went under?" He said, in his view, it was predetermined by the end of the Cold War.

ZIERLER: Oh, wow.

THOMAS: He said that basically it was clear that McDonnell Douglas was not going to get as many military contracts as they used to, and they once made a lot of money doing that. They were encouraged—and I don't know the story behind this at all. But in the history of Boeing and McDonnell Douglas, and Douglas, the McDonnell family was encouraged to take over Douglas because Douglas looked like it was going to go bankrupt. Douglas had once been a very proud company; in World War II, made an enormous number of military airplanes in World War II, and some of the best. There were other companies there too, like Lockheed, but Douglas was great. But Douglas was losing money, and they were rescued by the McDonnell's—who soon didn't have many military projects in front of them because of the end of the Cold War. Then eventually a green light was put on—that's a word people use—by the Department of Defense that the Secretary would be OK with certain kinds of mergers. That's when the Boeing McDonnell Douglas merger was put together. There was a military airplane that was being built on the Douglas campus, that was the C-17, which was a transport plane. But it was an example by that time of a big project that wasn't working out well. They were constantly missing deadlines, being fined by the Department of Defense. Eventually, the C-17 flew, and I think has performed well as a military—as a manpower and cargo transport. They can do things like take off uphill. It can come down on a very messy tarmac that might have all sorts of junk left over from fighting and so on. It can come down and it performs really well. But to get to where it does, where it can carry the weight it needs to carry at the low altitude it needs to do that, that it can land in a combat zone and take off, it was years behind schedule by the time it was ready.

ZIERLER: Paul, looking back, the dishonesty at Douglas that you were talking about, was that, in your first job, in this new career, was that useful for you, sort of trial by fire?

THOMAS: You needed to survive. You needed to be ready to deal with it. I was a little older because I had been in grad school for a million years, and I had been at Purdue for five years. I found that in all three places where I worked, the fact that I was older was an advantage. I wasn't scared of the executives. I knew they had the power to do whatever they wanted to do with my career, but it didn't personally touch me. The younger people, I could see, would come from a meeting still shaking or crying, and the older people dealt with it better, I think. In the years that I was at Douglas, they got worse in the lies they told and the way they yelled at people. You'd end up with someone yelling at you, as if that was the right way to deal with the issue, in your face yelling. I still have a story I remember very well. Soon after I joined Douglas, I was asked to go over to the MD-12 project. The MD-12 was going to be some sort of successor to the MD-11, which was some sort of a successor to the DC-10. We didn't know very much about this plane we were going to build, but I was part of the task force. I was supposed to look at it. It was supposed to be an honor. I was told it was an honor. You're brand new. We never send someone over. They sent us to a different building. They talked about flying a pirates' flag, like just in the story of Apple, and Apple did that. But from the moment I was told the good news that I was going into the project, I had my doubts that they even knew what they were doing. For example, when I was called in and told this, I said, "This will be exciting. I'm looking forward to seeing this, helping to do the studies, and see the studies. How are you going to decide?"

I said, "Can I ask some questions?" They said, "Yes." "How are you going to decide that it's going to be a three-engine plane or a four-engine plane?" Because the DC-10 was a three-engine. The 747, of course, was four-engine. We were trying to come up with a product that would compete with 747. "How will you decide between a three- and four-engine?" "Oh, it'll be four." "Excuse me, to do the study?" "No, it'll be four." "How are you going to decide on this or that?" "Oh no, we've already decided that." Without the study, without doing anything, they had preconceived all these notions. The system worked, the MD-12 program was around for several years before it collapsed on its own dead weight. At one point, Douglas went to the banking community and said, "Will you finance this plane for us?" They'd never had to do that before. The banks looked into it and said, "No, we don't think so. We'll pass on that one." The system worked. There never was an MD-12, so we don't know what it would've looked like. But that was a poor excuse for scholarship, and a poor excuse for analysis.

ZIERLER: Paul, how did you adjust to the relocation to Houston?

THOMAS: The main problem was Kim had tenure at Whittier College, but I was meant to work for an airline so we could actually make it work. For seven years, we commuted about 40 weeks a year—40 weekends a year, I should say. We commuted between Houston and LA. One or the other of us would get on an airplane and fly standby. I had a high enough rating in the rules for standby. There weren't too many people who would likely be flying. They could bump me from a plane, but I could bump other people [laugh] from the plane. After I was promoted a couple times, Kim was given the same privileges, so we flew. Again, we probably spent—the reason we didn't fly 52 weeks is Kim would give up the Los Angeles weather, and come to Houston every summer when classes were not in session at Whittier. The rest of the time, we'd fly back and forth. That I loved. I love flying. Kim got to be fond of it too. You could see the airline in operation by flying it all the time, so I had a really good time. I learned a lot about Continental Airlines by being a standby passenger.

ZIERLER: Was this a step up or more of a lateral move for you?

THOMAS: When I was hired by Continental, and now Airlines, I was to report to the chief economist, Eric Amel, who had been a fellow student of mine at Washington University. Small world, right? I was a senior manager reporting to the chief economist, and that was in—again, you want to consult the résumé that I gave you—but '88 to '97 and '97 to 2004. When I first came over in '97, there was a promotion, and certainly a heck of a lot higher pay, so it sort of felt like a promotion. By the way, I found the secret to advancing your income, your salary.

ZIERLER: Please.

THOMAS: Never be faithful. Just move from one company to another.


THOMAS: I did that, and each time, the three biggest steps up in my salary came by moving from one company to another.

ZIERLER: Sure. How different were the responsibilities? Obviously, Douglas and Continental are very different business models. What did that mean for you?

THOMAS: We did a lot more economics at Continental, so revenue management as the concept behind the price discrimination that airlines engage in. Remember, that's a technical term. I'm not being pejorative when I say price discrimination. But the airlines have a problem. The problem is that what their basic business model is that they have to let people buy seats unless they think that they can hold them and they'll be worth more value later. Revenue management comes on top of setting lower prices, which is revenue management has rules, like you need to have 21-day advanced notice flight, or you have to stay over on a Thursday night. The rules are designed not to drive you crazy, if you're following the NFL on Thursday night football, but the rules are intended to extract as much revenue from the passengers as possible.

In the revenue management world, you basically do say, "OK, I'm going to close this flight down. As we get closer, we'll reopen it, and we'll see how the demand has changed." With a stochastic demand, it's very hard to anticipate it. There's a whole department at each airline that does this, the revenue management department, and it's rocket science. They use models that were built by American Airlines. They were built by MIT and a few other places. They came up with these very complicated models telling an airline how to manage each flight. There are thousands of flights. I actually don't know what breakthroughs since then have occurred or have not occurred. When I left the airline, we were benefiting quite a lot from greater and greater computing power. It looked like we were going to do more and more clever price discrimination. When I said there's nothing pejorative, it's not illegal. There are various forms of price discrimination that are, but what we did was not illegal. But there are people who really don't like it.

ZIERLER: Paul, what was the impact of the pilot strike in the Reagan administration? Did that reverberate by the time you joined Continental?

THOMAS: You mean basically the air traffic controller strike probably.

ZIERLER: I'm sorry, that's right, yeah.

THOMAS: It meant more for the overall economy than for the industry. It broke the back of unions. It took them years to make up some of the progress they'd had before. Basically, CEOs all over the country felt encouraged to put their foot down about the union demands, because Reagan had won in his contests with the air traffic controllers. Let me just say my own personal, no one's asking, but my own personal belief is that it is OK to give up the right to strike if you're in one of those critical areas where society thinks it's worth doing. Military would be an example. Police would be an example. You're going to have to make it up some other way but, in my view, you don't have to tolerate demands that every kind of job is the same. There are certain jobs that are life and death, and you don't want to turn those jobs off just because the workers have more leverage. They're exactly the ones you can't turn off, because they're there to save lives. You'd compensate them in other ways.

ZIERLER: Paul, I've been waiting to ask this in the narrative, we're here for the chronology, September 11th, what was that like for you personally? What was that like at Continental?

THOMAS: I remember the day very well, as everyone does. I was at Douglas Aircraft. Sorry, I'm sorry. I was at Continental Airlines when it happened. Our executives and board members were all in Houston at one of the local hotels having a board meeting. Anyone and everyone you want to have there for brainstorming was there, just accidentally. As the towers fell, first of all, we weren't sure what we were supposed to do, we at one level. [pause] Let me think about this. [pause] We were looking for direction of what to do. [pause] We went and talked to people in the department that was responsible for cleaning up messes, basically. If a plane had to be—a flight had to be canceled, you'd have overflow of passengers wanting seats all over. We had a group, customer relief group that worked, and they were the ones who seemed to be in touch with the FAA as the day went on. We asked them, "What's going to happen?" They told us, and it's a very dramatic story, but I don't know if it's true. Someone said that the message has gone out to all the pilots of all the planes that are in the air. "Tell your copilot to take the crash-ax, have them sit by the front, by the cockpit door, and kill anyone who comes through." That was the story, and we were told that story that day. We were also told that there were other airplanes that had been in which the hijacking had failed. Never heard of anything after that, after the first or second day.

As the days went on, and we couldn't fly, we were hearing lots of rumors. We were hearing Seattle was open, but we caught some of the bad guys in Seattle, so they're closing it down now. Again, we've never heard a story that suggested that was happening. Gordon Bethune was the CEO of Continental. When he came back from the board meeting, he got on the public address system, and said—and this includes employees at airports—and said, "We're living at a new world as of now. I don't know when we can fly again. We're not going to have any revenue until we get flying again. It's going to be OK, but I don't know what it's going to be like. The airports are going to be locked down. There'll be no more free airports." He was exactly right. We were relieved that there were no further stories about Continental being involved in hijacking. It was United and American alone that paid the price. Everyone, everything was grounded. The airlines didn't have to make a decision. They weren't allowed to fly. You couldn't fly commercially. The reason that was given is you couldn't give an outlet for the terrorists to get away, and you don't hear much about that afterwards. I was terrified. Those planes, some of them were heading west. I was thinking about Los Angeles next, and that's where Kim was. I said we saw each other every weekend for years, though we missed three weekends. One was because of 9/11, and here was no flying that weekend. We knew as we were forecasting revenue, we had just finished the latest version of the business plan the night before. I held a meeting where I called my people in, and very dramatically said, "Here's the business plan," and then ripped it in half. I said, "We start all over again. Post what happened today, 9/11, we don't have a business plan. We have to come up with a new one." We did, and we obviously did with a lot of made-up assumptions. We didn't know if it was 10% of revenue or 90% of revenue. The answer depends on when you looked. It took a long time before the scar from 9/11 disappeared from the bookings data for people booking the airlines.

Today people are very unlikely to avoid flying on 9/11. But for many years, they wouldn't fly on 9/11. It's not that that was the only loss of business; it's just that was just a little story you could see developing. I was part of a survey that was being done regularly by one of the Wall Street firms with their lawyer's permission. I'd be asked questions like, "How's business?" I would often go talking to the lawyer, but to the analysts who worked with the—they're not called analysts, but the department that would talk with the analysts, Wall Street analysts. I would talk to them. [pause] They asked me, they'd say, "On a one to five scale"—we'd all been giving answers every couple of weeks for several years—"on a one to five scale, where do you think the industry is now?" I said, "I think we've been running around three and a half or something." Then 9/11 occurred, and they said, "Where do you think we are now?" I said, "0.3." They said, "Really? You're the only one who didn't give zero." I said, "Don't they realize it could get worse?" It could have been much worse. One more plane would've done who knows what to our ability to get people back in the air. I am a little disappointed about the way that the security rules developed over the years. I don't know any better than anyone else, but you get some of the rules we have in place—and they're being relaxed now—might not have been necessary, but they were in place because they seemed necessary at the time. We had a system where it was impossible to let up on the pressure. To me, we should have been—my thought was we should have been angry. We should have something like take back the night that the women's movement has used. Take back the flight. We don't want to tell people, "Stop flying. It's dangerous out there." We want to say, "Come and get us." I'm a little disappointed. It's cheap talk. We don't know what would happen if we had done that.

ZIERLER: Did 9/11 change your career trajectory at all?

THOMAS: Just a little bit, I think. I remember giving a presentation to some students at a high school in Long Beach, and they said that airplanes are like flying bombs, and they were very negative. It's like the kids were scared. I don't think it changed that much that happened at Intel, which came last. It was my last major employer. It probably didn't change us a lot; change me a lot.

ZIERLER: By the time you left Continental in December 2004, as chief economist, had Continental basically recovered from 9/11?

THOMAS: No. You need associated signs of the scarring. We were having another slowdown. When I left to go to Intel, Intel was offering me a lot more money. But it wasn't the money that made me move; it was to learn something new. The money mattered too, and to learn something new, and to have a better salary. Since I've said that Douglas was so awful, I'm going to say the company I most liked working for was Continental, but the most impressive company was Intel, which seemed to have a secret recipe for success, till they lost it.

ZIERLER: Paul, I'm curious if you appreciated, at some point, either as a Caltech undergraduate or later, the incredible intellectual connections between Caltech and Intel.

THOMAS: Yeah, I did. Carver Mead summarized that. Somewhere—my wife and I were trying to remember where—we saw a table. It's either showing the major employers of Caltech graduates or the—I think we were left with some ambiguity in our memory of this. Something like of the 10 companies that Caltech graduates tend to go to, number 10 is Intel. I don't know if that was the way it was expressed or not, but I'll look for it to see if I can find it. If that was the way it was described, it might've been somewhere in the Caltech alumni information. There are a lot more employees at Microsoft. Microsoft's going to have—it's going to be larger for Intel, larger for Caltech graduates than Intel's going to be. But Amazon is huge. I don't know if you know what Amazon is doing with its economics group.


THOMAS: It's usually true. I don't know if it still is, because I've been playing hooky for some of the professional meetings. But it's usually the case that the only economics group that is larger than the Amazon economics group is the one in the Federal Reserve system. Whether that's still true, I don't know.


THOMAS: But when we were defending the fact that I got to build the department at Intel, where we went from about 3 to about 23 in just a matter of a few years, having lots of PhD economics and statistics, PhDs and master's people around ready for the work that we did at Intel, meanwhile, Amazon was hiring hundreds of economists. [laugh] When you talk about price discrimination, they find ways to price everything in a million different ways, and it makes a difference. They get a lot more revenue out of it. They know what to charge for these two square inches at the top of the screen versus the next screen, four square inches. They're doing studies and experiments on all these things. They're using big data. They're using machine learning, and they've been hiring assistant professors all over the country, the more mathematical ones. There's kind of an amazing story going on, has been for a while, in Amazon. It's long enough that there probably are new trends by now that, playing hooky, I'm not aware of. That's not the kind of department that I was able to build. First of all, I wouldn't have been allowed to have hundreds of people.

ZIERLER: Now, did you still do the long-term commute since you're still in, you know, you're in California, but you're in different parts of the state?

THOMAS: Long-term commute, once I left Continental, I didn't have a ticket. I couldn't get on anyone's plane, standby. The next time I had a chance to do a long-distance commute was when, the year before I retired, I moved up to Hillsboro, where there actually were more employees than in Santa Clara, so the Hillsboro Intel plant, which had lots of different groups from different products. I moved up there, and took the company's fleet—the company had an Embraer 145 fleet, which is not necessarily a good idea. It's a very dramatic thing to do, to have your own airplane fleet. It wasn't for the executives; it's for the regular employees going back and forth. The thought was, this week, you have to be in Hillsborough Hillsboro; this week, you have to be in Seattle; this week, you have to be in in Arizona at one of the fab plants. We had an Embraer fleet. I know for a while, Adam Pilarski, who I mentioned before from Douglas, was the person who was actually giving them advice on their fleet, not because of me but because he understands airline finance, airplane finance. I flew back and forth, and I did this two to three times a week, a line between Hillsborough and San José, and of course I loved it. It was the most peaceful time of every week was a flight down around 6 a.m., and a flight up around 8 p.m..

ZIERLER: Paul, what was your initial work at Intel? What were you doing?

THOMAS: They wanted me to resurrect a group that had fallen apart, that would forecast the number of different kinds of devices that would be purchased around the world. They believed that it should be—cause and effect should go through the economy, which is probably true. It probably is, but you have to be very careful because of the econometric problems that you have with non-stationary series, with the economy going up, and the computer numbers going up too at the same time. They wanted us to rebuild it, and they already had a tradition. They had a lot of people in the market research groups, some of whom had PhDs in anthropology, who would go all around the world and relay a different kind of sense of what computers were being used for maybe than we knew. They were the ones, for example, who called very early the alarm that smartphones were coming in. You have no idea how it's going to turn your world upside down. But they were dismissed. They had no credibility. But they were right. We were asked to build a combination, a group that had a combination of forecasting and analyzing the data. We embraced the anthropology part of that.

It turns out a number of market researchers who already worked in a larger group, the parent group to my group, were willing to come on over if they could still do some market research. We brought them over, and we built a really strong—it's called Market Forecast and Analysis Group. I don't want to suggest that it was all—it was interesting. It was very interesting, and parts of it I loved. But Intel can be a very, very intense environment. When I was there, there was a visible power struggle going on among the VPs. It makes me despair almost of how do we get great economic analysis and financial analysis into companies if companies are—all their energies are being absorbed in in-fighting about who gets what goodies? Maybe it's inevitable that it'll always be that way. We built a group up to over 20 different people. The model we used, they were in different countries around the world. We had someone in Brazil, someone in the UK. They were sort of representatives of regions, to that extent. They would be the ones who would work with the econometrician to come up with a simple story about what was going on in different parts of the world. The most interesting stuff from a social scientist's point of view, I think, at Intel was not my group; it was the anthropologists.

ZIERLER: What were some of the conclusions as a result of building up the group? What did they do?

THOMAS: When I first got there, I was building up the group. They'd been on a terrific run, raising the growth rate, the actual growth rate of the products, especially laptops, every year. They didn't want to see a forecast that had that ever end. They would say, "It's growing way above trend. There's an auto-correction possibility here that it could disappear." I had people trying to bully, the way that they had bullied at Douglas Aircraft, but not really having the heart for it. It's a company that's intense; maybe brutal. People have used that term when they talk about Intel. But honest, as far as I could see all the time. They're not the simplest. Not a single suggestion that there was anything that wasn't being done on the up and up. It looked great. One of the things I think may have led them to show they have, right now at least, feet of clay is they used to be willing to spend a huge fortune on fabrication plants using the latest generation devices and ideas and machinery. You would hear the stock analysts asking the questions of the people at Intel. "Why do you have these people working on a project that you don't even need for several years? Why don't you put them into manufacturing or get rid of them?"

We had, I thought, a very good CEO, Paul Otellini, who would say, "Because they're creating the next generation as they do this. I let them go. We're not going to have another product that comes in." My personal reading is I think the board's nervous about how expensive it was getting to build fab plants, and in the sense how unnecessary it was. For a while, let's say you were one of Intel's competitors, if you moved big time into one of the fields to compete with Intel, Intel was always just a few months away from starting a new huge fab plant, fabrication plant, and you would learn if you were a competitor, like AMD. If you can raise a few billion to take on Intel, they'd come back at you with 5 billion or 10 billion. But you could see in just reading what people were writing about the industry that the board of directors were more and more nervous about how much you had to spend before you got a single product out at the other end. There may have been antitrust questions also about being so big that no one could compete against you. But now, they have lots of competition. Something really interesting happens when you have former oligopolists who've lost their power. They're really good at getting the government to give them money. The fact that Intel doesn't make as much money as it used to make means that just billions of dollars, their hands are out, to get from the government.

ZIERLER: Paul, I wonder if being at Intel gave you more of a global purview of business economics.

THOMAS: Yeah, it did, although I had it at Continental and at Douglas also. But all along that time, we worked with actually economic consulting groups. There was a group called Wharton Econometric Forecasting, WEFA, Wharton from the University of Pennsylvania. Larry Klein had won the Nobel Prize for developing econometric models, and that was part of the heritage of Wharton Econometric Forecasting Associates. By now, they've bought each other and changed their name so much, I don't try to keep up with who's got what name and what it used to be called. You can't do a lot mathematically, but you can just try to follow what you can about different countries. It's a natural, I think, it's a natural mistake to make, to think you've typed the kind of company and kind of country by, say, whether they're democratic or not. Obviously now we're looking at a number of democracies that are flirting with very undemocratic programs, in my view. You can't say, "I can see that South Africa is on its path to prosperity, and we'll sell a lot of computers through them at some point," if you also have evidence that South Africa is always a week or two away from collapse. You can't have both. There's a tendency to tell a good story, and just stick with it, and be reluctant to give it up.

ZIERLER: Where were you organizationally at Intel? Who did you report to?

THOMAS: I'll tell you the official answer versus the real answer. [laugh] I reported to a guy named Stu Pann, P-A-N-N, who's now doing spectacularly good things for Intel in terms of running their global foundry initiatives. He was high enough up, he could get involved in anything he wanted to get involved in, and he chose to be involved in the stuff we were doing. I kept him well informed of what we were doing. He was a good mentor at Intel for me, and he liked my group, and you could see that they were flattered that he would spend time with them whenever they were in Santa Clara

ZIERLER: Did you ever interact with Gordon Moore?

THOMAS: No. No, I didn't. I interacted with Andy Grove a little. He was an amazing guy who could be really hard to work for. There were times I saw people who were very good who I thought made bad calls, but that's their prerogative. They were allowed. They could do that. But Andy Grove was the most prominent personality for Intel over its history.

ZIERLER: Now Gordon Moore, was he not around or, just administratively, you wouldn't have had reason to interact with him?

THOMAS: Moore's Law had been written a long time ago, so I'd have to look back at the history of CEOs and presidents and chairman of the board. I don't know if we'll talk again, but if we do, I can look at beforehand. I said that I thought Paul Otellini was very good. He was the CEO when I was there, most of the time I was there. But there's been a different model for what a CEO should do since then. They're back to the idea that the CEO has to be a scientist or an engineer, and shouldn't be primarily a marketing guy, like what Otellini was. But I think Otellini shines in comparison to some of the people who came afterwards. I do want to refresh my memory about some of the people. I know that one of the reasons I admired the anthropologists is I heard them defending their view that the cell phone was going to change, that the smartphone was going to change the world. Some of the bigger names pushed back against them, and said they didn't know what they were talking about. But some others did not, so I don't want to call out names when I can't remember who said what. But it definitely has changed the world.

ZIERLER: Over the course of your tenure at Intel, who were some of its main competitors, and had that changed, indicating how Intel's overall business strategy was changing?

THOMAS: AMD was seen as its sort of traditional competitor. They had only about 5% of the server market, and they might've had 25% of the tabletop notebook market. They were constantly trying to catch up with Intel, which was into big-time spending at that time to push them back. The role that companies like Nvidia and Qualcomm, and so on, ended up playing came because of the development of great usage models for new generation chips. Intel still talks, if you look at their products, the Core 3, the multi-core products, and the i3 and the i6 and i9 and so on, so they're still using some of the same product names. Intel has trouble getting into any market but the CPU market. They've tried to find a new place for them. They used to be huge in memory before the Korean producers entered the market. In fact, one of the great things about Andy Grove's history with Intel—because he wrote an autobiography, which tells about how he made some of the decisions at Intel. While Intel was fighting to stay in the memory market, the story is that Gordon [pause]—I think it'll be Gordon Moore and Andy Groves. The story is that Andy said, "What would you do if you were the board, because we're losing our share in the memory market?" Gordon Moore said, "I'd fire the two clowns for ruining the company." [laugh]

ZIERLER: [laugh]

THOMAS: Grove said, "Let's go for a walk. When we come back, we'll get out of memory," [laugh] so they did. They went on a walk, they worked out the strategy to get out of memory, and they started moving that way. They were they're able to make dramatic changes. But eventually your own success gets to be an impediment. Do you know the stuff that—I guess he's his name right's here. The Innovator's Dilemma, do you know that book?


THOMAS: I've talked to other people who've read it and studied it more than I, and some of them say I'm going too far on my conclusions. But The Innovators Dilemma is not a great name for the idea. The idea is that it's hard, once you've been successful thinking about a product or a service in a particular way, it's hard to change course. For example, this is the kind of example that Christensen, who I think was the Harvard professor who wrote The Innovator's Dilemma, if he said, "Hey, we've been marketing this new kind of chip. We sold 50,000. We're getting good reports. We're ready to announce it and hire," people would say, "Fifty thousand? That's a mistake. That's the size of a mistake. You don't have anything. Go away." But if you were doing a start-up, and that was your only product, and you sold 50,000, break open the champagne. Watch out Intel, here we come.

The Innovator's Dilemma is your own success becomes a competitor. You also start thinking about the product in different ways. He tells stories about companies that had earthmoving equipment, like Caterpillar. In Christensen's book, what kind of machine moves earth, moves dirt, basically? A huge machine, a machine that's hydraulic, a machine that's so big that you need to clear the way for it to get in. Here along comes someone else who's going to build a small earthmover. It's going to have some particular pneumatic features that don't scale up very well. People are going to say it's a joke, until they start to buy it and use it, at which point, it may be too late for the big companies to get in because they've already labeled it as a joke. I think for a long time, Intel's been able to ride the wave that they weren't IBM, but you could do things with a home computer. Then they became so successful in everything, and there was a lack of basic respect for what your competitors were going to try to do. I would see reports, people would say things like, "We're two generations ahead of these guys. By a year from now, we'll be three generations ahead." You would say, "Why are you going to be three?" "Because they're not going to innovate very much." "Why aren't they going to innovate?" "Because there's nothing to innovate. We've already mined it all, and that seems very unlikely." I think companies lose their special status. They lose their ability to almost do the impossible. But can they get it back? That's something for people studying Intel to decide. They're going to try.

ZIERLER: Paul, how had your portfolio changed over the course of your time at Intel?

THOMAS: You mean my employment portfolio, not my personal investment portfolio?

ZIERLER: No, the kinds of things you were responsible for.

THOMAS: I was going to say, where is that portfolio? [laugh]

ZIERLER: [laugh]

THOMAS: I became a bigger presence in the profession, so I was gradually asked to join a lot of different groups: the NBEIC, National Business Economics Issue Group; the Council of Business Economists; and NABE I mentioned before, National Association for Business Economics. I became an board member in NABE. I'd be invited to give presentations. I'd always check with my manager. I'd say, "This is not actually my job." They would say, "No, but it's what makes our customers want to see you." If you go back to where I mentioned my difficulties in finishing my dissertation, I was always a reluctant writer, not a reluctant reader, but a reluctant writer. I always could think of something I wanted to be doing instead of writing. What you do if you're a business economist working for corporations is you become a PowerPoint presenter. It's nothing that you're proud of that you wouldn't share with a publication, but it can reflect very good analysis, and you can trust it. It doesn't have to be PowerPoint but it tends to be. I've noticed when I was remembering putting back together that list that we've been referring to as my résumé, I had dozens and dozens of presentations around the world that I would go to. I didn't have a history of published papers. I have a history of unpublished PowerPoint, and they're obviously going to be very different jobs, I think, of what you do.

My portfolio changed in that people wanted to see me at our customers', and sometimes at our companions', companies we were working with, who always had an open door for me and my group to go to Dell or HP. I was always invited to present economic outlooks, world outlooks. It was a lot of fun because you could be talking to people doing the most interesting work imaginable in a related field. For example, for school computers, as an example, there are companies that put computers together for schools, so you don't have to buy Intel or you don't have to buy Hewlett Packard. Someone will put the computer together for you. That's a different kind of marketing. They want to know what a big company like Intel is seeing in the economy, what they're seeing in the demand overall for PCs, so they can do their job, that they can find for themselves, I'd say, educational devices, because they may not be PCs anymore. The biggest educational device is probably the phone. It's also probably the biggest threat to education. [laugh]

ZIERLER: Right. [laugh] Paul, tell me about your decision-making around 2015–2016 to retire.

THOMAS: I was forced out.


THOMAS: The company was having some trouble, and it decided to—it was very open about what it was doing. It was going to lay off 1,500 people. There were about 100,000 employees at that time. They were going to target senior managers. They were going to have a certain number of points: their age plus the number of years they've worked at the company. They were going to be given a generous offer. If they didn't want to do it, they didn't have to do it. But there was no guarantee what would happen next if they didn't want to do it. I was working through with people in my group, managing them, and I realized that one of the people in my group was being asked questions by executives that made me think they were trying out the idea of getting rid of him. Then I thought a little bit, and I thought, if they're trying out the idea of getting rid of him, and I have to infer its existence, then it's not going to through me. I wonder what they are doing about me that I don't know about? I contacted them and said, "Are you making plans for me about leaving the company?" They said, "It's classified." I said, "Yeah, are you doing it?" They said, "Yes, we are."

The choice I had, as well as the other 1,500 people, is to say no to the offer and take my chances on the next performance review the next year, or realize that it was a generous offer, and they were being quite open about the fact that age was a factor. I wasn't thrilled. To this day, this sounds pitiful, but the most common dream I have is probably a dream I'm still working at Intel. This condition I have is new, but it might have been affecting me a little bit earlier. I don't know that. Now it would clearly limit what I can do. It's aphasia that I have to deal with on a regular basis.

ZIERLER: It's not just that you weren't ready to retire at that point, you weren't ready to stop working for Intel?

THOMAS: No, and I was willing to work other places, but when I put together the offer, which I knew how to sweeten, I knew how to make it better, I thought I could afford to retire, and we could see what it was like. Kim had retired from Whittier College by that time.

ZIERLER: Were you proud of what you had built up at Intel?

THOMAS: Yeah, pride was involved, but I was more determined to find a way to let the people in my group be very productive, and to have them do good work. I was proud of the way that I managed the group, and proud of them for being so easy to manage, in some ways.

ZIERLER: Have you kept up contacts? Is the group more or less still intact?

THOMAS: There's been a little bit of—they use the same terminology that the journalists do—embedded economists now in different groups. I think it's about half the size it was, but the other half are still there, embedded. I've been noticing, because I follow some of the people on Facebook, congratulate so-and-so on their 18th year at Intel or 12th year of Intel, and these are people I hired. One of my big fears is they'd be let go whenever someone coveted their resources, and they've done pretty well, and I think they still like the work. They don't have the kind of department—I thought of it as the equivalent of a small college academic labor pool, but it's not, it never really was, and it's not anymore.

ZIERLER: After Intel, did you think about another job at a big corporation, or you wanted to do something smaller?

THOMAS: I wanted to do something smaller. Since I've always been a reluctant writer, I naturally thought I should write. Time will tell.

ZIERLER: [laugh] Did you do consulting? Did you start a business?

THOMAS: I did, but we didn't do anything but just set it up as an empty vehicle. I haven't done anything with it. We called it Economic Stories, so I'm thinking of writing now.

ZIERLER: What was the idea? What would Economic Stories produce?

THOMAS: Stories that would give people a greater insight into what was going on around the world?

ZIERLER: Nonfiction, I assume you mean?

THOMAS: That would be nonfiction, yeah.

ZIERLER: Pitch me, Paul. What would it look like? Why would I want to buy an economic story?

THOMAS: Because there are lots of smart people out there, a few of them are really good at telling you what's going on in the economy, and we would try to bring some of them together. I'll give you an example. There's a national—I don't want to get this wrong—but a national small business. I'm trying to remember what it's called. [pause] My brain is failing me right now. I'm obviously not going to pitch the company to you if you've seen me perform here.


THOMAS: Dunkelberg, Bill Dunkelberg, I think he may have retired now from Temple. Before that, he'd been at Purdue. The people I run into in professional meetings, the one I've known the longest is probably Bill Dunkelberg. He's the head of the National Federation of Independent Businesses, NFIB, which asks people who run small businesses, "How's business going? Is this a good time to hire? Is this a good time to invest?" Bill's politics are conservative, and maybe there's a conservative tilt to the National Federation of Independent Businesses. Lots of small businesspeople are conservative. But he can look at a messy situation, and make a prediction out of it. I've always known there are some people who can do those things; not me though. That's where my interest in expertise came from, about the lack of progress and expertise, people developing expertise. I was going to pitch something now. I don't know if it's too tiring for people to read and think about Parkinson's or not, but I would probably try to pitch something that is fictional about Parkinson's, because it's certainly interesting. The weird things that happen are very interesting.

ZIERLER: You can have almost an outsider's perspective looking in on your own experiences?

THOMAS: Yeah, maybe I can. I was diagnosed about 16 months ago, and I'm in unusually good shape for a Parkinson's person. I also have the gene that's usually associated with a harsher form, and no sign of that expressing itself. I've started to write a little bit about it. I'd had to write that essay if I wanted to go to a writer's workshop. I showed you.


THOMAS: I was trying to develop a cadence for where I say—where one of the things I actually say, but I think I don't want to offend anyone. I've said many times, it's a good thing I'm retired, or I wouldn't have time for this silly disease. I don't mean it's silly as in don't take it seriously, because it can kill people, but it just has ridiculous aspects to it, like I said, the loss of the ability to write in large letters. If you ask people with cognitive problems, "Draw a picture of this clock," something that shows up with some of the Parkinson's patients and maybe others is you get them to draw a picture of the clock where the numbers are painted all around the clock, and you ask them to show what the hands, the second hand and minute hand look like from minute hand, and hour hand when it's 10 minutes after 10. That hasn't happened to me yet. I'm having trouble doing the analog clocks. I prefer digital, and never cared before. Something's obviously going on. But the ridiculous thing that happens is you find a large number of people who, once they have some of these problems, will draw two non-intersecting circles. One's got the minute hand, and one's got the hour hand. Now, this is like a chronometer. There's nothing really ridiculous about it. That's not what an analog clock looks like. How could something strange be going on with a certain kind of neuron so you do something silly like that? I don't know yet. I don't expect to know. You know the Apple TV program Shrinking, I think it's called?


THOMAS: They have Harrison Ford having I guess you could say the onset of Parkinson's, but I don't know how far they'll go with it because he still is able to do almost anything he wants to do. I think there might be an audience for reading that kind of thing.

ZIERLER: I hope you pursue it.

THOMAS: Thank you.

ZIERLER: Paul, we've worked right up to the present. For the last part of our talk, I want to ask a few retrospective questions about your career, and then we'll end looking to the future. You mentioned briefly but I wonder if you can reflect more broadly just being a Caltech undergraduate, what that meant for you in terms of your intellectual development, what it meant in terms of how you understand the world, even how you look at data. What stayed close to you over all these years?

THOMAS: Two things about Caltech I think have been very important to me. One is the commitment to an honor system. I don't know if that's deteriorated or changed in all the years since I've been gone. But while I was there, three of the four years I was an undergrad, I was part of what they call the Board of Control. A terrible name [laugh], but it was a collection of representatives from different houses, who would help them to enforce the honor system. The other thing I've always liked is, I would say, the small science aspect of Caltech compared to the big science approach that many big universities and maybe MIT—I don't know—all have, that you should be able to show your basic ideas on a blackboard with chalk, and you should be able to do it in real time, and everything else that comes afterwards is commentary. You know the story about standing on one foot, right?

ZIERLER: The whole Torah.

THOMAS: [laugh] Yeah.

ZIERLER: Paul, what are you most proud of in your business career as an economist?

THOMAS: The first thing that comes to mind is in 2008, when the economy tanked, things look really awful for the industry, the chip industry. Intel was planning to lay off tens of thousands of people to accommodate the downturn in business. We said, "Don't do it. Our forecast is this is going to be an error correction. Don't do it. If you have to do it, wait." Someone, Stu Pann actually came over and said, "You saved a lot of jobs." Now I would've had to say do it if things had looked awful. But I got a free ride.

ZIERLER: Have you had opportunity to serve as a mentor in the business world? If there are natural inclinations, had you continued on in academia where you naturally would've done things like that, are those similar opportunities there in the business world?

THOMAS: If I had stayed at Purdue, my mentees would've been my students. It's a full-time job for people anyway. I will say that I'll probably become—this is not being a mentor, but it might be part of it. I might allow myself to get pulled more and more into the Parkinson's world, where you're helping people with Parkinson's. I think from some sort of ethical scale, that doesn't get a lot of points. [laugh] It's helping people like yourself, right? Again, the scales of charity. But I notice when I'm in the gym at these different forums where people with Parkinson's are boxing, for example, that I naturally worry about the people who are having trouble. I'm not someone who was known for being that sensitive. I think I probably had a lot of blindness towards that. But it's not that when a person's really dizzy and they have to sit down, it's not that I'm there, but I could be and I might be. I already have had periods of dizziness. That's not surprising. When do I start falling? I don't know.

I've noticed that there are three large foundations that help fund, publicly fund Parkinson's research, and I'm sure that there's stuff that the HHS and other places like that give a lot of money to.o These groups are—one is Michael J. Fox's Foundation. Another is just called Parkinson's Foundation. There's another one which is interesting because it's ADPA, I think. It's trying specifically to provide funding for scientists in academia so they can take a different approach, so it's meant to be different. Whether that's enough to justify a foundation, I don't know. You run into people, once you're in this world, and you run into them a lot. I think of it as a mobilized group. It's a group that didn't choose what's happening, but they're very good at commanding resources to help themselves. Again, someone may take offense at that. I apologize. But I expect to get a straight answer when I talk to a doctor. There's so much out there to read that I've got to be a time-consuming patient for them. My wife and I are now thought of every time there's another experiment, and they want someone to participate. They're just as likely to call us as anywhere else. They're doing these experiments, trying to find the biomarkers that will indicate the onset of Parkinson's, maybe along with some therapy so they could slow it down or maybe even reverse. It's not a realistic chance, but you can dream.

ZIERLER: Finally, Paul, for my last question, looking to the future, I'll go big on this one. Using your powers of extrapolation, in your earlier comments about the importance of integrity, just for American business in general, where are you optimistic, and where do you see real cause for concern?

THOMAS: My pessimism is not so much about American business and businesses; it's about the country. Roughly 40% of the world or 40% of the US seems to have given up on the idea of our being a nation together. I just hope this also passes. But in these different groups that I used to be very active in, National Business Economic Issue Council, one reason I've stopped is I can't be sure I'll be able to complete a sentence without the aphasia occurring. We usually start those meetings by asking people what's keeping them awake at nights. You can get a very technical answer. You can get a great historically based answer, very dramatic answer. I said, "I'm worried about civil war." I've read a few books that have been published on the topic, and it wouldn't necessarily—it's not going to be gray and blue cannons firing at each other. But tell me which police force answers which governor or president's call for troops if they have to put down an insurrection, if there's violence on the streets? You have people who are saying, "We're the friends of the police. The other people hate the police." I do worry that the national fabric is torn. I like to be wrong, and certainly there were times I see green shoots that things are getting better.

ZIERLER: You have some historical perspective here? You remember 1968?


ZIERLER: That's sobering, Paul.

THOMAS: We shouldn't be drinking at this time of the afternoon.

ZIERLER: [laugh] That's right. It's got to be 5 p.m. somewhere. Paul, I want to thank you so much for spending this time with me. By the way, we went to 2 hours and 43 minutes, solid the entire time! Most impressive. I want to thank you so much.