In this conversational interview, economist Tyler Cowen shares his bold forecasts and nuanced views on the future of artificial intelligence. He predicts that artificial general intelligence (AGI) could emerge within days, arguing that the most advanced AI systems in China are built on American technology, which gives the United States a strategic soft‑power advantage. Cowen stresses the importance of free trade in AI inputs, expressing skepticism toward tariffs and noting the limited effectiveness of export controls. He warns that media will be disrupted as AI can generate clearer, personalized news stories, raising a free‑rider problem and prompting questions about future intellectual‑property regimes. Discussing market dynamics, he observes that many firms are “asleep” to AI’s impact, that disruption will be gradual but inevitable, and that current AI‑related stock valuations (e.g., Nvidia) may not fully reflect the broader economy’s adjustment. Cowen links AI to potential economic growth, noting that large, bureaucratic sectors (healthcare, government, education) limit rapid gains, and that substantial institutional restructuring will be required for a sustained boost in GDP. He touches on near‑term technological applications, highlighting driverless cars as an imminent influence while remaining doubtful about the near‑term relevance of humanoid robots. When asked about defining AGI, he offers a personal benchmark—when AI is smarter than he is—while also acknowledging alternative economic‑output definitions. Finally, Cowen reflects on his own experience with AI, saying it has not noticeably improved his thinking, though he sees it helping many others. The interview weaves together policy, economics, technology, and personal perspective to sketch a picture of an AI‑driven future that is both promising and fraught with challenges.
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Well, I think we're going to have AGI this coming week. The smartest entities in China will be AIs, and those are American. Media is in big trouble because you can read a smarter, clearer version of the story on the AI. People are asleep. While the disruption may come slowly, it will come. You want free trade in the inputs for AI. The AI race is much more important. We got to try to win this thing.
You wrote recently around American soft power and AI. If you had to sort of summarize your takeaway from the article, you know, what would you share with our audience?
Well, it makes me more optimistic about America that we're the AI leader. You know, the Chinese models, Deepseek and Manus, as you probably know, they're based on American AI. So as the Chinese government uses AI more and more, It will be more dependent on Western modes of thought, and they can censor the AI on Taiwan, on Tiananmen Square, but they can't really change how it thinks without making it much stupider. So we're taking them over is one way to put it, not in the sense of conquering them, but the Francis Fukuyama vision I think will be realized through AIs.
Can you expand on that?
Well, the smartest entities in China you know, already, but more and more as the future arrives will be AIs. And those are American again, even if it's Deepseek or Manus. So their smartest entities all of a sudden are American. How would we feel, you know, if all of our smartest entities were Chinese? We'd be like, whoa. Well, that's the position we're in now.
That's a great take. I like that.
Um, how do you, how do you think of tariffs in the trade war in the context of the AI revolution?
The AI race is much more important, but to win that, you want free trade in the inputs for AI, which is quite a few different things. Now, you might want export controls on China, which we have to some extent. I'm not sure they're effective, but I don't see any downside to trying them. Uh, but in the meantime, you want to just take in everything as much as you can, as cheaply as you can, as quickly as possible. So I would say it's an extra reason to be skeptical about the tariffs.
How did you process the Studio Ghibli moment a few weeks ago?
Well, no elite would have predicted it, but obviously people loved it and just something about it worked. I hope it didn't, you know, fry the servers on the cloud computing, but, you know, the stuff is still up and running. And there was something online, I forget the numbers, but some radical upsurge in use of ChatGPT in the last few weeks. Sam gave the numbers, just stunning. And we're going to have a bunch more of these moments in the next year or two.
Do you think there will be a kind of a a cohesive renegotiation around intellectual property that comes out of the AI era?
I hope not. But, you know, media is in big trouble because you can read a smarter, clearer version of the story on the AI tailored for you. There is a free rider problem here. I don't know what kind of arrangement we'll come up with. I don't want government subsidized or government controlled media. Maybe it'll be some weird barbell equilibrium where there's like the New York Times and then there's bloggers and, and tweeters and not that much in between. I don't know. I do think it's a real problem, but to make the AI companies pay for everything the model reads, that strikes me as a bad idea. And I would rather win the AI race with China than do that.
Do you think that AI is broadly priced in yet? It feels like Nvidia in many ways priced to perfection, uh, but it feels like many other industries haven't had maybe the, uh, and companies haven't had the corrections you might think they would have if they were on the verge of massive disruption.
People are asleep. While the disruption may come slowly, it will come. And I think there's a lot of places companies with mid-tier quality software that will end up devastated, you know, within 5 years. Not as quickly as some of the crazy people think, but, you know, within a time horizon relevant for share prices.
Did you have a chance to read or read about AI 2027, and what was your reaction?
Well, I always ask those people, are you short the market? And I never get a straight answer. Those are private conversations, but there's one prominent doomster His response to me was, well, I don't know how to short the market. I just giggled. I'm like, ask the AI if you don't think the AI can arrange that for you. It's probably not very threatening.
Yeah.
So look, any new technology has a lot of dangers. You shouldn't rule out any scenario. But what I tell those people is do what the climate change people did. Take this to peer review, referee journals, make a serious case. Don't just write, you know, the blog post with 17 different vertically arranged separate points.
Yeah.
And see where you get with it. Uh, the other kind of response I have, it's jokey, but also serious. I say I would rather be an American paperclip than a Chinese paperclip. So it's coming anyway. You know, you want to have it on your terms. There is no pause option. We got to try to win this thing.
How do you think about AI adoption? I know it sounds like a simple question, but I feel like this is an interesting technology where every single person that I know— and I am in a bubble, right? I live in— I live on the coast. I work in, you know, tech broadly. AI in many ways seems in sort of certain segments seems to have been like, you know, fully adopted, like it's being used. And, you know, and now it's just more about the sort of capability unlock, right, in, in all these different use cases. But I'm curious how you think about sort of, okay, everybody's using AI now, um, but they're not.
I mean, it's totally brutal. You've got to get out of your bubble. Like, a lot of people use ChatGPT for something trivial. Yeah, yeah, they don't take it seriously. It's like another app. Like, they used it to name the dog's puppies or something, and they have no idea it's going to change their lives. That's the default mode of our elites.
Yeah, that makes sense.
And I was at a prestigious New York event just like 2 or 3 months ago with 5 people, all of whom are well known, and I used the 3-letter phrase AGI. Not one of them knew what I meant. I don't mean they didn't understand it in a deep sense— maybe none of us do— they didn't even know what I was referring to. That's where we're at.
Wow. How do you think about, uh, economic growth? It feels unimaginable that AI would not be the thing to disrupt stagnation and get us at least to 3, 4, 5% real GDP growth annually. Are you expecting things to change or will it just be a reshuffling of the deck? Even though things will be disrupted, there's not really a net new experience of our economy or, or our energy infrastructure.
I think it will improve slowly. But if you look at our economy, and I'm going to sound like Peter here, like, just add up what percent of it is totally non-functional, non-adaptive, bureaucratic. Much of healthcare, most of government, higher ed, K-12, nonprofit sector. Like, that's more than half the economy, right? Yeah. And at what speed will that respond? The stuff that responds quickly, which is great, of course, it becomes so cheap, it's an ever smaller share of GDP. So it's very hard to get the growth rate up by a lot. I think it will happen, but one way to put it is the better the AI is, the more the human imperfections matter. We're already at the point where they're gonna put out new models and most people aren't smart enough to see that they're better.
Yeah.
So I'm all for the new models. They will ultimately matter, but you need to restructure, rebuild almost every institution for the growth rate to truly accelerate. And that will happen, but it's a generational project.
Is that a warning sign? Should we already be really discussing AGI at every fancy dinner party that you get invited to?
Well, I think we're going to have AGI this coming week, so. Depends how you define it. I think driverless cars, as they spread, will have a big impact, and they're coming to Washington, D.C. this year. That's an important city for obvious reasons.
Do you feel like humanoid robots are like, you know, somebody, uh, you know, uh, a Henry Ford alternative saying like, I'm gonna build a mechanical horse? Or do you think that humanoid robots can be, uh, the right form factor for AI, you know, embodied sort of AI labor.
Robots still seem far away to me. I'm not dogmatically convinced they're far away, but I would say they're far enough away that it's difficult to forecast when they'll get here. So my thinking is mostly about the smarts in a box more than the robots. The robots seem to need pretty controlled environments.
Yeah. On the AGI question, I feel like these definitions get wrapped up in benchmarks or IQ tests or human performance. But I've always wondered if it's almost better to think about the impact of AI through an economic lens and say something like, AGI is here when AI is doing, is producing GDP greater than humans or something along those lines. Is that a useful framework or am I just thinking about it all wrong?
You know, Satya Nadella said some version of that, but with different numbers. You know, my AGI definition, just to be totally self-centered, is when it's smarter than I am, I call it AGI. I think that's coming within the next few days. So I get that's not the only definition, but surely it's a meaningful benchmark of some kind.
Tyler Cowen, how much smarter do you think you've become due to AI.
I'm not sure what you mean by smarter. So I've been using it lately to learn English medieval history, and I know much more about that than I would have—
more like maybe quality of thinking.
No, I don't think— I don't feel that way. Uh, you know, in chess that's been a factor, but I think maybe it will help some people who are less rational Maybe I'm already there and so irrational I don't know it, but I don't feel it's improved the quality of my thinking.
Is that dependent on like discoveries, like, or almost like frameworks? Like if, if AI discovers the next, you know, law of supply and demand, that would make every economist smarter, right?
I don't think it will. I think there's a lot of areas we're never going to learn much more, not because the AI is weak, just there's only so much to learn. Sure. But I think there's a lot of people, you see this already, like the AI tells them to calm down or please rethink that email before you send it.
Sure.
It's quite significant. I just don't think I'm in that category at age 63.
Yeah.
But yeah, it's helping a lot of people think better, just not me.
That makes sense. Well, thank you so much for hopping on. We really enjoyed talking to you.
Yeah, very insightful.
Thank you. We'd love to have you back in the future. This was a really enjoyable conversation.
My pleasure, as always. See you around. Take care.
