hello everyone and welcome back to conversations with Tyler today I am speaking with Brad Delong on his book known as J Bradford Delong on scholar.google known as J Bradford Delong but to most of us known as Brad Delong he is Professor of Economics at UC Berkeley he and I went to grad school together at Harvard he was one of the very first if not the first economics
blogger and he this year has out a long-awaited New York Times best-selling book slouching towards Utopia an economic history of the 20th century Brad welcome thank you thank you very much for having me and giving me an opportunity to sell books as well as to talk to one of the most smart people and wide-ranging people I know about the
economy political economy and similar things uh thank you for that now if I look at the productivity and growth statistics for the late 19th century they're highly fragmentary they're imperfect they are what do you think the numbers are showing us because they don't look that good is it that we don't trust the numbers or is it the numbers like that
are what big progress meant back then I think the numbers then are what big progress meant back then um and that you know I mean John Stuart Mill in the 1870s could think and had some reason on his side that there actually had not been an increase in working class real wages across the years from 1800 to his day and a bunch of that is distribution
but a bunch of that is simply slow growth you know that things like the two percent per year income and productivity growth that we have grown used to you know since the coming of the Second Industrial Revolution since the start of Bob Gordon's one big wave that really is completely unprecedented you know there was nothing like that before you know
not in the biggest efflorescences not in the classic British Industrial Revolution if we're trying to think about the period say 1870 through to the 1920s when you have some kind of modern consumer Society what's the best number for reflecting how big that change was I would say that you got to look worldwide um and that if you look worldwide um and if you take account of you know
the fact that world population has now hit growth has now hit kind of more than one percent per year after 1870. um that you had something like 1.3 percent per year for average world real income growth from 1870 on up to the eve of World War One worldwide and you do what I do which is say let's take real income growth and add half of
population growth and call that technology growth um do that you get something like 1.7 per year for the global rate of increase of quote technology unquote from 1870 to 1913. you know which is four times what the worldwide average was back in the century before 1870. it's a huge shift and it's one of the things that makes the modern world as we know even vaguely
possible to imagine if I'm trying to understand economic statistics and if I believe the 50 years starting in 1870 sort of changed everything but if I also believe the last 50 years in the west did not change everything it gave us computers and internet but it's had growth rates that are not probably too far from the earlier rates
like what accounts for that difference should we then say I think it did change everything or it changed if didn't change everything but it changed a lot of things um there is there is a difference between the growth rate of wealth and what that growth rate of wealth means right you only go from having no indoor plumbing and no public health and so having half
your babies die before the age of five um two one in which infant mortality is extremely low and they you know and they can genuine you know astonishing tragedy um once um you only go from spending two hours a day at least thinking about how hungry you are and how it really would be nice to have more calories right now um to not having to think about that you
know kind of once um you know you only go from having your children so malnourished that the adult Heights of the boys are five foot three who the dog Heights five foot nine or so on average you only do that once you know and we did that and we did that mostly in the 50 years after 1870 at least for the global north um we're doing equal things in terms of how
much we're making um since but with possible exceptions after 2006 slowdown um but in some sense it means a great deal less because it doesn't impact our thinking and our family tragedies and our children so malnourished that they're badly stunted in such an obvious you know and visceral way you know but there have been big changes right you
want you want to talk about modes of production you want to be an orthodox Marxist in following not so much marks but Friedrich Engels and you say there's a huge jump between feudal society and the commercial societies of the gunpowder Empires between a thousand and 1650 or so yeah but then there's another equal jump between the gunpowder Empire commercial
societies and the other steam power societies of 1870. you know but the Second Industrial Revolution beasts of 1910 or so are a different animal too you know as are the mass production societies of 1960 as was the global value chain Society of 2000 and right now we're well into an infobiotech economic Revolution you know the underlying technology
driven forces of production are continuing to change and are continuing to change a lot but in some sense we think it means less simply because our needs are much less are biologically much less urgent why did German universities so blossom in the 19th century it seems like a quite astonishing record even just skirt thinking for mathematics
taken alone is hard to believe right it is an absolutely astonishing thing um not something that I would have expected back you know before 1800 not something I really have a great deal of understanding now um yeah it certainly is a wonderful and marvelous thing um from the perspective of what a society just beginning to kind of crawl out of The malthudian Agrarian age it
decides to do with its wealth with its time with its focus and not parallel not equal to anywhere else you know not even the land-grant colleges and the private universities of the US could do it there are reasons that my great-great-grandfathers and great great uncles went to Germany for graduate school what do you think of the Common View
that England in some way fell behind Germany in the late 19th century um well you know the fact that in 1913 the largest British electrical manufacturing firm is the English subsidiary of the German zemans um you know that speaks a lot um the fact that Britain is still richer um in any kyphoon at least in any comprehensive GDP kind of accounting is
I think in large part because Germany is dragged down because when we when we speak of Germany in this sense we're meeting the rur and the Rhineland largely and some of Silesia and some of Saxony as well that um I mean it is it is absolutely marvelous that you would expect the country that is the most industrialized and that has the at least the most
advanced universities in 1800 to have an enormous comparative advantage in driving forward technology um and in maintaining its place as the kind of industrial technological leader um and yet not um so what was Britain doing wrong those years then oh there are arguments that you know too much well they're the standard arguments that
were applied to Holland before and that are applied to the U.S today you know financialization rent seeking an over Mighty State taxing the economy in order to accomplish geopolitical goals um you know that for Britain it does seem to have been a um unwillingness to focus the attention of society on pushing engineering forward um and you know once you start to lose
the concentrations of the you know um of the communities of engineering practice you know it's quite easy to lose more and it's quite easy to get yourself back into a bishop and to a vicious spiral I would always talk about how you know Americans and Germans would be much more willing to invest in Enterprise and that in Britain you really did not
have the growth of the large intermediaries you know like the Deutsche Bank on the one hand of the JPMorgan partnership on the other you know that saw themselves as being in the business of intermediating information um intermediate information between people who had money that they needed whether they wanted to save and invest and people had ideas that they needed to
deploy um and that the rationalization and routinization of that through Investment Banking you know Universal banking in the years after 1870 played a substantial role um I was never really able to nail that down to my full satisfaction but that was always my guess um I would have to say we really do not know but that it does tell you how
quickly within one or two generations what we think of as technological leadership and technological Supremacy Ken ebb away as a matter of position in leading sectors of the sheer mass of Engineers engaged in communities of engineering practice and the also the educational system um certainly played a big role that Germans were being trained to manipulate
molecules and organic chemistry while britons were being trained to write verses in the style of Macaulay which would be the poems that the Romans would have written if they had been Scots um as a focus of their educational system what do you take to be the best understanding of the 17th century Scientific Revolution oh if indeed you view it as the 17th
century Revolution yeah I mean like that that's you know I mean I always think Joel Moke here is absolutely um magnificent on this um I think he understates the role that having printing by movable type blade in kind of creating a you know the community of scientific practice and knowledge seeking um there's one thing there's one thing
that happens that is extremely unusual right that um okay um back before 1870 yeah back before 1870 there's no possibility at all that you know humanity is going to be being able to make good economic pie sufficiently large that um everyone can have enough which means that principally politics and governance are going to be um some Elite constituting itself and elbowing
other Elites out of the way and then finding a way to run a force and fraud domination and exploitation scheme on society you know so that they at least can have enough that when prudan wrote in 1840s that property is theft um it was not metaphor um it was really fact and what does this Elite consist of well you know it's a bunch of thugs with
Spears um the people who have convinced the thugs with Spears that they're their bosses and their tame accountants bureaucrats and propagandists you know which means most of the time um if you have when you have a kind of powerfully moving forward set of people thinking about ideas um whether the idea is true is likely to be secondary to whether the idea is
useful to helping me keep my place is a tame propagandist in the force and fraud domination and exploitation Elite machine this is a point I've stolen from Ernst Gilder and I think it is very true and yet somehow the Royal Society decides no the Royal Society decides nothing except through experiment you know that we are going to demand that
nature tell us or tell one of us or at least someone writes us a letter saying they've done the experimenting about what is true and that is a miraculous and completely unexpected transformation um and one to which I think we owe a huge amount and where does that impulse come from of the Royal Society it seems not an accident that it's in
England the same area when you're developing rule of law constitutional thought some theory of the Rights of Man uh other stranger movements right right right that you know I mean kind of in I don't know whatever as I go looking back I you said starting around 1600 the intellectual air starts to smell different you know you have ambasso de camposola
writing in the city of the sun about how there has been more technological progress in the past Century than in Millennia before um he then ruins the effect by saying and this is a result of the astrological influence of the Moon and Scorpio and the purity of a technological progress we would find rather lacking in many ways um and you have Francis Bacon saying that
the world has been utterly transformed by you know the compass by movable type printing um and you know um gunpowder and the Utopia he goes on to paint is one in which there is indeed yo Solomon's house you know a bunch of scientists um devoted to uncovering the secrets of nature um to the enlargement of the human Empire and to the affecting of all
things possible you know and this that Utopia or Cornucopia at least is on our future and is going to be because we've figured out how to use our minds to understand things rather than because we've managed to recover a golden age or because some theological being has come to our rescue um or because we've finally figured out the right static social order um
that's kind of unusual um and I got to trace it to what happened between 1500 and 1600 which was the discovery of the new world the subsequent Colombian Exchange the great reduction of the prices of carrying goods across the world as a result of the first um globalization you know that and the tinkering culture of Western Europe meant that in 1600 you
could look back and for the first time in history really say wow things are a lot different um than they were even a hundred years ago you know in fact we know more than anyone in the past you know ever did that in earlier ages you look back and you see monuments of at least some ancient civilization that look pretty impressive to you
um by 1600 no um and so in by 1600 the idea that knowledge was a possible thing that Humanity could grab for you know was in the air and as you say it all concentrates in England um it all concentrates in England or maybe better to say it all concentrates in a circle yeah a circle 300 miles around the port of Dover because Hume and Smith and the
other Scottish Enlightenment people kind of head for London fairly quickly in order to get inside the circle and get inside the discourse um that is a wonderful and marvelous thing to have happen um and I think it is a systematic change from the House of Wisdom in Baghdad in 900 or from the empirical and you know metaphysical and you know alchemical
researcher researchers of the researchers of the Song Dynasty and as I say we're very lucky it happened what do you think of the original Paul Romer view that across the very long run growth rates simply rise um well um you know depending on you know that's something bad seems to happen after the year 150 um right right the up until the year 150
I think you can say yes although whether you can actually back that up with numbers you can semi-believe in really depends on what you see of the population evolution of yo Humanity toward the end of the Bronze Age you know that there's a fight between the hide people who think that Bronze Age Empires were much more populous than others did who think that the kind of
that the big increase in human settlement population and Technology before the year zero you came in the late bronze with the of the hittite and the you know Babylonian and the Egyptian empires of the time and the rest of us who tend to think that we see an acceleration with you know the classic coming of classical civilization as a whole you know in the
axial age you know and I'm on the axial age side but it's disputed um after 150 though after 150 things really do fall off a cliff um both in terms of the sophistication of High Society and also in terms of the rate of increase of human population at least eurasia-wide you know and it's not just that the Romans vanish um from the from Britain
and it's not just that the Latin language Frontier gets pushed back so that it's out of Britain completely and has moved 200 miles into France um as one Elite succeeds another you know it's that there's a enormous destruction of the mechanisms that we're pushing ideas forward you know in the western but also in the Eastern Roman Empire um in yo Persia and in India which are
subject to repeated fairly disastrous Barbarian invasions and the successor States never kind of get back to the level of social of in-depth of infrastructure and other investment and you know ideas putting pushing forward ideas about manipulating nature yeah and in the fall of the Han Dynasty in China and the Warring States period
And in the subsequent Tang Dynasty that you look it isn't until the sun arrived and people start once again doing serious selective breeding with rice that it looks like the rate of Technology Advance gets back in here you know what I can't convince myself that between 800 and 1500 the rate of growth of world technology was any greater than in the age of classical
Persia in Greece and the coming of Han China even though the population in 800 you know it was kind of three times what it had been when Classical Greece started so there's a big Interruption of the Romer story from 150 to 1500. and afterwards it seems to me it's not so much two heads are better than one but rather we find and make much better institutions
you know in Fairly discreet steps but if we take your answer which that which I largely agree with it seems to me strikingly non-malthusian in the book you see much more a malthusian that the problem over the very long run is simply the Ebbs and flows of population well you know say um you know say you have technological progress of five percent per Century
worldwide before 1500 um which supports maybe an average Century in which human population grows at 10 percent yeah and you know but then after 1500 you can say that that triples you know um and say um one-third from the fact that you actually now get globalization because you now have ships that can actually sail rather than having to kind of break
bulk at eight different spots along the way and one-third from the Colombian Exchange itself and one-third from you know the tinkering and Innovative and Royal Society culture in Western Europe so that after 1500 worldwide it's not five percent per Century for technology it's more like 15 and so you see population growth rates of maybe 30 on
percent tree worldwide but you know thirty percent per century is still a malfujian economy um it's got to be a somewhat richer one you have to be somewhat richer so that your population can grow at 30 rather than 10 percent per Century but still half your babies die still life expectancy is 30. um still you wouldn't expect you'd expect living standards to
increase on average by just enough to support the 30 percent per Century population growth rate um rather than the 10 percent but it's still a malthusian economy the interesting question is what happens between 1770 and 1870. when you know we looks like we get our Global rate of technological progress up to almost half a percent per year which means that you
know a one percent per year population growth rate you could kind of eat all that up in terms of smaller Farm sizes offsetting better technology uh but you do have an upper class whose living standards are being transformed by new inventions and you do have a doubling of Humanity's technological capacity every 70 years is that thing um even though it is still the Charles
Dickens Jon Stewart Mill um we're not going to get anywhere and let's get a handle on our population growth problem is that 1770 to 1870 global economy still a malfusion moving ahead to the 20th century as you well know Keynes predicted a kind of leisure society would come to the West reasonably soon and people still work quite a bit yes
now earlier than that no what exactly did Keynes get wrong in your opinion obviously a very smart man yes I really do not know right that I'm tempted to follow you know Richard easterlin and say that modern economic growth is not a Triumph of you know Humanity over material humanity and Technology over material want um but of material want over humanity
and Technology you know that um I now haven't 18 year old laptop or an 18 month old laptop um and I find myself annoyed that it's not as fast as another laptop I could get um using a slightly not a slightly improved um using a much the significantly improved process of [Music] you know turning sand into something that can damned close to think
with parts four nanometers on a side in the most complicated human manufacturing and division of labor process ever accomplished um so complicated that in fact there are only two productive organizations that eat that Each of which is absolutely essential for it one of which is the one in the Netherlands that makes the extreme ultraviolet machines and the
other one is the one in Taiwan that knows how to actually use the extreme ultraviolet machines to carve paths um for electrons to flow in stone stone made of sand you know um I should be and most of the time I should be aware that materially I'm very quite sated um that when I do spend a lot of money on a dinner out and on our bottle of wine I have a nagging worry that you
know suppose I were to take this money and buy you know um 20 McDonald's gift certificates and go down to a local child care center and hand them out to harass single mothers who are having difficulty making ends meet you know wouldn't the smiles on their faces be better be make me happier than actually drinking this stuff um and you know it's
a question um and yet as you say I work pretty damned hard um and I work pretty damned hard in large part because I like my work um but also because I am somewhat of a status seeking individual and it's something like you know Leah quad ahmed's review of slouching towards Utopia in foreign affairs this morning um the idea that someone as smart and
accomplished and as knowledgeable as him um thinks I actually belong in his company that really does send me over the moon um is that a bad thing um is that me living my best life um would Cain say that I am no longer in the Kingdom of necessity that in fact I have outgrown the kind of community of those hag written by by The Vices of avarice
usury and precaution which we pretend are virtues because they're socially useful and I'm now living my best life wisely and well um or would I be better off simply taking things off than going down and hanging out at my cousin's place in Malibu was schumpeter correct about the bureaucratization of the large business firm um I would say in the very long run no um
in the medium run you know definitely yes you know that there's an organization you you look at the um you look at the Apple tsmc oh it's not yet a Duo and dual Duo Monopoly it's not yet the combination of window but it's kind of getting there I mean it's fear and it's an extremely taught and low bureaucracy organization when you look at the entire value chain in it
you take a look at do you know Google um and it also is looks to be an extremely taught unbureaucratic value chain yeah you look at the old Twitter um and yes the old Twitter apparently was highly bureaucratized because nobody could get approval to ship anything um and whatever you think of Elon Musk will do of Twitter which my view is he's
most likely to Simply light it on fire and burn it down um it is going to be an experiment in which he takes the organization that had become extraordinarily bureaucratic and seriously shakes it up um possibly to the long run possibly to the long run public good you know um about a decade ago you and I did a symposium with Greg Clark I think it was
at UC Davis and we talked about his book farewell to alms since then he's had other books The Sun Also Rises For Whom the Bell Turf rolls what do you think of his approach to economic growth after all these years now that you've thought about it written your own book um um well his approach you know is the huge um kind of approach there's the hard
largest scale yep I'm looking at the 20th century which is a considerably smaller scale thing and so what I'm most interested in is you know that um know all the things that Joel mokir talks about all the things that Greg talks about you know all the other stuff that gets you up to 1870. um and then you wave your hands and say the story continues yeah
well you know and in this book I've taken the position and I'm about 70 sure I'm right you know that really no the story doesn't continue right that say from 1770 to 1870 you have you know the half a percent per year on average of steady technological progress you know but one third of that comes because the last set of glaciers served as bulldozers
um and scraped all the post-permian rock off of a good chunk of Northwest Europe leaving all the stored sunlight in the form of coal um right there on the surface for you to pick up and then use to power steam engines you know and about one-third of that comes from you know the second globalization um allowing you to pull all the
manufacturing of the world into the districts in which manufacturing was the most productive and efficient you know and by 1870 um the other the really cheap coal was pretty much gone and you'd already pulled in all the manufacturing and that leaves you with the underlying rate of invention and Innovation which you know is about one-sixth of a percent per year the
things discovered developed deployed and diffused in the world economy um and you know that one-sixth um that that only supports population growth at the rate of one-third percent per year as best farm sizes grow smaller with higher population you know one third of a percent per year that's just ten percent a generation um that's still an economy that the that
the steampunk economy in which you ran out of the coal and you'd already globalized the manufacturing and you just had invention at kind of the 19th century steam engine Pace the early 19th century steam engine Pace you know that produces a steampunk economy that looks pretty damn malthusian to me but instead we had the one big wave as
Gordon calls it we had the sudden jump up um so that we get our two percent per year productivity and real income growth after 1870. yo and it's that two percent um together with yoshampatarian creative destruction revolutionizing the economy to double human technological competence every generation you know that wild ride from 1870 to today um that's the story I want to tell
and you know that's a story that Greg misses because Greg is simply viewing it from too high uh from too high in altitude now when I read High X constitution of Liberty I see a thinker who favored a social welfare state single-payer health insurance and vigorous application of antitrust law and you paint Hayek is for a laissez-faire so what gives
well there's a Hayek and there's Hayek and there's Hayek right um and there's a difference between things that Von Hayek wrote and things that deal Von Hayek is supposed to have written and in some sense that people wished that he had written um I'm really using Hayek in my book as a hook on which I can hang a set of ideas and your Palani as a hook on which I'm
hanging another set of items you know you know and yes you know Hayek had moods in which he said of course we're not barbarians of course we have single-payer Universal Health Care um care he also had moods in which he said that you know fishermen who only have jobs because they can sell their fish into the World Market who want to
complain about how the market is not rewarding them justly should simply shut up and Soldier yeah um there's the Hayek who very much values you know the Western traditions of you know Liberty um and there's the Hayek who rails against your permissiveness as the chief enemy um of human civilization um no there is isn't it the collectivist impulse and not permissiveness no
depends from from place to place you know there's no Hayek who actually likes you know democracy and discussion and sees freedom of thought um and there's the Hayek who thinks that you need a light kurgan moment in order to destroy socialism and re-establish the constitution of Liberty which is primarily economic Liberty on its own foundation on solid
foundations and his hopes that Augusto Pinochet would be that kind of guy from Chile but he was right about that right Chile is today a democracy they did make the transition that Hayek had predicted no I'm with Maggie Thatcher on this um that definitely other roads in keeping with British constitutional Traditions I believe she wrote
um can achieve all that is good about such goals um you know that he's a complex guy who got crankier and crankier with age and you know he was a genius with respect to seeing the you know when I want to annoy my left-wing friends I want to say that if they want to learn how to truly crowdsource anything they need to look at higher than what they're pushing for is a
central planned system in which someone at the top orders everyone around as if they were robots and does so at no information or a bureaucracy in which a bunch of people have written the rule book that requires everyone else to be a software bot with the rule book only covers one-third of the possible cases you know or a market with private property
um and contract and individual initiative so that all of the decision making is pushed out to the periphery of society where the information and the brains really are and how you automatically solve the problem of incentivization as long as you manage to successfully align market prices with social values if there is no better way for harnessing the 8 billion
brain Anthology intelligence of humanity um to achieving the social goals we all want other than to organize a well-functioning market system um and do you know that um is a basic and serious truth um the problem though is the kind of align prices with social values and the fact that in a real Market um the only rights that matter are property rights
and so unless you are very very good at making the distribution of property rights in accord so that the people who control those property rates are issuing orders to the market that Accord with what you believe Utopia requires um then you get yourself into huge trouble plus you have to take care of all the externalities you know the um the information externalities the
direct externalities the macroeconomic externalities and so forth if today we were to rerun a new Julian Simon versus Paul erlich bet which side would you take I would definitely take Simon's side why Simon we are extremely inventive um we are eight billion of us we can talk we're very very smart collectively and so if the problem is to figure out how
we can use resources in order to support productivity we are highly highly likely to find a way yeah that problems of environmental catastrophe and pollution and so forth are problems of externalities and the proper management of commonces they aren't problems that natural resources that are physical objects are suddenly somehow going to
become scarce you know the only example I seriously know about this is the extinction of the spiced silphium in the Roman Empire all right [Music] um and I still do not understand how it could have possibly happened because as silphium got scarce for one of the many Lata pandistas of Imperial Roman Italy to have established a silphium plantation would have seemed
to be a very obvious thing to do what is your current view of the middle income trap um so you're on an optimistic Road China looks like it's falling into it I mean we've we've long known about you know the resource trap right um you mean from having too much oil yeah that you get a society you get a society where the returns to engaging in
positive some kind of let's win win figure out how to cooperate productively if you're a young man or woman on the make or less than the returns from figuring out how to join some force and fraud exploitation and domination machine which you know in the modern age is usually powered by Foreign demand from someone elsewhere who is richer right
um you know the drug lords in Latin America and the United States the oil Lords and the Middle East and the European Union and so forth um the middle income trap looks to me a lot um like that thing expanding um you know expanding its reach that you know governmental technology of appropriation improves along with other Technologies and so there comes a point where it's
better and easier and more comfortable for yourself to try to join you know the government regimentation machine then to be out there in the kind of entrepreneurial and positive submission um and so my understanding of the middle income prep is that that's where it comes from you know and it's it seems scarily persistent right right
um but Ireland that I used to that I used to argue that Divergence worldwide was largely the result of you know I'm internal and external colonialism um you know plus Lenin right that if you were externally colonized your colonizer really didn't care about your Economic Development and if you were internally colonized by say an elite that regarded the rest of
society as its prey and thought it was separate because they were descended from the conquistadores of Castile um they regarded the rest of the country as not just their prey but the acquisition of knowledge and Social Power by the rest of the country is absolutely dangerous and you combine that with you know Lenin's extraordinary success at organization
and his pupils and their theological belief that the market must be damned to Hell forever um and you get almost all of the Divergence that we've seen since 1870. um and then in the generation after World War II I could say well you know um failure to converge after the end of colonialism that's because they've kind of destroyed State institutions and
building a state is a complicated thing and you have to reward your friends in order to maintain control and establish like Henry VIII stole the monasteries and you know stealing entrepreneurial wealth is a good thing to do if you're trying to maintain a stable State and things will settle down um and then I could say well African
retardation there are special problems of sub-Saharan Africa related to long-run destruction of social trust and so forth them but you know now I've kind of run out of excuses um for why middle income and other traps persist and you know maybe the fact that I've run out of excuses is tied this is combined with the fact that we've actually seen substantial convergence in
the world since 2000 but you know on the other hand um the coming of XI jinping's some new Imperial China yeah and the coming of nahantra Modi and what looks a lot to me like National hinduist India to India um those make me think that you know perhaps the middle income trap will be will continue to be much stronger than I would wish
or then by hoped five years ago when I was in the mood I've run out of excuses um now you served in Treasury under the Clinton Administration let's say you're called into the UK and maybe you have been so the trust regime try is a mix of spending hikes and tax cuts and markets don't like it you're asked for advice there's probably a recession coming is it that you
actually recommend austerity what is it you tell them to do right now oh boy um that's a good question that's a hard question um yeah if it is I confess I was surprised by the fact that the fiscal theory of the price level suddenly showed up outside of White Hall and camped out instead of its tent I understand it's such an impressive what um
and you know it's the problem of um is the fiscal Theory price level really true or have we have the wrong group of people in charge of money in financial markets and they're dead today ratio it's only at 80 right yeah that is the people the you know I mean Milton fried hoped that noise Traders would lose money and go away right simply because they were being
irrational and you know it was Larry Summers who pointed out that rational people don't maximize expected wealth they maximize utility and you know as a result of that Insight of his I actually have had a good career in economics which I might well not have had otherwise being as scatterbrained as I am um but I think that Insight is much deeper
it's not just that there'll be a lot of noise noise trading will be persistent um it will be that the largest and most influential Financial players will be people who have not only taken you know positions that are overly risky in a beta sense they will be overwhelmingly people who have massively failed to diversify and who have been very lucky three times in a row
um and Who as a result think that they're absolute geniuses you know that we're selecting for a market in which the celebrity participants at least um are people with positively bad financial judgment um prone to Bubbles and enthusiasms um and relatively right-wing in their politics because you know the right wing will offer them low taxes the great and good
financially of Britain have been told for 15 years that austerity is an important thing to have um and those so that's why you need to have us rather than the labor party in control as near as I can see the result has been a Britain that's 10 poorer as a result of a failure to make public and private Investments over the past decade and a
half and another 10 percent poorer because of the disaster of brexit that was never supposed to happen it was just supposed to demonstrate that Boris Johnson was on the side of the little people of England um you know um and maybe the fiscal theory of the price level was only there because they believed what Cameron had told them and that maybe you could actually Bowl
through this if I were advising Liz truss I would say go back and tell the European Union it was all some horrible mistake we've come to our senses but they wouldn't take them back at this point right they can't incredibly commit to staying in all the time they can't credibly commit to staying in but still they can you know and you know it is the only obvious
thing to do to massively raise British total Factor productivity is to get back into the European Union quickly um otherwise I do think you need um you need a substantial boost of public investment um it would be very nice to take advantage of the forthcoming recession to actually get it done you know when private spending sits down public
spending should stand up there needs to be a long run plan to definitely Finance it um given that as you know John Maynard Haynes said the animal spirits of investors that the animal spirits of investors depend very much on investors attitude toward and confidence in the soundness of the government and a hatred of investors for Leon Blum or the labor
party is a powerful factor that must be taken into account um you know um I would indeed say that a conservative government that promises you know a feud that makes incredibly promised substantial future wealth taxes to keep the deficit under control in the future is the right Road forward to Britain um I do not see how the conservative
party as it's currently constituted can make such long-run promises and I certainly do not think that you know those whose those whose credibility is needed um for Britain to avoid a very nasty inflationary spiral over the next 10 or 15 years um would trust the labor party at all you know what's your favorite novel we're likely to find um we're likely to find that um
you know well you know what happened to Leon Bluff um or it happened to Francois meteorite you know attempt to move left and find yourself having to attack right very very quickly what's your favorite novel I would still say I would still say it's Thomas mom's the Magic Mountain but I'm not sure whether that is actually my favorite novel or whether
that is a novel that reminds me of one of my favorite times I'm or is there a real difference between them yes what is your favorite movie um yeah I'm a sad but I still have to say that I admire Casablanca extraordinarily much um you know I wish my favorite movie were the Seven Samurai but when I was sitting down even when I'm not exhausted and actually want
to watch a favorite movie I do find myself turning to Casablanca so by revealed records do you think there's any novel or movie that is really quite good for understanding economics or is the scene versus unseen distinction too much of a distortion that in novels and movies there's too much intent and not enough invisible hand oh I would actually say red plenty
um I would say red plenty by Francis buffard is a wonderful novel about economics what's your favorite video or computer game right now oh I don't have a computer computer game um civilization gone I don't dare yes yes yes I mean the as I say the fact that in late 1993 I had to decide between being a civilization addict and a deputy assistant Secretary of the
Treasury and do you know at least if I'd manage to figure out how to win consistently at God leveling civilization I might I might feel I had accomplished more than I did at the treasury I might not yeah um but I microwaved the disc and have not gotten it played a video game since it's not something I trust myself with does UC Berkeley have the right
amount of intellectual diversity does UC Berkeley um if it were the only Berkeley I would say yes um I would say that a American educational system that has even 20 places um in which I'm as far right on the faculty as I am at UC Berkeley would not be a terribly healthy situation and I think we're in that situation how much has religion influenced your
political and economic views if at all I would say formally and consciously not um the problem is that I know too much about the genealogy of a great many ideas I hold to be very dear um absolutely enormously and what from Christianity or elsewhere do you think you've drawn upon the most I might say you should ask Rabbi Hillel to teach you the entire Torah while
standing on one foot um you know that that what is hateful to others do not do to them um that do you know um or maybe Bill and Ted you know be excellent to each other and party on dudes um but filtered through a religion well except I would say religion is filtered through Kant and emerges as kantianism sure but he would say that it comes from
elsewhere he had his own pietistic background right that's probably not a coincidence yes the history of this book if I understand it correctly there's a director's cut of this book hidden away somewhere is that correct I have not yet managed to assemble the director's cut there's a cutting room floor there it has 600 Pages including index and so forth there
are another 400 pages that exist in draft that exit that exist in disorganized form and then there are the notes and quotations and outlines for another 500 pages um will be able to manage um the Lord willing and the creek don't rise yes you know the question is which part should I which part should I add to and come out next um should it be the one that's really
about Industrial Research labs and modes of production since 1870. um should it be the history of the malthusian world um you know should it be the um parallel to the Unbound Prometheus or should it be very much the schumpeterian industrial creative destruction book people can vote send me emails with your votes and last question what else might you be
planning in addition to possible sequels oh um to write I would say that some possible sequels is pretty much all that I'm planning right now but sub stack you're going to stay on sub stack go back to blogging do more on Twitter there's other choices right sub stacking is blogging except that sub stacking is blogging where you have explicit
permission um to send things to people's email inboxes and also to have a rather large tip jar any sub stack or blogging better sub stack the post seems longer to me blogging it seems shorter and more about scrolling which do you prefer I thought blogging was more fun I like being a squirrel um I think if you know if you believe as recline that
we need to be more gutenbergish because the social media audio visual world is really one in which you have to declare who are your enemies in order to get listened to and that that really is not a healthy foundation for a public sphere um I think I have a moral obligation to help Hamish and Company push substack forward in the future and that it would
be nice if they succeed in their long run projects for world domination Brad Delong thank you very much and again everyone the new book is slouching towards Utopia an economic history of the 20th century yes and thank you very much Tyler for inviting me and please read and think about and you know criticize the book and criticize the book please harshly
and mercilessly because that's about one of the few ways I'm going to learn things and what's left of my life is to read incisive and merciless critiques of my book um and I definitely do want not to stop learning things I think you're you're too hard on Hayek that's my critique for today but Brad thank you very much and look forward to seeing you next