Audio Interview of Foundation Fighting Blindness Board Director Karen Petrou on Her New Book and Living with RP
American Banker dubbed her as “the sharpest mind analyzing banking policy today – maybe ever.”
In conversation with the Foundation's Ben Shaberman, Karen discusses her new book, "Engine of Inequality," which underscores the growing disparity between rich and poor in the U.S. and presents innovative monetary and regulatory solutions to address the issue. Karen also reveals how she has addressed the challenges of vision loss from retinitis pigmentosa to move forward successfully in her life and career. Listen to the interview below.
Below is the transcript from the audio interview recording:
Shaberman >> Welcome everyone. My name is Ben Shaberman. I'm Senior Director of Scientific Outreach at the Foundation Fighting Blindness. And I'm really pleased to have a conversation here with Karen Petrou. Karen is a director on the board of Foundation Fighting Blindness. And she's also co-founder and managing partner of Federal Financial Analytics, a nonpartisan consulting firm that provides analysis and advisory services on legislative, regulatory, and public policy issues. And I hope you're not embarrassed by this great accolade but Karen -- but American Banker Magazine dubbed Karen as the sharpest mind analyzing banking policy today, maybe ever, that's a pretty good accolade. One of the exciting developments for Karen is the introduction -- publication of her book Engine of Inequality and I really enjoyed the book. It's an excellent read. Just a quick summary of the book because Karen, I want you to obviously talk more about it. The book is about the widening disparity between the rich and poor in our country, and how the problem may be addressed through monetary and regulatory policy. And what I really liked about the book is how it's so fact-based, it's just chock full of great information. And as -- not being a financial person, it was very accessible for me. And Karen, can you tell us more about what the book is about and what inspired the writing of it?
Petrou >> Well, let me start with what inspired the writing, just because I think that may be particularly interesting to everybody in the FFB community. I don't know how much of this has to do with my blindness but I do think it might be that as I began to go blind, and became a part not only of the FFB community but also the broader community of persons with disabilities, it does kind of kick you out of the space of entitlement. Some people might have called white privilege, I don't know, because I grew up middle class or upper-middle-class and comfortable. And back in the day when I started my career, which was -- I graduated from college in 1975 and back then, American -- America had rich and poor people. But Americans regardless of how wealthy they were or how much income they had earned a fair share of the national productivity. In other words, hard work really rewarded hard workers. In 2018, the last year, when data are available, the top 1% in America got 300 times more of their share of productivity than they did in 20 -- in 1975. It tells you something happened. And I think when you're sort of kicked out of your position, and you start to have to fight harder, not just for the fight for sight through FFB, but also the fight for recognition not even as a person with a disability, you can still succeed and achieve. It changes the way I look at equality and particularly economic inequality. And that's why starting in 2016 when the election was so angry, I started to take my thinking about monetary and financial policy, the work I do in my day job, and focused it instead not just on analysis but also on advocacy. My book is an effort to layout one solution that would make America less unequal. It's not the only solution, but it's one and I think it would have both a lot of power and be politically more easily achievable than many others.
Shaberman >> And can you expand a little bit on what you think the possible solution might be?
Petrou >> Sure, I think when you think about economic inequality, a lot of people talk about income inequality. But in my book, I explained that I think that's only one part of the problem. It's important to understand that inequality comes both in terms of income and wealth. For example, two kids could have the same income but the one whose parents put up a downpayment for him or for her is wealthier and they, therefore, have a house and they have a much better shot at wealth accumulation through homeownership than the person with the same income, who's also struggling with lots of student debt. Once you understand economic inequality and its full range of both income and wealth, you also realize that it works as an engine. As you said, Ben, the title of my book is Engine of Inequality, which goes on to talk about -- the subtitle is the Fed and the future of wealth in America. And I called it Engine of Inequality because income and wealth are, of course, money. And no institution has the power over money in the United States, no institution has more power over that than the Federal Reserve. And it has become by virtue of the fact that money is the fuel of economic inequality, the Fed has become the engine of inequality by virtue of policies both in terms of how it sets interest rates and how it supports stock markets, and the rules it imposes many of which may be a bit technical, but are really important because the Fed determines how money moves through the financial system. And its rules determine what banks are able to do with that money and who gets it from banks and increasingly, from non bank financial institutions at what cost.
Shaberman >> Right. And I found it heartening that your book is relatively nonpartisan. But with the recommendations that you make for monetary policy, and regulatory policy, for the most part, is a nonpartisan view. And that really stood out to me.
Petrou >> It’s totally nonpartisan but then I wrote it without any regard to positions from Democrats or Republicans and conservatives or liberals. I've been very pleased, I've talked to Trump [people] who often described the book as pretty purple. I think it is because of course, this is a complex problem and partisan ideological solutions are not going to be constructive. The little bit technical one spots, because once you get away from slogans, solutions are a little bit harder but that's what I've tried to do.
Shaberman >> Right. But again, the facts that you provided, there were a few that stood out to me, one was 40% of Americans can't easily handle an unexpected 400 dollar expense. That really blew me away, that's nearly half of our population is living paycheck to paycheck.
Petrou >> Well, that's right. And one of the reasons -- and that takes you back to the engine of inequality is that when you -- everybody listening to this knows that if you go to the bank and put money in a savings account, the things we were all taught to do with kids is save, but right now, interest rates set by the Federal Reserve are so low, that once you take inflation into account, rates are actually negative. You save money, you lose money. That means that Americans, even those who are trying to save -- and it's important, low and moderate-income people actually do try to save, but they can't. Not only because the cost of living for low-income people is so high, child care, health care, student debt, all sorts of other expenses are as you said, make families live from hand to mouth. But when you try to save you lose but if you put money in the stock market, you are a big winner. And many of us listening right now, we all have -- on this call, maybe I know not all of us. But lots of folks in the FFB community have some money in the stock market. And that helps in terms of both expense -- household expenses, and especially retirement. But the top 1% in this country have 53% of the stock and the top 10% have 88%. So if you put money in the stock market, you're doing great and you have over the last 10, 15 years. If you put money in the bank, you lose and that's a recipe for worse and worse. That engine of inequality, one of the factors, one of the turbines is ultra-low interest rates.
Shaberman >> Well, again, I encourage people with any interest in this subject matter to get Karen's book. It's available on Amazon, in Kindle, audio and hardcover. I have enjoyed the hardcover. But Karen, I want to turn a little bit to your personal story. And you did say that you grew up in a relatively financially stable world, from a financial standpoint, but you did have the challenge of having vision loss. And can you talk about that journey a bit? And also how, what happened in your life that got you interested in the financial world and financial policies?
Petrou>> Well, I was diagnosed with RP when I was 18. And I suspect many people on this -- listening in will identify with the fact that that was an extremely difficult experience, not only because it's a hard diagnosis but because the ophthalmologist did it very cruel way and quickly, and basically said I would be totally blind by the age of 25. And I still remember a silent drive home with my mother and then sitting in my bedroom in our house at 18 looking out the window at the sunset and wondering what it would be like never seeing that again. But I was fortunate as the doctor was wrong which is one of the reasons I think it's so great that FFB does natural histories of each of our different eye diseases because in 1970 when I was diagnosed, nobody knew anything about RP, they just knew it wasn't good. And that didn't stop ophthalmologists from, you know, providing prognoses that were completely wrong. Now FFB has led the way in providing lots more information and often lots more hope for long-term vision. Because I actually didn't -- I lost my reading vision very fast in my early 30s. And that was traumatic. But I didn't lose my mobility vision -- I was married, but then got divorced. And I lived on my own for about eight years before I married Basil. Basil is my late husband, and I had no problem getting around even in the dark. I used to say I passed, I traveled internationally, again, I traveled to Australia on a U.S parliamentary delegation to Australia. And the only thing I couldn't see was, you know, street signs and filling out the forms entering new companies. And I just lied a lot. I said everywhere I went I lost my contact lenses. Because I think many of us also you don't want to admit not only to other people because of the stereotype of blindness is so bad, but also even to yourself. So I just lied a lot till it was -- became pretty obvious in my very late 40s then I got a white cane and when I turned 50, I got a guide dog and I had been on the go with independent mobility ever since.
Shaberman >> And what drew you into the financial world? Is that subject matter always been of interest to you? Was there a moment a teacher, family member that was an influence?
Petrou >> Nope, it was a complete accident. I was finishing my doctorate in political science at the University of California at Berkeley. And it sort of dawned on me that the UC Berkeley political science department was considered the best in the country. And it had a faculty of over 40 people of whom there was one woman who wasn't even on the tenure track, let alone tenured. And although I had done undergraduate MIT, and I was used to being the only woman in everything I did, I was also used to just chugging along and being pretty successful at it. And I began to realize that academia was going to make that really hard. And right about the time I was working on my dissertation, to a variety of total accidents, I got a job offer to be the first corporate political scientist for the Bank of America. And as I said then, it's very true I knew nothing about banking other than where to find my checkbook. But I knew I didn't want to be in academia and I figured what the heck I would take the job. It certainly paid better than being -- starting out as a junior lecturer. And I found that interesting and that's what I've been doing ever since.
Shaberman >> Well, your passion and knowledge for the subject matter are very obvious. And congratulations again on the book and, of course, your successful career and firm. I guess a final question or perhaps the next to final question. A lot of people that will be listening to this interview because it will be posted on the Foundation Fighting Blindness website, a lot of them will have vision loss, and you've had a pretty successful career and life, you've navigated the world with vision loss relatively well. Do you have any thoughts or advice that you would give to people that are having this challenging journey?
Petrou >> Yeah, I would say that when you have a disability, you have two choices. You can deal with it or not. And not is worse, right? I think it's just so important, I think for parents of children with disabilities not to make assumptions about what someone can do with a vision impairment. I've talked to -- in lots of FFB meetings, lots and lots of parents with vision impaired children and I know it's easy to fear for the kids. But I think you look around there are many people with severe vision loss, who are just living independently, living successfully, achieving much with technology today, for me guide dogs, for others, people use different mobility aids. There are really very few obstacles, it's harder but it's absolutely doable. And I think for persons with this -- with vision impairment, the biggest obstacle is the same challenge, that stereotype. And it's sort of a last stereotype that people don't feel bad about, you know, they know they're not supposed to say certain things or if they try not to think certain things about people of color or women but there's no hesitation grabbing you as you're trying to go down a flight of stairs and throwing you completely off balance or trying to, well, trying to help or turning to the person you're having dinner with and saying, "What does she want for dinner?" I mean, that stereotype is -- it's hard to fight it not just in day-to-day but even in our own minds. And I just think just put it aside and be who you are and what you want to do and your vision impairment is part of that. But it's not the defining part of that, who you are is what you are.
Shaberman >> Well, thank you for sharing that perspective and advice. I think that's very helpful. And thanks for all you've done for the Foundation Fighting Blindness over the years as a volunteer leader, you've really helped us drive our mission and your experience in the world certainly helps us do that well. Are there any other parting thoughts that you wanted to give us before we conclude here?
Petrou >> Yeah, I think maybe say that my experience as a person with a visual impairment informs the book. I've talked in it, particularly in the section discussing access to the banking system and access to day-to-day finances, some of the challenges for persons with disabilities and I hope that that's a new element in the debate. And I've been very pleased, the book is happily been getting a good deal of attention. And I hope as people talk about the Engine of Inequality and the Fed's impact on wealth, that they also think about how financial policy affects persons with disabilities and we can start to make some changes there too. That is part of my goal. And I'm looking forward to continuing to work with you, Ben, everybody at the Foundation to make that a part of our mission along with saving and rescuing, and preserving sight.
Shaberman >> Well, I have to say it's a pleasure working with you, Karen. You bring great passion and insights into whatever you do, including supporting our mission. And I wanted to just remind people that Karen's book, Engine of Inequality is available on Amazon in hardcover, audible, and Kindle versions. I highly recommended it. It's a very insightful book, lots of great facts. I learned a lot and I think it's subject matter that everybody can benefit from. So thank you, Karen. We appreciate your time today. And good luck with the book.
Petrou >> Thank you very much, Ben. And please, anyone listening to this who has got a question or a comment, please send them via FFB and I look forward to getting them and responding. It's been a great pleasure.
Shaberman >> Thanks, Karen. And if listeners you do have a question, you can email us at info@FightingBlindness.org. Thanks again, Karen.
Petrou >> Thank you.