Tyler Cowen - The Great Reset

Speaker 1 Cowan needs no introduction, so we'll just begin. I want to ask you about the great reset.
So you wrote a book in 2017 called The Complacent Class, and in it you predicted a great reset.

Speaker 1 You wrote, quote, at some point, our country will face an immediate crisis, and there won't be the resources or more fundamentally the flexibility to handle it. Now,

Speaker 1 how are you so prophetic? And is this the great reset?

Speaker 2 You know, I think I need to reread that book. I didn't quite think the great reset was coming as soon as it did.
It It struck me as something five to ten years away,

Speaker 2 but I do think it's here now. We can still borrow at low rates of interest, but we haven't shown the flexibility to adopt mask wearing or set up a serious enough test and trace regime.

Speaker 2 And the American regulatory state and executive branch and also Congress, it's failed.

Speaker 2 The Fed and Supreme Court, in my view, have been quite good, whether you agree with every decision or not, but just as institutions, they're fully up and running. And the rest is rotting.

Speaker 2 And our willingness to just let things happen has finally caught up with us a little more quickly than I was thinking.

Speaker 1 In the complacent class, you predicted that after the great reset, dynamism would be with us again. Are you predicting that we'll be dynamic again after the following this crisis?

Speaker 2 Well, predictions probably ought to be conditional. I think in the biomedical area, we will be incredibly dynamic.

Speaker 2 There's been so much research activity into coronavirus and associated associated problems, which involve virology, immunology, I mean even the common cold, how to fight the next pandemic, how to do vaccines.

Speaker 2 I think this will go down in history as a phenomenal blast of innovation in a very important area. And the tech sector is still innovative, but has been for quite some time.

Speaker 2 Other sectors I'm not sure about. I'm heartened by seeing Tesla stock so high.

Speaker 2 I guess I ought to side with the market there, though I don't quite see why it should be worth more than like General Motors Ford and a few other auto companies put together.

Speaker 2 But again, I'll defer to the market. So I think that the chance of that burst of dynamism has never looked better.
But of course, we're still capable of blowing it, right?

Speaker 1 And other than how quickly it happened, what surprised you the most about how the great reset has occurred?

Speaker 2 Well, you may recall also in the complacent class, I predict that racial issues and

Speaker 2 segregation will be a central part of it because American blacks are so often the most or among the most vulnerable members of our society.

Speaker 2 And trouble will flare there early as a kind of warning signal. And that looks like a pretty good prediction, I have to say.

Speaker 2 I don't think I ever predict that we'll solve the segregation problem, just that it will be like a real signal we should look for.

Speaker 2 So,

Speaker 2 like I said, I need to reread the book, but it's sounding pretty good right now.

Speaker 1 Oh, yeah, for sure.

Speaker 1 It was almost cathartic when I was reading it.

Speaker 1 But so at the same time, I was reading Stubborn Attachments, and there seemed to be a contradiction to me between the two books, because Stubborn Attachments advocates for economic growth because of the stupendous returns it has over the long term, as long as it's continuous.

Speaker 1 But the complacent class advocates for a cyclical view of history where ongoing progress and growth are not possible.

Speaker 1 So isn't the argument for economic growth much weaker under a cyclical view of history?

Speaker 2 Well, it may depend on your time horizon. So there will be periods of slower and more rapid economic growth.

Speaker 2 But if you keep reasonably liberal institutions, I think over quite a long run, let's say centuries, you can have steadily advancing economic growth.

Speaker 2 And I would favor that, knowing you're going to have periods of time like that one that probably started in 1973. So maybe I'm cyclical in the short run, but I believe in a fair amount of persistence.

Speaker 2 in culture and institutions. So I think the recipe of stubborn attachments over the much longer run still still can be true.

Speaker 1 And let's talk about the really long run.

Speaker 1 So you gave a really interesting lecture at Stanford where you're talking about how time horizons influence how we should weigh sustainability and economic growth.

Speaker 1 Before I ask you about that, can you just recapture the argument for us? I'll prompt you by giving a quote from Greta Thunberg.

Speaker 1 The myth of eternal economic growth is a perverse fairy tale, to which you respond.

Speaker 2 Well, let me first be clear. My episodic memory is extremely weak.
I have a good memory for facts, but a very poor memory for narrative and stories.

Speaker 2 So I actually don't remember what I did at Stanford.

Speaker 2 I'm sure the ideas in that talk would be familiar to me if you presented them. I mean, they were mine, right? I don't think I've repudiated them.

Speaker 2 But if I had to like write an essay on what I said, it would be close to a complete blank.

Speaker 2 But I think I said something about

Speaker 2 The argument for stubborn attachments requires the time horizon neither be too long nor too short.

Speaker 2 That if the time horizon for successful growth is too long, you just become completely risk averse because you just don't want the world to end.

Speaker 2 Things can run on for so long and you end up not caring much about growth at all. You just care about safety.

Speaker 2 And I think I kind of estimated off the top of my head in semi-joking, but also semi-serious fashion. I thought we had another good seven or eight hundred years left in us.

Speaker 2 And I remember that because I read it, someone saying it on Twitter. and I recognized it.
But I don't really remember saying it, right? Like it's back to this difference in memory problems.

Speaker 1 So I want to ask you about that, because I think maybe your argument for economic growth would even continue in the long term.

Speaker 1 I mean, isn't there an assumption there that the most risk-averse thing to do is to be static for the long term?

Speaker 1 When in fact, it could be the case that only through economic growth, you can solve the problems that are guaranteed to hit your civilization over the long term.

Speaker 2 That's correct. I probably said something like that in the talk.
And I think there's a big qualifier here.

Speaker 2 If you're what I would call a space optimist, you can believe in a very long-term horizon without getting obsessed with safety.

Speaker 2 Because, you know, humans or the successors to humans can colonize galaxies or go further. And the multiplicative gains from that can just be enormous.
But I'm not a space optimist.

Speaker 2 I think the speed of light, the difficulties of travel are really binding constraints. And maybe there'll be vacations on the moon or something.
But basically what we have to work with is Earth.

Speaker 2 But again, if you are a space optimist, you can escape a lot of that risk aversion and obsession with safety and replace it by an obsession with settling galaxies. But that to me also

Speaker 2 is a weirdness I want to avoid because it also means something about the world we live in

Speaker 2 no longer matters very much. You get trapped in this other funny kind of Pascal's wager where it's just all about space and NASA.
and like fuck everyone else right

Speaker 2 and uh i mean if that's right it's right but but somehow

Speaker 2 my my intuition is that possible's wager arguments they both don't apply and shouldn't apply here that we need something that works like for humans on earth am i allowed to use that word on your podcast oh yeah you're allowed to do that okay i'm sorry no you definitely are uh okay yeah uh but

Speaker 1 if If we're going to have like growth for centuries, doesn't that at some point require us to escape Earth? Like, is there like a finite limit of growth we can have just just on Earth?

Speaker 2 I don't know. I mean I think it's finite as opposed to infinite, but it could be quite a long run.

Speaker 2 If you look at Earth and ask what are really the binding constraints, it doesn't seem to me that living space is one, and it doesn't seem to me that energy is one. So human conflict might be one.

Speaker 2 That's indeed what I worry about the most.

Speaker 2 In the short run, carbon emissions are one, but I think we'll fix that at some point.

Speaker 2 And my goodness, there's ocean platforms, there's living underground, there's, you know, castle in the sky, Miyazaki and so on. I think there's a lot we can do here on Earth.

Speaker 2 I often joke, like I'll go to Mars once they filled up Nevada.

Speaker 1 So if it's so great here on Earth, why do you think we're going to be gone in 800 years?

Speaker 2 Weapons of mass destruction. I think in any year the chance of a war is quite small, but if you just let the clock tick for long enough, a major war will happen.

Speaker 2 And I don't think you have to believe that literally every single human will die, but that what we know is civilization may not really persist just because of war.

Speaker 1 And you're not persuaded by Steven Pinker's arguments that violence and war has been going down is likely to keep a stay down?

Speaker 2 As I read his data, it's at least as equally compatible with a ratchet hypothesis that major wars, each one is worse than the last. So they do come less frequently.
right?

Speaker 2 World War II was a while ago. But World War III is going to be quite a doozy.
And to seriously believe, oh, there'll never be a World War III,

Speaker 2 that seems obviously wrong to me. I just think it's probably not soon.
But it's going to happen. What about when a nuclear weapon costs $50,000, right? How's that going to be?

Speaker 1 Well,

Speaker 2 they asked Pinker this in my podcast with him, and he didn't say fuck. I heard it.
But he didn't have a decent answer either. He sort of collapsed.

Speaker 2 He said, oh, like, I'm not doing a predictive thing here. Like, of course you are, Stephen.
Come on. You conceded.

Speaker 1 Yeah, there would be no point in the book if it wasn't wasn't predictive.

Speaker 2 That's right. So he collapsed on that.
And the fact that he couldn't answer the question made me revise in Bayesian terms to think I'm more right.

Speaker 1 Okay, how about this argument, which I heard from David Deutsch, who Pinker is heavily influenced by, I think.

Speaker 1 And the argument is that the people in free and open societies will innovate faster than the ones in closed societies. So the enemies of civilization are at a disadvantage when it comes to innovation.

Speaker 1 And so we'll figure out ways to innovate and to

Speaker 1 stop their possibility of killing us all faster than they'll figure out how to kill us all.

Speaker 2 That's possibly true.

Speaker 2 But the counter argument that the costs of destruction are so much lower than the costs of building, and it may not be like some totalitarian enemy that does us in, but just some wacky general or

Speaker 2 an insane president or a kind of mistake in measuring whether nuclear weapons are coming over. I think those are the likely scenarios.

Speaker 2 Not that somehow there's this Nazi power of the future that has better bombs than we do. I would bet against that.

Speaker 1 Do you see a warning sign for a war in this crisis?

Speaker 2 I don't see any evidence of a major war in this crisis, or indeed at all in 2020.

Speaker 2 Maybe the single biggest problem would be China, Taiwan, South China Sea, possibly North Korea. Those are very real issues.
I don't see that they've gotten worse necessarily.

Speaker 1 And as I was reading suburban attachments, you pointed out again and again in the book that

Speaker 1 your views end up aligning with common sense morality a lot. Now, is there a

Speaker 1 deeper reason why common sense morality is so often right about these issues, or is it just a coincidence?

Speaker 2 Well, common sense morality evolves. And I really wouldn't want to argue it evolves to exactly the socially optimal point.
But at some very gross level, there's some kind of group selection, right?

Speaker 2 I don't mean in the strong sense, but societies that had uncommon sense morality, like, you know, commit suicide when you're five. Every family should either have 20 children or zero children.

Speaker 2 Be unwilling to talk to your grandparents, right? That's the opposite of common sense morality. Those societies won't do well.

Speaker 2 So the ones that in some way reproduce, they're not going to be too far from something that's at least workable, I think.

Speaker 2 And again, you don't have to be some kind of extreme believer in group selection to buy into that.

Speaker 2 So also across individuals, across families, across kind of clubs, there are competitive pressures.

Speaker 2 People observe what's relatively successful. Again, not an optimum process.

Speaker 2 But if your philosophy totally contradicts common sense morality, as say Peter Singer sometimes does, I think you should start worrying that maybe it won't actually fare that well if you try it.

Speaker 1 So that argument points to the equilibrium being with free and prosperous societies.

Speaker 1 Do you think that then there's almost something inevitable about the successful societies in the future being free and prosperous?

Speaker 2 I mean, I want to say yes, but to many people, those words free especially would be question begging.

Speaker 2 Like, what does it mean exactly free? And what will it mean in, say, 50 years when surveillance is far more advanced than it is now? So I'll give you a very qualified yes.

Speaker 2 But I'd want to fill in those boxes much more. I don't think totalitarianism is a long-run winning strategy.

Speaker 2 I think autocracy has proven to be a much better competitor than we all thought 20 years ago. We should take that seriously.

Speaker 2 That's where I am right now.

Speaker 1 So the long term, you think China will remain autocratic?

Speaker 2 Depends what you mean by long term, but I don't see any particular reason to think they have to change. Obviously, sort of long enough with drift, anything can happen.

Speaker 2 But the naive thesis that as they get wealthier, they'll be more democratic, there's no evidence for that. They've become less democratic.
They're much wealthier.

Speaker 2 The Chinese potential median voter doesn't even seem to want democracy. That could all change, but right now, those are the facts on the ground.

Speaker 1 And

Speaker 1 let's talk about your most recent book, Big Business. Now, I think I also see a contradiction between the complacent class and big business.

Speaker 1 Big business almost reads like a love letter to the complacent class.

Speaker 1 I mean, for example, you point out that startup formation is down in the complacent class. But if the existing big businesses are so great, why does it matter that startups are less common?

Speaker 2 Well, it depends on the area you look at. So if you look at the decline in startups, it's actually remarkably concentrated in retail.
And I don't think I knew that when I wrote the complacent class.

Speaker 2 So I'm less pessimistic about that fact than I was when I wrote complacent class. So there were fewer kind of mom and pop department stores trying to sell clothing to compete against Nordstrom.

Speaker 2 I mean that may or may not be a bad thing, but it's hardly a worrying development. So I think the startups that will carry dynamism,

Speaker 2 again COVID aside, that's obviously damaging startups.

Speaker 2 It's not clear to me they're doing worse than they were doing 10 years ago.

Speaker 2 And I would just say this, if you want to look at who are the innovators right now who are fighting against complacency uh it is big business to a considerable extent and we should appreciate big business for that and yes also want it to be more dynamic but big business has far higher productivity than small to medium sized enterprise so the productivity problem in america is definitely not with big business so i'll still write them a love letter but bitch about the bigger picture ah interesting um but is there that then something complacent about the fact that big business is especially efficient and productive

Speaker 1 and that newer firms aren't as productive or smaller firms aren't as productive?

Speaker 2 Well, it depends on the degree of contestability. So I think big businesses today face a lot of contestability and don't just have perpetual locks over their markets.

Speaker 2 We'll see how well that prediction pans out. But also our big businesses are extremely innovative.

Speaker 2 If you take, you know, alphabet slash Google, it's incredible how many different ideas and products they've come up with, and that's big business. Look at Amazon.

Speaker 2 They were this weird, crummy website selling books. Now they help keep us alive.
They send me Rainier Cherries, like whenever I click on the thing, and they're on my front doorstep.

Speaker 2 And now they're a leader in cloud computing services. Who would have thought that? That's wonderful, dynamism.

Speaker 1 So have you then changed your mind about the great stagnation thesis? If you think that these big companies that are very powerful are also very innovative?

Speaker 2 Not at all. So much of the great stagnation is about education and health care and services, sort of non-tech, non-internet services.
And those are still stagnating.

Speaker 2 So, you know, health care is one area where we might make major breakthroughs through biomedical research. And on that, I'm much more optimistic.

Speaker 2 On education, it seems to me the sector is getting hammered, and it's pretty low productivity. And then there's government.

Speaker 2 It's hard to measure the productivity of government, but the American response to the pandemic has been pathetic. So the key areas where there was stagnation still fall under it.

Speaker 2 But it's neither the tech companies nor big business. It's the other stuff.

Speaker 1 And speaking of the education sector, you created a Marginal Revolution University, which is like an online college for economics courses. How did that turn out? And I mean,

Speaker 1 in terms of like trying, maybe trying to replace existing institutions, what lessons did you guys learn?

Speaker 2 Well, I've never viewed it as a replacement for existing institutions. For me, it's a supplement.
So we have hundreds of economics videos.

Speaker 2 We have complete micro and macro principles classes, which include, you know, problem sets, exercises, not just the lectures, not just the material. And I've taught principles with these fully online.

Speaker 2 So has my co-blogger, co-creator, Alex Tabarok. And it works great.
And the students really like it. This is done within George Mason University.
It will not make George Mason bankrupt.

Speaker 2 But the simple hypothesis, like ask any human, take the education you had and replace the worst 20% of it with things you choose online from a wonderful menu. Is that a good deal for you?

Speaker 2 Obviously, in my view, the answer is yes. So we've helped lead that revolution.
But to me, it's 20% of the sector. It's not a replacement.

Speaker 2 Face-to-face will always be there as the center of the educational experience.

Speaker 1 So tell me what we can't replace because Marshall Revolution University is great and if I was a young person interested in economics what am I getting from going to college and paying tens of thousands of dollars a year that I can't get by just watching your YouTube videos?

Speaker 2 You are a young person interested in economics, right? And you go to UT Austin, which is a great school. So you could tell me better than I could tell you what you get there.

Speaker 2 But you interact with different personality types. You learn how hierarchies work.
You meet mentors who inspire you.

Speaker 2 you meet mentors who help get you jobs, and you socialize, and you figure out how a lot of things work. And my guess is like the best 10% of your face-to-face classes are really pretty awesome.

Speaker 2 What would you say the percent is? That's really great.

Speaker 1 Well, it's not just about how many of them are awesome, but how many of them are irreplaceably awesome, like in a way that like could not be.

Speaker 1 For example, I mean, you're.

Speaker 1 I can talk to you and you know, maybe this is not scalable, but I'm talking to you right now. And not only did I find your books and videos really

Speaker 1 really informative but now I can get to ask you questions and you know that this could it in some way this is a replacement for a university education I get the privilege of Tyler Cowboys without going to George Mason

Speaker 2 well sure but that's why you want to sub in the 20% right if you want to argue for 30% I mean we can bargain I'm not fixated on the number 20 but think how good your best 20% at UT Austin has been and I'm not informed on that but for most most people, it's really quite good at most schools.

Speaker 2 So you can have both. And this is part of it.

Speaker 2 And that's my vision. And again, we can have competition and figure out if 20% is the right number, 15%, 30%, whatever.

Speaker 2 But the people who think it's somehow all Khan Academy or

Speaker 2 I don't know. I've never seen real world institutions work that way for extended periods of time.
So people decide to get together. We've been in quarantine lockdown.
Everyone's antsy and restless.

Speaker 2 They're going crazy on Twitter. They're all pissed off, depressed, whatever.
They need to see other people.

Speaker 2 Maybe it's not rational, but I think education is always going to cater to that and not try to fight against it.

Speaker 1 Okay, so on a latter note, you visited Parkersburg this summer.

Speaker 2 West Virginia, absolutely. I was so excited.

Speaker 1 Yeah, I lived there for three years,

Speaker 1 between, I think, the age of 12 to 15. And my dad worked at a hospital in Marietta, which you also visited.

Speaker 1 Now you noticed some things about Parkersburg that I never noticed in three years of living there. Can you talk about your experience there?

Speaker 2 Well, it's an old West Virginia town that has a background in oil and gas money.

Speaker 2 And some parts of it are, at least for its time, they were quite fancy, early 20th century homes. I wouldn't quite call them Victorian, but there's some kind of West Virginian take on Victorian.

Speaker 2 They're lovely to look at. Downtown itself is is like half excellent architecture and half the ugliest stuff you've ever seen.

Speaker 2 And it was an area that was very innovative with suspension bridges. And it was like central to American Ohio River culture, which in these limping along ways is still there.

Speaker 2 There's like a minor theater district and some arts, but it's also in a way pathetic and very run down. So to see that blend, that's like glorious tourism, right?

Speaker 2 Not that far from where I live. So, I thought my daughter and I, we drove there.

Speaker 1 Hmm. What happened? Why did the aesthetics get so much worse? Because

Speaker 1 I mean, I didn't even think about this before. Um, I read your column about this, but I don't know if you got to see Parkersburg High School while you were in Parkersburg.

Speaker 2 Uh, probably not, no. But it's good or bad.

Speaker 1 It looks like a castle. I mean, it's really interesting architecture.
And I just didn't think about like how great the architecture was.

Speaker 1 And I didn't notice how bad the other architecture was around it. What happened to the aesthetics? Why did they decline?

Speaker 2 I don't know enough about the history to say, but you see something similar under extreme forms of communism, you know, like Prague, incredible for centuries.

Speaker 2 And then those apartment blocks they put in are just awful. But we know why that was, right? Communism.
Now, you could say, well, there was economic decline in West Virginia, Ohio River Valley.

Speaker 2 I mean, I'm pretty sure that it's true. But it's still the case.

Speaker 2 Like, absolute wealth in Parkersburg is much higher today than when they built these wonderful homes in 1910, 1890, when they were built.

Speaker 2 Why don't people give a damn? So there's some loss of cultural self-confidence, notion of centrality, kind of ethos, importance.

Speaker 2 I'm quite sure I don't understand it, but that's the direction my thoughts run in.

Speaker 1 Interesting.

Speaker 1 Okay, so I want to ask you about your advice for young people.

Speaker 1 So can you tell us about what you were like when you were 19 and what advice you would give to like a generic 19-year-old?

Speaker 2 When I was 19, I had more hair.

Speaker 2 I was younger.

Speaker 2 I didn't eat as many different kinds of food, but I think I was recognizably Tyler Cowan.

Speaker 2 And I was already doing things like giving talks and writing. And I mean, it's remarkable.
You're all having talks when you're 19?

Speaker 2 Yes. I was just starting, but I had a summer job.
I gave talks to high schoolers, high school debaters, teaching them how to use economics to understand high school debate topics.

Speaker 2 so i kind of barnstormed around the u.s very early got this love for travel saw many parts of the nation i never would have gotten to it's like grand rapids or like eastern kansas all sorts of places like i've been multiple times that was great and they paid me and i learned how to give talks but the point is like what i do now what i did then

Speaker 2 now there's the internet but it's the same I'm the same, kind of, for better or worse.

Speaker 1 I mean,

Speaker 1 it sounds like you didn't need much advice when you were 19 but what advice would you give some other 19 year old then?

Speaker 2 Well I think I needed a lot of advice when I was 19.

Speaker 2 I don't know how much of it I sort of took in a literal way but I think the collective impact of it made me wiser and more prudent and I eventually was able to do things like manage projects.

Speaker 2 that I certainly was would not have been able to do at 19. And that came through listening to advice.

Speaker 2 But my kind of classic advice for young people or even older people, the first is get at least one really good mentor, preferably two or three.

Speaker 2 And second, get like a small group of good friends that you love talking to, hanging out with, maybe WhatsApping, emailing, however you're going to do it. So small group theory and mentors.

Speaker 2 That's my generic advice.

Speaker 1 Why are mentors so important?

Speaker 2 I think they...

Speaker 2 only teach you a few things, but those few things are so important.

Speaker 2 They give you a glimpse of what you can be, and you are oddly blind to that in the absence of those mentors, even if you're very, very smart.

Speaker 2 So I think rate of return to good mentors is just enormous.

Speaker 2 And you don't need many. More than one is ideal.
Choose them wisely.

Speaker 2 Actually, ignore most of what they say, but what you get from them will be so important.

Speaker 1 So when you say they give you a glimpse of what you can be, do you mean that you get to see what they are and you're getting some inspiration by that?

Speaker 1 Or do they explicitly tell you, give you some actual possibilities?

Speaker 2 I think usually it has nothing to do with them telling you. They might tell you whatever, BS.
Who knows, right? But it's what you see. I don't know that you listen to them that much or even ought to.

Speaker 2 Like there was one fellow I met when I was young. His name was Walter Grinder.
And he had just tried to read as many books as possible.

Speaker 2 And just the notion that you could be a human and try to read as many books as possible, I got from him. That was incredible.
Huge influence.

Speaker 1 Yeah, it seems like you've been on that path for a while.

Speaker 2 Yeah. And I think I was 14 when I met him.
That was just amazing. Now, did he once tell me, read as many books as possible? Like, who knows? But I got that lesson, you know, in any case.

Speaker 1 But is there,

Speaker 1 do you get anything by knowing them personally?

Speaker 1 Like, if I just listen to you on different podcasts, talk about how many books you read and, you know, your depth and your breadth, can I just kind of osmotically gather that ambition just by listening to you elsewhere?

Speaker 2 Well, maybe you should tell me. I mean, I think to some extent, but having flesh and blood mentors is still, I think, very important.
And again, it's a portfolio approach. You want both.

Speaker 2 And now you can get both.

Speaker 1 Okay, so

Speaker 1 this is very interesting because

Speaker 1 it goes to the topic of the new book you're writing, which is on identifying talent. Are you ready to give some sneak peek of that book?

Speaker 2 Absolutely not. But I'm co-authoring it with Daniel Gross.
I'm to deliver a manuscript July 20th.

Speaker 2 No problem meeting that deadline. It's about 70,000 words.
And it's, to me, all fascinating is what I'll say. But I don't want to give away any of the content.

Speaker 2 And it won't come out on Marginal Revolution. When the book appears, it will be 98% fresh material.

Speaker 2 I try for most of my, all of my books to be.

Speaker 1 I mean, that's fair. I'm curious.
Is there like a reasoning behind that?

Speaker 2 Well, I write a lot. I've blogged every day for 17 years.
I write for Bloomberg.

Speaker 2 I try not to have overlap. So if people are buying my book, I don't want them to think, oh, I've read this guy's blog, whatever, I've heard this.

Speaker 2 It's like, you know, why do that?

Speaker 2 So

Speaker 2 you owe it to your readers or people who hear your podcast that the different parts of what you're doing. stand independently.

Speaker 1 But aren't you repeating the theme of your book when you go on a podcast and then, you know, discuss and promote it?

Speaker 2 You do because you have to. And I'll put some of the book on the blog when the book comes out.
But that's marketing. Like I'm not pretending it's some other thing you ought to buy.

Speaker 2 And people demand that you do it. But like my Bloomberg columns, they won't just be from the book.
They won't just be from the blog.

Speaker 2 The blog will still mostly be fresh posts, not just excerpts from the book.

Speaker 2 So, you know, you try as much as possible. But when you market your book, you can't just like talk about CAS or something, right? You might actually want to.
In fact, I do, but they won't let you.

Speaker 1 I'm very excited to read it.

Speaker 1 Let's go back to the Great Stagnation.

Speaker 2 It's a very practical book. It's both for talent searchers and for people being searched for.

Speaker 1 And is it, maybe you don't want to answer this question, but is it going to tell the people who want to be searched for how to signal their talent or how to develop it?

Speaker 2 Both.

Speaker 2 Okay. But I would say it's more about spotting and signaling than about developing it.
So it's not about how to go into the weight room. But I think once you understand

Speaker 2 the signaling aspect and the spotting aspect, you'll learn a lot about what to develop.

Speaker 1 And I want to ask you, when it comes to developing talent,

Speaker 1 are you an optimist about people's capacity to develop talents

Speaker 1 they're after the age of 18?

Speaker 2 Or do you think that absolutely after 18 is the best time to do it?

Speaker 3 Huh.

Speaker 2 Because before 18, you're much less able.

Speaker 2 I mean, clearly there's some areas where that's not true. So like some areas in sports, if you start tennis at 19,

Speaker 2 these days, you're just not going to be that good, right? It needs a lot of evidence.

Speaker 2 But for most actual jobs, that's after 18 is the best time to develop.

Speaker 1 But then you were reading gonox's book uh you know before your teens and then giving talks when you were 19.

Speaker 2 I was very lucky and I had a huge head start I'm all for that head start but people who don't have it should not write themselves off in fact they will have done other things and may come at the whole field with fresh perspectives having done other things I just hope at age 13 they were not a slug on the ground right

Speaker 2 Maybe they were playing tennis and they learned something about competition or merit or efficacy. I hope.

Speaker 1 And do you think temperaments can change significantly after 18 or just interests

Speaker 1 and skills, I guess?

Speaker 2 I tend to think temperament is relatively stable.

Speaker 2 I mean, when you're very, very old, it's different. And when you're very, very young, it's different.
Terrible twos, whatever.

Speaker 2 But from like 18 through 70, I think temperament is fairly stable for most people that I've known.

Speaker 2 I think there are exceptions.

Speaker 2 There can even be what are sometimes called mental illnesses, not a word I like, but just as a catch-all, where people's temperament changes a lot in short periods of time, I would fully grant that.

Speaker 2 But for normal range of variation, I don't think people change that much from 18 to 70.

Speaker 1 Okay, so going back to that.

Speaker 2 Especially men. Women are more likely to change.

Speaker 1 Why do you think that is?

Speaker 2 They have a more formative experience with childbearing for many, not all women.

Speaker 2 And I think think they are more disadvantaged by society in terms of being able to do things.

Speaker 2 And it may take them longer to lift or fight through those barriers and their change can come later and be more radical.

Speaker 2 If you're just like a smart, nerdy white guy at 18, like if there's something you can be really good at, Like you're gonna get your chance.

Speaker 2 I'm not saying you might not hit some bad luck, but you will get your chance odds are

Speaker 1 my intuition would have been the opposite on the gender issue because men,

Speaker 1 I heard somewhere that men develop their,

Speaker 1 the complete development of their frontal cortex happens later. So then I would figure they have more room to grow because, you know, they develop later than women.

Speaker 2 I think male risk taking declines later than female risk-taking, and male risk-taking is more extreme.

Speaker 2 So doing really stupid stuff, a male might do at age 21 in a way that a woman on average would not. So that's a change.

Speaker 2 But again, you just need to rejigger when you start the age count for personality not changing that much. Maybe for some people it's a little after 18.

Speaker 1 And speaking of the gender distinctions here, you've mentioned when you're talking about the great stagnation thesis that society has turned more effeminate and that that is on balance a good thing.

Speaker 1 Is there a reason you think the getting safer and

Speaker 1 you know m less restless is a good thing on average?

Speaker 2 Well, safety is a good thing. Less restless may or may not be a good thing.
But the chance that, say,

Speaker 2 an American dies in combat for decades has been very, very low. And that's the upside.

Speaker 2 And our safety here in the territory of the 50 states, I know there's some terror attacks, but it's still very, very, very high. And that's a significant upside from feminization.

Speaker 2 And we should be thankful for it every day.

Speaker 1 But if I take seriously the concept of Crusoria, plants, sorry if I'm mispronouncing that from

Speaker 1 summer detachments, isn't the claim then that economic growth is more important than because of its returns over a long period of time, it's more important than any small thing

Speaker 1 today?

Speaker 1 So that

Speaker 1 even for safety today, we should rather prefer growth instead of safety because of its impacts in the long run?

Speaker 2 Well, if you feminize

Speaker 2 you'll have higher safety. Let's say you'll have lower growth.
I'm not even sure that's true.

Speaker 2 That would depend then on your potential time horizon. If you think there is a long future stretching out there is possible, that's a good trade-off.

Speaker 2 I would just say, look, feminization is inevitable.

Speaker 2 Once you have something even vaguely approaching equal rights, what you would need to do to fight it off would be highly destructive and unfair and violate rights.

Speaker 2 So let's make the best of it and let's build a more dynamic, highly feminized society.

Speaker 2 and i think we can do that i mean i i view myself as a part of trying to do that somehow thinking reversing feminism femininization will get the rate of growth high again

Speaker 1 uh it's a myth it's not really there fair enough um by the way is there a reason that it's uh i mean it's especially conservatives and people on the right of the spectrum like you ross southeast peter thiel that are concerned about the lack of change in progress because i would my intuition says it should be the opposite the progressives should be concerned about

Speaker 1 not enough dynamism.

Speaker 2 Well, I think they would define progress differently.

Speaker 2 That they view certain parts of society as having seen so much progress, and they think what's holding society as a hull back

Speaker 2 is the restrictions on the opportunities to the least privileged members, and that that just has to be this absolute priority.

Speaker 2 for us to take the next steps and that if we don't our politics will be so toxic it'll be terrible for almost everyone uh we shouldn't reject that out of hand right you might disagree with particular things they'll argue but that's not a crazy view

Speaker 2 uh but you disagree with it uh because redistribution is not as strong as economic growth to get help the least privileged well the way i stated it i don't think i disagree with it in fact at all I just find when you go out and meet these people, they believe a bunch of other things that aren't true.

Speaker 2 But what I just outlined for you, I'm completely on board with.

Speaker 2 And economic growth over time, even when the gains are unequally distributed, over time it does raise all boats. And that's an insight we've lost sight of because of our own impatience.

Speaker 2 And I get you can go quite a while and not see that happening, but it's nonetheless true.

Speaker 1 Okay, so this is a question I asked Brian Kaplan when he was on. What's the biggest mistake in human history? What was the single decision that just had the biggest downside to it?

Speaker 2 I don't think we know yet.

Speaker 2 Very hard to say. Most of human history, I'll put on my Steven Pinker hat, has worked out well relative to where we started.
Even for like a poor country such as Laos,

Speaker 2 Laos compared to the Stone Age is doing remarkably well. Just like agriculture works, right?

Speaker 2 Public health measures have gone up in almost every country over the last 20 years. A lot of great things happened.
So it's very hard to isolate this one big mistake.

Speaker 2 Even something like World War II, which is one of the worst events in human history, possibly the worst.

Speaker 2 The right side did win and the right side did get nuclear weapons first. So to want to rerun world history, I mean,

Speaker 2 I would do it, but don't be so sure. you're going to always like what you see.

Speaker 1 Brian Kaplan proposed proposed World War I. Would you be tempted to agree?

Speaker 2 I don't think there's a better answer. But look, say World War I had been circumvented, which could have happened, right? There were a lot of contingencies behind World War I.

Speaker 2 And then, say, by the time you get to 1942, some very large, aggressive, but non-Nazified Germany develops atomic weapons first.

Speaker 2 I don't know what that's going to work out.

Speaker 2 Is the world as a a whole going to be better than what we have? I'm just reluctant to make the comparison.

Speaker 2 So

Speaker 2 I don't know is the answer.

Speaker 2 I don't think we understand historical contingency very well.

Speaker 1 And this goes back to your argument against Pinker, which is that it would have just built up potential energy that could be released in a stronger way.

Speaker 2 Correct. Whereas as it's gone now, we've had

Speaker 2 well, depends what you count,

Speaker 2 but really 70 plus years of mostly peace in many, many parts of the world. And that was hardly to have been expected.

Speaker 1 And do you think a nuke is going to go off in my lifetime?

Speaker 2 A non-tested nuke? Yes, absolutely. A nuke used to kill people.
Yes.

Speaker 1 Enough to like significantly impose an existential threat or just like a few?

Speaker 2 Just a few. And it could be an accident.
It could be like trade a city for a city. Most likely a terror attack.
I would say the chance is over 70 that a nuke goes off in your lifetime oh gosh uh

Speaker 2 i'll i'll i'll try to be in the wrong city then um but the chance of a nuclear war in the sense of like that old movie booked like on the beach and there's just a few people left somewhere on like stewart island of new zealand and they're wandering around trying to get a radio to work or something i think chance of that is pretty low for quite a while.

Speaker 1 I don't understand how mutually assured destruction works in the sense that like, isn't the guarantee that, like, if you nuke us, we'll destroy you.

Speaker 1 But if your country is already destroyed, I mean, isn't it almost psychopathic to like then go ahead and destroy another half of the world?

Speaker 2 You know, Thomas Schelling was my doctoral advisor, and he was the person who first, in a serious way, pondered these possibilities in print in an academic manner.

Speaker 2 I think we don't know what any of these leaders would do if they saw the missiles coming.

Speaker 2 I think the evidence we have indicates they would retaliate, but I'm genuinely not sure.

Speaker 1 Okay,

Speaker 1 going back to

Speaker 1 your advice for young people, or at least how you were molded, did you learn more between like, let's say, the ages of 15 to 25 than you have in the last 10 years?

Speaker 2 Oh, of course, but that's just diminishing marginal something or other. I mean, 15, I didn't even know how to drive, right? I'd never been to any other country.

Speaker 2 I had left New Jersey to visit New New York City and Philadelphia. That was it.

Speaker 1 But if I take seriously the idea that knowledge compounds, then shouldn't I expect people to, by a large margin, learn more the older they are and the more they already know?

Speaker 2 Well, there's an asymptote and then there's a period of very high increasing returns.

Speaker 2 I think I

Speaker 2 started high returns at around age 14.

Speaker 2 And

Speaker 3 up through

Speaker 2 kind of my late 20s, my learning returns were just very, very high per year. And since that time, they've been somewhat lower, but I think still pretty high, but not as high as they had been.

Speaker 1 And if you were exposed to like left-wing economics

Speaker 1 when you were a teenager instead of Austrian stuff, would you today, is there a high likelihood you would be more to the left?

Speaker 2 Or would you convert it to? I was like left-wing economics when I was 13, 14. It was most of what was out there.

Speaker 2 I read Keynes, Galbraith, LeCochman quite early, Robert Heilbrunner, Walter Heller when I was like 14,

Speaker 2 Karl Marx, probably I was 15.

Speaker 2 So

Speaker 2 here I am.

Speaker 1 Fair enough. And what field do you wish you'd learn more about when you were younger?

Speaker 2 You know, if I could type really well on a smartphone.

Speaker 2 I would feel better about things. And you always want more math and stats.

Speaker 2 You know, I tried programming in high school when it was basic in Fortran, and then to me it was very boring.

Speaker 2 And I have no regrets to not taking that path, but I just don't know much about it. And maybe that is some kind of huge gap.

Speaker 1 Let's close on a pessimistic note.

Speaker 1 What contingency are you most worried about following this crisis?

Speaker 2 You mean coming out of the crisis?

Speaker 2 Well, first of all, I'm not convinced when the crisis will end there's a chance it drags on for years

Speaker 2 I think the chance of a vaccine in early 2021 is quite high but how good a vaccine it will be is not certain there's even a chance it harms some people and lowers the credibility of vaccines

Speaker 2 so if this were to run on for two two years or more

Speaker 2 Just the psychological scarring, the unemployment, the collapse of international cooperation, ongoing collapse of of migration and immigration.

Speaker 2 I worry about all those things, and I think those quite possibly are plausible outcomes. They're not like, you know, tale scenarios.
They're happening right now.

Speaker 1 Okay, let's not close on.

Speaker 2 People think somehow like Trump not being president will undo it. And I think that's wrong.

Speaker 1 So let's close on the optimistic scenario then. What's the best scenario?

Speaker 2 Maybe that was the optimistic scenario.

Speaker 1 Really?

Speaker 2 I'm joking. Okay.

Speaker 2 The real pessimistic scenario is a war starts and you have a war and pandemic together, which historically has not been that uncommon, right?

Speaker 2 May not be causal, but that's like, you know, a doozy.

Speaker 2 The optimistic scenario is,

Speaker 2 well, the death rate in the U.S. is already about a quarter to a fifth of what it was just a few months ago.
And that's great. It's better than almost anyone had predicted.

Speaker 2 And when I was doing podcasts in April, I talked of, you know, by the time we get to August, I think the death rate will be a third of what it is, and no one is seeing that.

Speaker 2 And it turns out it's like a quarter or a fifth to what it was, which is really good.

Speaker 2 So think of that process continuing.

Speaker 2 We have more remedies, not just a vaccine, and then kind of a 40% or 60% quality vaccine by early 2021, and then a V-shaped recovery by March.

Speaker 2 and then we

Speaker 2 open up borders again and the world resumes. It's also quite plausible.

Speaker 1 And is it possible that we'll see an increase in productivity growth, economic growth, higher than it would have been otherwise?

Speaker 2 Well, I don't think in the short run. I think when you have an extreme recovery from a weird event, for one thing, productivity measures don't mean anything, like a lot of other economic statistics.

Speaker 2 Like how much of the output gains people working more versus working smarter. I don't think we'll ever know.

Speaker 2 But I think it is not just plausible, but likely to believe that biomedicine five to ten years from now will be really much, much better because we had this pandemic.

Speaker 2 Doesn't mean it was worth it, but I think that's extremely likely. And that's the silver lining in the cloud.
And it's not a guarantee, but it's like well over 50% probability, in my opinion.

Speaker 2 And we'll be better prepared for the next pandemic when it comes, which it will. And that will be a huge gain.
However terrible this feels, we're getting off lightly, I'm sorry to say.

Speaker 2 Is that the good news, the bad news? I'm not sure. But next time we'll be ready.
Let's be happy that at least so far,

Speaker 2 this time has like only been as bad as it's been. It's been terrible, but it could have been much worse.

Speaker 1 Okay. We'll call that optimistic.

Speaker 2 Call it optimistic. Okay.
Thank you very much for doing this podcast.

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