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Alex Tabarrok - Prizes, Prices, and Public Goods
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Alex Tabarrok is a professor of economics at George Mason University and with Tyler Cowen a founder of the online education platform http://MRU.org. I ask Alex Tabarrok about the Grand Innovation Prize, the Baumol effect, and Dominant Assurance Contracts. Episode website: https://www.dwarkeshpatel.com/p/alex-tabarrok Apple Podcasts: https://apple.co/3TGYbIz Spotify: https://spoti.fi/3ADoIxq Follow me on Twitter to be notified of future content: https://twitter.com/dwarkesh_sp Follow Alex Tabarrok: https://twitter.com/ATabarrok Alex Tabarrok's and Tyler Cowen's excellent blog: https://marginalrevolution.com/ Timestamps: 00:00 Intro 00:34 Grand Innovation Prize 08:45 Prizes vs grants 14:10 Baumol effect 27:50 On Bryan Caplan's case against education 31:35 Scaling education online 48:50 Declining research productivity 52:15 Dominant Assurance Contracts 58:40 Future of governance 1:04:05 On Robin Hanson's Futarchy 1:06:02 Beating Adam Smith 1:08:35 Our Warfare-Welfare State 1:19:30 The Great Stagnation vs The Innovation Renaissance 1:21:40 Advice to 20 year old
Segments Timeline
The Role of Government in Innovation
Alex Tabarrok discusses the balance between wanting a small government and ensuring it can effectively respond to crises, particularly in the context of innovation during the pandemic. He emphasizes the need for government to act decisively and efficiently when necessary.
"look i want a small government but i want a government to be able to do what it's supposed to do at the time it's supposed to do it [Music] okay today i have the pleasure of speaking with professor al..."
The Role of Government in Innovation
Alex Tabarrok discusses the balance between wanting a small government and ensuring it can effectively respond to crises, particularly in the context of innovation during the pandemic. He emphasizes the need for government action to facilitate rapid vaccine development and other critical responses.
"look i want a small government but i want a government to be able to do what it's supposed to do at the time it's supposed to do it [Music] okay today i have the pleasure of speaking with professor al..."
Understanding the Grand Innovation Prize
Tabarrok explains the concept of the Grand Innovation Prize, highlighting its purpose in incentivizing rapid vaccine development during the pandemic. He discusses how traditional incentives for vaccine manufacturers may not be sufficient, and how a substantial prize could motivate quicker action.
"the podcast yeah it's great to be here awesome okay so first i want to ask you about uh the grand innovation prize can you explain what this is and i'd like to ask you some more questions about it sur..."
Understanding the Grand Innovation Prize
Tabarrok explains the concept of the Grand Innovation Prize, highlighting its purpose in incentivizing rapid vaccine development during the pandemic. He discusses how traditional incentives for vaccine manufacturers may not be sufficient and how a large prize could motivate quicker action.
"the podcast yeah it's great to be here awesome okay so first i want to ask you about uh the grand innovation prize can you explain what this is and i'd like to ask you some more questions about it sur..."
Funding Vaccine Development
In this segment, Tabarrok addresses the challenges of funding vaccine development, particularly for innovators who lack initial capital. He explores the trade-offs between grants and prizes, emphasizing the importance of providing upfront funding to encourage innovation.
"can say okay we're gonna pay some of your costs and there's pluses and minuses but the basic idea of a prize or advanced market commitment or advanced market purchase or paying for at-risk capacity is..."
Funding Vaccine Development
In this segment, Tabarrok addresses the challenges of funding vaccine development, particularly for innovators who lack initial capital. He explores the trade-offs between grants and prizes, advocating for a prize system that encourages diverse approaches to vaccine creation.
"can say okay we're gonna pay some of your costs and there's pluses and minuses but the basic idea of a prize or advanced market commitment or advanced market purchase or paying for at-risk capacity is..."
The Need for Diverse Funding Approaches
Tabarrok argues for a multifaceted approach to funding vaccine development, suggesting that a combination of prizes, grants, and upfront payments for manufacturing capacity can help address the urgent needs of a pandemic. He shares insights from his collaboration with Nobel laureate Michael Kramer.
"vaccine is going to be the most successful and there's a whole bunch of different types you know there's the traditional live attenuated vaccine a killed virus vaccine there are some new vaccines usin..."
The Importance of Diverse Approaches
Tabarrok emphasizes the need for a variety of funding mechanisms to support vaccine development, including upfront payments for manufacturing capacity. He discusses the historical success of prizes in fostering innovation and the potential for new solutions in the current pandemic context.
"vaccine is going to be the most successful and there's a whole bunch of different types you know there's the traditional live attenuated vaccine a killed virus vaccine there are some new vaccines usin..."
The Role of Venture Capital in Vaccine Innovation
Tabarrok discusses the potential for venture capital to play a role in funding vaccine development, but notes the challenges and information asymmetries that can hinder this process. He emphasizes the need for quick action and investment in diverse solutions.
"advanced market commitment for the pneumococcus uh vaccine uh which probably saved 700 000 lives was given to millions of children and in that the primary tool was the promise of a fixed price if you ..."
Venture Capital and Vaccine Innovation
In this segment, Tabarrok explores the role of venture capital in funding vaccine research and the challenges associated with high-risk investments. He discusses the difficulties VCs face in evaluating vaccine projects and the need for immediate financial support in a pandemic.
"advanced market commitment for the pneumococcus uh vaccine uh which probably saved 700 000 lives was given to millions of children and in that the primary tool was the promise of a fixed price if you ..."
Throwing Money at the Problem
In a surprising turn for a free-market economist, Tabarrok advocates for significant government investment in vaccine development to combat the COVID-19 crisis. He acknowledges the potential for waste but argues that the costs of inaction are far greater.
"the government i mean he had skin in the game but for a vc to learn enough about vaccines and to figure out to you know you got to be on on uh on presence uh to figure out which which are the scams yo..."
Throwing Money at the Problem
Tabarrok argues for a proactive approach to funding during the COVID-19 pandemic, suggesting that the costs of inaction far outweigh the risks of wasteful spending. He advocates for a diverse portfolio of vaccine candidates to increase the chances of success.
"the government i mean he had skin in the game but for a vc to learn enough about vaccines and to figure out to you know you got to be on on uh on presence uh to figure out which which are the scams yo..."
The Case for Prizes in Innovation
Tabarrok elaborates on the advantages of using prizes as a funding mechanism for innovation, particularly when traditional experts have failed to solve pressing problems. He highlights how prizes can attract unconventional thinkers and solutions.
"they're not sure whether it was due to the vaccine or due to something else but it's a danger and that that could happen i'm not saying the astrozenica vaccine is going to fail um i hope it doesn't i ..."
The Case for Prizes in Innovation
Tabarrok discusses the advantages of using prizes as a funding mechanism for innovation, particularly when traditional experts have failed to solve pressing problems. He highlights how prizes can attract unconventional thinkers and stimulate creative solutions.
"the process so you really want to have a diverse set of uh vaccines in your uh portfolio and some of them you know pay for manufacturing capacity some of them pay uh have the price the guaranteed pric..."
Challenges of Grant Funding
In this segment, Tabarrok examines why grants have become the dominant method of funding research over prizes. He reflects on historical trends and the potential for a resurgence of prize-based funding mechanisms in light of recent successes.
"the money so it it's just incredibly frustrating um and i thought a prize because you can announce it even before you've you know gathered the funds or figured out who's going to be on the prize commi..."
Why Grants Dominate Research Funding
In this segment, Tabarrok explores the historical context of research funding, discussing why grants have become the dominant method over prizes. He reflects on the potential for a resurgence of prize funding in light of recent successes.
"the money so it it's just incredibly frustrating um and i thought a prize because you can announce it even before you've you know gathered the funds or figured out who's going to be on the prize commi..."
Efficacy of Prizes vs. Grants
Tabarrok presents evidence suggesting that prizes can lead to more effective research outcomes compared to traditional grants. He cites examples of successful funding initiatives and discusses the implications for future funding strategies in innovation.
"were much more common in the 19th century and then they kind of failed failed off or trailed off in the 20th century and they've seen a little bit of a resurgence uh in more recent decades one reason ..."
Efficacy of Prizes vs. Grants
Tabarrok presents evidence suggesting that prizes can lead to more effective research outcomes compared to traditional grants. He cites examples of successful funding models that have yielded significant innovations and higher citation rates.
"were much more common in the 19th century and then they kind of failed failed off or trailed off in the 20th century and they've seen a little bit of a resurgence uh in more recent decades one reason ..."
Transitioning to the Baumol Effect
Tabarrok introduces the Baumol effect, setting the stage for a deeper discussion on its implications for education and innovation. He hints at the challenges posed by rising costs in sectors reliant on public funding.
"howard hughes actually tried to set up a tax dodge and ended up found founding the you know howard hughes medical centers um which have lasted much longer than his uh his tax dodge so he had some bene..."
Transitioning to the Baumol Effect
Tabarrok introduces the Baumol effect, setting the stage for a deeper discussion on its implications for education and innovation. He hints at the challenges posed by rising costs in sectors that rely heavily on human capital.
"howard hughes actually tried to set up a tax dodge and ended up found founding the you know howard hughes medical centers um which have lasted much longer than his uh his tax dodge so he had some bene..."
Understanding the Baumol Effect
In this segment, Tabarrok explains the Baumol effect, which describes how prices in certain sectors, like education and healthcare, continue to rise despite stagnating productivity. He contrasts progressive sectors that experience productivity growth with stagnant sectors, illustrating how the opportunity cost of labor drives up prices in less productive industries. This discussion challenges traditional views on price increases in these sectors.
"you about uh the bamboo effect yeah bommel yeah so um so we have these industries uh where every year just the prices just seem to keep going up and up and up and up without without fail um and uh edu..."
Understanding the Baumol Effect
Tabarrok introduces the Baumol effect, explaining why certain industries, like education and healthcare, experience continuous price increases. He contrasts these stagnant sectors with more productive industries, suggesting that the rising costs in less productive sectors are a result of opportunity costs driven by advancements in more efficient sectors.
"you about uh the bamboo effect yeah bommel yeah so um so we have these industries uh where every year just the prices just seem to keep going up and up and up and up without without fail um and uh edu..."
The Impact of Skilled Labor on Prices
Tabarrok elaborates on how the demand for skilled labor in progressive sectors influences wage dynamics across the economy. He discusses the implications of wage stagnation for less skilled labor and the potential risks posed by automation. This segment emphasizes the importance of education and skill development in maintaining labor market stability amidst technological advancements.
"other way of thinking about that and that is what this implies is that prices in the stagnant sector will start to go up less quickly when the progressive sector is slowing down so this means that the..."
Productivity Disparities Across Sectors
In this segment, Tabarrok elaborates on the differences in productivity growth between sectors. He explains how industries that are not improving in productivity, such as education and healthcare, see rising prices due to the opportunity costs associated with more productive sectors. This discussion highlights the economic implications of stagnant productivity in certain fields.
"uh repaired uh today than it used to be auto repair has been going up in price uh over time relative to other uh goods and services so much that you know for example um i had to replace the blade on m..."
The Impact of Skilled Labor on Prices
Tabarrok addresses the relationship between skilled labor and rising prices in stagnant sectors. He argues that as skilled labor becomes more valuable in high-demand areas like Silicon Valley, the opportunity cost for educators and healthcare professionals increases, leading to higher wages in these sectors despite overall wage stagnation.
"uh something good about the progressive sector that's why things are getting more expensive because you can you have to give up a lot more because this sector is becoming much more productive uh let m..."
Reassessing Education's Role in the Economy
In this segment, Tabarrok critiques the current education system in the U.S., comparing it to European models. He argues for a rebalancing of educational attainment, emphasizing the need for more high school graduates and questioning the value of sending so many students to college, especially in fields with poor job prospects.
"it can be part of a naturally growing um economy um there's a new good book on this uh you probably know it i've forgotten i should think of the title the author is going to be mad at me for not i'll ..."
The Future of Teaching in Online Education
Tabarrok explores the future of teaching in the context of online education, particularly through his initiative, Marginal Revolution University. He predicts a decline in traditional teaching roles as online platforms allow for greater scalability and efficiency, ultimately benefiting students and educators alike.
"uh friends then they go into journalism right which is like a terrible field or psychology right these are terrible fields to go into for for jobs um and yet these fields journalism and psychology in ..."
Automation and the Future of Labor
In this thought-provoking segment, Tabarrok discusses the implications of automation on labor markets, particularly for less skilled workers. He raises concerns about the potential for job displacement as automation becomes more prevalent, while also noting that skilled labor remains in demand. This segment explores the balance between technological advancement and labor market stability.
"could be a bad thing yeah it's such an interesting explanation it just changes all of the prevailing wisdom that you hear everywhere about uh why these um why these industries are getting so much more..."
Harnessing AI for Personalized Learning
In this segment, Tabarrok discusses the potential of artificial intelligence in education, highlighting how AI can provide personalized learning experiences. He explains how AI tutors can analyze student performance and tailor instruction to individual needs, significantly enhancing the learning process.
"um because you know why should you the problem is education has always been difficult to scale right uh it's such a one-on-one kind of business and if you're able to scale education is actually we're ..."
The Great Stagnation Explained
Tabarrok connects the concept of the Great Stagnation to the increasing dominance of less productive sectors in the economy. He explains how a shift towards service-based industries, which typically grow more slowly, contributes to overall economic stagnation. This segment provides insights into the long-term trends affecting economic growth and productivity.
"that's true but i do worry and as we're already seeing that certain types of labor um you know can be overrun by uh automation right so you know less skilled labor uh their wages have not been going u..."
Education's Role in Economic Growth
Tabarrok emphasizes the need to increase educational attainment in the U.S. workforce to counteract declining growth rates. He contrasts the U.S. education system with that of European countries, advocating for a rebalancing that prioritizes high school graduation and relevant skill development over college attendance.
"it can be part of a naturally growing um economy um there's a new good book on this uh you probably know it i've forgotten i should think of the title the author is going to be mad at me for not i'll ..."
Why Online Education Could Finally Disrupt Traditional Models
Tabarrok addresses skepticism about online education's ability to disrupt traditional learning. He argues that advancements in technology and the unique advantages of online learning environments could lead to a significant transformation in education, making it more accessible and effective for students.
"much more quickly so i think there's huge huge possibilities for artificial intelligence and for you know video online learning and so forth so you give out these optimistic scenarios of how education..."
The Challenge of Signaling in Education
In this concluding segment, Tabarrok reflects on the importance of signaling in education. He discusses the need for online courses to provide a credible signal of intelligence and conscientiousness to employers, emphasizing that without this, traditional college degrees may still hold more value in the job market.
"but uh i don't want to speak for brian kaplan here but maybe somebody might say uh what if you're just solving the wrong wrong problem that people aren't really giving up four years of their life to g..."
The Signaling Problem in Education
In this segment, Tabarrok addresses Bryan Caplan's argument regarding the signaling aspect of education. He acknowledges the role of signaling in college education while advocating for a broader approach that includes vocational training and apprenticeships, as seen in countries like Germany.
"now my first guess on the podcast was uh your colleague brian kaplan and he would argue probably the opposite that he'd say you're just increasing the cost of signaling if you make people have a highe..."
The Flaws of the U.S. Education System
Tabarrok critiques the U.S. education system for its low high school graduation rates compared to other countries and the disproportionate number of graduates who attend college. He argues for a shift in focus towards ensuring more students graduate high school and acquire practical skills.
"uh friends then they go into journalism right which is like a terrible field or psychology right these are terrible fields to go into for for jobs um and yet these fields journalism and psychology in ..."
Coaching and the New Education Model
Tabarrok delves into the changing role of educators in a digital age, suggesting that traditional teaching will shift towards coaching and personalized instruction. He envisions a future where online learning is complemented by one-on-one coaching, similar to sports training. This segment highlights the need for a new educational framework that prioritizes individual guidance and support.
"universities will be the ones who go online they're not gonna be and not all of them are going to make the transition you know we're seeing this right now with the pandemic a lot of universities are f..."
Baumol's Effect on Education Costs
In this insightful discussion, Tabarrok explains Baumol's effect and its impact on the rising costs of education. He describes how the increasing demand for education, coupled with stagnant productivity in the sector, leads to higher prices. This segment provides a critical analysis of the economic forces shaping the future of education and the challenges that lie ahead.
"um because they'll be much more hierarchical um actually so you know one guy at the top will have this kind of hierarchy of tas and things like that i mean that's kind of how college works anyways a l..."
The Future of Online Education
Tabarrok discusses the potential of online education to revolutionize teaching by allowing instructors to reach larger audiences. He predicts that the shift to online learning will lead to fewer teachers but higher pay for those who excel in this new environment, emphasizing the scalability of education.
"uh okay so i i didn't want to make any presumptions [Laughter] but yeah i'm glad i'm glad you fit the correct uh uh the correct uh you know modus operandi you do it you're doing the right thing yeah y..."
Artificial Intelligence in Education
In this segment, Tabarrok explores the role of artificial intelligence in enhancing educational outcomes. He highlights how AI can provide personalized learning experiences and improve assessment methods, suggesting that these advancements could significantly change the landscape of education.
"um because you know why should you the problem is education has always been difficult to scale right uh it's such a one-on-one kind of business and if you're able to scale education is actually we're ..."
The Paradox of Rising Education Costs
Tabarrok addresses the paradox of rising education costs alongside increasing enrollment and spending. He discusses how more students are attending college than ever before, yet educational outcomes have not improved proportionately. This segment raises important questions about the effectiveness of current educational practices and the need for reform in the system.
"okay um so that's an interesting thing about uh education and healthcare um is that even as the price has gone up we're spending more on these goods right and that's really bizarre from just about the..."
Why Online Education Could Succeed Now
Tabarrok reflects on the historical skepticism surrounding new educational technologies and argues that current advancements in online education may finally disrupt traditional systems. He cites the advantages of online learning, such as flexibility and personalized pacing, as key factors in its potential success.
"key to learning so the students can advance much more quickly so i think there's huge huge possibilities for artificial intelligence and for you know video online learning and so forth so you give out..."
The Promise of Dominant Assurance Contracts
In this segment, Tabarrok introduces the concept of Dominant Assurance Contracts as a solution to public goods problems. He explains how this innovative approach can incentivize contributions to public goods while ensuring that individuals feel secure in their investments. This discussion highlights the potential for new economic models to address longstanding challenges in public finance.
"mentioned that it was uh every 13 years you need to double the amount of resources to get the same growth so we could just have every pair of 13 year olds just have four research kids yeah yeah and it..."
The Future of Education: Online vs. Traditional
In this segment, Tabarrok addresses the limitations of online courses in replacing traditional universities. He argues that while online education can expand access, the need for credentials and personal interaction remains crucial. He discusses the potential for universities to transition online while maintaining their reputations and the challenges they face in doing so.
"but uh i don't want to speak for brian kaplan here but maybe somebody might say uh what if you're just solving the wrong wrong problem that people aren't really giving up four years of their life to g..."
Dominant Assurance Contracts Explained
Tabarrok introduces the concept of Dominant Assurance Contracts as a solution to the public goods problem. He explains how these contracts incentivize contributions by ensuring that individuals benefit regardless of whether a project reaches its funding threshold, thus addressing the free-rider issue.
"so so let me ask now about um dominant assurance contracts uh before i ask you some more questions about it when we get in the weeds do you want to explain what that is sure um so uh so dominance it's..."
Kickstarter and Public Goods
In this segment, Tabarrok compares Dominant Assurance Contracts to Kickstarter, illustrating how the latter allows contributors to only pay if a project is successfully funded. He emphasizes that this model can significantly increase the success rate of public goods projects by mitigating the risk of wasted contributions.
"kickstarter solves one problem in that you're not worried that the other people you know just won't show up and then your your funds will be wasted okay your funds are never wasted uh your funds only ..."
The Baumol Effect and Education Costs
Tabarrok explains the Baumol effect in the context of education, discussing how rising costs in stagnant sectors like education and healthcare can coexist with increasing wealth. He highlights the paradox of rising educational expenses despite more resources being allocated to teaching, and the implications this has for future educational outcomes.
"will be spread out um because they'll be much more hierarchical um actually so you know one guy at the top will have this kind of hierarchy of tas and things like that i mean that's kind of how colleg..."
Research Productivity and Its Challenges
In this segment, Tabarrok reflects on the declining productivity in research sectors, particularly in pharmaceuticals and technology. He discusses the increasing number of researchers needed to achieve the same growth rates and the implications for innovation. This segment raises concerns about the future of research and the potential for breakthroughs amidst these challenges.
"today than you did in the past and the same thing you know i work a lot on pharmaceuticals i tend to you know focus on the fda and the fda kind of slows things down but even putting aside that the amo..."
Challenges in Public Good Projects
Tabarrok addresses the inflation of budgets in public projects, such as bridges, and discusses the various factors contributing to rising costs. He acknowledges that while Dominant Assurance Contracts can improve contribution rates, they do not solve all issues related to public goods, particularly those involving budget management.
"problem and what some colleagues and i um uh tim cason and robert zuberkus uh what we've actually shown is this works in the lab so we've run experiments and the dominant insurance contract is able to..."
The Future of Governance Mechanisms
Tabarrok explores the potential for new governance mechanisms in the digital age, emphasizing the importance of experimentation in collective organization. He discusses how online platforms can facilitate innovative approaches to public goods and governance, drawing parallels to historical shifts towards democracy.
"people like you and me to instead of having to like convince a majority of people to adopt our ideas to just like set up alternative institutions that are based on ideas like this yeah so i mean i thi..."
Understanding Dominant Assurance Contracts
Tabarrok introduces the concept of Dominant Assurance Contracts, explaining their significance in addressing public goods problems. He emphasizes the importance of this concept in economic theory and its potential applications, setting the stage for a deeper discussion on how these contracts can facilitate cooperation in public goods provision.
"so so let me ask now about um dominant assurance contracts uh before i ask you some more questions about it when we get in the weeds do you want to explain what that is sure um so uh so dominance it's..."
Innovative Governance Mechanisms
Tabarrok explores the potential for new governance mechanisms to emerge from online experimentation. He discusses the importance of creating alternative institutions that can effectively produce public goods, highlighting the role of blockchain technology and other innovative approaches in shaping future governance.
"and there's a you know there's a problem especially in the united states with why uh you know subways and construction and uh tunnels why they're so expensive here compared to the rest of the world ri..."
Futarchy: A New Governance Model
In this segment, Tabarrok delves into Robin Hanson's concept of Futarchy, a governance model based on prediction markets. He expresses enthusiasm for experimenting with Futarchy alongside Dominant Assurance Contracts and other innovative ideas, highlighting the need for fresh approaches to governance in the modern world.
"it's it's a governance mechanism right and uh we've now had you know 200 250 years of experience and we know it works well in some cases and less well in in other cases it's not a great preference agg..."
The Future of Collective Organization
In this segment, Tabarrok reflects on the evolution of governance systems and the unprecedented opportunities for experimentation in online environments. He emphasizes the need for effective collective organization to address public goods challenges and the potential for new governance models to emerge from these experiments.
"yeah yeah the optimistic scenario here is um elias rudowsky wrote a book called inadequate equilibria as i'm sure you know and then he detailed three ways in which like a civilization can feel asymmet..."
The Future of Governance Experiments
Alex Tabarrok discusses the potential of online worlds to facilitate thousands of governance experiments, drawing parallels to the post-World War II transition to democracy. He highlights the importance of experimenting with new governance mechanisms, including Robin Hanson's concept of Futarchy, which proposes using prediction markets to guide policy decisions.
"and the plethora of online worlds and experiments is i think one way which we're going to do this and it's it hasn't been done all right the last time we did this was transitioning to democracy uh bas..."
Futarchy: A New Governance Model
Tabarrok elaborates on Robin Hanson's Futarchy, a governance system based on futures markets. He expresses enthusiasm for this innovative idea and advocates for more experimentation with Futarchy and other radical governance concepts, such as dominant assurance contracts, to explore their viability in modern governance.
"uh with new types of governance mechanisms that's so fascinating uh by the way what do you think of robin hansen's idea of a future where prediction markets decide which policies are stopped right so ..."
Exploring Futarchy and Experimental Governance
Tabarrok discusses Robin Hanson's concept of Futarchy, a governance model based on prediction markets. He expresses enthusiasm for experimenting with Futarchy alongside Dominant Assurance Contracts and other innovative ideas, advocating for a more experimental approach to governance in the digital age.
"as we are today it's really quite extraordinary like tasos has got its mechanism and you know ethereum has got its mechanism and so we're doing much more experimentation in how to organize collectivel..."
Dominant Assurance Contracts: A Sixth Governance System?
In this segment, Tabarrok considers whether Dominant Assurance Contracts could be classified as a sixth form of governance. While he acknowledges their potential, he refrains from equating them with traditional governance systems like democracy or monarchy, emphasizing the need for further exploration of these mechanisms.
"few turkey with dominant assurance contracts with kind of some of glenn wilde's radical exchange ideas um you know i want to see a lot more experimentation in these big ideas than we've had in the pas..."
The Role of Dominant Assurance Contracts
In this segment, Tabarrok reflects on the concept of dominant assurance contracts as a potential sixth form of governance. He acknowledges its significance but suggests it may not fully replace traditional governance systems like democracy or monarchy, emphasizing the need for diverse governance mechanisms.
"few turkey with dominant assurance contracts with kind of some of glenn wilde's radical exchange ideas um you know i want to see a lot more experimentation in these big ideas than we've had in the pas..."
Teaching Economics to the World
Tabarrok shares his ambition, alongside Tyler Cowen, to teach economics to more people than anyone in history. He reflects on the impact of their online educational platform, Marginal Revolution University, and the remarkable reach they have achieved in educating students globally, highlighting the transformative power of online learning.
"that's pretty amazing yeah yeah um uh so let me ask you about uh though the different ways in which you've been creating content so you write papers you write books you've written a textbook with tyle..."
Teaching Economics to the World
Tabarrok shares his ambition, alongside Tyler Cowen, to teach more people economics than anyone in history. He reflects on the impact of their online educational platform, Marginal Revolution University, and the remarkable reach it has, allowing them to connect with students globally and potentially surpass historical figures in economics education.
"that's pretty amazing yeah yeah um uh so let me ask you about uh though the different ways in which you've been creating content so you write papers you write books you've written a textbook with tyle..."
Catching Up to Economic Giants
In this segment, Tabarrok discusses the historical figures in economics, such as Adam Smith and Alfred Marshall, and expresses his aspiration to surpass their influence through modern educational methods. He emphasizes the importance of teaching economics effectively to ensure that future generations learn from past economic wisdom.
"history of the entire world that is actually possible i don't know what's gonna i'm not saying it's gonna happen um but we're climbing the ranks oh i i don't know haven't uh have you not already done ..."
The Challenge of Influence in Economics
Tabarrok discusses the frustrations of being an economist whose ideas often go unadopted by governments. He reflects on the credibility economists have in policy discussions and the challenges they face in influencing real change, particularly in light of the COVID-19 pandemic and the response from institutions like the CDC and FDA.
"that is actually possible i don't know what's gonna i'm not saying it's gonna happen um but we're climbing the ranks oh i i don't know haven't uh have you not already done this because i don't know ho..."
Frustrations of an Economist
Tabarrok candidly discusses the frustrations economists face when their ideas, such as dominant assurance contracts, are not adopted by governments. He reflects on the challenges of influencing policy and the importance of being heard in the corridors of power, despite the slow pace of change in governmental responses.
"would be uh what is it like to be an economist putting out all these ideas out there yeah it's frustrating at times for sure um like i just said you know the world has not caught up with um adam smith..."
Dysfunction in Government Response
In this segment, Tabarrok critiques the government's response to the pandemic, highlighting failures in agencies like the CDC and FDA. He expresses concern over the lack of effective governance and the complacency that has emerged, suggesting that the current state of affairs is a troubling indicator of broader dysfunction within the government.
"would be uh what is it like to be an economist putting out all these ideas out there yeah it's frustrating at times for sure um like i just said you know the world has not caught up with um adam smith..."
The Need for an Innovation State
Tabarrok advocates for a shift from a warfare-welfare state to an innovation state, emphasizing the importance of investing in research and development. He argues that the U.S. must prioritize innovation to remain competitive globally, particularly in light of advancements made by countries like China in technology and pharmaceuticals.
"i i find that very comforting that you're being consulted with because all i see is paul romer just uh getting incredibly upset at how little his advice is listen to and then i feel bad that if other ..."
The Dysfunction of Government Response
In this segment, Tabarrok critiques the government's response to crises, particularly during the pandemic. He highlights failures in agencies like the CDC and FDA, arguing that the government must be capable of effectively addressing emergencies and that complacency in governance poses significant risks to society.
"i i find that very comforting that you're being consulted with because all i see is paul romer just uh getting incredibly upset at how little his advice is listen to and then i feel bad that if other ..."
Lessons from Historical Competitions
Reflecting on historical moments like the space race, Tabarrok discusses how competition can drive innovation. He suggests that the U.S. needs to rekindle a sense of urgency and purpose in its governance and innovation strategies, especially in the face of rising global competitors.
"uh all at trump's doorstep you know congress has completely failed as well right congress is the one supposed to be passing the law where's congress's testing plan where is congress's uh vaccine plan ..."
The Need for an Innovation State
Tabarrok advocates for a shift from a warfare-welfare state to an innovation state, emphasizing the need for increased investment in research and development. He argues that competition with countries like China can spur innovation and that the U.S. must prioritize technological advancement to maintain its global leadership.
"okay but you cannot blame the failures of the cdc and the fda uh all at trump's doorstep you know congress has completely failed as well right congress is the one supposed to be passing the law where'..."
The Role of International Competition
Tabarrok concludes by discussing the potential benefits of international competition, particularly with countries like China and India. He emphasizes the need for the U.S. to respond to global challenges with innovation and cooperation rather than complacency, highlighting the importance of effective governance in achieving these goals.
"not working and it's not all going to be uh the danger is that where they abide in an administration you know the liberals will be so happy that all thought of fundamental change will uh end which is ..."
Learning from Competition
In this concluding segment, Tabarrok discusses the historical context of U.S. innovation, particularly during the space race. He argues that international competition can drive progress and innovation, suggesting that the U.S. must respond to global challenges by fostering a culture of innovation and collaboration.
"anything is possible um and it's well i am worried yeah i'm i'm worried and it's not just about the pandemic but i think that is just the canary in the coal mine which tells us that this government is..."
Globalization's Impact on Research and Development
Tabarrok addresses the paradox of the Great Stagnation occurring alongside globalization. He explains that while globalization should enhance research and development, there are countervailing factors that have made it more challenging to achieve significant technological advancements. He discusses the need to adapt to these changes and the potential for future breakthroughs in technology.
"not just in terms of innovation but also in terms of freedom and liberty and you know uh racial and sexual equality all of these things which in many respects not not all by any means but in many resp..."
The Innovation State vs. Warfare-Welfare State
Alex Tabarrok discusses the need for the United States to shift its focus from a warfare-welfare state to an innovation state. He highlights how historical competition, such as the space race with the Soviet Union, spurred significant investment in innovation. Tabarrok argues that as military and welfare spending has increased, investment in research and development has diminished, which could hinder America's global leadership in innovation.
"but one thing which i think is going to be helpful is actually competition with other countries uh such as china and india you know like what really made us why did we go to the moon okay we went to t..."
Advice for the Next Generation
In this segment, Tabarrok shares valuable advice for young adults entering the workforce. He emphasizes the importance of education in technology-related fields and the need to develop skills that complement technological advancements. He encourages embracing opportunities in data science, design, and marketing, highlighting that combining artistic impulses with technology can lead to significant career advantages.
"um and you already see in china um leading technologies at 10 cent and so forth baidu and things like that so they're already investing a lot in these technologies which are public goods artificial in..."
Global Competition and Innovation
In this segment, Tabarrok emphasizes the importance of international competition, particularly with countries like China and India, in driving innovation. He expresses concern about the U.S. falling behind in technological advancements and advocates for a renewed focus on innovation to maintain leadership in freedom, liberty, and equality. He envisions the U.S. as a 'shiny beacon on the hill' that attracts global talent and fosters innovation.
"super iqs of you know 160 plus you know start marching out of their factories okay um you know hopefully that will will kick us into gear and we'll say okay we've gotta we've gotta you know respond so..."
Advice for the Next Generation
Tabarrok shares valuable advice for young adults entering a rapidly changing world. He stresses the importance of education in technology-complementary fields, such as data science and engineering, to thrive in the future job market. He also highlights the significance of combining technical skills with creativity and design, suggesting that those who can bridge these areas will find greater success.
"united states be yeah yeah i had the pleasure of interviewing caleb watney which who made a similar point as you that the path dependence of technology is very important and so it's important that it ..."