[Applause] [Music] [Applause] [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 arcades.in conversations withth tyler.com and today I am here with Paul rer who just won a Nobel prize in economics hello Paul it's great to be here Tyler let's start in on the topic of economic
growth sure shouldn't the internet have boosted economic growth more well you would have expected it to maybe it did relative to what would have what growth would have been in the absence of the Internet it's also possible that it will have an effect on output that we won't see for 10 20 years this is the kind of story that Paul David tells about electricity so and it also may be that it's giving us benefits
that we're not measuring very well but of course other Technologies in the past could have given us benefits that we're P right yeah yeah so uh you know I think it's a it's a bit of a puzzle right now that people feel both that boy we have too much technological change to manage but yet we're not getting enough growth if we look at say 5e moving averages at least measured growth seems to be
slowing down do you have a theory as to why that's the case I don't think five years is enough to really pull out the the low frequency or growth component things vary so much even when I was looking at like the history in the United States even decade by decade there was a fair bit of fluctuation that I think fundamentally driven by the the macroeconomic stimulus versus you know recession uh position like male wage
growth since 1970 doesn't that refute all theories of economic growth that it's been so flat well but then you got to then you got to look at some of these questions about what's happened to the distribution of income sure but even say for whites yeah within a group it seems wage growth for men is pretty slow but if you're what if you're using the the average or or the me the median if you
pull out the top whatever percent it again yeah seems less than either Milton Friedman or Paul Samuelson would have predicted in the 1970s but then I think we're really starting to confront this question about what's going on to the distribution of income what's happening to labor share versus uh versus profits those are topics that traditional growth models just haven't haven't addressed
but they're obviously very you know very important concerns right now Michael web at Stanford with some co-authors he has a paper arguing that the returns to Scientific effort are diminishing substantially and that you have to throw a lot more scientists at an idea to make progress yeah what do you think of that literature well if you if you go back to the really long run questions that
interested me the big question was why you know why over this you know the centuries the Millennia has growth been speeding up I had one model that I eventually concluded wasn't exactly right then my second 1990 model which I think in terms of the foundations was strong but it had this feature that as the number of say researchers or people grew it it predicted much too fast an acceleration in the rate of growth so
Chad Jones has really been leading the push saying that to understand the broad sweep of History you've got to have something which is offsetting the substantial increase in the number of people who are going into the R&D type business or the discovery business and that could take the form either of a short run kind of adjustment cost effect so that it's hard to increase the rate of of growth of of ideas or it could be
the the more things you've discovered the harder it is to find other ones that kind of fishing out effect to fit the long run growth and the big increase in people engaged in science and in research and development I think Chad is right that you have to have some kind of a diminishing returns or some kind of a kind of a constraint in that in that rate process and so the you know there's
there's a variety of recent papers that have that have tried to to look at that if your if your question is can we sustain a particular growth rate X or can we keep increasing growth rates at higher and higher rates that may give you a less optimistic answer than say the the initial take I had but it it may still be the case that we can have growth that we can sustain it partly by having more and more people go into
something like research because there's a 10 or 11 billion people will end up with and we can increase the fraction of people who go into that so we can offset some of these fishing out problems just by having more people uh working on it and it it also doesn't mean that we're already at the efficient or optimal level of of R&D so I think the the general messages about you know that
bigger Global integrated economy is going to lead to faster growth that policy could improve efficiency by getting more research going I think those messages will still carry through even with a kind of a slightly less optimistic you know perspective on how how fast we could really grow do you think the distinction between economic growth at the fron here and catchup growth is always so well defined so if
you think of China they seem to have Innovations how quickly they can build things that they have an autocratic government but they've managed to keep a reasonable amount of stability and keep the public on board isn't that a kind of innovation like a technological innovation and their growth in a way is that some other Frontier rather than just being catchup well I I think going back to the to the work I was part of in
the like the '90s where we were looking the CrossCountry growth regressions I I think we weren't careful enough to distinguish some kind of extremes of say growth at the frontier and and growth catching up I think in the case of china it would make sense to recognize that China is in some sense different economies like the economy of Shanghai is very different than the economy of of
rural China there may also be in addition to this catchup versus Tech the Leading Edge distinction which is based on the essentially the level of technology in a country there may also be a a separate Dimension which is something like you know the the institutional evolution of the economy so you could have a you know very inst institutionally well-developed economy that's still you know very low in terms
of its technological uh success that would be unexpected you could also have some significant technological success but still very very weak institutions so we'll need more than one dimension to really really characterize different economies but all of that said I I I found at least when I started to think about problems which is really the best test of of of theory that I needed a different theoretical apparatus to think
about say the challenge in Tanzania than the challenge in you know Germany if you're called into a White House and asked to give advice how could the United States promote Innovation what might you say I know it's big long list but where would you start when I the way I constrain people with that question is okay what's your first priority or or if you go into the office on Monday what
are you going to work on on Monday I I think uh I'm I'm really opposed to these long list kind of policy exercises because it it tends to it tends to become this political thing it's like oh yeah this is why the World Bank used and so much it's like well we're in favor of technological change oh but and we're in favor of uh like this and this and you know every interest group gets on the
list we can search this transcript for how many times we each use the word and oh that'll that'll be embarrassing yeah but uh my number one recommendation is is to invest in people humans that are well- trained are the inputs into this discovery process and there's big opportunities still I think to do a better job of investing in in people the policy I actually worked on we got to the point where we had a bill that was
ready to be introduced in Congress on this was one that was designed to make it much more attractive to go into graduate school and to give students who go into say stem careers in in graduate school to give them much more freedom and control over what they study and where they where they work basically moving the money that now goes through professors as the principal investigators who hire research
assistant move that to money that goes directly to promising students who could go into to graduate school you think the bottleneck is on the student side or that there are a lot of stem graduates who don't get great jobs and they're a path to stem without going to graduate school such as through computer science yeah where's the actual bottleneck in that process part of it is that um first
we we should always remember that the education business is one of the ones that has the biggest problems with asymmetric information so people who like a a young person who pays somebody to educate them is is very dependent on the decisions that the educator makes about study this go in this this direction so we we always have to be careful not to treat this as like a perfect information competitive market I
think that the problem in higher ed is that the institutional incentives don't provide the kind of training that would maximize the opportunities for the students or for that matter maximize outcomes for the for the nation I I think there's for example much too much persistence in kind of disciplinary line and modes of inquiry if you go back to the first half of the 20th century in
the United States universities invented whole new schools and training programs like chemical engineering electrical engineering the universities have not been as is innovative or responsive I think in the last the post World War II period the only big change has been computer science and that was really driven by the defense department and the US government rather than kind of the
universities responding to demand so I think it'd be very helpful if if there were a lot more students looking in at the far future saying where are the big opportunities what what do I really want to learn about to have an exciting career those students controlled tuition resources that universities were competing for I I think the universities would be more more responsive to the the changing landscape so so it's
lengthening the time Horizons of potential graduate students well it's really putting them in the driver's seat we we subsidize graduate education through money that goes to professors but we let the professors make the decisions about the problems they work on and then therefore the things the students are trained in and I'd rather let the students be the ones who decide yeah I don't really want to work on high
energy physics it's kind of dead end I I think there's something much more exciting in you know condensed matter physics so it's um I mean if you really want to push the analogy is it's kind of like vouchers for for graduate school but I think it would have the same benefits that people anticipate when they talk about it in other context which is it would force more competition between the the different educational
institutions do you believe in the notion of general purpose Technologies I do but actually let me come back on one of the one of thing on on growth so my my number two on human capital would be to think about skills throughout the whole kind of skill and income distribution especially if we're worried about inequality as we are there there's lots we could be doing to take students
when they enter school who have a certain amount of inequality in their preparation and their just their makeup take that inequality and make sure our school systems damped that inequality instead of doing what they currently do which is to substantially amplify that that inequality I I think an example of this would be to pay a lot more attention to students who have trouble learning to read there there's there's a
kind of set of conditions seem to be have some genetic component that we call dyslexia too many of those students don't become effective readers and then miss the whole kind of feedback loop of learning to read learning to master Concepts learning to en enjoy learning and so a little more attention to the kind of instruction that would make sure that they get caught up with their peers who are who find it easier to start to
read that could substantially reduce the inequality in educational outcomes and then eventually reduce inequality in the in the labor force now you've stated you're a dyslexic yourself yeah do you ever think that for you in some ways it's been an advantage maybe not for everyone but for some people I don't see an obvious Advantage with dyslexia um but you learn how to delegate better you
learn what you're really good at you focus more yeah uh yeah to be honest I I don't I don't see it there's um you have W in noal prize right well yeah there's oh yeah you can overcome these things but uh but what's interesting is is that essentially everybody learns to speak and there's when you make this transition to learning to read there's this small kind of variation where there's some people who have more more
trouble with it and it it's you know that the the science that's emerged on this is is I think very interesting about what does it take to get the brain to break a sound into letters uh or kind of subcomponents but that that kind of deficit I I don't see a big advantage in there are different styles I I've always been a little bit more inclined to take risks or maybe to sample a lot more
ideas I I I sometimes make fun of Myself by saying I'm just a random idea generator and then you know what what's needed is others who can filter out the bad ones then on average I could I could be helpful I don't know if you know having a little trouble with spelling which is the way it shows up for me I don't know if that makes me a little bit more willing to be sample widely on ideas in any case even if it is true if
we put a little bit more effort into teaching kids who really struggle with reading and and by the way the phonics like instruction is clearly the thing that works for th for those kids not whole word or these other kind of broken approaches a little bit more instruction there could really change their their educational outcomes and and there are school systems that focus on this and
well as well in Singapore they're very careful to make sure that everybody in the class keeps up up through about fourth or fifth grade they test you frequently in math and reading and if you're falling behind you get the best teachers you get more classroom instruction they really invest extensively in the ones who might otherwise fall behind and then can achieve much more equality in their
educational outcomes and there's no reason we couldn't do that in our school systems if we made it a priority and you also think we should simplify the English language right well there's there's two parts to that um one is I I think in writing and communication there's there should be a very high priority on Clarity and it's hard to know what's the mechanism that that that enforces that there are sort
of variants on English like the the English used to write the manuals people use to service airplanes where there's a very restricted vocabulary and it's Cho the words are chosen so that you can't have any ambiguity because you don't want somebody servicing a plane to get confused so there are some things you could do on writing word choice vocabulary Exposition there's a separate
issue which is that amongst the modern languages English has the worst orthography the worst mapping between spelling and sounds of any of the uh existing uh languages and it's it's a tragedy because English is becoming the universal second language that the incidence of people who don't learn to read is substantially higher in English than in other other languages people have known for a long time it it takes
longer to learn to read in English because of the bad orthography but what I think hasn't gotten enough attention is that there's there's an effect on the variance as well there are more people who never get over this hurdle to actually learning to read so if there were a way to do in English what they've done in other languages which is to clean up the the orthography that could make a huge difference in this sort of
variation associated with whether or not people can learn to to read read English should CH China and Japan move to romanized script it's very hard to learn how to read Japanese especially a newspaper you may not be able to do so till you're 10 years old and Japan has good schools I I basically don't know the answer to that question but I'll use that as a way to talk about something
else which is the the the proposals for reforming spelling in say the US England and anywhere in the anglosphere have have never succeeded and there's is very hard to imagine a direct way to change something like spelling but most of the people are going to be learning English these days I mean the the the country has the most is China so if somebody had a big incentive to actually create a
rationalized spelling that could operate in parallel with the traditional one it would be something like like China so they could easily introduce you know just as they have like the the kind of Latin letter kind of equivalence for some of the Chinese words they could introduce rationalized spelling and then use that for everybody who wants to learn English as a second language and it would be a trivial translation
problem to let some people write in one spelling form others in the other because it would be word for word translation so I could I could write you an email and you know rationalize spelling and you know I could put it through the plugin so you get it in traditional spelling so I don't think it's this idea that it's impossible to change spelling I think is is wrong it's just it's hard and it should you know we
should if we want to consider this we should think carefully about the the mechanisms if we pigeon IE English though does that lead to a multiplicity of englishes and it creates a new class inequality you see this in India where many people will speak a high BBC kind of English and then there are mixes of English and Hindi or in Singapore you have Singlish which is highly efficient
but it's not something you're supposed to speak in a lot of workplaces is that the future of our language well I think I think this is this is the kind of issue you have to worry about and it's it's why it's so hard to do spelling reform because there are things like class that are signaled through either the pronunciation or or spelling and so and also then you could get difficulties in communication if there's dialects
that differ substantially but in this case changing having two different orthographies has no necessary connection with different pronunciations so in principle you could have a shared dialect and pronunciation even though the the the parties had different spelling systems I and I think there is some value in facilitating easy face-to-face communication through spoken uh spoken language that there's
also a dialect that some people refer to as as globish so it's the global version of of English which is like slightly simplified has slightly different uses of the the the definite articles and indefinite articles um there there might emerge a kind of default dialect for spoken English that is it dominates amongst the people who learn it as a second language they they understand
each other much better than when they talk to somebody like you or me because we we have all these distractions in how we and how we speak so general purpose Technologies do you believe in them well that this raises a sort of a deep philosophical concept like do I believe in abstractions you know of of of any form I I think the general purpose technology has been a useful way to distinguish a type of innovation that
you could think of as being aligned along a along a Continuum there are some that are you know have long Paths of exploration that induce a lot of complimentary Innovation at the other end of the spectrum you can think of things that might just be pure pure one-offs like you that the paperclip okay we're done with that and so the the abstraction takes a Continuum or very high dimensional set of possible
Innovations and then defines a category as a discret entity and says these are these have a particular character they're they're worth studying I think this has been a helpful abstraction for thinking about things like uh electrification and so I I you know I imagine that it will be helpful as we contemplate things going forward although the question there is if it is a general purpose technology will we
know it as it's unfolding or will we only see that when we when we look back why do you think economic growth is so hard to forecast so if you go back to development economics say in the 1960s a lot of people thought well the Philippines salon now Sri Lanka they'll be the big Winners they have some English language they have nice ties with the Western World it didn't work out that way what is it that makes
growth so hard to forecast oh it involves people people are just but people in the errors cancel out there's a law of large numbers cultures don't change that quickly but yeah there's nothing that comes off with people that odds better than I don't know three out of five even in big groups uh which actually is is is interesting because there's a social interaction Dimension to people that means that
instead of just aggregating you know independent entities you're you're you're getting correlations so uh I I think it's actually a pretty General phenomenon that social outcomes are hard to hard to predict and and I think on if you then drill down into the specifics I think e economists maybe all social scientists don't have a a very rich or accurate picture yet of what really drives people what really motivates us
our you know our notion you know in economics well just more is better more stuff you know that that gets you some distance but there are these subtle forces that we just put labels on like Norms about right and wrong identity shame anger guilt I mean the they're these very powerful emotions that don't just average out necessarily when people inter interact and that are I think are
important for understanding uh group group outcomes let me give you one that I I like there's a book called freedom and fairness I I I don't remember the author's name uh but he's a well-known historian what he traces is the difference in the the political uh language in New Zealand versus the United States He traces that back to founding populations that left England at different times in the United States
it was at a time when people were very concerned about religious freedom when they went to New Zealand it was later and economic inequality and and Economic Opportunity was the was the dominant force and what's interesting is the Persistence of those founding effects you start with people who were particularly concerned and talk about an issue and then even as you know huge numbers of migrants move into those
places often the same sources generate migrants who go to both places the m migrants get then socialized into the the kind of the Norms the beliefs about right and wrong in these two places and then you end up with persistent differences in the the politics not just the language even the political decisions in these two countries so I I think there is a actually I think a growing number of economists who are
thinking about culture as is at the label for describing some of these more subtle effects that that operate in our beliefs and our preferences our Norms about right and wrong and and how those interact uh when we we work together in groups I think these are the things that we didn't understand when we were kind of naive about predicting growth in the developing world and that we still don't
understand very well can a charter City work if we import good laws from the outside world but not the appropriate matching culture well you you've really youve zeroed right in on the the connection the the real motivation that I had for Charter cities was exactly this one that you know that you can see in the US versus New Zealand so rather than thinking of the charter and you can think of a charter City exercise this is
actually the story of Maryland we're going to create laws and we're going to guarantee freedom of religion in Maryland and it's it's in the laws it's in the institutions somehow that didn't turn out very well Maryland had a Catholic Elite but then large numbers of protestant kind of indentured servants or uh workers and uh the this kind of commitment to freedom of religion was was not stable
in Maryland at all the case that's worth trying to copy is Pennsylvania where William Penn recruited large numbers of people who actually believed in Freedom of of religion so that Charter that the name Charter the word charter comes from the charter that Penn wrote for Pennsylvania but it wasn't the document that mattered What mattered was that there were a bunch of people in the founding population who were committed
to this idea of a sep separation of church and state and religious freedom and that's what made it durable in in Pennsylvania in a way it wasn't in in in Maryland so if culture is what really matters and the quality or the beliefs of the people you have y that seems like a lot of hard work your theory of growth there's something nonrival that in principle can be spread rather readily
does this run counter to your theory of growth that it's all hard work actually well I you know the way I think about it is as economists you can kind of divide the world into inside the head and outside the head outside there's things like you know the transistor and penicillin and all these things to discover and formulas and so forth inside the head we have these very complicated motivations you know we the
usual economic model of inside the head is complex conscious reasoning but very simple kind of preferences or emotions or motivations I think in fact the motivations are at least as complex as our ability to reason in a conscious sense so so my you know I I actually at one point I wrote a paper called thinking and feeling that was really my first Venture into trying to say okay
well we have some sense of why growth is possible and what could determine the long sweep of History let's now look more carefully inside of the head at what motivates people at these feelings because it's there that I think a lot of the action is so to answer your your question I I think to to have a Rich enough theory of development to explain the variety of outcomes we see in different in different countries and to
offer useful advice in different contexts we need to understand a lot more about uh about culture and as as you were saying um culture doesn't spread as quickly it doesn't change as quickly that that can be a plus and a minus if you think about cultures that support institutions you might want your institutions to be relatively durable and not just you know collapse and and and change uh as they did in Maryland
when like there was trouble in in in England so persistent Norms are not necessarily a bad thing but you do need to think about what if you get stuck in a situation where the Norms in a population are inefficient they're really holding you back and then you have to ask what are the mechanisms where a group can change its norms and this idea of letting a a a non-representative subgroup go off and
be the founding population in a new place then as people are kind of go in at a at a moderate rate from the old population to the new one they can get socialized into the predominant culture in the new place with that mechanism you can actually change the whole uh distribution of norms in a population in a way that might be more feasible than if you're trying to change those those Norms in place in the in the
population and you know the I think these are the questions we should be asking about how to resolve some of the deepest uh challenges we face in development under what conditions would you get involved again in another Charter city project let me well just to but to drive to drive this this point home let me just kind of give you an illustration of what what's at stake I mean imagine you
wanted to try and get New Yorkers to have the same Norms about pedestrian behavior that people in uh Zurich have or California yeah true stay in the same country yeah know yeah I wasn't I was afraid most people didn't realize the Norms are are different in in California did did you get that from me or or do you you you've observed this independently it always stuns me in California I I I walk out
jaywalking and people half a mile away stop for me okay yeah yeah I think this is a Coan transaction like I'm willing to just let you go you just let me go keep on driving yeah I I actually think the Norms are very different in California but I i' I've never read like evidence to confirm that but so as they say great minds think alike but but if you take the the the Zurich which is a little more familiar example where the
you know the proverbial you know old lady will scold you when there's no cars in sight and you cross against the sign if you if you passed a law or or took the existing laws and tried to have police enforce them in New York youd get a backlash I mean you could never you know I don't think anybody thinks you could change this in New York but yet if you do move a few people to Zurich you
know they'll start behaving like people in Zurich and then over time you could you know move everybody from New York to a place like Zurich The Pedestrian Norm you know Norms is I think a useful one because it isn't too charged politically or emotionally but but this is the process that that's in play my now go back to to Charter cities which I thought of as a mechanism for addressing
some of these issues I think the response when I proposed this about 10 years ago was that this was the worst idea that anybody had heard now if you go fast forward about 10 years I think the response now is well that's the worst idea for dealing with migration except for all the others and so that there's now uh some real interest from governments and a variety of you know actors in this space who'd like to
explore something different because nobody's got a good answer to the question what would we do if like 20 million people needed to leave a country in a hurry because of something like a descent into into Civil War uh or 10 million 10 20 I think nobody has any delusion anymore that that an outside force can invade a country like that and quickly resolve a problem like that so I
think it'll be great hesit to do that this idea that we're going to deal with Migration by just not letting it happen in this case would mean well we're just going to we're just going to build the wall or hold them in and you know if they're killing each other that's that's their problem and you know as a humanitarian you know crisis I don't think it'll be acceptable to just do nothing but yet there are no existing
political systems that could absorb 20 million new you know arrivals without I think real risk to whatever their current political uh equilibrium is so and then you could scale this up I there's hundreds of millions of people who say they want to leave not because of an immediate crisis but just because of the the lack of opportunity and the you know the high levels of violence in many parts of the world say Syrian
refugee cities aren't they a kind of Charter City but they don't have credibility so they don't attract foreign investment wages are very low people are stuck there they don't build Futures so if 10 million people need to leave say Bangladesh wherever how do we set up a well-functioning credible Charter city with the right commercial and legal culture I'm I'm going to do something which is probably bad form
which is like talk about an idea before I've even written it down but but so be it I I I I find it's a way to refine ideas I I think we should talk about a trilemma for migration which is you know three things and we can only have two out of the three I I think the three we'd like to the you think of the kind of the liberal democracies what would we like as a response for say large numbers
of people who need to go someplace if it was a you know there some political jurisdictions one of the things we want is local Democratic accountability for the officials in the government the second would be equal treatment under the law and the third is in this jurisdiction the ability to absorb large numbers of migrants you know potentially numbers that are bigger than the existing population so picture picture
one of these places when there's a million people there but you you'd like it to be able to accept another 9 million all three of those things are things that most people would support and you just can't have all all three so the you know the the two we we pick in most existing jurisdictions we just don't allow large-scale U migration and there's you can see some logic to that
if if you're one of a million people and you kind of like the equilibrium and you're contemplating bringing in another 9 million and you're committed to equal treatment under the law the system's going to basically be the one that all the new arrivals are going to vote for not the ones that you like and uh the new arrivals might be coming for the thing that you like but still collectively they might vote for put in
place something that you know isn't the one they're they're seeking out so there's a reason why Democratic systems can't absorb huge numbers of migrants you could violate equal treatment and say okay well we're going to let large numbers of people come in but they're not going to become citizens uh have a different legal status and that I think because of these the the Norms that evolve in these conditions of inequality
I think that is is going to prove to be a very damaging approach in in both the The migrants Who arrive and the people in the existing Society so I don't think equal treatment is a very useful uh option and the Hong Kong like solution I think we should consider is to say we're committed to large-scale migration for a period of time we're going to treat everybody are going to give everybody
equal treatment under the law but we'll make the transition to local Democratic accountability when we've basically reached our you know our maximum population and the migration process is over and this is I think the way to describe Hong Kong under the British the the the governor there was still accountable to a democracy uh it wasn't like an autocrat they changed periodically some
were better than others uh but it was an offshore democracy in in in England but and you know people in Hong Kong were really quite happy with the that system under under British rule the pressure for democracy only came when it looked like it became apparent that the British would would leave and there was a concern about well who is going to kind of guarantee our system so I I think we could consider Hong Kong like
Arrangements where an existing democratic system an existing system of government helps create the the frame for a a new jurisdiction then large numbers of people can move in and then you know once it you get full it it basically makes the transition to to local uh Democratic control it's a very unfamiliar approach but the thing and has features that are unattractive but the thing to realize is we just don't
have an answer at all if we're you know facing uh this kind of a very large scale crisis of of migration we don't have an answer to either The Chronic problem of people who really want to leave the places uh hundreds of millions want to leave the places they're currently in nor do we have an answer to the immediate crisis what would we do if when within the space of a year you know
like tens of millions of people needed to get out of an environment that was going to descend into violence speaking of cities you're now A New Yorker do you have more sympathy for Jane Jacobs or Robert Moses if I had to pick I'd definitely Jacobs uh rather than than Moses but you love infrastructure High fixed cost low marginal cost he's The Mastermind of infrastructure uh my my colleague
Alberto is is a a big proponent of this idea that go back to this side of abstractions to simplify things you need in a city both some design which you can think of is kind of like top down and then some market like or decentralized kind of uh forces so you can't have a successful City without some level of design I think the problem with Moses was that he didn't actually understand the right the right design for the kind
of the the given the infrastructure that everybody relied on Moses was of this generation that was too enamored of the car and this is where I think Jacobs was at a better intuition the challenge or the dichotomy I would pose would be Jane Jacobs versus gor Morris Morris was the guy who drew the grid that laid out the rectangular you know street map for for Manhattan and I I think it's important
to understand how incredibly valuable it was for someone like Morris to establish that Foundation which really all it all it was was an assertion that here's this two-dimensional grid of public space so that the public authorities will be able to make DEC decisions in the future about how you you use it for for vehicles for pipes and wires and it was the foundation for connecting everybody in in New York and if you don't have
that Foundation that like a public entity can use later for you know bike Lanes or buses or whatever you want you can't it's almost impossible to get it if you don't start out with it like we're never going to see I I don't think another like Houseman who can bulldoze you know new streets is in Paris so if I tring to pick between Morris and Jacobs I'd go with Governor Morris but you know
I wouldn't I wouldn't go with Moses because he Ages was too big on this this super highway thing which isn't that's not it's just not a good design of a grid to connect everybody up now unlike a lot of academics you've had success in the private sector founding and running APPA that experience with your company what did you learn about managerial economics and what did you learn about behavioral economics well perhaps
because it's more recent what's immediately coming to mind are questions I had about management from my time at the bank because you know there I I you know went in as a senior vice president I had about 400 people who reported to me sometimes I I kind of play this game with myself which is like okay if I'm going to be reincarnated what would I do as a new a new young person and for a for a long time I actually wanted to be
a software developer and uh there's still an itch there I want to scratch but you are a software developer well I've been teaching I've been teaching myself python so I I've learned I can scratch that itch a little bit but I think there's some really interesting questions about management that um as academics we don't understand very well I think as practitioners most practitioners don't
understand very well and um it's it's hard it really does involve people who are you know complicated and correlated Behavior but it's intellectually I think interesting and I think practically could be quite quite relevant uh what do you understand about management that say most academic economists would not well you said something about behavioral I one thought I had at the bank is that
we've we've now got we got behavioral economics of the individual and and behavioral in outcomes in a in a market but you know if you think about like the theory of teams we don't have an analysis where we have these kind of Agents with more complicated Mo motivations and you think about um teamwork so so I think thinking about you know Behavioral or broader motivations in teams is is the the way
to go the most interesting practical thing I learned and and in domain like this how would you make progress I wouldn't sit sit down and make some assumptions like like come up here are the axioms of management you know what I do is go out and look at the evidence and I think some of the most interesting evidence About Management actually came out of Toyota who applied principles
from Edward Deming but there's this one mechanism called kban at Toyota that was used to like manage things on the the production line which has now been taken up by people in in software development and it has I think some really interesting principles one is that transparency is very helpful in Teamwork because when people don't know what others are doing they tend to have a bias towards the negative they think
something bad is happening so transparency is actually a a good way to build trust so part of what kban does is try and make it clear what what's everybody doing the other more subtle observation is that too much work in progress can really impede the flow through of a system so that you limit that it's kind of like congestion on the street you limit the amount of work in progress to avoid the the effects of
like task switching and distractions and that again kban is a way with kind of visual cards that you can kind of limit work and progress and coordinate people and the the most interesting thing I read about a reform of a kind of somewhat dysfunctional team was basically if an it you know service team in a large company where they were able to use the these two principles of limiting work in progress watching for
things like you know like rework that was inefficient but building trust and that uh this and it wasn't just trust within the team the typical situation of of an IT team or like a Research Unit in a place like the bank is that there's this almost unlimited set of requests you get of which you can process only a subset and so you need some transparency about how is it you're selecting the
things you actually work on given the many things people want and if that's transparent enough to other people and there's some rational process for making those decisions you just get much better outcomes than if if it's kind of covert and you know influence you know that you do things because one of your friends asks you to uh uh to do them so so I I thought the the first thing to do on
management is just like proceed empirically and and see where reforms have worked in in organizations like this then I think you could start to build a theory about you know why is it that trust is so important when you have a a team of people what's your favorite song by acoustic Huna oh yeah well a man's fate a man's fate I would say hesitation blues oh would you yeah oh oh interesting and maybe death don't have
no mercy yeah oh no on that one I I I really like the the Great Dead version actually uh on on live Dead uh there's a there's a great kind of solo that Garcia does uh in death don't have no mercy mans fade you know what I like there is the the parallel or symmetry between the acoustic and the the bass yes you know they they they they take turns and and uh that kind of role reversal I I guess
it's like what what like Clarence white did when uh you know kind of turning the guitar into the a lead instrument analogous to the to the fiddle so I mean I think that kind of innovation in in music in the kind of the structure or Inplay is uh is wonderful and I I must say I just love the the bass guitar of of Jack Cassidy so and why is Clarence white still underrated as a guitarist I don't know I i' I've run into enough
people like there's somebody else at at NYU I bumped into who's from from Virginia who who knew who knows of of of Clarence white I think his reputation is is growing and you know YouTube is I think a a big part of this because you can find a surprising number of you know videos or recordings of of of Clarence playing what's your favorite performance of Clarence white with the birds which
song for me it's have you seen her face I think well I I was actually going to sing that's exactly the period where he was bringing in these kind of country is licks you know either just on his regular guitar or with the this this uh Bender the GU the Bing Bender but um when he would bring in those just those country-ish flavored notes that he would bend on the bird songs of the of that
era I thought that was just you know just a genius genius mashup my partner and I have this kind of long-standing debate about who's better Graham Parsons or Clarence white and is this ongoing sort of battle at home no no Clarence White's really the one who was responsible for country rock no no no Grand Parsons and it's one of those one of those battles you you it's one of those few places where you're not trying
to achieve consensus this is not like this is is not like science this is just we like going back and forth on that one what's your favorite novel and why uh a couple I I I loved the intricacy of Tinker Taylor Soldier Spy by Jean lar and the subtlety of the emotions and the manipulation of the emotions and this kind of spy story I also was very taken by Catch 22 but even more so the vate
book oh no I'm I'm forgetting what was the um play piano Slaughter has five Slaughter has five yeah house 5 partly because of the kind of the Insight it gave you into him and the story he tells of being in Dresden during the bombing in World War II and and the book is his attempt in some ways to try and cope with experiencing this this really amazing tragedy um I I uh I actually like those kind of stories where you
there's a kind of a a meta element where the you know you can see a little bit more transparently the author trying to work something out in in the in in the story itself with with my kids I actually like the Muppet movie partly because it's it's like Kermit is going to Hollywood but it's really the story of Jim Hensen and uh that that was uh I think the part that made that a more touching story what's your favorite
country to travel to and why oh actually just before we leave reading reading let me just mention um somebody sent me just within the last two weeks a reference to a a philosopher in the US named Pierce uh Charles Sanders Pierce here yeah brilliant man poly meth I had never even heard of Pierce and he's a bit like you in some ways well that's a that's a little worrisome his kind of the latter
half of his career didn't turn out so well but you know he he uh I think ended up pennyless and uh you know destitute and abandoned but uh but he did he did have wide ranging interests and and de curious yeah and it turns out things he was thinking about you know I was referring before to abstraction and how we use abstraction to communicate he he was very thoughtful about that and I
think had a much more sophisticated sense about kind of how science proceeds than say that the the sort of the you know the positivist sort of you know machine that that people describe but but one of the joys of reading that's not a novel but one of the joys of reading and the to me like slightly frightening thing is that there's so much out there and that you know like hundred years later you can discover
somebody who you know has so many things to say that can be helpful for somebody like me trying to understand how do we use abstraction how do we communicate clearly how do we you know he he started this field of semiotics of like this connection between the sign and the the concept and the distinction between those two that I think is a is instead of I I used to think things like that we kind of academics worrying about angels
on the head of a pin but um but this I think is actually a really profoundly important distinction to to pay attention to but but the joy of scholarship I think a joy maybe of any life in the modern world is that through Reading we can get access to the thoughts of of another person and then you can sample from the thoughts that are most relevant to you or that are the most powerful in some sense and uh
that's that's really you know the foundation for the transmission of knowledge growth and this this whole this whole process so I I I think I should read probably a little bit more widely in uh in fiction but I find somebody like pierce my reaction is God I'm gonna I I you know I'm going to quit everything else and just go read uh the kind of the non-fiction stuff because
there's there's so much out there that I I didn't even know about two last questions about you first you grew up in the mountains when so many of the powerful people are on the coasts how has that shaped your life and thought uh you know I don't know but I it seems like an interesting question to ask you know Bill nordhouse is from uh New Mexico and there's this striking parallels between Bill's career and mine
we both like as graduate students wanted to understand you know endogenous technological change he he was working you know 10 10 or more years before before I did uh but uh I I've wondered if there was something about kind of the Mountain West that then moving to the east coast that made us both willing to kind of take on things that weren't the the kind of the accepted you know consensus about what were the most
important things to to work on when when I get a chance to talk with Bill I want to ask him about that but the problem is you know from introspection I don't know if I can ever figure out what effect those things had but uh I I I think there's a slightly different culture in the midwest compared to the east coast and and there's enough of difference so that when you go from one to the other
you have maybe a little bit of a sense of being an an outsid so maybe those maybe those things have filtered into my work and we all know your father was governor of Colorado active in the world of policy but what did you learn from your mother well my mother she raised seven kids um I told her I told her just recently that you know this priz is for her because there there's this formative period uh when
you're a very young child where the kind of the care and affection and just warmth the emotional warmth with the mother it is I think a big influence on uh the rest of your life uh she she started in the you know like in the 60s I guess uh a preschool in in Colorado she was not only raising kids but she started a preschool because she was so convinced at how important this early childhood uh nurturing kind of
environment was so what I got from her I think were the kind of the emotional capacities that that you get if you can grow up in a supportive environment so she's going to come she's 89 she's going to come to to Stockholm and uh I'll bring the rest of my my whole family we'll we'll max out my whole you know kind of allotment of people I can take but it'll be a kind of a family event in
in Stockholm Paul romor congratulations on the Nobel Prize and thank you very much thanks and I I look forward to coming back another time to have you again 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 [Music] show