American Dream Reconsidered 2017: Jack Miller Center Conversation with Tyler Cowen & Bill Kristol

Good afternoon and welcome to Roosevelt University's American Dream Reconsidered conference. This is our second meeting. We hope it goes on for many years thereafter. The name of our session is called the Jack Miller Center conversation on the American Dream. And the reason for this is this particular session is funded by the Jack Miller Center. We do have a representative from the Jack Miller Center here today, I believe Randall Hendrickson. Randall, are you here? Randall is all the way in the back. Randall is the director of the Jack Miller Center. Director of Academic Programs at the Jack Miller Center. He has his PhD in political science from Boston College, and most importantly, he wrote his doctoral dissertation on Montesquieu. Yes, I know. Jack is next. In addition to Randall's being here, Jack Miller of the Jack Miller Center focusing on the founding principles of the American Republic is here. Jack? A very good friend of the university, and he would castigate me if I didn't mention his wife, Goldie, who has a greater honor than Jack because Goldie is a graduate of Roosevelt University. So thank you to the Jack Miller Center, to Randall for all of your everyday support of us, and to Jack Miller as well. We live in very curious times. Parading around us are the voices of I disagree, I agree. Little reflection, little modulation, little moderation. It's distressing that little consideration is given to the possibility that one may agree a bit with something and disagree a lot, but still agree a bit, or or vice versa. And that's distressing. But worse still, to the extent that we become as polarized as we have, what's been lost is any semblance of intellectual curiosity. We're so quick to want to be on one side or the other that we never ask and inquire what the other might be trying to say, or something about the complexity of the affairs that are before us. There's a tension between I agree, I disagree on the one hand, and intellectual curiosity on the other. It's a tension between commitment, which is the necessary concomitant of I agree and I disagree, and intellectual curiosity on the other. We've lost so much sight of the latter that we haven't given any thought to how we might straddle these two things. Uh, the two gentlemen before us this afternoon have spent an enormous amount of time on just these two things: being intellectually curious about a variety of phenomena while simultaneously being committed to certain practical ideals. Let me introduce them to you. Our moderator today is Bill Kristol. Bill was born in New York City, and there's much to be said for that. He received both his BA and PhD from Harvard University, writing on American political structure in the field of political science. Uh, he worked as Chief of Staff in two administrations in the White House. He was Chief of Staff for the Secretary of Education in the Reagan administration. He was Chief of Staff for the Vice President in the George H.W. Bush administration. Uh, to say that Bill has firsthand knowledge of how the wheels of government turn, uh, I don't think really needs to be said. In a certain way, following in the footsteps of his famous father, Irving Kristol, Bill went into the journal newspaper business and founded the Weekly Standard, for which he is now currently editor at large. He appears frequently on CNN and MSNBC. And it really is a remarkable experience being in a hotel with him, as I was last evening, in which people would— you're— I've seen that face before. Being a professor of philosophy here at Roosevelt, that's not an experience. I suppose it's one I'd like to have, but it's not one that I frequently have. One of the things that Bill has made himself into an extraordinary figure in is having conversations. And if you look online, you will find a myriad of conversations he's had with significant people called Conversations with Bill Kristol. Please welcome Bill Kristol to Roosevelt University. Our main speaker is Tyler Cowen. Unlike many of our speakers for the course of the last 2 years, Tyler is not from New York City. He's from New Jersey. Nevertheless, we thought we should invite him. Tyler's an extraordinary person. I've known him, I'm afraid to say, for over 30 years. Uh, at the age of 15, he became the youngest New Jersey state champion in chess. At the age of 25, he concluded his graduate studies in economics under the Nobel Prize laureate Tom Schelling and received his PhD in economics at Harvard. Uh, currently, he is the Holbert Harris Chair Professor of Economics at George Mason University. He's in charge of the most frequently visited economics blog in the world, Marginal Revolution. He also has another blog, Tyler Cowen's Ethnic Dining Guide, in the DC area. I took him to lunch at Lao Sichuan and I took my life in my hands wondering whether it would be sufficient enough for him. It wasn't because he ordered something else that someone who really knows, uh, would have ordered. Tyler has visited almost 100 countries. Europe, Asia, Africa, the Caribbean, every place in the world. He's been to Cuba many times, Haiti many times, driven mostly by a sense of intellectual curiosity. He knows something about the world. He's authored over a dozen books, dozens of essays. My favorite book of his is Markets and Cultural Voices, which is a book about Amate bark paper painters in rural areas in Mexico. He's written on the subject of fame, What Price Fame? He's written an important economics textbook, and within the last year he published a book called The Complacent Class: The Self-Defeating Quest for the American Dream. Please join me in welcoming Tyler Cowen to Roosevelt University. And the floor is yours.

Thank you, Stuart. It's a great pleasure for me, and I'm sure for Tyler, to be here at Roosevelt. I had heard about it for years, but I'd never actually been here. My mother was a graduate student at the University of Chicago. My mother, who's alive and well at age 95, thank God, was a graduate student of history at the University of Chicago in 1945 when Roosevelt happened, when it was founded. And she actually told me the story. I may watch this with admiration from down in Hyde Park, and insofar as they were allowed in Hyde Park to know what was happening anywhere else in Chicago or the world. So it's a real pleasure to be here, especially in this beautiful hall, which is really amazing. I do want to clarify, when Stuart said something about being in the hotel with me last night, that was the hotel restaurant. But we had a very nice meal down there, a couple blocks away at the Blackstone. And also, it's very unusual to be praised for having been born in New York City in Chicago. I find that that's a new open-mindedness in Chicago that I didn't used to experience, I would say, when I came here. It's really a pleasure. Now I'm gonna just toss questions to Tyler. I asked Tyler what he— he's written so interestingly about so many things, really, I think one of the most people you can learn the most from in America today on many, many topics, and just to watch someone being intelligent and thoughtful and imaginative about so many things, usually centered around sort of economics in the broadest sense, but not even, not always. I asked Tyler what he wanted to talk about, what he wanted me to ask him about, and he said, "Ask whatever you're interested in." So I think I'll just let this conversation go where it goes. And right after that, we were chatting about Donald Trump, of I guess neither Neither of us was a big fan of his when he was running, or still now, I think. And Tyler said he was a little more optimistic now than just a few months ago. And actually, maybe I'll just begin with the most obvious thing, which is Trump, and then we'll move to a maybe more historical look at the American economy and the American dream and all that. But why are you a little more optimistic than you were a few months ago?

There's one general reason and two specific reasons. The general reason is that I think our other structures of government, most of all the courts, but also actually Congress and the media as an additional estate, they have, in my view, held up as legitimate checks and balances. And also the swing of opinion toward a greater federalism is at least potentially another check and balance. I see that as effective. But more concretely, the fact that Obamacare was not successfully revised I took as a very good sign. Just to be clear, I was not actually a big fan of Obamacare, but I felt what was on the table was worse than Obamacare. And with one party controlling all branches of government, that that could fail and be put away, I take as a very good sign. And then on North Korea, when we're assessing Trump, you know, too soon to tell is still in some ways the correct verdict. It could easily be the case that a correct assessment of Trump would depend 70-80% on how North Korea goes in the broader scheme of history. Now, we don't know yet, but there have been two different steps of sanctions against North Korea, the toughest we've ever had. I'm pretty sure those won't be enough, but the fact that they could happen, just that like a good thing could happen that required some execution, I took as actually somewhat cheery. And you know, asset prices have stayed fine, measures of volatility in asset markets are very low, so I think the best forecast at this point is that it will be eminently livable. It's certainly not what I would have chosen or did choose, but I'm more bullish on this country than I was in the month or two after the election. Does that make sense to you, Bill?

Yeah, I mean, I worry about, on the one hand, I spend half my time worrying about how much damage Trump could do in all kinds of ways, both kind of very concrete, just bad decisions. Let's have a trade war with China, for example, and things like that, or let's do something reckless with North Korea, or the opposite of reckless and back off and look weak after a lot of rhetoric. But then I am also struck by the strength of the institutions, and I guess both the formal ones, the courts and media, so to speak, but also the kind of what people call civil society these days. I'm struck by that.

How strong it is.

I mean, it's nothing easy to mess up the markets functioning and the universities and churches and businesses. I mean, there's a huge country here which luckily the president is not dictator of.

And let's say they just put me in an empty room and told me, "Tyler, try to mess up the United States." There's not actually anything I could do. Now, you feel Trump, well, he's president, it's a different position, but it's less different than I might have thought. And if anything, I have the fear that he doesn't follow through on threats, that eventually foreign leaders will see him as too weak rather than too crazy, and they will game him and not back down, and then our government as a whole will actually be compelled to retaliate in a destructive way. That's become my biggest fear. How the relationship with Germany has been handled, I feel, has been one of the worst aspects of the Trump presidency. But the Mexican peso is up 20% this year, That's strictly a Trump phenomenon. It's actually a positive, or at least not negative vote on Trump. It fell 19% when he was elected, and this year it's up around 20%, which is more or less back to where we started.

I mean, on the more economic front, you feel pretty, we're not gonna have trade wars, you think he's gonna be, I mean, you're mostly a free trader, I think, and, or?

I'm a free trader. I don't know these days what a trade war means, because so much of trade is not about tariffs. You can measure when a tariff goes up or down, but so much of trade is about are you standardizing regulations with other countries, and that's hard to measure, it's not transparent. And then on issues related to China, it's now become a true bipartisan consensus that China is not giving us market access at all under some of its WTO obligations, and China is stealing a great deal of intellectual property from American corporations. Now, what should we do in response? I'm genuinely unsure. It might be the correct answer is nothing. But if you do something in response, you know, is that you're leading a trade war, or is that you're responding justly or appropriately to wrongdoing on the other side? That's very much a gray area. So if Trump gets something wrong, I don't think it would be a simple trade war. It would be that he messes up that gray area, But since actually the rest of us don't know what we should do, in that sense, if we randomize that decision, again, I don't prefer that move, but it might not be worse.

This is the most optimistic discussion I've had, most optimistic discussion I've had about Donald Trump in 8 months, or 18 months, so I feel like we should adjourn now and just feel like— let me ask you about Trump, not so much, you know, who knows what's gonna happen, obviously, but Do you have the sense, I guess I, many people do, and I guess I do too, that this was a big moment? I mean, it was an accidental moment in many, many ways. Trump was lucky in his opponents, he was lucky in the field, he beat Clinton by drawing an inside straight really on the Electoral College and so forth, but that somehow this is not just a, well, or is it? I mean, or is it a one-off kind of blip, slightly weird election, guy who becomes president who's not like his predecessors, but we're gonna go back to the way things were? Where are you on the spectrum between it's a one-off that will be an interesting footnote in history, and it's a moment people will look back on and say, well, this was really an inflection point in all kinds of ways, and that Trump captures or mirrors or exemplifies all kinds of other things that were going on in the culture and in politics?

What I find striking is that the Democratic Party is also collapsing and losing its coherence. You just look on Twitter how much people are still arguing, you know, Hillary versus Bernie, the Hillary comeback, here's why I lost tour. The candidates who are possibly running or slated to run are, in my opinion, not the most likely to win. You know, this should be an election the Democrats take easily. They seem to be working not to do that. So if you view the event as the collapse of the party system in both parties, It probably is somewhat permanent, and it's also caused me to kind of revalue the American past. Maybe I'm going too far based on one election, but I now see our 19th century as not so much of an outlier. You have many strange presidents in that century who are hard to characterize and are unorthodox in their methods and their rhetoric, most of them actually. And then how one views the 1980s or '90s, During those decades, I thought it was part of a linear trend that would continue. I now view them as a bit of an outlier, and I suspect American history will return to its longer-run norm, which is to be quite partisan, not have a centrist media, be more violent, have more riots and protests. And I thought that was over, and now I ask, why were the '80s and '90s so different in terms of falling crime and greater peace and a sense of some kind of end of history. And it's really changed my view on that, that that era, we did something remarkable, but also quite fragile.

Yeah, I'm just struck— 45% of the Republican primary voters voted for Trump at the end of the day. He was getting more like 38%, 40% when it was contested. 45% of the Democratic primary voters voted for Bernie Sanders. So 45% of the voters, they're about the same numbers in both primaries. So 45% of the voters in the primaries in 2016 really voted for candidates who were way outside the mainstream of what had become the mainstream of either party. And I don't say that as a judgment, maybe it was good to be outside the mainstream, maybe the mainstream needed to be shaken up and the elites were out of touch and all that. But it is, very few people would have predicted that you would have, you know, after having pretty conventional races, Obama, a little less so, first African-American president, but still, I mean, ended up barely beat Hillary Clinton and then ran a pretty, as a normal Democrat, you might say, and advanced a pretty conventional liberal agenda, I would say. Then you suddenly get so much dissatisfaction as to have 45% for Sanders, someone who's a socialist and wouldn't join the Democratic Party because it was too corporatist, 45% for Trump, obviously not a traditional Republican, in so many ways. I'm a little spooked by that. On the one hand, maybe it's healthy, maybe this happens every now and then, but why are people so unhappy? I mean, objectively, it's not 1929 and the Depression, it's not 1938 and the Nazis. I mean, what's happening out there?

The median Trump voter in the Republican primaries had an income of $72,000, so it's not, people in desperate straits in West Virginia, in general, who elected Trump. And I'm struck by the Anglo-American successes of whether you call it populism, alt-right, whatever the right label is, it has mostly failed on the Western part of the continent, but done pretty well through Brexit and Trump in what we think of as the two more open societies of the West. Trump and Sanders do well because we're more open to startups and German politics is so consensus-laden and centrist that there's less traction there. I suspect that is the reason, and maybe that, that's not grounds for hope, but it also indicates this isn't the last change if it is due to the UK and the US in some ways having more open systems that are easier to disintermediate through social media and other factors.

I mean, you're a big social media user, and you've done real breakthrough work with your blog, and then with your own conversations online, and sort of online education, actually. How big is a phenomenon, how big a, well, I was gonna say how much, leaving aside Trump, though maybe he was also caused by this to some degree and took advantage of it, how big a change is the whole social, you know, internet/mobile devices, you know, Facebook/Google/— how big a deal is that ultimately?

What I'm about to say will sound as if it cannot possibly be true, but I think people still underrate what a big development the internet and social media are. They settle societal disputes, not always for the better, by any means, but we have so many parts of our society where people still argue issues and those arguments have become irrelevant. And I'm thinking of some, but not all, corners of academia. There's a very rapid war fought out almost as kind of a quick-fire simulation on the internet, on social media, and that debate can be over in hours or maybe a day or two if it goes on for a while. And then the rest of the world ultimately takes those cues, and the extent to which that has happened, I feel most people actually we still don't get. And one way to understand this is to look at the phenomenon known as, you know, YouTube stardom. There are mega-famous people on YouTube who are known to tens of millions that probably no one here has ever, ever heard of. I did an experiment with my law class. I interviewed two comedians. One is Dave Barry, who is quite well known to anyone who was who was paying attention in the '90s, and I said, "How many of you know Dave Barry?" One hand went up. Then there's another comedian, Dave Rubin, who is very famous on YouTube, but otherwise isn't well known at all, and probably most of you don't know him. I was not really familiar. And I asked the class, "How many of you know Dave Rubin?" Every hand but one went, "Oh, Dave Rubin! You're interviewing Dave Rubin, wow!" Like all of a sudden, they were impressed. And for us, it's the flip. But they're right and we're wrong. And if you know who Dave Barry is and don't know who Dave Rubin is, you too are still underrating the impact of the internet, I would say.

And that impact, walk through a little of what you think of as the positive and negative sides of it. There's a big cover piece, have you read it, in the New Atlantic magazine?

Sure.

Pretty interesting piece by, is she a psychologist or I'm not sure exact, social psychologist, I think. To it.

There's a very good book on what she calls the, the iGeneration, the first group of individuals to grow up only knowing a world with the internet. I feel very blessed, actually, that I lived a big chunk of my life pre-internet and also post-internet. We're the last generation that will be able to say that, in a sense. You know, we know how to use a library and have a foot in each camp. The big plus is freedom of entry. The big weakness is freedom of entry. And another weakness is some of it encourages polarization. So whether it's on Twitter, Facebook, blogs, wherever, but the people you disagree with, you can actually see how bad they are. And they are, some of them at least, are bad. They're morally bad. And maybe we're morally bad, and they can see that. But it's hard to pretend under this veneer of politeness. So it's easier to dismiss people, because you're reminded regularly how much they offend you. It is this free-for-all, it can be manipulated, but the notion that just anyone can start doing anything, and if it's interesting, it will get a hearing, it really is true. I find that astonishing. Patrick Collison asked me a while back, "Well, Tyler, what do you think is the chance, you know, this will all just turn out to be internet experiment, something very different than what we had thought at first?" And I think that's a risk. I think it's possible, you know, we'll end up regretting the internet. But I'll still say 70% chance that we don't, 30% chance that we do. Our current political structures live in one century, the internet lives in another. And having those two come together in a coherent way, we're very far from managing it. And what the internet is won't budge, and the way politics works budge only grudgingly, and we're in for many more clashes, including with the internet companies.

I think the two-party system is going to be— could— which I studied political science and had the normal traditional view that we were lucky to have a two-party system compared to many European countries and others, and gave stability and organized people and so forth. I think it could well be a victim of several things, but one of them is just the internet and social media, in the sense that there's something not about having this, and the polarization which then makes it even less responsive to actually the mix of what people want. And we, you know, that could be an interesting experiment, maybe for the better, maybe for the worse. These things are very hard to predict, but I sort of share the view that we've only begun to see the implications of it. I mean, this woman's article, she makes a big deal, and this is consistent with my experience, not my experience since I'm too old to have you know, obviously shaped by it. But my kids' experience, I would say, who, which is the internet is huge, was huge, is huge, but the iPhone and mobile devices and the immediate accessibility to both the internet and to each other is maybe even bigger, or as a kind of sociological, psychological thing. And her point, her argument is, I'm blanking on her name, she's written other things in the past on related topics to to this too, but you'll find it quickly if you Google, speaking of the internet. It's in the New Atlantic, is that if you do studies of kids' happiness, sense of, or conversely, sense of isolation, depression, I mean, pretty, she says, and she's a serious person, you know, serious studies, big studies done pretty carefully show, you know, these things go up and down a little bit, they mostly are pretty stable, honestly. If you look back decades, the percentage of kids who are very unhappy, the percentage of kids, sadly, who even do try to do things like suicide, I mean, those tend to be sort of constant over time, more or less. But around 2010, I guess, things start to fall off a cliff, and it really does correlate above all, she thinks, with the iPhone and the kind of just the— it's one thing to have an internet, to have email, to be able to go home and go on your computer and look for things. My kids did that to some degree in high school and certainly in college, and I don't think it fundamentally changes that much if you're looking stuff up. It's very different, of course, but the sort of everything becoming immediate, instant, looking at your phone instead of having a conversation with other people, never being able to replicate as well in real life how interesting things are on your phone. I don't know, somehow that whole, complex of things may turn out to be pretty fundamental, I think.

A general way I would think about some of it is the internet allows you to communicate with only a minimum of surrounding context, and I think that broader framework explains a lot of the effects we see. So say pre-internet, say some Russian fellow wanted to organize a rally in support of Trump. Well, he could go around with his Russian accent and scream at people that they should go out and march for Trump, but The context of that claim everyone sees and evaluates accordingly. But done on Facebook or done on the internet or as anonymous comments posted on a blog somewhere, the context is completely absent. So what it means to live in a world— I wouldn't say there's no context to internet communications, but it's nothing like the contexts, the thick, even sometimes inconvenient but sociologically rich contexts we're used to. To process information with all that context text stripped away. That's the revolution we're not proving very good at dealing with. And maybe it partly depresses us also, in addition to leading us wrong.

Right, there's so much and you can never do enough. I don't know. Do you find your students, I mean, how different, you've been teaching a while, how different are just existentially, so to speak, the students in your classroom today than 10 or 20 years ago?

Well, more of them text in class than they did 20 years ago. I'm not of the view that American students are falling apart by any means, and we have a lot more talent from abroad. So it may be talent from abroad is what will save us, so to speak. But I think there's possibly an effect with attention spans. I find when I talk, I get to the point more quickly. I suspect that's a good thing. Overall. But again, a world where everyone gets to the point right away is a world where a lot of that thick surrounding social ritual and context of communication is gone. And it's going to change what we say, change what we think. We'll be these phenomenal learning machines who can put our finger on the pulse of the internet and pull out truths just by seeing who's saying what. But on the other hand, it's this bizarre Wild West where a lot of unpredictable things can happen. And we've seen some of them happen already.

Yeah. No, I think it's a big moment. I started off skeptical about this. I'm generally curious whether you agree with this or not. Generally, people overstate the implications and the effect of technological change. I mean, that is to say, I grew up in the '70s and '80s and college in the '70s. And everyone's, you know, nothing's ever changed as fast as it changes today. Whoa, the world is crazy. Compared to the slow world our parents and grandparents lived in. That was a total cliché, totally false. I mean, my grandparents saw changes, political, technological, and others, that dwarf anything I've seen, honestly, in my life. I mean, think of growing up in 1880 or '90 and the technology of that era, the politics of that era, the society of that era, the social roles and norms of that era. And living as you would if you were born in 1890 to what, 1970, and seeing, you know, what that world looks like. I haven't seen anything comparable to that actually, I would say, but I do think that the internet plus mobile devices is maybe the, will be the biggest thing. Transportation hasn't, Peter Thiel, our friend, good friend of yours and a friend of mine too, you know, makes that comment, you know, We're taking the same trains, driving the same cars, living more or less in the same buildings. Here we are in—

The trains are slower.

The trains are worse, yeah. The planes are less pleasant. This building is the same, I assume. I mean, no, but it is interesting when you think about it. For all the science fiction stuff of the '50s and '60s and '70s and the Jetsons and this and that and transporting yourself one place to the other, people's lives are actually not that different. I would say, from our parents and grandparents. Correct. I've argued in a book— But I do wonder if the— on the information side, I think this is a big change.

In 2011, I used to go around saying, we've overrated what the internet has done for us so far, and we're underrating what it will do in the future. But I don't say that anymore. And that was only 6 years ago.

Right.

Now we're getting—

I think people are rating it—

We are seeing the big changes, really with Mobile, near-universal mobile devices are probably—

That seems to be the thing that makes it, yeah.

The iPhone, yeah.

Yeah.

Kind of offshoots.

Crazy thing for that to be so important, but I guess that's how the world works, right? These changes. What about the more strictly just, you know, job, the effects on jobs, wages? I mean, that's become a big concern. Obviously, Trump, you know, median family income hasn't gone up much, allegedly. I'm curious to know what you think of that 20, 30, 40 years. That date is contested some. People are going to be thrown out of jobs. There are 4 million truck drivers in the US. They're going to be self-driving cars and trucks soon. I mean, where are you on the sort of automation is a genuine threat today in a way that it hasn't been as much in the past, or is that just overstated and sort of not a real worry?

I think it's a real problem. I don't think automation ever will create mass unemployment. Employment, that's quite unrealistic. But men in particular, manufacturing jobs have declined steadily. Men had an advantage getting those jobs for physical reasons. With the near disappearance of manufacturing jobs, at least the measured male median wage is now equal to where it was in 1972. Now you can say the measurement is wrong, but if you had asked Paul Samuelson or Milton Friedman in 1972, said, "Oh, the world's gonna be at peace, there'll be near-free trade, you know, no nuclear war, and communism will fall, what's gonna happen to the male median wage?" They both would have said, "Oh, it'll go up 2 or 3% a year," or maybe a pessimist would have said it'll go up 1% a year. But as measured, it's been flat. That's remarkable. I don't think it's the very recent technologies. I think it's a mix of globalization and men losing their manufacturing advantages and a lot of males are not good at service sector jobs that require a kind of subservience. And there's this cultural mismatch that I don't think is going away. And you've had millions of young men leave the labor force and not come back. It now seems to be the case, you know, 1 out of 5 of them is out of the labor force because of opioid use. One of the technological advances we've had is to make those drugs more potent. Which of course is a negative. And the combination of people living more at home, viewing pornography, taking opioids or smoking pot, and just not working and somehow getting by, and maybe periodically driving for Uber— that's what it looks like, and we already have it, and I think we'll see more of it. It's not going to do us in, but one is right to feel concerned about that.

And that sort of picture that I think very— Charles Murray, Bob Putnam, J.D. Vance's book all tap into aspects of this, of a certain kind of not very well-educated, especially males, and not only males, just having a rough time in this modern education-based, information-based age. And then other social dysfunctions either coming as a result of their having a tough time or contributing to their having a tough time or Or both, I guess it's a chicken and egg thing. You think that doesn't go away and there are no easy solutions, are there? I mean, no policy, no magic policies either on right or left that sort of deal with this problem.

Sure, one can always do better, but just ask the simple question, can you imagine wanting this person as your babysitter? Often the answer is yes, I'd take Bill Gates as a babysitter. It's not what he's gonna end up doing, he'd be fine. It's not true for all males, so then ask the question, well, could you imagine that person working taking care of the elderly, which will be the sector for job growth looking forward under virtually all forecasts? Again, plenty of people would do it well, doesn't mean they will do it, but if you feel, well, they couldn't do that well, you're again getting back to the class of people where there's a real problem.

Any policies that you would, you know, so if some senators said, what can we do about these 10 million, I think we think, people who are not working in America or not seeking work in America, because we have low unemployment rates now, which captures people who are seeking a job, whether they're getting jobs. But 10 million people, mostly males, are not— seem not to be— between 25 and 54, so these are not, you know, 74-year-olds, are not working, they're not in the workforce. And some of them have been or are in prison. I mean, that's a problem, obviously. But a lot of them just seem to be sort of disconnected from jobs. And the workforce has been one of the very, very important ways we connect people to society in broader ways, right?

Sure. There are three core systems in America that I think are somewhat broken. One is our education system, which is wonderful at many margins, but not working well for people, say, in the bottom 1/3. Another is our healthcare system, which for everyone is too expensive, and then for people of lower income or lower skill is again often not working well even if they have coverage, which is by no means, by no means guaranteed. And then you have general cost of living issues that we have become stricter and stricter with building, so moving to a highly productive city as a means of upward mobility is much harder to do now than it was, say, in 1950. 1980. And none of those are about this group of people in particular, but when you have such major systems being broken for so many Americans, there's gonna be a lot of collateral damage. And I don't think we can force these people back to work. I don't also think we can retrain them.

It's of the po—

oh, let's retrain, retrain. People have to retrain themselves, whether we like that or not. But if we fix more at the macro level, I think the next generation will evolve into to better habits, that's the best I think I can do.

Yeah, but it's tough because it's sort of saying that the 52-year-old former manufacturing employee or coal miner or whatever, you know, we hope he gets a job, we'll help him with obviously some government programs, but you don't have a terribly cheerful outlook for those people. I mean, that's a rough, I do think that's part of the Trump and Sanders phenomenon. I mean, people aren't as optimistic of us they once were, not only about themselves, but I was struck, Bill Galston, I did this little report with him, he's a Clinton administration guy, very, he makes this point, which I haven't seen that many others make, I think this is correct, in the Gallup or Pew poll, one of the very respectable polls, 2013 or so, for the first time in modern polling history, a majority of Americans said they were not confident that their kids would do better than they would.

That's right.

A little startling, although this does get us to the topic of this conference, because the American Dream, presumably as much as anything, was a kind of a confidence in the system as a whole and in political liberty and so forth, but also in that very concrete fact that this is a place most everyone knows there are instances of downward mobility, but mostly of upward mobility, and your kids really will do, if they behave themselves, so to speak, will do better than, have a good chance of doing better than us.

One thing I cover in my book, The Complacent Class, our willingness to move across state lines for some reason, economic or otherwise. It's gone down by about 50% since the postwar period. So we just stay put more. Some of that may be we're just more dug in, more entrenched, more complacent, but there may also be fewer reasons to move. There are fewer booming regions, and one region that is booming or has been booming, the Bay Area, it just costs so much, and not everyone is trained to get those jobs.. So you don't just say, "Oh, I'll go to the Bay Area, you know, and become rich." You can't just show up and knock on doors. You have to know something about tech, and you have to pay incredibly high rents. I'm struck by these older movies or TV shows where there'll be men who are not like obviously doing well in life, and they just move to Manhattan. They go into some flophouse. They're like paying, you know, a dollar a week for a crummy room, and there's like a toothbrush, and they end up doing well. That was part of the American dream, and for policy reasons, we've lost that.

We'll talk about the policy reasons, that's important, I think.

That it's harder to build in cities. There's much more NIMBYism, not in my backyard. There's a recent paper by Ed Prescott and Leo Haneyan that estimated that if it could today be as easy to build new buildings as it was in 1980, that much of America's productivity gap, wage gap, compared to earlier periods would go away, that it's for a long time been a main way people get ahead. It still is, say, today in China. You move from the countryside to the city, you move from a less productive to a more productive area, don't even have to retrain yourself, you go somewhere where wages are higher. Maybe you work harder, but you can do it. That has become much harder, mostly because rents are higher.

And what other policies? I mean, rents are higher because of a combination of—

Restrictions on building. There's plenty of room in Oakland, or for that matter San Francisco. We could build many more units of lower rental housing. Obviously the people who live there don't want that. There is bipartisan opposition to doing this. Not that there's really bipartisan rule in San Francisco, but if there were. Texas you can build, but many parts of this country, very hard to get things built. And then the price goes up because demand goes up. We're in an era where finance and tech are powerful. Those are geographically clustered sectors. They're in places like Manhattan or the Bay Area. Rents are sky-high in those regions, and it's hard for outsiders to get in.

Did you expect— I think economists now are pretty convinced that the network effects, if that's the right term, of living in cities are very important and positive, and that young people— it's certainly true that young people seem to be moving to cities and want to be in cities, and then they of course have the challenge of paying the rents. But did one expect that? Wasn't the conventional wisdom sort of the opposite 30 years ago, that especially because of technology and certainly now with computers, that everyone would just spread out and density was kind of something that was a feature of 19th century London where people all had to be in one place to make things, and now you don't need that density. So we can have remote learning, distance learning, and all. Yet it turns out people wanna be in cities more than ever now.

There was a Francis Cairncross book, I think from the '90s, called The Death of Distance, and that hasn't happened. The internet, it turns out, is a kind of complement to some kinds of social networks. So if you live, say, in the Bay Area, you can use the internet to help you meet important people, but then you have to be there to meet them. So location has never mattered as much. And you see Amazon agonizing over this, where are we going to put Amazon 2? It really matters for them, and it ought to matter. So if you look at data on international trade, you would think, oh, with the internet, other technologies, you would trade with distant countries as much as nearby countries. But that gradient of trade with distance, it hasn't really actually changed. You trade much more with nearby countries. That was the case at It's still the case today, hasn't changed.

Let me ask you, you mentioned China. You've done a lot of— you've been there many times.

Many times.

You've done a lot of writing about it. What's your— there's such a wide range of views about how that's likely to work out over the next 20, 30, 40 years, kind of important for the future of the world, presumably. What's your sense?

All predictions about China are wrong, including that one. But I would say a few things. First, for the first time in my lifetime, in a way, the for the first time ever, America finally has a peer country. Soviet Union was a peer with respect to nuclear weapons, but not in general. But in terms of human talent, GDP, China right now is in most ways a peer country to the United States. We're not ready for that mentally or emotionally. Just going to Beijing or Shanghai is a start, but it's seeing many more parts of China, just realizing how much is there. It's jaw-dropping. You can have a city, you know, 8 million people, and in China that's considered small. China is much more meritocratic than many outsiders believe. Their educational system is in some ways harsh or unpleasant for many people, but if you are really smart and work hard, you can very much rise, and that's very much to China's credit. And also, there are now many areas where where China is not copying, but is a true innovator in areas such as retail payments. They're way ahead of the United States. Their version of Facebook, WeChat, it does more than Facebook. It's like super Facebook. It's better than anything we have. So they're not just, you know, cheap plastic toys at Walmart. In areas like quantum science, artificial intelligence, biotech, they are pulling even with us, possibly pulling ahead. It's going to continue to change the world, and I would just urge all of you to get to China as much as you possibly can. It's like living in the 1920s. What's the interesting place to visit? It's the United States. Right now it's China. Mostly I'm optimistic. I don't feel I have any kind of accurate prediction about China. I wouldn't have predicted Deng Xiaoping's reforms in '79 or the Cultural Revolution So the next big thing to happen there, I'm not going to predict either. But so far, so good. Full steam ahead.

When you go there and lecture and meet young people, and of course a lot come to study in universities like here and at George Mason, is your sense that the world they want to live in or expect to live in is one of competition between the US and China, but mostly peaceful and with some liberalization on the political side in China, or is there a kind of coming clash of civilizations or of nations or a 1914 Germany-England type rise. History, I mean, some foreign policy people put a great deal of emphasis on the fact that history does not suggest that it's easy for the international system, excuse me, to accommodate rising powers. That was a challenge running up to 1914, that didn't work too well. Go back in history, rising powers tend to, want to be recognized in a way that the existing power doesn't want them to, or there are miscalculations and how to manage it, someone's pride gets wounded and you do get a situation that spins out of control. But do you see, I mean, how much of that do you see? How much of a wish to put the US in its place as opposed to simply let us be a great country as well and a wealthy country as well and so forth?

I don't think most Chinese believe in democracy. I do think they believe in a broad notion of liberalization. They understand far better than we do how badly the rest of the world has treated them. They resent that. They want respect. They do not get respect from our government, and it's not a claim about Trump, it's just a claim about the West in general. Think how few allies they have and how many allies we have that more or less surround them. They believe we're really quite unaware of this, and we exercise really an awful lot of sway over our own hemisphere and have most of Western Europe more or less on our side, and they're acutely aware of that, and we don't act that way and we don't treat them with respect. I don't really think there's any way we can, given that our politicians, of course, appeal to domestic voters. I'm not by any means I'm convinced conflict is inevitable. I don't believe in the Thucydides Trap. Here's why not. Like, North Korea so far has been China's thorn in our side. I feel that's flipped. Chinese public opinion has flipped. Opinion within Chinese government is in the middle, but has been changing a lot. China would like to undo the current North Korean situation, but they don't know how to do it in a way that doesn't harm their national interests. North Korea will become our thorn in China's side. Side over time pretty quickly, and it's that there's North Korea and a rearming and maybe eventually someday nuclear Japan and also India. The first line of China containment is India, North Korea, oddly enough, Japan, and I don't know how that will go, but it's a kind of buffer between China and us. It could be a force that pulls us into conflict, it could be a kind of buffer that allows us to say somewhat removed from it, China and the Chinese people do see themselves as the forthcoming dominant power in Asia. The government has to moderate public opinion, if anything. The public is more hawkish than the leaders and less technocratic. So if we too strongly or imprudently oppose China on that, there could be conflict. China doing One Belt, One Road is one of the 2 or 3 most important events in the world right now. Hardly anyone in this country even thinks about that. I'm not convinced that will go well, but that's the Chinese attempt to gain direct access to their energy supplies and turn what is west of them into their economic territory so they are essentially fully independent of the United States and that the US Navy cannot cut off their energy the way it can right now coming out of the Persian Gulf. They are extremely vulnerable and completely aware of this. And again, it's something about them that we don't recognize. We're very, very bad at seeing their point of view. Even for like Canada or Mexico, we as Americans, we're bad at seeing other people's points of view, but Chinese in particular, it's so distant from us, we have so few points of contact with it, I would say we're especially bad at it.

I mean, in general, do you think we're— how worried are you that the American public on the one hand, and American elites maybe as well, or more so even, don't, I don't know, somehow just aren't serious about the different challenges that we face, whether technological or foreign policy, and I guess I'm sort of struck by that. I mean, somehow, maybe it's just nostalgia, you read these accounts of Truman and John McCloy and Marshall and Acheson, and you think, you know, they were really serious about the world. They made a lot of mistakes, but, But I don't know, maybe it's just nostalgia to think that that was really different back then, and of course there was a lot of lunacy and Joe McCarthy and this and that and foolishness, but I don't know what—

But I think it was different then. Here's what I think the difference was. You had two major wars, which of course went our way in the final analysis, and then this incredible burst of cooperation after the end of the Second World War, also leading to what is now the European Union. But all the multilateral institutions come from during slash right after World War II, and it's remarkable actually how well they've held up. You may have various criticisms, but they're still with us, they still do more or less what they're supposed to do, there's still a NATO, European Union has been much more successful than I would have thought, but the further we get from that time period of conflict, the more complacent we become, and we just allow that order to decay. And Chinese leaders are so much more focused on thinking long-term and geopolitics than even very sophisticated American leaders, who are also in short supply, arguably. But that said, you know, there's always the chance that's our American blessing in disguise.

Right.

So we let a lot of things lie fallow. Maybe at the last moment we do the right thing, but in the meantime, civil society, decentralized side of American life comes up with a lot of solutions, so we may manage nonetheless, I hope.

Yeah, that's always been the argument. America doesn't have— I mean, Bryce makes this argument in the 19th century comparing us to Britain. The British system is set up with that intense parliamentary experience to produce the best men, men and women now, but men then, as Prime Minister and as Cabinet Ministers. We're set up not to do that particularly. We're set up though with a system that is supposed to produce good outcomes without depending on the best man, and that's the Federalists and separation of powers and stuff. And I do, and I think that's worked pretty well, and you can make a case, and that's how markets work, and I respect our political system is a little more like markets, you know, it doesn't require any one person figuring everything out, it requires a system that allows things to bubble up and compete, but when, I don't know, maybe But if you wanna get pessimistic, you could say— Yeah, let's do that for a few minutes.

Yes, right, yeah. You could say it's worked well because we're free-riding off the cooperative capital built after the end of World War II. And that as that decays sufficiently to truly live in a G-zero world where there's no global policeman or no ultimate source of order, and you end up with a lot of nuclear proliferation.— and a lot of local conflicts just going bad. So, you know, the ultimatum given to Qatar in the Gulf, well, maybe it'll go okay, but it's worrisome. It's sort of a sign, well, we're not that important there. And then, you know, taking back of Crimea, well, it's a sign we're not that important there. And you just see North Korea getting out of control, well, it's a sign we don't have so much leverage there. And no one of them is reason to be pessimistic, but I just see somewhat of a proliferation in a way we probably didn't have in the 1990s. And that's the pessimistic case, that GZERO world is not stable.

Yeah, no, I think that's— personally, I think that's plausible, that the greater threat is not someone rising up and attacking us directly. The threat isn't, in a way, the '30s with Nazi Germany trying to conquer the world. The threat is more of a kind of, maybe 1914, things getting out of control with weak allies dragging us into things, or us sending bad signals which are misinterpreted, and then we overcompensate or have to compensate and get into a war. Or maybe more almost the ancient kind of Roman Empire thing, where it's not that no one defeated them, it just all kind of crumbled because they couldn't hold it all together, and at some point they got both tired, complacent, whatever. We'll talk about the complacency since that's the title of your most recent book, The Complacent Class, and you've— since this is an American Dream conference and you say that the American— the quest for the American Dream is self-defeating, walk us through that a little bit.

When I talk about complacency in the book, I mean this notion that we have lost the ability to imagine a future fundamentally different from the present we live in. So people think of our cities becoming nicer, or more gentrified, or having, you know, more fun restaurants you can go to, and things being more pleasant. The delivery of packages to your home, that should arrive more rapidly. Amazon has lockers all over, you can get things in a day rather than 2 days. But the notion that somehow we're building a world to be fundamentally different and better than the world we have, which was the prevailing American attitude in at least the first half of the 20th century, and then some. That to me seems almost entirely vanished. We obsess over keeping our kids safe, medicating ourselves, digging in, not moving so often. The internet has made staying at home a lot more fun, much more than it's made us more productive or more dynamic. Netflix comes to your home, sit on the sofa, Amazon packages, they come to your home. Leisure is much better, there's much more choice, people are much better at dining out and at traveling. I find it striking that music is no longer culturally so central for young people. Music is fundamentally somewhat rebellious, it makes you wanna get up and dance or even protest. That dining replaces music, to me, is a sign we're more complacent. Dining, you want to repose, you combine it maybe with some wine, you feel a little sleepy. Music as a social bond has been replaced by the Facebook page. So also the disappearance of that thick surrounding cultural context we talked about earlier with the internet, I feel might make people more complacent. It's very interesting in China what's free and what is not. There's way more freedom of speech in China than many outsiders think, but also far less freedom of assembly. The opinion of the Chinese government is they can keep control if they allow a lot of freedom of speech freedom of speech, though not completely, and cracked down on public assembly and the building of small groups. What we have with the internet is a world where speech opportunities are amazing, unbelievable, incredible, but people don't assemble so much because they're too busy doing a like on their Facebook page or sending a tweet. And we're doing exactly what the Chinese government believes to be impotence in terms of changing society. And that too, all this together, I see these as signs of this big general trend toward America being more complacent outside of the tech sector, less innovative, and just willing to roll with the punches out of a mix of risk aversion and sometimes fear or just lack of imagination.

Yeah, I guess from a Tocquevillean point of view, the sort of associations that he argued were so important to sustaining liberal democracy and freedom, I mean, those require work and patience and committing for— you join, you become an officer, you run it on a volunteer basis, whether it's the PTA or a sports league or whatever, 5 years later. It's not the instant gratification. That does seem to be something a little different from what one thinks of as Facebook, iPhone kind of culture.

And we don't in every way know how well those are doing. So the response to the Houston storm I found very heartening.

Yeah, that was Interesting.

People just getting out in their boats and solving a problem, sometimes at considerable risk to themselves. So we see good signs and bad signs. But if you look at things we can measure— how much do people move around, how much do they change their lives, what's the rate of productivity growth— all the things we can measure seem to be down. So I think we need to be very concerned.

Anything to be done? I mean, is it— it just seems like we're in this respect, the victim of— you can't complain about Netflix, it's great, but of course it does have the effect that one doesn't get together with, you know, 5 other people to go to the movies and to, you know, or be part of a group that goes every week to a play or something like that, or that goes to a local performance or something. It makes it so easy to get— and YouTube is fantastic, I love some classical music, and, you know, really I do go to the Washington National Opera because I I like it and I think it's sort of something you should do and help support the local opera, but honestly, you can watch such great stuff now for free or pay a little bit, that it's tempting to just do that and stay home if it's raining or something.

Fair. I've never known a society to move out of complacency voluntarily. It usually takes some kind of crisis. So Perry going to Japan in the 19th century would be one example. The Japanese suddenly became quite non-complacent and ended up doing some terrible things, but also building the country and ultimately becoming a big success. But just that Americans would wake up and say, well, I'm gonna do the Bill Kristol or the Tyler Cowen or whoever in the audience list of things we ought to do because I've decided they're correct, I think the chance of that is near zero. That in essence, we'll at some point, probably not soon, be forced out of complacency by the fact that we we cannot pay our own bills. The thing about complacency is that it is quite pleasant, and I use that ambiguous word pleasant on purpose. There's a slight negative tinge to the word pleasant. It's very comfortable. I sometimes say mediocrity is underrated. That's a thought that may, you know, it should confuse us, but you know, I've lived in the same state now for almost 30 years, I don't want to leave. I have a very nice situation there. I try to be not complacent in other ways, but we're not going to leave this trap voluntarily.

Yeah, that's interesting. What about— you mentioned just in passing, but this fits in, I think— artificial intelligence. I mean, how big a change? We've talked about the iPhone and the internet as a change, but some people think AI, artificial intelligence, will end up dwarfing everything else. Where are you? You've studied that and are familiar with it, I think.

Sure.

It will change many things, but I don't think most of the changes will come in the next 20 years. I think the next big AI-driven change will be driverless vehicles, which are already on the roads in very limited numbers. But when you think in a highly regulated society, all the problems you need to solve— well, right now they still don't work well in No, you have to keep on remeasuring, you know, your roadmaps and update that. There are liability issues on many sides. The federal government is going to pass standardized rules and regulations, but you have cities, counties, states, all dealing with issues like, well, what if a pedestrian tries to play a game with a driverless vehicle by jumping out in front of it? Just like some kids, believe it or not, they drop rocks from, you know, the top, on top of the freeway. Anyway, well, who's liable for that, and how do we treat that under the law, and how will liability work, and will juries go along with the federal guidelines, and so on. Think how long it can take us to build a bridge these days. Tappan Zee Bridge, they finally reopened. They talked about that when I was a kid in New York State. So for us to move to truly greater reliance on driverless vehicles, it's not a 5-year thing, it's probably a 20-year thing. And artificial intelligence, it's not a technology, it's a set of capabilities that you need to build anew each time for each task. And what you do is quite different, and you're always filling in a lot of gaps. It's not like a one thing, like electricity. So it will happen, but much slower than many people think.

And you're not too worried about the— demolishing— robots are not going to be running our lives? They're not going to be making themselves humans and ordering us around and so forth.

Well, sometimes I wish a robot were running my life. It would be better organized. Personal assistants are an area where AI will probably yield greater dividends fairly quickly. So you'll talk into your smartphone, and it will run your life in different ways. You'll walk into a Whole Foods, and it will do something like send you 5 texts, what you ought to buy based on knowing what you've bought in the past. I think smart software, Alexa, Alexa Plus, will lose a lot more privacy. You'll always feel you're being recorded, you'll never quite know when you aren't being recorded. Facial surveillance is already a major issue in China, it will soon be a major issue here. The new iPhone X has facial surveillance built into it.

What does that mean? What do you What do you mean?

To sort of activate your iPhone if you want, if I understand it correctly. Instead of a password, you hold it up to your face and it recognizes you. But this means everywhere you go, you'll walk into a store, the store will know it's you, they'll send you 5 texts to market you things. There'll be such a record of where you are. Again, this is already the case in much of China. I was on a Chinese flight and they wouldn't let us off the plane, the Chinese authorities, came on board the flight, and they had like a Xerox printout of someone they were there to arrest, picked up by probably the airport scanner. And they just went like, you know, to row 20, and they looked at him, and he knew, you know, the game was up. And they escorted him off the plane, and he was arrested, maybe will never be seen again. And he was caught by facial surveillance. It will be a deeply weird world, and that is not 20 years away. That in China is here now. And will come here in a different guise, more private sector, pretty soon.

Hmm. Privacy, that's something we've kind of come— liberal societies have always put a great premium on that. It's kind of what it means to be a liberal society, right? You have a realm that's outside of the state and outside of the public if you choose it. But that erodes.

You know, you mentioned that phrase liberal society, and this always has me worried. So I know what liberalism has been, and I, you know, very strongly consider myself in the classical liberal tradition. But if you think of a few of today's key issues, such as privacy, also climate change, I'm not even sure what the liberal view is. So what the classical version of liberalism means today, it needs to be reinvented in some fairly radical and innovative way. I don't see that being done. I see a kind of splintering into left versus right, and the idea of liberty as a fundamental principle but applied to the new issues that don't fit the old categories, I think on that we're very complacent, if I may say.

Yeah, I think 2016, to get back to where we started, for me one of the most striking things was neither candidate ran as a candidate really of liberty. I mean, because normally the Republicans have been the candidates of, let's say, to oversimplify, economic liberty, the Democrats sometimes the candidates of civil liberties or of liberties for groups that have been discriminated against. But in this case, it was all about anxieties, grievances, which candidate was gonna help which group that felt they needed help from government, but neither, very little discussion, just the word didn't even come up much. I did a quick search in the debates, and as someone who shares, who come from slightly different backgrounds, but basically shares the appreciation for the classical liberal tradition, and I think that's really the core one has to preserve. One can mess up various public policies, but the sort of lack of— and then Trump particularly is so disrespectful of traditions of constitutional liberty. The Democrats in their own, the liberals, the progressives are sort of disrespectful of those, which progressivism has always been a tension with liberty, which is messy, it's not organized, it's too retrograde. So you have two parties now, the leading edges of which, it seems to me, are not terribly friendly to classical ideas or classical American ideas of liberty.

And I would say a lot of our friends and the people we work with, maybe people you and I know in common, they're too content to retreat to issues they feel comfortable handling, like free trade. A lot of people are for free trade. People wanna advocate for free trade. I agree with that view. It's fine. There is like a classical liberal position, tariffs should be lower, zero, except for national security. But it's the tougher issues, like how to think about intellectual property, how to think about the effects of the internet, again, climate change, privacy, how to deal with terrorism. I don't think, again, these fit very readily into the frameworks we used to have. So there's a kind of— we're writing off, like, intellectual capital from in the past, so the left still has its take on issues coming from the New Deal, like redistribution, regulation, government welfare. The right has its take on issues that handled pretty well through Milton Friedman, and the new issues are not either of those.

Which ones would you urge young people, there are some students here and this is a university, to think, I mean, I think you've mentioned a couple, but I mean, yeah, that's very interesting actually, that the rethinking isn't happening in a way.

And just not, not to rely, you know, build on the intellectual capital of the past, respect the past greatly, but don't get caught up in taking sides, don't let yourself be manipulated by the symbols being thrown back and forth by both sides now, don't focus on judging personalities, it's fine to have opinions of them, but if you let your emotional judgments of personality personalities drive your judgment of policy, you end up in a trap. So, you know, say for instance you hate Donald Trump. If you think Trump is wrong about everything, to me that's a huge mistake. I don't think he's wrong about everything. So the view that America, say, is in a crisis because it's not exporting more, I think he's correct about that. I think some of the things he says about China is correct. I'm still not a Trump supporter, but the ability to look past the personalities and symbols and detach yourself. We're losing that, and we need a lot more of that, I think. And I find not many people are doing a good job at that.

Yeah, it seems the culture's going the other direction, wouldn't you say? I mean, Trump himself was so benefited by being a celebrity, by having—

Sure, and provocateur.

Yeah, that seems to be— the celebrity culture seems to be stronger, which cuts against, I think, what you're calling for?

I think he has a strategy to get people as upset as possible, but talking about his issues. And he feels if he controls the conversational agenda for a long enough time, he and his successors, that they will win those battles no matter how low he may be in the opinion polls today. That that will be what people feel about, think about, talk about, work on. And if you wanna resist that, I would say don't just think, "Well, I'm gonna take the other side, think about changing the game altogether. What he has done is change the game altogether. And don't just fight on his terms but on the other side. Or if you're a pro-Trump person, don't just like rail against the left, political correctness, long list of injustices, things you can point to that are outrageous and so on. Really think about how to redefine the game so there's some new space opened up for actually kind of seeing through to that deeper reality.

Let me close, but I wanna ask about education since we're here at a university and we were talking about it a little before, and you've written a lot about this, about the failures of our education system, the coming transformations perhaps in both K through 12 and higher education.

Mm-hmm.

I mean, what, that is, as you say, one of the biggest, it's a big part of our country. It's a part that has some great achievements, but I think everyone agrees isn't performing as it could. So say something about that.

We need an online version of everything free. The Khan Academy is a start, but we need online education for credit for everything. No, I do not think it can or should displace face-to-face. But if you think people at face-to-face schools, they want to finish early. They don't want to get up Monday, Wednesday, Friday at 8:00 AM. They're in the military. Maybe they have a disability. Maybe they're taking care of children at home. Online for credit will be very important. Also, our top, top schools, it's remarkable how few people they admit. That's a bad thing in and of itself. It leads to this crazy game, Upper West Side, can I get my kid into the right kindergarten? I think Harvard, Princeton, and other institutions, they need to do more of what actually University of Chicago has done a bit of. And that is significantly expand their entering classes and create more opportunity. You know, I'm happy if they do more legacy admissions. They turn a profit on those, but then they need to spend that money on taking in more people, say the top students at Roosevelt University, who I know, like at George Mason, absolutely can and would do well at Harvard and thrive and prosper and be more upwardly mobile. And these are things we can do. I think eventually we're gonna We're going to do it all, but it's taking way longer than it ought to. And so much about education moves so slowly, it's so frustrating. The average age of a professor at Harvard tenured is, what, it's like 60. It's too old. There's too much bureaucracy, too much spending on administration. The bottom third for K through 12 is very low quality. We're messing up everything. I actually think we'll fix it, but right now, still remains to be done. It's like a It's a task for us all.

And it's hard politically to fix. I mean, I think that's what the—

Of course.

K through 12 has very strong institutional barriers to reform. Higher ed has barriers to entry in a certain way, or to, you know, so it's really been a challenge.

It may be outsiders who do it and who force the incumbents to adapt.

The Khan Academy, I think, is a fascinating case. I mean, maybe not everyone knows that much of it. Say a word about it. Such an interesting glimpse into what could happen much more broadly.

They have free videos online. It started with mathematics, but they now cover many topics, including art history. I was myself inspired by Khan Academy. Alex Tabarrok and I co-founded a venture called Marginal Revolution University, which is free economics videos online, also with tests and exercises and feedback. And Peace piece by piece.

Where is that done, the Marshall Revolution?

It's on YouTube, mruniversity.com, go to it.

And people have taken these courses and finished them?

Yeah, millions of people. I mean, we don't have finish, it's a menu, you know, you eat what you want, so to speak, you're never done.

Do you do competency tests or do you let them—

At the end of every video there are questions, quizzes, there's not like one grand test for finishing the whole site, but we will over time put up the basics of what is known about economics on this site, it's free, there's no ads, no charge, we will never charge people anything for it. We would like for there to be 4-credit classes based on this. Eventually this all will happen, but it's very hard work, it takes a long time. Innovation does come from the outside, but you're doing it without, you know, the advantages of being, say, Harvard or Princeton. But Americans are still entrepreneurial, there's more talent in this country than there ever has been. I guess ultimately Fortunately, that's why I'm still optimistic.

And the Khan Academy example, I mean, say a word about how it started.

He was tutoring his relatives.

He's a guy who's—

Immigrant. Immigrant, what does he do for a living?

Bangladesh.

He's an engineer or something, or he's a—

He was working in finance. He may also be an engineer.

A math type guy, right?

That's right.

But in his 30s, I believe, or— Correct. Living in, I think, North Carolina.

Louisiana.

Louisiana.

Details. Distance.

What do these places matter anymore? As I recall the story, but you correct me, he had a niece or something who was having trouble with like third grade math or something in California. And so, and their parents knew that he was good at the, you know, he was a math guy, so he did these videos just for her, right?

Correct. And then he put them online and the whole world flocked to them and he was like, oh my goodness. And now the world's It's the number one site for online education, and it educates millions of people worldwide. It has subtitles in many, many languages, a lot of accompanying exercises at varying levels, K-12, high school. The material's very good.

Yeah, I mean, one of our daughters teaches middle school, and I mean, now you can use this kind of material online to get the kids to do a lot of the work at home, to take the competency test, make sure they know the basics, then you can use in the classroom not to administer, you know, waste 30 minutes or 45 minutes having kids, you know, marking off stuff on a test. They can do that at home on the computer and then they can actually talk about the material or whatever. I do think it is gradually going to change everything, but it has been frustratingly slow, I suppose.

Well, we will be online too and part of this broader universe, right?

We will. No, and I do think it's interesting that it comes from outside. I mean, I think that is, for me, that's This is why I'm sort of ultimately optimistic, probably a little less optimistic than you about the very near term with Trump, but keeping, this is why I do think it's important to keep a free society, not to be too simple-minded about this, that people are not putting enough of a premium on that. We really need to have a society that's not so regulated, so hidebound, so credential-obsessed that Mr. Khan can't put up this video, decide that hey, Nieces learning from it, send it to a bunch of other people, and then decide, okay, I'm gonna start this, you know, waste a little money, start a 501 not-for-profit, make it free for everyone, that you guys can do this out of George Mason. We all take that for granted, but not every society is set up to make that easy. Some are set up to forbid that, of course, but not every society makes it as easy as we have tried to over the years in many, many areas, healthcare, other areas. I think a lot of the, I wouldn't be surprised if a lot of the breakthroughs don't come from, you know, I have a brother-in-law at Sloan Kettering, it's great research, you know, scientists and all that, they're doing great work, but who knows where the breakthroughs will come from, they could just as easily come from somewhere else, right? Yeah. So we need to keep an eye, it seems to me, on the structures of liberty. I think that's something that's not focused on enough these days.

And just, you know, what do people believe in? Do Americans still believe strongly in their future? That's a variable I always look at, and when I see that they do, I become much more optimistic.

And do you do that?

Right now it's wavering, so it's made me more pessimistic. But if you're asking like, what's the one indicator I would track, it's not anything material. It can but doesn't have to include religion. Do people believe very strongly in some kind of future they imagine very clearly in their own minds?

That's a good question to end on.

Thank you very much.