[Music] conversations with Tyler is produced by the mercada center at George Mason University Bridging the Gap between academic ideas and real world problems learn more at marcus.org and for more conversations including videos transcripts and upcoming dates visit conversations withth tyler.com hi everyone this is Tyler now today's
episode it's going to be just a little different than usual a few months ago I asked Patrick Collison the CEO of stripe to be on the show I wanted Patrick on the show for a few reasons one is just that stripe and its Atlas project it's one of the most exciting growth companies out there right now I also told a reporter recently that I
considered Patrick to be one of the five smartest people I've ever known and he's a lot of fun as you'll hear Patrick actually is from Ireland now Patrick agreed but only under the condition that he be the one to interview me so back in January I traveled to stripe headquarters in San Francisco to be interviewed by Patrick I'm happy to say
Patrick stayed true to the spirit of a conversation with Tyler so we covered a wide range of topics including macroeconomics Silicon Valley how some people can read so fast the Trump Administration and why the blog marginal Revolution is so ugly we have more great conversations coming with guests like Raj cheddy Jill leor and Gary Kasparov
so please make sure to subscribe to the podcast if you haven't done so already and now here's the conversation of Patrick Collison with me thank you all very much for coming um I would typically uh start out with a uh lengthy introduction of you know the the speakers um various accomplishments and you know things that make them notable
and noteworthy but uh uh Tyler told me that sort of Durer in these conversations is to keep them to 90 minutes uh and so I I I don't think I can really go far down that list uh in this case um suffice it to say that uh you you published 15 books uh is that the right count I don't know I have no idea okay well um's I think it's more
well he's published at least the number of books uh in the stack here um along with um and actually I think second from the top is his uh his new book which is about to come out which I trust you've uh you've all pre-ordered on Amazon um I won't be offended if you all just or I'm sure Tyler won't be offended if you all take out your phone and uh go ahead and
order it right now the complacent class I highly recommend it um published more than uh 60 papers uh obviously the author uh of the great stagnation uh which I think was sort of the the work that you know really brought you sort of top of mind at least here in Silicon Valley um Tyler has visited uh every um every US State uh with the exception of
Alaska I just learned um and then you know I think really most impressively and noteworthy um of all um Bloomberg business week uh named him uh America's uh hottest Economist uh back uh and I I think that was was it two three years ago it was before I worked for them and so be before he worked for them and before the era of fake news uh so
you can uh you can all trust it um excited with this conversation my mother put it on her Facebook page so um the first thing I I sort of wanted to ask you about is uh you know you're you're an economist um at least uh you know originally and Paul RoR uh who's you know now of course the um the chief Economist of the World Bank uh he opened
his most recent paper uh with the assertion that uh for um uh for the last 30 years macroeconomics has been going backwards uh and I looked into this and I realized that Tyler uh got his PhD uh exactly 30 years ago um and so I don't necessarily want to imply anything causal um but uh but do you agree with Paul I don't agree with Paul I think we
understand credit crunches much better than we used to we understand the structure of asset returns and when and why risk matters compared to earlier times models where you have multiple equilibria where more than one thing can happen we understand better I don't think we've solved any ability to predicts business Cycles or or Market
crashes or or great recessions in that sense there's not progress but I think the best theories often imply they're intrinsically difficult to predict so I think we ask much better questions and on that particular issue of science I'm much more optimistic than is Paul RoR what do you think of the paper itself and the the claims in it I thought the
paper was quite a poic so writing a pmic can be useful it attracts attention it jolts people out of their dogmatic slumber to use the Ala philosophical term uh but that said a lot of the debate ended up being about either Paul RoR or a particular group of macroeconomists rather than about what macroeconomics should do so I think a
central question for macroeconomics is economic growth I think our understanding of the determinance of growth just like our understanding of how well science does is extremely poor much of that is ultimately cultural and bridging economic and cultural ideas we very bad at and I think macro has neglected that centrally important topic
that would be my main critique of macro but it would be phrased more gently than Paul's uh is is that well I I would take it that's you know partially because if you're your your differences in temperament and not just the differences in belief structure uh yes but Paul when I talk with him he has a very gentle temperament so I don't actually have a
good theory of Paul I get on with him very well I enjoy exchanging ideas with him but sometimes he's a a fire brand when he writes so I want I want to um so dig in on this question where uh you know you just mentioned how we have sort of much better models now right um uh but you you sort of touched on this notion of our our predictive ability um
and it seems to me that you know uh there's the old joke about sort of economists where economics is the field where you you can win the Nobel Prize for for proving or for showing x uh and then later you can go you can go on to win it for showing that X is is in fact false right um and and I guess you know the Nobel Prize in in um in 74 when
Myrle and and heak uh shared it was kind of evidence for this um but I guess the thing I want to ask you is uh how much progress you think is actually possible here right and that you know we're still having the debate as to whether like what what what exactly is the nature of the relationship between uh interest rates
and inflation right and sort of does one drive the other and in which direction what's what's the nature of the co-movement and so on um or like is washing was the Washington consensus correct is the Washington consensus correct you know what what's the right you know uh how much Freedom around the movement of capital should there be in
developing nations and so on like what what's the right policy to adopt if you're a developing country and it seems to me that uh you know it well I I won't answer what it seems to me I'll ask you the question to what degre do you do you have confidence that economics will ever get to durable answers to these questions um
and you know what do you imagine uh the the version of the Paul rer paper in 30 years to look like Frank Knight once said something wise maybe he overstated but he said the main function of Economics was to offset the stupid theorizing of other people so it's very useful as a form of discipline and economics as a way of thinking it's very useful for inoc
inoculating you against other kinds of mistakes even though in some ways it may be a mistake itself but I would say in macro we're very good at retrodiction so if you look at the Great Recession and you try to trace when and where were the Bad Mortgages made and which banks held them and when did they go bad we can trace that with a level of detail and
care that say we couldn't have done for the 1979 through 1982 recession and that's a scientific advance but in terms of control we believed in the great moderation we were wrong now we're probably wrong again you have people like Jeremy Stein who are convinced the FED shouldn't be holding rates down people like Paul Krugman who are more or
less convinced they should have been and given that we cannot rerun alternate histories I don't think statistics simply getting better will ever settle a lot of these key questions so economics will always be hovering between Art and Science will it always be retrodictive or does it become predictive at some point I don't think it will be
predictive anytime soon not in our lifetimes not on a lot of important issues there's plenty of micro where it's predictive so people who work at Uber they have a data set and they can now answer questions with that that works pretty pretty well okay so so on what basis should we then be making macroeconomic decisions well we have to
make macroeconomic decisions to do nothing is also a macroeconomic decision so I think the notion of having a Federal Reserve System that is predictable and tries to keep the nominal flow of purchasing power growing at some steady rate we know that something like that is close to the best we can do in a fairly impressionistic way and that's really
important people didn't know that in 1929 it's a huge victory for the Contemporary world and so do do you think that sort of from a forward-looking standpoint we should we we we should try to come up with some very minimal set of um of of stable rules uh along the lines of what you just mentioned and after that the sort of again forward-looking predictive
effort is is sort of we we've done most as much we as we are likely to be able to do and everything after that is sort of filling in the details on what happened sort of expost I agree with that but I would add another caveat if you have a good rule you have to wonder if all systems including the US Constitution just all
systems in the world eventually can be gained so it could be your macro rule rule would be good for a long time but it could be gained if only through people figuring out how to use politics to distort or lie about the indicators so I'm not sure there's an eternal solution but I think there are policy semi solutions that at least are good
for 20 or 30 years and so um you know you're sort of touching on this notion that maybe economics has a lot of sort of you know post ha talk illustrative power you know uncertain how much um how much predictive power it has so you've written a lot about how uh sort of the study of economics has influenced uh your appreciation for for the Arts and
for literature and for food and all the rest um you haven't written as much uh about sort of the influence in the reverse Direction uh and so how has how is your appreciation for and and study of the Arts influence your study of economics and is this a version of that this is a version of that here would be a simple example if you think about
Renaissance Florence at its peak its population arguably was between 60 and 880,000 people and there were surrounding areas you could debate the number but they had some really quite remarkable achievements that have stood a test of time and lasted and today have very high market value now in very naive theories of Economics that shouldn't be
possible people in Renaissance Florence they didn't produce a refri kind of refrigerator that we're still using or a tech company that we still uh consult but there's something different about say the visual arts where that was possible and it was done with small numbers so there's something about the inputs to some kinds of production we
don't understand and I would suggest if we're trying to figure out like what makes Silicon Valley work actually by studying how they did what they did in the Florentine Renaissance is highly important you learn what are the missing inputs that make for other kinds of Miracles Ireland and writing would be another example
um what uh what fraction of uh of tenured uh Economist uh in the US do you think would agree with your take on uh on the predictive power of macroeconomics there's really a sharp distinction here between people who do macro and people who don't so those who don't are typically pretty cynical but I think they're actually too cynical macro
is the favored Whipping Boy of a lot of economists and the public is always upset at the macro economy so you'll always find an audience for this but I think macro is slightly underrated but then in macro you have too many people who are simply too arrogant like they think they're working on God's chosen method in different ways and that's wrong also
it's much more pluralistic than that you're just grabbing parts of the the elephant in a a fairly blind way I think what um what field outside of economics has the most to say about macroeconomics well if you're just counting statistics or a condom metrics but I think psychology some some form of social psychology you mean along the
lines why there's contagion of beliefs why beliefs move together why people move to fear and panic yeah the of stuff that's right yeah um what are uh what are the say top two most sort of underinvested areas of Economics today culture and economics for me is by far the most underinvested uh I still think randomized control trials they're
expensive but you do actually learn things from them which are probably true that's remarkable they contain actual knowledge now it's true the questions you can ask are narrower but but it seems odd to turn down the reward of actual knowledge right um uh you you recently linked to the new book um uh who whose title is escaping me on uh you'll probably
remember it on the um uh series of interviews on random control trials in uh in economics and there's all these questions about you know to what degree they have external valid validity and so on do you think the critics are overstating the case one of the main criticisms is if you do randomized control trials you're
studying something like well does paying mothers to bring their children in for vaccines work in getting the mothers to bring the children in you're not asking big picture questions of political economy but big picture questions of political economy they can be very hard to control there's no one who can steer say what will happen with India or Kenya
but you can change some policy regarding do you reward mothers for bringing their children in for vaccinations so you know the subtitle of our blog small steps toward a much better world there's something to that we can make a lot of these small steps and it's also related to the correct attitude about management a lot of good management is doing very
small things and not always some Grand philosophy so I think this is actually still underrated so um uh you you said that culture is sort of one of the most underinvested areas um and uh you well I guess you've written several books about culture but among them uh creative destruction uh and this is sort of a at least as I read it um uh on the face of
it a defense uh of the effects of globalization on culture right uh and that you know you while globalization might cause a decrease in across country cultural diversity that we should we shouldn't look at it at some you know God's eye view objective uh uh level we should instead be focused on the you know the the individual the subjective
and the and the operative uh level of of diversity and you know here in San Francisco we see the fruits of all that globalization right um but you also say in the book I mean you do acknowledge the point that there might be a decrease in total Global uh cultural diversity um as a consequence of globalization uh and so if you think culture is so important
and so underinvested in and so understudied is it not sort of way too hasty to advocate for a force that's producing a a net reduction in the quantity of it in the world well there are multiple readings of a number of my books and I would say when you're looking at the globalization of culture we've engaged in a rather significant
cashing in exercise so say you have a very small community Inu in Canada or artists in Bali they're very small in number and until they're in some way reached by larger richer cultures they can trade with in many instances they're not that creative they have some tradition but it's not fully mobilized then there's this intense cultural
interchange and it's very fruitful there's a flowering there's more commercial sale top creators come to be more genres are defined there's more diversity within the Banes world or within Inuit sculpture say but eventually that Peters out as the smaller communities are absorbed by larger ones and over the last century we've done an unprecedented amount of
this cashing in by having smaller cultures obliterated now one way to look at it is well they're there and if you never touch them that's a shame uh is there an optimal rate of cashing in I'm not sure that's a variable you can control but I think in along some critical Dimensions our next Century will be less creative than the last
because we've cashed in on such a large number of small groups right and I worry about this with Ireland too place you're familiar with so the Irish literary tradition flowers arguably in the first half of the 20th century right and I worry now that people in Ireland Hear Too Much American English too much English English and that style of
writing talking joking lims is becoming somewhat less distinct still many wonderful writers from Ireland but again it's like an optimal stock depletion problem and maybe we've pressed on the button a little too hard the transaction costs should be higher should be but again it's a hard variable to control and with the tech World in some ways the
tech world might be growing too quickly so people very quickly shift to Facebook and that allows them to do much more socializing and that in some ways actually limits the diversity of the world they're happier individually but that's another instance of cashing in uh that actually may not be socially optimal and so is it that you believe
that we can't do anything about this and so we should appreciate the consequences as best we can and and make the best of it or you think that we should not do anything about this as an individual there are definitely things you can do so you can be quirkier you can be eccentric you can partake in some networks rather than others and
subsidize things that otherwise might have their stocks depleted too quickly uh at the macro level it's hard to steal here so the Nasim Talib case that free trade gives you too much monoculture I take it seriously at an intellectual level but the amount by which you would need to cut off trade to really create separately existing
independent parts of the world that would give us greater protection against existential risk it seems you would literally need need to go back to 1500 to do that and that's not feasible it wouldn't be desirable but I think he's getting at a tradeoff that a lot of the rest of us are sufficiently willing to admit that in some ways we're investing in a
literally a monoculture of diversity and that's a little dangerous like every city has restaurants I saw a Guam restaurant on Mission when I was walking today I ateed a Cambodian restaurant two days before I was at Mandalay uh a Burmese restaurant and many cities have these and we call it diversity but we have to be careful also not to just be
fooling ourselves and so is connectivity the worst thing that ever happened to Global culture you need connectivity and today's world has much longer life expectancy people are happy or they're better off we produce more things but there's a danger in connectivity and the extreme acceleration of connectivity through
Tech I would say is a huge non-controlled experiment uh that we need to be a little cautious about you know you you wrote with uh with Derek parfett um um back in the early 90s about how we should uh you know our intuitions about the discount rate we should have for the future um are wrong it the discount rate should be much
lower and we should care way more about people in the distant future and if you believe that uh shouldn't that you know on on this particular cultural point Cause you even more concern uh because you know 500 a, 5,000 years time uh were were not not just slightly but enormously limited you decreasing the amount of culture that they can expect but keep in
mind if you don't mind the stocks of these smaller diverse cultures their outputs deteriorate and Decay so there's so much from the past we'll never have a clue about because it's gone and we never quote unquote exploited it that's most of the culture completely a closed book to us so if we're worried about the future you actually want to do
exploitation plus preservation now maybe we haven't done enough preservation but it doesn't steer you away from the exploitation caring a lot about the very distant future is there anything uh you know you you point out that talb says that you know the we you know the things we would have to do in order to sort of counteract this
effect would be so totalitarian that they're not really even worth kind of taking seriously on on the micro level or on the local level is there anything we can do uh to to make this we perhaps we can't solve us but we can uh reduce the effect somewhat well spend less time on Facebook use Google in funny ways right uh be careful should we just use
Bing well Bing is too much like Google simply being a weirdo with Google will suffice I think uh be careful how you use Netflix streaming if what's streaming on Netflix is your filter you are part of the problem I but these are all these are all actions for the individuals I mean us as a society are there any policies we can enact or or
that we ought to follow well our main policies toward the Arts more and more have to do with copyright patent and intellectual property uh so I think for the most part those are too strict we could improve them and we'd get more cre creativity and more borrowing but I don't think at the margin they will those changes good
though they may be will have a major impact on this issue just the core how do ordinary people spend most of their time that's the Big Driver here and other than having drastic changes in policy I think most of what we have to do are these small steps at the individual level toward the much better World um and more randomization think
more carefully about physical space so when I was growing up I would you know drive my car into a town maybe Philadelphia with my friend Dan Klein first thing we would do is get to a telephone booth remember those and like evil people we'd rip out the pages for used bookstores and then drive around and try to find them and we would find
them by basically yelling out the window and asking people where some Street might be and that seems horribly inefficient but I think keeping a memory of why those odd bizarre practices have some efficient elements when thought of as search algorithms preserving that knowledge is very important and I think people who write or think or communicate
with others can do that would would this all suggest that we should be even sadder than we are in the uh decline of uh various languages around the world uh yes we should try to preserve them when we can so you know nle is actually my favorite language when I hear it and it still has well over a million speakers it's not an immediate
danger but I would predict in less than 200 years it will be gone GAC has made somewhat of a comeback but it's still up in the air perhaps would you have written on on this point would would you write the same book today not the same book uh but when I reread that book I think I capture the multiple layers of how globalization is
dynamic and creative and Welfare enhancing but dangerous and stock depleting and giving us this funny monoculture of extreme diversity add in ourselves on the back but all being a bit diverse in the same way I think that's in the book and I'm I'm happy about that um we love to play at diversity theater uh that's one thing striking to me about
the current world so you need different kinds of representation but the kind of moves you make to get there often create a monoculture of its own and you see this when you compare the coasts to other parts of America so I once wrote a blog post saying well there's a lot more diversity amongst supporters of trump than supporters of Hillary Clinton this
got me in a lot of trouble PE people wrote To Me outraged how can that be but there's many kinds of diversity for instance a simple principle is a correct point of view will be less diverse than people who are wrong because there are many more ways to be wrong and if you're completely right about something that's a way in which you're not very diverse
even if you sort of Fe you're religiously ethnically otherwise more diverse so whether the kinds of diversity that matter are the kinds that are elevated in current American political discourse that's so taken for granted especially on the coasts and I think actually most of America doesn't necessarily agree with that can you say
a bit more about uh about the concept of diversity uh with regard to culture or ideas or whatever and sort of in particular um are do you think diversity in in some particular directions or some particular kinds of diversity matter more than others or are you just for more heterogeneity in the broadest sense well
let's try thinking about highly creative groups because we're in the Bay Area there's some way in which they need to share something that's quite common common language language in the broad sense of the term and a common framework in The Sciences the great coauthorships they're very often people who are alike and not completely different it's a
little counterintuitive but I I think that's true but at the same time you want a kind of optimal insulation from too many other Frameworks you don't want to be obsessed with all problems you don't want all the knowledge of the ancient mes Mesopotamians in your head whatever people know a thousand years from now will only distract you a lot of
what the Bay Area does is make you non- diverse by focusing your attention on this semi diverse monoculture and the monoculture part of it is what's effective it's like Renaissance Florence where they didn't think too hard about you know China or what was going on in Sweden and they had a particular set of problems based on satisfying a certain
set of patrons integrating the Christian religion but with clever twists and being somewhat Strauss and having a positive sense of Life realizing they were rediscovering Antiquity using a shade of blue that had this wonderful beautiful glow and at the same time having a kind of cynical commercial attitude about their own art which they
knew was done for money and profit and that blend was just perfect and you don't you didn't want it destroyed by these outside elements so are successful clusters uh places with the right kind of diverse monoculture yes and the right kinds of implicit barriers to Too Much outside influence but they also tend to be stimulated by some major outside
influences such as in the Renaissance rediscovering Technologies from China and the Arabic World rediscovering Antiquity a huge prod just like here part of the prod is Mo's law my goodness what can we do now and we're going to exhaust all those possibilities as quickly as we can so you need the prod you need the insulation you need the
common language you need the barriers you need to be weird and have a a theory of your own weirdness that's different from what your own weirdness actually is because you're too looking at it from the inside and this area has that it's great it's inspiring so um I uh I want to actually get back to the topic of weirdness uh a little bit later on but
uh sort of quickly before we we shift Focus from Silicon Valley um many in silic and Valley are talking about the idea of universal basic income and sort of what we do when the robots take all of our jobs and I think you were initially a supporter of it and then you changed your mind uh and so can you describe why you change your mind
and also whether you think some kind of negative tax or of expanded version of the Earned Income Tax Credit could be said is that an adequate adequate replacement for us or do do we need something further still this is my worry with the universal basic income it does make logical sense especially as we get wealthier but it for me was a kind of
formative experience about 209 in response to the financial crisis one of the better policies would have been mortgage cram downs and writeoffs from any Afflicted people and many economists agreed with this Larry Summers pushed it but politically it proved impossible people didn't hate all of the bouts as much as they claim but they
hated the idea of the person next door getting a break that they didn't get when they had in their own mind worked harder and paid all their bills and that proved impossible so the notion of the kind of asymmetric treatments of neighbors what kind of politics it would engender post brexit post TR it won't be asymmetric everyone will get
it it depends how you do it right but in essence the people who work more are being taxed more to pay for the whole system so on net they're getting less from having the system isn't that to some degree the case today do you think it's just becomes more flagrant in a Ubi World it works today precisely because it's not transparent and how many people
even economists can explain to you how the Earned Income Tax Credit Works whether it matters you know the number of children whether or not you're married uh who Bears the final incidents even very few PhD economists could explain that incorrectly much less correctly so so many of the sustainable structures of the Contemporary world
have to become non-transparent so do we just need a sufficient the obis skated version of a Ubi and then we're fine we call it disability insurance and as it works now it's not working but I think will actually evolve disability in Insurance in some way to become an off fiscated form of a partial Universal basic income and it won't be
enough it won't work that well we'll combine that with earned income tax credit and some other policies and it still won't be that wonderful but that's what we'll do do you there's kind of various debates as to whether the there should be sort of uh some absolute floor or whether we should preserve the property that sort of some level of work
is required you know in order for there to be any income sort of more along the the lines of the uh the earned income credit uh do you think that matters I think the symbolic values a society rewards M matters a great deal and more than I thought and if you have a universal basic income it's like you're putting up a sign for immigrants this is the kind
of country we are and for me selection of immigrants is very important we don't think about it enough uh by having a lot of inequality you're putting up another kind of sign for immigrants like life here is tough and if you live here well tough is tough but on the other hand you're building a stronger cluster of creativity and a stronger group and it
might be better to have the signs without Ubi less transparency about how you help people and a variety of Ethics that on the face are not entirely defensible but when you view them as an advertising campaign for your immigrant rich country with more to come uh you're getting more productive people who will also help the rest of the world more
keep in mind us generates public goods for the whole world just like stripe and Atlas do so you're never optimizing for what's best for this country you want to optimize for what makes this country the most creative and that's different than just making us happy doomed to be the somewhat screwed up unjust not quite
happy maybe more mentally ill country and we're the kind of atas in some other sense partly carrying some of the world on our shoulders um I'm Dad we're recording this so we can uh uh later put forward that that that conception of America but um you you um you mentioned immigrants um Michael Clemens and and L pritet all the open border stuff and the trillion
dollar uh bills lying on the sidewalk and and so on what do you make of it I think they're wrong and Michael himself has as I read him moved away from that view so my basic view I'm Pro immigration I think we should should and can take in more people both High skilled and low-skilled but there is some point where your politics is no
longer sustainable I don't feel in this country even with what's happened that we're at that point but it places a real check on open borders and a United States with open borders I think politically would be unworkable in less than 10 years even though it makes economic sense and it gets back to this optimal degree of insulation there's a political culture
here which requires a certain common language common set of delusion common set of set of myths common set of things we understand this country does it pretty well not perfectly and I don't think open borders is compatible with that I think it would kill the goose laying the golden eggs so I favor much more immigration but not
unrestricted immigration I also think infrastructure would be a problem if you could put forward any immigration policy tomorrow um PA your a what would your policy be for for the for the US in particular it depends how constrained I am but just taking what we have and increasing all of the numbers I think my own ability to judge
you know what kind of Visa should there be more of do we manage the quote is should the preference be for family members I'm a little more skeptical than most academics about the Australian and Canadian systems for this country I think they work great for Australia than and Canada but for the United States they would bring in too many high- paid
Professionals in service sectors that don't bring that many productivity gains so just having more you know Advanced degree professionals isn't what we want we want people who produce public goods Goods in the United States and that's not really what dentists are maybe Australia you know wants more dentists and we want more Engineers
creators dreamers artists uh eccentrics and our immigration policy should reflect that and in some ways maybe be more random or appear more nonsensical so again all the people say it succeeds at that sorry we do um this sort of touches on at least um obliquely on on the um in the political status quo uh and uh Brian Eno who I
think you're a fan of absolutely another green world it's one of my favorite albums so he uh he said in an interview today that he is pleased uh about brexit uh and Trump um because they may be the kick up the ARs that we need uh this is a proper crash uh and a chance to really rethink but that it's good news do you agree not as stated but there is a
reworded version I would agree with and let me say I'm already very clearly on record as not supporting either brexit or Trump for reasons which are more or less the standard reasons but if you think all systems can be gained and are in some ways not sustainable when you crack into the wall there is an optimal time for that and
you want to do it when other parts of your society and institutions are still healthy enough so you can make a case this shock has come at a time when we still can respond in a positive way I don't know how to prove or disprove that proposition I think it's quite possibly true in that sense it's lowered my optimism but my optimism about the mere
election given that the election is possible I'm not as worried as a lot of people I think there's a chance it turns out to be a course correction that we needed which is distinct from supporting the event itself maybe that's what Brian meant by the way I've sent him an email asking to interview him and for three months I haven't heard back but we'll
see um if it uh if it turns out to have been a good thing in in let's say as aess from 20 years from now right why will that have been the case it could be there's something about the diverse monoculture of the American coasts that wasn't as good as we thought wasn't as stable as we thought and was more resented than we thought and
certainly the latter seems to be true so if the strategy was to sort of double down on the Progressive Vision bring in more immigrants have a permanent Democratic majority and remake America in the Progressive ideal and be a larger Canada possibly that was the path we were on quite possibly that was a bad idea and again I don't prefer the way maybe
we're getting off that path but if we were going to get off it anyway this might be the least painful way at least possibly I I worry a great deal about the associated risks but again I don't rule that scenario out what do you think the prob probability is that you will vote for Trump in 2020 zero even if one of these versions comes
to pass I don't think I would know by then uh I find it anesthetic and just my temperament I'm not attracted to people who are either bullies or who pretend they're bullies and just that mood affiliation I don't want so nothing's probability zero but uh I won't make the assessment in an instrumentally rational way so it's pretty close to
zero um obviously uh Trump is um is in the the throws of making all sorts of um at least by traditional standards unconventional appointments uh and so if he created the the new role of uh uh SAR of great stagnation ending uh and asked you to to take the job uh what would your policies be uh my policy would be tell him to give that job to Peter
teal and he's done it I think a lot of the Trump appointments actually are excellent or might turn out to be excellent at the FCC possibly at the FDA uh education has possible upside though I don't think it will really change much I think there's a good chance Rex Tillerson turns out to be quite good now what it's like to be a
good appointee without proper support from the executive branch that we're going to run that experiment it could all go badly but I also think you know Bannon is very smart and it's quite possible the strategy is we're going to appoint a bunch of people who are really just different and talented but not political and give them all free reign and we know
80% of them will fail but a bunch might do good things and we saw the Obama model you know be a unifier hope and change appoint academic smart like people who love Obama and Obama loves them and they're loyal to him and there's a semi- well functioning White House that didn't actually change many things whether you agree with all the
programs or not so that's their immediate experience and they're going to try to do everything different as a social scientist I find this fascinating but the notion that two or three of the agencies could come out of this much better and a few much worse I worry the most about the fed and the EPA uh but I think a lot of them are
very smart talented able people and we'll see what they're able to do the case is often made that the EPA doesn't matter a great deal because it's economic that determines what happens on the climate front and you know coal plans are becoming uneconomic and you know China is cancelling plans to build them and solar is crashing in price and
so forth uh given all of that why do you think the EPA really matters I don't think we know how much the EPA matters but I don't see any reason to deliberately do bad things with it um and it seems quite likely that's what will happen but I think you're completely correct that the major factor inside climate change it could just be
luck do we invent something cheap enough that the whole world wants to do it and the political battles may not go down in history is that big of a thing I know they feel important and there's good guys there's bad guys there's symbolic whatever on the line you know I I've said I think a carbon tax would be a good idea you've got to tax something
why not do that but that all said it's probably not the main thing and a carbon tax is in many ways an overrated idea getting science and the tech world to work better is probably higher impact because us you know as the rest of the world grows we become a less and less important politic ler and we need something cheap enough that everyone is
going to do it you know Africa Vietnam so it really has got to be pretty good and that's up you know to all of you you know there's a lot of discussion about um all sorts of tail risks uh uh especially geopolitical risks um that uh we could face for the next four years um and uh your uh your PhD adviser was Thomas shelling correct uh how would
shelling have looked at today and uh are there any ways in which your views um about the sort of the probability of extreme tail risks uh and how we should uh approach and handle them differs to what you expect he would have thought I had a long conversation with shelling about a year ago he passed away just this year so I asked him some of these
questions one of his big influences on me was simply to get me to see nuclear weapons will always be the most important issue in the world no matter what else you might think and it's very interesting you go back read people right after World War II why is that given all the putative sort of cyber warfare and you know pathogenic weapons
and and all these other kind of catastrophic macro events that we think could occur there's a chance pathogenic weapons could become more important at some future point but for now it's still nuclear weapons a lot of people have them they've been used right twice by us uh they might become much easier to acquire they can be launched
by mistake the institutions surrounding them are not always welld designed North Korea is a particularly hard to understand case that might be highly dangerous so the notion that nuclear weapons are always the most important issue this also gets back to your Trump question uh you want especially from this country a lot of predictability and I worry right now
that the risk premium especially in Asia which does not have Western Europe's builtup anti-war tradition that we're underestimating that risk premium I don't see it in asset prices I think it's simply poorly understood I don't have a prediction but it's my single biggest worry that the South China Sea and Northeast Asia are less stable than
we think is there any way in which your outlook differs to shellings please repeat that I didn't catch is there any way in which your outlook uh differs to shellings I mean shelling himself his own thoughts went through several phases but he thought what was remarkable is how much the world has sustained a taboo against
nuclear weapons use and he thought this was a high a very strong and highly enduring Norm that is still with us and he gave a whole talk on this it's still online and he gave talks on this actually in Iran I think about seven or eight years ago they're very interesting to hear shelling addressing an audience of Iranians and I'm not convinced the taboo
is that strong it's certainly the case no one has used them but whether it's mere self-interest or whether there's actually a norm and taboo with independent Force I'm not convinced by his arguments and that's made me a little more pessimistic to close off on this topic um you've said that uh the the the sort of broader phenomenon of of
uh Donald Trump and his election is uh is making us all stupider uh can you EXP on that well I think it's made the left more stupider than the right uh whenever the party elected is objectionable uh the people in opposition become stupider as pretty much a rule and they become more emotional and they attack the worst versions of the ideas they're against
when I think they should pick and choose more and uh you know should move more toward the center and try to bring more American and the important thing now is to give people who are Trump supporters an open path into not being Trump supporters and being something else and a lot of the rhetoric isn't doing that like I thought
the marches went pretty well from that point of view they were very broad very American that to me was very encouraging but a lot of the intellectual left I feel has become polarized and is doing the opposite so I want to ask you about um the set of people that you that you work with and the and they're all dear friends so I'm totally
biased um and uh and the group that kind of you've you've helped assemble at at George Mason um so I'm I'm talking to people like you know Arnold cing and uh Robin Hensen and Brian Kaplan and Alex Tabo and and and so on how did that happen because these people are such a you know there's such interesting commonalities between them and they
represent sort of such such a large fraction of uh of of interesting ideas uh and and somehow so many of them are are in the same place they're all inquiring they all have broader interests they all feel economists should be able to speak to real people they all in varying ways have some kind of libertarian bent albeit with a lot of
diversity some of it is uh George Mason has long been a school willing to take a lot of chances and we've had the mercada center public choice Center the experimental economics group and we've invested in these Florentine like clusters of people who are different and been willing to make huge bets on them and see that through consistently and
have determination and stick with our strategy was it obviously a good decision to hire them at the point where you did no of course not what were you looking for what what made it clear to you well I voted on each of these hires uh I voted for them uh for a lot of them I was on the hiring committee Robin Hansen's a good example when we hired
Robin he was much older than a typical assistant professor would be and of course we don't practice age discrimination and neither does anyone else but Robin was going to have a tough time being hired and I gave Robin some of my papers to read he came in he was a little actually obnoxious to me though he's one of the nicest people you'd ever
want to meet and he sent me back comments on my papers that they were all wrong and there was no preliminary politeness I thought this was interesting but and I thought this was great so I thought you know we need to hire Robin Robin is different and Robin wrote papers I thought were crazy but he clearly also was a genius and I pushed
very hard to hire Robin and uh he made a good impression on a lot of other people and he's been with us ever since were the papers in fact all wrong Robin's criticisms were all good points but they weren't entirely wrong so if if you had to somehow force yourself to kind of uh to reduce these these people to sort of a a single
strand of commonality between them um and you you mentioned kind of some of the shared characteristics but what's the fundamental thing that that links them I think about this quite a bit it's some mix of how one processes information and the willingness to be analytical about many things and to take your beliefs in one area and at least
try them out on all other areas what I find depressing about a lot of Academia is you have people who think very scientifically about their research but then their life is just something totally different or they talk about politics and they'll be S just like anyone else and not very analytical or very scientific so the idea that if you
believe something you know at least try to see it through what else does it imply what else does it imply for all other things I believe in life and then allow that to have feedback into your research and I think that's what we all have in common at the most fundamental level um in what way should there be more such clusters uh in economics and Academia
there are some other clusters you had one at UMass Amherst which isn't quite what it used to be you had one at notredam those were uh more kind of heterodox leftwing clusters there's a group called inet backed by George Soros that's trying to create more of these I think that it's a very positive Endeavor I would like there to be you know a few
departments that are still some version of marxist other heterodox views uh I'd like there to be more departments that specialize in experimental economics other methods but you have too many people trying to just move up in the rankings and be number 23 which isn't necessarily that glorious rather than be number one or two along
some stranger Dimension if if we go home and we all conclude that we we should ourselves become part of some movement to you know help create more more of these heterodox clusters um is the sort of characteristic you were just describing about sort of trying to extrapolate views to other ostensibly unrelated areas is that thing that you
you should be trying to do even outside of Economics or is there so sort of some underlying thing that's the the right sort of guiding principle when you're trying to create non-economic heterodox clusters no I think it's a fairly Universal principle but it gets back to these smaller cultures like the Inuit they tend to be absorbed precisely
because they're smaller in number today there is no unique Florentine style of painting it's long long since gone for centuries so you have to replenish them but we now have this thing Tech and connectivity and that's outraging the kind of countertactics to keep certain things weird you create some Niche groups by bringing people together but
there's also a homogenizing effect it's so quick so rapid so powerful and so what's going to win that race I'm not sure but I I fear a bit how how quickly it's going and how hard it is to steer come back to that um you've you've often argued and sort of contrary to the prevailing Trend uh in in the US and in Europe uh that Society should become
more religious um or sure it would be a good thing if that happened um so why do you believe that and what's the Crux of your disagreement with the you know with the supposed expert opinion that holds the opposite position well first let me say I am myself a non-believer you could say I'm an agnostic but tending toward non-belief but it seems to me religion
is a very special form of cultural capital it's people's most fundamental beliefs about the world people will believe in something and for much of the West I see Christianity and to some extent Judaism as having had a very special role and the notion that we should just cash in on that and all become secular uh and not be sure what we
believe in I see a great danger in that and if you visit a place like England where Church attendance is remarkably low people are extremely secular that strikes me as unhealthy secular societies tend to fall into much lower birth rates they don't reproduce themselves that's one of the most damning things you can imagine actually
about a society and religion even adjusting for income has predictive power over birth rate and it's one reason why America uh still has a stable or typically growing population along with immigration and American religion has stayed remarkably strong for our level of income and it seems almost obvious to me that's a positive there's paper a paper
by John Gruber using instrumental variables you know religion tends to make lives better uh more Social Capital more cooperation but that's I think secondary to the bigger picture question what do people believe in do those beliefs encourage self-replication of the basic Society or not and America is doing a good job on that mostly because
of religion is religion one of the few remaining sources of uh durable cultural diversity in an increasingly connected world it is and there's something fundamentally strange about religion but in a rewarding way so my next interview it's actually on Thursday I'm interviewing a rabbi so I been restudying the Bible and the Bible is
one of the most beautiful strange and open to multiple interpretations books that there is and it's one of the books you can learn the most reading and rereading and rereading I've been finding this very rewarding and uh there's a chance you know you look at parts of the culture like today Shakespeare and Jane Austin they're much more popular but our
knowledge of the past it's thinner sort of secondary figures seem to be getting lost and a small number of things get elevated maybe it's the The Beatles from the 1960s music Shakespeare but say a lot of the Russian novelists seem to be falling away people don't seem to read n as much as they did in the 60s or 70s so there's a
centralization of what we take from the past because the present is so crowded so um Michelle ek's uh submission was one of your favorite books in 201 yes and uh this is a book about uh a country that in fact reversed this this trend towards uh increased uh secularism uh what did the book mean to you submission is in my view a fundamentally
straussian work um that is it has secret meanings it has to be read in the European context so typically it's regarded as zbec being anti-islam and he said some things in public that are you know somewhat outrageous on the issue but I think actually he's envying Islam and the Muslims in France for the fact that they believe in
something and writing like Jonathan Swift it's a criticism of contemporary France that we don't believe in things enough anymore and here's a dynamic element in our society and maybe in some ways we dislike it but we actually ought to learn from it and it's about the weaknesses of his own class the French intellectual class that he comes from
and I thought it was spot on um are you in favor of not just more religious it but more religions I'm not against them but of course it's hard to start them in ways that are sustainable I find it very interesting to study relatively recent developments such as Mormonism and it feels funny to people that somehow when you have religious
narratives that are recent they sound weirder than ones that are all but that's quite arbitrary uh possi I'm more of a fan of monotheism than religion per se I agree with Hegel that with hegel's remarks on polytheism that may not be conducive to political order I'd say that's still an uncertain question but it's a worry I have and as Hume pointed out monotheism
itself breaks down into partial polytheism because people want multiple things to worship to pray to to talk to so it's not a stable balance um why did you start marginal Revolution Alex tabarok came into my office and he said Tyler we have to write an economics textbook and I said Alex first we need to write a blog and become better known
and then we'll write an economics textbook I'm not sure what Alex thought at that point I think he felt he was just humoring me and that he really wanted that we write the textbook I don't know I'll ask him and we did the blog and that went very well but it even took a few years uh before it really took off so we started I think 2003 I'm
not sure but I think like persistence and determination for something you enjoy and believe in is very important it's related to your remarks on religion and I like doing it we just kept on doing it and thought you know if we have something to say giving it away for free ought to lead to something and if we don't have something to say giving it
away for free ought to tell us you know we we suck and you know full steam ahead and I think that's a good attit ude to have why does it look so strange does it look strange marginal Revolution yeah it looks old it is old it has that funny green color because that was originally the shade of green that George Mason had and
I think Alex who did the visual design but I've been the one saying we need to keep it he took the green to stand in for George Mason and I think green so often is an ugly color I like green well you would like green but I thought the notion that we would deliberately choose an ugly color was a good idea it would imply the
merits of the Enterprise had to be elsewhere and all the places that look nicer they're some they usually connected to advertising we always wanted to Signal we're not about ads and it's about the ideas and that we you know we're we're retro and now we're we've been doing it a long time I feel it ought to look retro have the ways in which it's been
valuable for you changed over the years uh absolutely so uh when I started it hardly anyone read it uh when I started I thought if 5,000 people read it this would be something remarkable and that happened pretty quickly so for me it was enough and I actually think five people's enough and at times like during the financial
crisis over a 100,000 people were reading it on a given day plus RSS feeds I'm not sure how many total and that seemed like absurd but 10 years ago it was a way to connect with younger people and now the young are much less likely to read and it's a way to connect with older people uh and wealthier people and better connected people you just need to
start the Snapchat version yes maybe we will someday um what kinds of blogs should there be more of in the world single-issue blogs on issues of importance so uh if you take something like Penal form an underrated cause prisons I think are barbaric but it's not an easy problem to solve there's not a quick fix some people do need to be constrained in some
way the idea that there should be more blogs that track that and persistently deliver the message something is wrong here uh issues of animal welfare on blogs uh economics on blogs is doing pretty well and has for a while it's one of the healthier parts of the blogosphere it's very hard to blog philosophy maybe someone will figure
figure it out I tend to think it usually doesn't work current events Works partisan politics works but single issue blogs maybe they're not profitable but I think socially they could have a big positive impact why do why do economics blogs work better than other fields other academic Fields especially economics has a Common Language getting
back to the point about what makes for good clusters but don't other fields more than other social science Fields so we have microeconomics you can put an argument into micro and all economists can grasp it and anyone who knows some economics can make some sense of it but and we have an empirical side and the empirical results of Economics a
lot of them you can communicate in a sentence and often to non-sp Specialists so both the common framework and some empirical element even if you're a little skeptical about both like they're there as a first offering even if you end up mocking them and sociology doesn't have the common framework philosophy the empirical element is
tough to find and analytic and Continental philosophy the arguments take so long economic arguments if they're good they don't take that long that might be wrong but if an argument takes 10 pages it's almost certainly too complicated right right um so I think many of us are here so we can ask the question um how do you read so much by reading a lot so if I read
fiction I don't read fiction much faster than most people maybe a little faster but within the normal bounds if you just read read a lot of books you find most books aren't very interesting uh and you can focus on what's important and actually get a lot read so like I'll pick up a book Put it Down someone says how long did it take
you to read that book and I'll say 52 years because I've been reading since I was three and that's the correct answer people don't get that 50 it took me 52 years to read that book and uh so I'm not a fast reader I'm a very very slow reader you're just miss mismeasuring the unit if you think I read something quickly um I remember you
commented in an interview in in an interview a couple of years ago um that you discard a lot of books um are we all just making a huge mistake by finishing so many books uh is that when if you finish them I'm not convinced you all do so there's data from Kindle on this and whether it's cheery or depressing you can debate now you might be more willing to
finish a physical book because it has an embodiment maybe it's more Vivid or maybe by buying it you made a greater commitment as opposed to having 400 unread things on your Kindle uh but serious readers probably finish too many books and sit through too many movies uh there's a biological intuition be loyal to things which is a good
intuition but if you can selectively discard it for parts of your intellectual life without discarding it for your personal life great does does this Kindle data about um our you our median inability to finish books um does this suggest anything deficient in the artifact of the book itself should it be otherwise there are probably too many
books so it depends what your goal is if your goal is simply to learn something so often reading a blog post is better than reading a book even if the book is of course much longer so books embody knowledge they store knowledge they certify knowledge those are important I'm not FY book but as a means of communicating knowledge once you've read
a certain number of key earthquake worldview shattering books books are way overrated they're actually a pretty weak impotent way of learning new things is there something between blogs and books that you think ought to exist that does not PDF I don't know uh I'm so often disappointed in those the the you know the the books
that really change your mind are the best way to learn but there's only so many of them those and there's completion of the stock and you age and after that travel and then meeting clusters of people and you talk to them and you learn areas by meeting them and toss in some books and you should read more and more in clusters like pick an
area from time in history and reading that rather than reading a book do you have any heuristics for uh for getting better at sort of more quickly finding identifying books that are likely to change our minds email me or read marginal Revolution I mean I can't have a better heuristic than what I say in other contexts but how do you
do it you can't email your you can email yourself but I'm not sure how effective it is I sometimes say my business model is I respond or at least try to respond to every email I receive I don't quite hit 100% well well that sounds very dangerous if you ever do email yourself I email myself names of restaurants but I don't respond to those that's why it's not a
100% um but I feel if my responses show the right temperament that people will sort of tell me everything I need to know and I think that's worked pretty well so emails underrated in my worldview well on on that note um I wanted to ask you about a couple of things and whether they are in fact over or underrated sure um and so starting
out with something that obviously has a lot of popularity here um effective altruism it's overrated by the people who know what it is it's underrated by the entire rest of the world uh can you expand on the former a lot of giving is not very rational whether that's good or bad it's a fact and if you try to make it too rational in a particular way a very
culturally specific way you'll simply end up with less giving and then also a lot of the particular targets of effective altruism I'm not sure are bad ideas so somewhere like Harvard it has a huge endowment it's super non or even anti-egalitarian but it's nonetheless a self-replicating cluster of creativity and if you are a
rich person Harvard was your Alma moer and you give them a million dollars is that a bad idea I don't know but effective altruists tend to be quite sure it's a bad idea and I think there's too much pretense of knowledge in the movement as it is but that said relative to the people just making mistakes it's way way way underrated so I'm actually a big fan
of it in a public sense how about flying cars flying cars I think uh will be dangerous for a long time and I don't know why you need to fly and then drive so you can fly and then Uber or taxi and you separate the flight in the car until I hear a good reason why the integration is so important you can you know like carry your iPad from one to
the other and have a pretty integrated experience so so I'd much rather have the 140 characters well that that was going to that was going to my next question so 140 characters uh over underrated you mean Twitter itself or the characters both I don't think they should relax the rule as they've done in a number of ways
tweets are too long there are too many photos there ought to be like a pagui in tax on putting photos and sub Tweets in your tweets and threads I favor a non-zero amount not like the old rules but it defin itely should be limited in taxed with micro payments and I think that would make Twitter better and quicker uh we agree but mostly I'm a
Twitter fan and uh rules really matter for their own sake so yes 140 characters plus and and Twitter itself over underrated uh underrated and I think Trump has shown how powerful it is again you don't have to agree with his tweets but it's woken the world up that Twitter is not just some inferior face Facebook that never was going to turn out to be
anything it's extraordinarily powerful people in Iran have known this for a long time it will stay important and Powerful I think it's still very very underrated actually as a commercial Venture I couldn't say but as a force for shaping Society um you use Twitter but not Facebook uh why is that partly my time is limited but the
Facebook page to me is too confusing it's like William James's buzzing blooming confus fusion and they always change it and I get a headache it's like trying to work a very complicated microwave oven and I can't really work a simple microwave that well so I'm sensitive to the complexity of the visual field uh but that said if you have
broadcasts to larger numbers like would you prefer the smaller number the closed gated thing that's not searchable I don't see why I would and I worry at the social level Facebook is subsidizing sociability too much so a function say that used to be served by music you know when you're in the seventh grade this is the band I like
it's now served by social media so it's pulling away a lot of hidden deep implied subsidies to culture and our culture is in some ways weaker because we're happier and more sociable I don't like that is Facebook net good or bad for the world uh we don't know yet if if you're a utilitarian focused on happiness it's very likely good but if you're a kind of
canes likee person who cares about the aesthetic worth of the most significant contributions and you want to see like another lead Zeppelin come to pass then it's probably bad and I have a bit of that in me um Silicon Valley over underrated what Silicon Valley means I've become confused by if you say the Bay Area I think it's been overrated up
until quite recently A lot of it was just better Leisure and now it's really starting to be integrated with the physical structure of things and it's probably quite a bit underrated so the diversity of businesses possible here I think is just getting going and I would say definitely underrated looking forward why does the term confuse
you well you're not in Silicon Valley are you me Geographic if you say bay area I feel comfortable with my answer uh uh Washington DC as a city to live in it's underrated I think its weather is underrated uh as an intellectual and media Capital it's one of the most stimulating places to be it's still highly livable and we live
half an hour outside of Washington when there's no traffic haha and still have deer and Fox on our lawn you know every morning at 630 a.m. that's amazing there's great ethnic food and no major downside except for the fact you're not in Silicon Valley that's the Bay Area sorry that's um that's a subjective experience of of living in DC what uh uh
what about the the broader phenomenon of DC the work ethic there is pretty strong uh the level of talent you know it's very much a monoculture it's the ultimate company town but I think those are creative I think it's a creative City typically in destructive ways I have highly mixed feelings about that I don't think the surrounding counties
should be as wealthy as they are on that you know I'd rather see government be much smaller and civil liberties be more respected so I have a LoveHate relationship with Washington I never want to live in the city I've always lived in suburbs Northern Virginia I love much more than DC and I go to Washington it feels like a strange
bizarre place but still acutely aware of its connection to the ancient world which hardly anywhere else in America has and that's really important and it's done something you know nowhere else in the world has and it's still like the single most important place in what is an improving World stability stability is underrated but there's also
status quo bias so this is tricky I think the Western World takes stability for granted because we've had so much of it for so long and our basic model as in macroeconomics you overweight your last 20 or 30 years so so since let's say either the election of Ronald Reagan end of the Cold War war fall of the Berlin Wall so many good things have
happened and it's mostly been stable and the worst predictions haven't come true I think that's exactly what makes this a dangerous point in time that we're not geared toward the kind of risk-taking imaginative thinking we need to stop this from being the next 1910 can you say more on that I see a creeping deterioration of the belief in individual liberty as an
important idea rule of law cosmopolitanism just general respect and decency even in some very good nice countries and you know this is one of them I see that as getting weaker and I think it's maybe a smaller move than a lot of the worriers are saying but still even when the trend is in that direction at all it could have a self-fulfilling
momentum and that's much more Danger uh than a lot of people realize brexit I'm not sure will be a big deal economically speaking but it's a strong negative from a cultural point of view that turkey has fallen apart the way it has that some of the Middle East is still up in Flames that Russia and China are much less free than some number of
years ago those to me are major major negatives at a cultural level not tangible that we're underrating its importance restrictive Urban construction and land use regulations they're terrible and we should allow much more building much more of this country should be like Houston and parts of Texas uh but that said I've become a
slight contrarian on this lately and I wonder if the Bay Area isn't the one place in the world where building restrictions might make some sense because most of you want the restrictions even if not you in the room you out there in this area so removing the restrictions would be attacks it' be great for the people who moved in but if
you're all producing these amazing Global public goods and the federal government is going to raise taxes on you anyway I promise this I don't care who wins the next five elections your taxes are going up State City local whatever and then we put this new tax on you and you all are the atlases out there I don't know if loosening building
here would tax your productivity or increase it but I'd at least consider the notion this is the one place in the world where we shouldn't loosen building restrictions do you somehow believe that uh can can you apply that argument in Reverse do you think Silicon Valley would be better off if it had half the population it doesn't I don't live here
I don't know how bad the traffic is uh and I suspect the people who are the most productive have workarounds they can afford to live where they want for instance I think a lot of spend a lot of time in traffic but it seems to me it's a pretty finely honed structure it's evolved the way it has and to cut it in half or Shrink it it's
probably a big mistake how do you square this notion uh with um well just to make sure I understand you're saying the tax would be the other people around us I mean it's it's that sort of our again our personal experiences of of the area would would somehow be diminished the general culture would change it would be less intense it would
be like taking Florentine Renaissance and injecting into it 100 th you know 50,000 people from Naples nothing against Naples I love Naples in fact more than Florence but I suspect that would have been a mistake back then so I worry if you have too many people move into this uniquely weird diverse monoculture uh you could wreck it just a
cautionary note I'm agnostic but I've started having this worry lately do do you generally believe in the idea of sort of uh uh increasing Returns the scale of of knowledge clusters yes absolutely but again you need funny kinds of insulation too it's having both that makes a place special so you don't want a completely open system you want
rhetoric that oh it's also open and Incredibly fantastic but that it absolutely isn't at the same time and I feel that every time I come here it's great contrarianism overrated that's the stran answer um are we still in the great stagnation probably but the last year I've seen a lot of signs partial signs were getting out of it so the last year wage growth
was pretty strong and I hadn't been expecting that I wouldn't change my mind based on one year of data but one year is a lot more than nothing and just what I see on the ground in terms of integrating better manipulation of information with actual real world processes and I've seen again not last year but I think four out of the last
five years healthc care costs have behaved in a somewhat sane Manner and that's been a big driver of living standard and productivity problems so I'm not sure that will stay on the right track but I've seen four or five pretty encouraging signs so I now hold the view there's a 30% chance we're on the verge like right now of climbing out of the
great stagnation can you see more on on the second point you mentioned there that the particular kinds of technological change that you're seeing If All Tech is is spinning information more rapidly it's wonderful for the infavor academics journalists tech people but a lot of people are actually just as happy watching Network TV with
three channels and Mary Tyler Moore maybe they like Facebook a bit more but the real Advantage is when you can ease you know how molecules impact your body so if driverless cars really scale as I think they will many commutes will be much better that's a lot less frustration for people right there I would say great stagnation is over it's
not a slam dunk I think there are more obstacles to them than you read about in the popular press but I think it's highly likely we get it within the next 20 years in some manner Uber and self-driving cars and Airbnb and a bunch of these sort of technology companies that are doing things in the real world or or some of these you know new biotech companies and
so forth that they they were all around two or three years ago so why weren't you more optimistic back then AI in the broad sense of that term seems to have developed more quickly than people thought and even you know in 2011 I wrote a book saying AI will develop more quickly than we think that's my book average is over and since
then it's developed more quickly than I thought and how many different problems you can apply that to we still don't know but just each time we seem to be positively surprised and we're still on that positive surprise curve what are you watching to tell uh whether or not we have in fact exited the great s Nation I think the best way would be not
to view any media at all and you know write down on a given day like what molecules impacted my body like people you know they're upset about Trump obviously there are risks things that are bad but it's also a healthy the exercise write down each day like the Trump molecules did they impact my body today and in some ways they will but
it's a very different perspective so if you stop reading about tech and Ai and whatever and just sort of write down about on those keep a molecules diary uh that's when you'll know when your moleculees diary gets really exciting um I I'll I'll for the moment leave it at that um do you want to take me three or so three or four questions from the
audience here um hi Tyler um my question was a lot of us look at issues or read about issues and then think oh what would Tyler Cohen think about this and go to your blog and try to pass off your views as our own um I was wondering who that's not scalable I was wondering who is that person for you and a sort of economists
Economist if you will I think the important thing about the Contemporary world is how you manipulate your networks and your clusters so I don't think any one person is very good on Twitter No matter how smart or clever they may be and I don't think any one blogger is very good at all so there's a kind of embedded algorithm in blogs Twitter other social
media if you're really good at kind of reading the system that's when you learn things that's extremely powerful and every day I try to train retrain myself in reading the system and I feel that's a skill I've become pretty good at but I'm always working on it like every single day that's the one thing I'm always how can I improve this
obsessively and I guess that would be my advice to downgrade the individuals and try to understand properties of these systems better you um hi I uh grew up in the Rust Belt and I've watched a lot of large companies tech companies come in and try to build uh hubs technology hubs in those areas and invariably they move in
and then 5 years later they close down um if they can't be Tech clusters what can they be or maybe they can be Tech clusters and they're just doing it wrong what should they do I think the the final number of tech clusters will be quite small the Bay Area and several parts of China uh Israel being a much smaller but still potent one and I think it will
shock people how few Tech clusters develop because it's a fragile ecosystem it's about project evaluation it's closest to the number of major Financial Centers and there are relatively few of those now you're asking so what will those areas become well empty I hope but I understand the transitional problems and I think one thing you'll see from a
trump Administration is a big redistribution of income back to those regions and it will actually solve some problems but in the longer run I'm not sure how that will work out when you want to just neglect a region and have it empty and when you want to try to keep it going uh that's a tough call but I think we're going to see big changes
like with Medicaid there'll be block grants perhaps and given out on a formula that rewards Rust Belt states um I wanted to connect two points that came up tonight first you know you are the original or like the the PIN of an inform oforce so I I I estimate that you process about a kilo book a year and at the same time you also have a great
Social Circle um so how would how would you say friendship adds something besides the information feed of talking to people like Robin Hansen what's the Friendship rather than say Reading literature about Robin Hansen it's very important to keep yourself like engaged and motivated uh and for me A good rule of like friends is just to really try to be
myself and just you know be willing to be weird if it's even weird uh and kind of let people self- select around that to some extent and that's worked well for me more than like trying to make friends and friends tell you you know when you're completely off the Mark it's companionship uh common sense of purpose you know it's really really important to
like be working with people at least you have friendly ties with even if they don't feel like you're friends with a capital f in the sense that a Russian would use that word hey um I was talking with a friend of mine about uh a possible possible next startups that we could start and uh we're thinking about starting a religion
so something maybe vaguely Dost uh compatible with modern science but hopefully something that gives people you know a sense of purpose religious community hopefully increases happiness uh I loved hearing your thoughts earlier do you have any tips or any ideas make it monotheistic apparently I think you need to stop smiling if you're going to start a
religion there's a severity to it some of which might be feigned that's quite difficult to pull off in the Contemporary world uh so I think my advice I I don't give that much advice but maybe my advice is not to do it uh the entry barriers are high and the religions we have are quite rich and welldeveloped and now what you would have to be to
succeed I suspect is someone who wouldn't be at this talk uh what's the next great political party that doesn't exist yet in the United States yes I think America will have its current two-party system for a very long time to come the barriers to a third party are very high the Trump experience shows how flexible parties are whether one likes that or
not I think the Democrats will do their own version of this in exactly what direction I'm not sure uh but my prediction is no major new or third party here for the foreseeable future and how long was our last new party my goodness you're going back into the 19th century let's mo one more question um so my question is kind of twof folded
so it stays as one question um one more person at the at the beginning you're talking about basic income and how it won't be feasible do you think that if we ever did get into a world where this was a thing then perhaps it would increase culture and creativity because people now have all this free time to use or do you think it would just end up going to
waste that's like the first half and sure so it stays with one um the second part is you were also talking about AI in the broader sense and how it has become how it's developing rapidly and how it's a bigger thing than we thought it would be do you think we have a future where our creativity and culture stems from Ai and things they imagine
and build in reverse order first in chess so much of the creativity already stems from AI computers playing chess uh I've listen Listen to Computer composed music art I don't think it's impressive yet but I don't rule It Out by any means so I think at some point those molecules will impinge on me a guaranteed annual
income I could imagine that working pretty well in countries like Australia and Denmark smaller markets where life is already less harsh in some ways and there's more collaboration and uh the work ethic is understood differently to begin with and they have more cohesion than the United States but I am an American exceptionalist we have this unique
Vision a kind of extreme puritanism adopting personal projects that are work-based and obsessively seeing them through in a determined way that I think is so special that say I never felt when I lived in New Zealand a wonderful country they can do Ubi uh but I get I I don't want it here I'd rather keep that culture I think it will do the world
more good and I think it also means we never will adopt Ubi or not anytime soon so you write a lot about um mood affiliation yes um and the problems within it and you write about this despite the fact that I think you believe that cognitive biases are themselves overrated um can you just for the folks here of quickly describe your
sort of current take on mood affiliation what it is and then what is something that people here don't believe and really don't want to hear because of our own sort of collective uh Bay Area Silicon Valley mood affiliation mood affiliation was a concept I first coined to refer to people who judge arguments by the mood of the argument so there's some writers
uh maybe they'll remain nameless but they're optimistic so if an argument is optimistic they think the argument is more likely to be correct well things have been getting better I'm not saying that carries no weight but be a very strict basian just because the mood feels comfortable uh a lot of very contemporary partisan
debate is really about moods if you feel someone is not condemning something with the right mood you'll reject the attached substantive claim so a lot of the exercise I do on the blog is trying to teach myself how to detach and how to unbundle things and kind of intert temporarily substitute moods and contain like bundles of optimistic pessimistic
condemning approving tolerant int tolerant whatever moods at multiple levels you know at the same time in some way so you know the Bay Area strikes me as having a lot of kind of pearl clutching and a reputation for thinking it's more tolerant than it is and I think that's true of both coasts uh and I think uh you know in general all cultures are
oblivious and America in particular its coasts tend to think like where the cosmop in side of American culture and I really don't believe that I think you're a uniquely brilliant like Twisted inward-looking diverse monoculture and I'm very glad you are wait wa wait this is H you've already accused us of that I want something that you you yourself
believe or are sort of quite confident is true but that again we don't want to hear well that that's really you know the main lecture I want to give you know religion is under ated uh I mean I think in general people in California overrate the efficacy of government I think Libertarians underrate it but if we're in California
I guess I can't not make that point and uh you have unique advantages here you have the cluster so there's a lot of things you can do and get away with that don't work in a more General way like you know raising the minimum wage to some level that cluster gives you enormous rents the world is not built out of clusters like
that and uh so I would just say be careful about overgeneralizing from your experience here but I mean you know so many things were like I'm sure like my view is wrong my view is Right California is wrong I don't think that's the right way to go about it you know I would say oh you know I like Southern California better than I like it here maybe that's
unacceptable I think Los Angeles is the greatest City in the world I'd love to live there it has the best ethnic food uh and there's something about it the way it's a Cosmopolitan City sense of openness someone once said like what's real there is so phony and what's phony is so real it's always surprising me and I I I love their diverse
monoculture it's my favorite part of this country tyen thank you very much thank you Pat thanks for listening to conversations with Tyler you can subscribe to the podcast in iTunes Stitcher or your favorite podcast app and if you like this podcast please consider rating it on iTunes and leaving a review this helps other people find the show