Brad DeLong on Intellectual and Technical Progress

Conversations with Tyler is produced by the Mercatus Center at George Mason University, bridging the gap between academic ideas and real-world problems. Learn more at mercatus.org. For a full transcript of every conversation enhanced with helpful links, visit conversationswithtyler.com. Hello everyone, and welcome back to Conversations with Tyler. Today I am speaking with Brad DeLong on his book known as J. Bradford DeLong, on scholar.google known as J. Bradford DeLong, but to most of us known as Brad DeLong. He is professor of economics at UC Berkeley. He and I went to grad school together at Harvard. He was one of the very first, if not the first, economics blogger. And he this year has out a long-awaited New York Times bestselling book, Slouching Towards Utopia: An Economic History of the 20th Century. Brad, welcome.

Thank you. Thank you very much for having me and giving me an opportunity to sell books as well as to talk to one of the most smart people and wide-ranging people I know about the political economy and similar things.

Thank you for that. Now, if I look at the productivity and growth statistics for the late 19th century, the They're highly fragmentary. They're imperfect.

They are.

What do you think the numbers are showing us? Because they don't look that good. Is it that we don't trust the numbers, or is it the numbers like that are what big progress meant back then?

I think the numbers then are what big progress meant back then. You know, I mean, John Stuart Mill in the 1870s could think and had some reason on his side that there actually had not been an increase in working-class real wages across the years from 1800 to his day. And a bunch of that is distribution, but a bunch of that is simply slow growth. That things like the 2% per year income and productivity growth that we have grown used to since the coming of the second industrial revolution, since the start of Bob Gordon's One Big Wave, that really is completely unprecedented. You know, there was nothing like that before, not in the biggest efflorescences, not in the classic British industrial revolution.

If we're trying to think about the period, say 1870 through to the 1920s, when you have some kind of modern consumer society, what's the best number for reflecting how big that change was?

I would say that you've got to look worldwide and that if you look worldwide and if you take account of the fact that world population growth has now hit kind of more than 1% per year after 1870, that you had something like 1.3% per year for average world real income growth. From 1870 on up to the eve of World War I worldwide, and you do what I do, which is say, let's take real income growth and add half of population growth and call that technology growth. Do that and you get something like 1.7% per year for the global rate of increase of, quote, technology, unquote, from 1870 to 1913, you know, which is 4 times what the worldwide average was back in the century before 1870. It's a huge shift, and it's one of the things that makes the modern world as we know even vaguely possible to imagine.

If I'm trying to understand economic statistics, and if I believe the 50 years starting in 1870 have changed everything, but if I also believe the last 50 years in the West did not change everything, it gave us computers and internet, but it's had growth rates that are not probably too far from the earlier rates, like what accounts for that difference?

Well, I think it did change everything, or it didn't change everything, but it changed a lot of things. There is a difference between the growth rate of wealth and what that growth rate of wealth means, right? You only go from having no indoor plumbing and no public health, and so having half your babies die before the age of 5, to one in which infant mortality is extremely low and a genuine, you know, astonishing tragedy once. You only go from spending 2 hours a day at least thinking about how hungry you are and how it really would be nice to have more calories right now, to not having to think about that, you know, kind of once. You know, you only go from having your children so malnourished that the adult heights of the boys are 5 foot 3 to the adult heights 5 foot 9 or so on average, you only do that once. And we did that, and we did that mostly in the 50 years after 1870, at least for the Global North. We're doing equal things in terms of how much we're making since, but with possible exceptions after 2006 slowdown. But in some sense it means a great deal less because it doesn't impact our thinking and our family tragedies and our children so malnourished that they're badly stunted in such an obvious, you know, and visceral way. You know, but there have been big changes, right? You want to talk about modes of production, you want to be an orthodox Marxist and following not so much Marx, but Friedrich Engels. And you say there's a huge jump between feudal society and the commercial societies of the gunpowder empires between 1000 and 1650 or so. Then there's another equal jump between the gunpowder empire commercial societies and the other steam power societies of 1870. Yeah, but the second industrial revolution beasts of 1910 or so are a different animal too. As are the mass production societies of 1960, as was the global value chain society of 2000. And right now we're well into an info-biotech economic revolution. Now the underlying technology-driven forces of production are continuing to change and are continuing to change a lot. But in some sense, we think it means less simply because our needs are biologically much less urgent.

Why did German universities so blossom in the 19th century? It seems like a quite astonishing record.

It is.

Even just Göttingen for mathematics taken alone is hard to believe, right?

It is an absolutely astonishing thing, not something that I would have expected back before 1800, not something I really have a great deal of understanding now. It certainly is a wonderful and marvelous thing from the perspective of what a society just beginning to kind of crawled out of the Malthusian agrarian age, you know, decides to do with its wealth, with its time, with its focus. And not parallel, not equal to anywhere else, you know, not even the land grant colleges and the private universities of the US could do it.

Nor France, right?

You know, there are reasons that my great-great-grandfathers and great-great-great-uncles went to Germany for graduate school.

What do you think of the common view that England in some way fell behind Germany in the late 19th century?

You know, the fact that in 1913, the largest British electrical manufacturing firm is the English subsidiary of the German Siemens, you know, that speaks a lot. The fact that Britain is still richer, at least in any comprehensive GDP kind of accounting, is I think in large part because Germany is dragged down. Because when we speak of Germany in this sense, we're meaning the Ruhr and the Rhineland largely, and some of Silesia and some of Saxony as well. It is absolutely marvelous that you would expect the country that is the most industrialized and that has the most advanced universities in 1800 to have an enormous comparative advantage in driving forward technology and in maintaining its place as the kind of industrial technological leader. And yet not.

So what was Britain doing wrong those years then?

Well, they're the standard arguments that were applied to Holland before and that are applied to the US today. Financialization, rent-seeking, an overmighty state taxing the economy in order to accomplish geopolitical goals. For Britain, it does seem to have been an unwillingness to focus the attention of society on pushing engineering forward. And once you start to lose the concentrations of the communities of engineering practice, it's quite easy to lose more, and it's quite easy to get yourself back into a vicious, into a vicious spiral. I would always talk about how Americans and Germans would be much more willing to invest in enterprise, and that in Britain you really did not have the growth of the large intermediaries, you know, like the Deutsche Bank on the one hand and the JPMorgan partnership on the other, you know, that saw themselves as being in the business of intervening information between people who had money that they needed to— whether they wanted to save and invest, and people had ideas that they needed to deploy, and that the rationalization and routinization of that through investment banking, you know, universal banking in the years after 1870, played a substantial role. I was never really able to nail that down to my full satisfaction, but that was always my guess. I would have to say we really do not know, but that it does tell you how quickly, within one or two generations, what we think of as technological leadership and technological supremacy can ebb away as a matter of position in leading sectors, of the sheer mass of engineers engaged in communities of engineering practice. And also the educational system certainly played a big role. That Germans were being trained to manipulate molecules and organic chemistry while Britons were being trained to write verses in the style of Macaulay, which would be the poems that the Romans would've written if they had been Scots. As a focus of their educational system.

What do you take to be the best understanding of the 17th century scientific revolution, if indeed you view it as a 17th century revolution?

I always think Joel Mokyr is absolutely magnificent on this. I think he understates the role that having printing by movable type played in kind of creating, you know, the community of scientific practice and knowledge seeking. There's one thing that happens that is extremely unusual, right? Back before 1870, there's no possibility at all that humanity is going to be being able to bake an economic pie sufficiently large that everyone can have enough. Which means that principally politics and governance are going to be some elite constituting itself and elbowing other elites out of the way. And then finding a way to run a force and fraud domination and exploitation scheme on society, you know, so that they at least can have enough. That when Proudhon wrote in the 1840s that property is theft, it was not metaphor. It was really fact. What does this elite consist of? Well, you know, it's a bunch of thugs with spears, the people who have convinced the thugs with spears that they're their bosses, and their tame accountants, bureaucrats, and propagandists. You know, which means most of the time when you have a kind of powerfully moving forward set of people thinking about ideas, whether the idea is true is likely to be secondary to whether the idea is useful to helping me keep my place as a tame propagandist in the force and fraud domination and exploitation elite machine. This is a point I've stolen from Ernst Gellner. And I think it is very true. And yet somehow the Royal Society decides no, the Royal Society decides nothing except through experiment. You know, that we are going to demand that nature tell us, or tell one of us, or at least someone writes us a letter saying they've done the experiment about what is true. And that is a miraculous and completely unexpected transformation And one to which I think we owe a huge amount.

And where does that impulse come from of the Royal Society? It seems not an accident that it's in England, the same era when you're developing rule of law, constitutional thought, some theory of the rights of man, other stranger movements.

Right. As I go looking back, starting around 1600, the intellectual air starts to smell different. You know, you have Tommaso de Campasola writing in The City of the Sun about how there has been more technological progress in the past century than in millennia before. He then ruins the effect by saying, and this is a result of the astrological influence of the moon in Scorpio, which as a theory of technological progress we would find rather lacking in many ways. And you have Francis Bacon saying that the world has been utterly transformed by, you know, the compass, by movable type printing, and Gunpowder. And the utopia he goes on to paint is one in which there is indeed, yo, Solomon's House, you know, a bunch of scientists devoted to uncovering the secrets of nature, to the enlargement of the human empire, and to the affecting of all things possible. And this, that utopia or cornucopia, at least, is in our future and is going to be because we've figured out how to use our minds to understand things. Rather than because we've managed to recover a golden age or because some theological being has come to our rescue or because we've finally figured out the right static social order. That's kind of unusual. And I got to trace it to what happened between 1500 and 1600, which was the discovery of the New World, the subsequent Columbian Exchange, the great reduction of the prices of carrying goods across the world as a result of the first globalization. You know, that and the tinkering culture of Western Europe meant that in 1600, you could look back and for the first time in history, really say, wow, things are a lot different than they were even 100 years ago. You know, in fact, we know more than anyone in the past, you know, ever did. That in earlier ages, you look back and you see monuments of at least some ancient civilization that look pretty impressive to you. By 1600, no. And so in— by 1600, the idea that knowledge was a possible thing that humanity could grab for, you know, was in the air. And as you say, it all concentrates in England. It all concentrates in England, or maybe better to say, it all concentrates in a circle 300 miles around the port of Dover, because Hume and Smith and the other Scottish Enlightenment people kind of head for London fairly quickly in order to get inside the circle and get inside the discourse. That is a wonderful and marvelous thing to have happen.. And I think it is a systematic change from the House of Wisdom in Baghdad in 900, or from the empirical and metaphysical and, you know, alchemical researches of the researchers of the Song Dynasty. And as I say, we're very lucky it happened.

What do you think of the original Paul Romer view that across the very long run, growth rates simply rise?

Well, something bad seems to happen after the year 150. Right. That up until the year 150, I think you can say yes. Although whether you can actually back that up with numbers you can semi-believe in really depends on what you see of the population evolution of humanity toward the end of the Bronze Age. You know, that there's a fight between the Hyde people who think that Bronze Age empires were much more populous than others did, who think that the big increase in human settlement population and technology before the year zero, you know, came in the late Bronze Age with the Hittite and the Babylonian and the Egyptian empires of the time. And the rest of us who tend to think that we see an acceleration with the other classic coming of classical civilization as a whole, you know, in the Axial Age, you know, and I'm on the Axial Age side, but it's disputed. After 150 though, things really do fall off a cliff, both in terms of the sophistication of high society and also in terms of the rate of increase of human population, at least Eurasia-wise. Wide, you know, and it's not just that the Romans vanish from Britain, and it's not just that the Latin language frontier gets pushed back so that it's out of Britain completely and has moved 200 miles into France as one elite succeeds another. It's that there's an enormous destruction of the mechanisms that were pushing ideas forward in the Western, but also in the Eastern Roman Empire. In Persia and in India, which are subject to repeated, fairly disastrous barbarian invasions, and the successor states never kind of get back to the level of invest— of infrastructure and other investment and, you know, ideas, putting forward ideas about manipulating nature. And in the fall of the Han Dynasty in China and the Warring States period, and in the subsequent Tang Dynasty, it isn't until the Song arrive and people start once again, doing serious selective breeding with rice, that it looks like the rate of technology advance gets back in gear. You know, I can't convince myself that between 800 and 1500, the rate of growth of world technology was any greater than in the age of classical Persia and Greece and the coming of Han China, even though the population in 800, you know, it was kind of 3 times what it had been. When classical Greece started. There's a big interruption of the Romer story from 150 to 1500. And afterwards, it seems to me it's not so much two heads are better than one, but rather we find and make much better institutions in fairly discrete steps.

If we take your answer, which I largely agree with, it seems to me strikingly non-Malthusian. In the book, you seem much more a Malthusian, that the problem over the very long run is simply the ebbs and flows of population.

You know, say you have technological progress of 5% per century worldwide before 1500, which supports maybe an average century in which human population grows at 10%. Then after 1500, you can say that that triples and say one-third from the fact that you actually now get globalization because you now have ships that can actually sail rather than having to kind of break bulk at 8 different spots along the way, and 1/3 from the Columbian Exchange itself, and 1/3 from, you know, the tinkering and innovative and Royal Society culture in Western Europe. So that after 1500 worldwide, it's not 5% per century for technology, it's more like 15%. And so you see population growth rates of maybe 30% per century worldwide, but you know, 30% per century is still a Malthusian economy. It's gotta be a somewhat richer one. You have to be somewhat richer. So that your population can grow at 30% rather than 10% per century. But still half your babies die, still life expectancy is 30. You'd expect living standards to increase on average by just enough to support the 30% per century population growth rate rather than the 10%. But it's still a Malthusian economy. The interesting question is what happens between 1770 and 1870 when we— looks like we get our global rate of technological progress up to almost half a percent percent per year, which means that, you know, a 1% per year population growth rate could kind of eat all that up in terms of smaller farm sizes offsetting better technology. But you do have an upper class whose living standards are being transformed by new inventions. And you do have a doubling of humanity's technological capacity every 70 years. Is that thing, even though it is still the Charles Dickens, John Stuart Mill, we're not going to get anywhere unless we get a handle on our population growth. From. Is that 1770 to 1870 global economy still a Malthusian one?

Moving ahead to the 20th century, as you well know, Keynes predicted a kind of leisure society would come to the West reasonably soon, and people still work quite a bit. Like now. Yes, now, earlier than now. What exactly did Keynes get wrong, in your opinion? Obviously a very smart man.

Yes, I really do not know, right? I'm tempted to follow, you know, Richard Easterlin and say that modern economic growth is not a triumph of humanity and technology over material want, but of material want over humanity and technology. I now have an 18-month-old laptop, and I find myself annoyed that it's not as fast as another laptop I could get using a significantly improved process of turning sand into something that can damned close to think with parts 4 nanometers on a side in the most complicated human manufacturing and division of labor process ever accomplished. So complicated that in fact there are only 2 productive organizations that each of which is absolutely essential for it. One of which is the one in the Netherlands that makes the extreme ultraviolet machines. And the other one is the one in Taiwan that knows how to actually use the extreme ultraviolet machines to carve paths for electrons to flow in stone made of sand. Most of the time I should be aware that materially I'm very quite sated, that when I do spend a lot of money on a dinner out and on a bottle of wine, I have a nagging worry that, you know, suppose I were to take this money and buy, you know, 20 McDonald's gift certificates. And go down to a local childcare center and hand them out to harassed single mothers who are having difficulty making ends meet? You know, wouldn't the smiles on their faces be better, make me happier than actually drinking this stuff? And it's a question. And yet, as you say, I work pretty damned hard in large part because I like my work, but also because I am somewhat of a status-seeking individual.. And it's something like, you know, Liaquat Ahmed's review of Slouching Towards Utopia in Foreign Affairs this morning. The idea that someone as smart and accomplished and as knowledgeable as him thinks I actually belong in his company, that really does send me over the moon. Is that a bad thing? Is that me living my best life? Would Keynes say that I am no longer in the kingdom of necessity, that in fact I have outgrown the kind of community of those hag-ridden by the vices of avarice, usury, and precaution, which we pretend are virtues because they're socially useful, and I'm now living my best life wisely and well, or would I be better off simply taking things off and going down and hanging out at my cousin's place in Malibu?

Was Schumpeter correct about the bureaucratization of the large business firm?

I would say in the very long run, no. In the medium run, you definitely— yes, that you look at the Apple-TSMC, it's not yet a duopoly. It's not yet the combination of Intel, but it's kind of getting there. And it's an extremely taut and low bureaucracy organization. When you look at the entire value chain, you take a look at, you know, Google, and it also looks to be an extremely taut, unbureaucratic value chain. You look at the old Twitter and yes, the old Twitter apparently was highly bureaucratized because nobody could get approval to ship anything. And whatever you think of Elon Musk will do of Twitter, which my view is he's most likely to simply light it on fire and burn it down. It is going to be an experiment in which he takes the organization that had become extraordinarily bureaucratic and seriously shakes it up, possibly to the long-run public good.

About a decade ago, you and I did a symposium with Greg Clarke. I think it was at UC Davis. And we talked about his book Farewell to Alms, which is wonderful. Since then, he's had other books, The Sun Also Rises, For Whom the Bell Tolls. What do you think of his approach to economic growth after all these years, now that you've thought about it, written your own book?

Well, his approach is the huge kind of approach. There's the largest scale. I'm looking at the 20th century, which is a considerably smaller scale thing. And so what I'm most interested in is, you know, all the things that Joel Mochir talks about, all the things that Greg talks about, you know, all the other stuff that gets you up to 1870, and then you wave your hands and say, the story continues.

Yeah.

In this book, I've taken the position, and I'm about 70% sure I'm right, you know, that really, no, the story doesn't continue. That say from 1770 to 1870, you have, you know, the half a percent per year on average of steady technological progress, you know, but one-third of that comes because the last set of glaciers served as bulldozers and scraped all the post-Permian rock off of a good chunk of Northwest Europe, leaving all the stored sunlight in the form of coal right there on the surface for you to pick up and then use to power steam engines. And about one-third of that comes from, you know, the second globalization, allowing you to pull all the manufacturing of the world into the districts in which manufacturing was most productive and efficient. You know, and by 1870, the really cheap coal was pretty much gone and you'd already pulled in all the manufacturing. And that leaves you with the underlying rate of invention and innovation, which is about 1/6 of a percent per year, the things discovered, developed, deployed, and diffused in the world economy. And you know, that 1/6, that only supports population growth at the rate of 1/3% per year, as farm sizes grow smaller with higher population, you know, 1/3 of a percent per year, that's just 10% a generation. That the steampunk economy in which you ran out of the coal and you'd already globalized the manufacturing and you just had invention at the early 19th century steam engine pace, you know, that produces a steampunk economy that looks pretty damn Malthusian to me. But instead we had the one big wave, as Gordon calls it. We had the sudden jump up so that we get our 2% per year productivity and real income growth after 1870. You know, and it's that 2% together with, you know, Schumpeterian creative destruction revolutionizing the economy to double human technological competence every generation. You know, that wild ride from 1870 to today. That's the story I want to tell. And, you know, that's a story that Gregg misses because Gregg is simply viewing it from too high an altitude.

Now, when I read Hayek's Constitution of Liberty, I see a thinker who favored a social welfare state, single-payer health insurance, and vigorous application of antitrust law. And you paint Hayek as for laissez-faire. So what gives?

Well, there's a Hayek and there's Hayek and there's Hayek, right? And there's a difference between things that von Hayek wrote and things that Jovan Hayek is supposed to have written. And in some sense that people wished that he had written. I'm really using Hayek in my book as a hook on which I can hang a set of ideas and Jopalanji as a hook on which I'm hanging another set of— you know. And yes, you know, Hayek had moods in which he said, of course we're not barbarians, of course we have single-payer universal healthcare. He also had moods in which he said that, you know, fishermen who only have jobs because they can sell their fish into the world market, who want to complain about how the market is not rewarding them justly, should simply shut up and soldier. There's the Hayek who very much values the Western traditions of liberty. And there's the Hayek who rails against permissiveness as the chief enemy of human civilization.

Permissiveness, isn't it the collectivist impulse and not permissiveness?

Depends from place to place. You know, there's the Hayek who actually likes democracy and discussion and sees freedom of thought. And there's the Hayek who thinks that you need a like Kurgan moment in order to destroy socialism. And reestablish the constitution of liberty, which is primarily economic liberty, on its own foundation, on solid foundations, and his hopes that Augusto Pinochet would be that kind of guy from Chile.

But he was right about that, right? Chile is today a democracy. Well, they did make the transition that Hayek had predicted.

No, I'm with Maggie Thatcher on this, that definitely other roads in keeping with British constitutional traditions, I believe she wrote. Can achieve all that is good about such goals. He's a complex guy who got crankier and crankier with age. You know, when I want to annoy my left-wing friends, I want to say that if they want to learn how to truly crowdsource anything, they need to look at Hayek. That what they're pushing for is a central plan system in which someone at the top orders everyone around as if they were robots and does so at no information.— or a bureaucracy in which a bunch of people have written a rulebook that requires everyone else to be a software bot when the rulebook only covers one-third of the possible cases, you know, or a market with private property and contract and individual initiative so that all of the decision-making is pushed out to the periphery of society where the information and the brains really are, and how you automatically solve the problem of incentivization as long as you manage to successfully align market price prices with social values. There is no better way for harnessing the 8 billion brain anthology intelligence of humanity to achieving social goals we all want other than to organize a well-functioning market system. And that is a basic and serious truth. The problem though is the kind of align prices with social values, you know, and the fact that in a real market, the only rights that matter are property rights.. And so unless you are very, very good at making the distribution of property rights in accord so that the people who control those property rights are issuing orders to the market that accord with what you believe utopia requires, then you get yourself into huge trouble. Plus you have to take care of all the externalities, the information externalities, the direct externalities, the macroeconomic externalities, and so If today we were to rerun a new Julian Simon versus Paul Ehrlich bet, which side would you take? I would definitely take Simon's side.

Why Simon?

We are extremely inventive. We are 8 billion of us. We can talk. We're very, very smart collectively. And so if the problem is to figure out how we can use resources in order to support productivity, we are highly, highly likely to find a way. That problems of environmental catastrophe and pollution and so forth are problems of externalities and the proper management of commons. They aren't problems that natural resources that are physical objects are suddenly somehow going to become scarce. You know, the only example I seriously know about this is the extinction of the spice silphium in the Roman Empire. And I still do not understand how it could have possibly happened because as silphium got scarce, for one of the many latifundistas of Imperial Roman Italy to have established a silphium plantation would've seemed to be a very obvious thing to do.

What is your current view of the middle-income trap?

China looks like it's falling into it. We've long known about the resource trap, right?

You mean from having too much oil?

Yeah, that you get a society where the returns to engaging in positive-sum, kind of let's win-win figure out how to cooperate productively. If you're a young man or woman on the make are less than the returns from figuring out how to join some force and fraud exploitation and domination machine, which, you know, in the modern age is usually powered by foreign demand from someone elsewhere who is richer. You know, the drug lords in Latin America and the United States, the oil lords in the Middle East and the European Union, and so forth. The middle-income trap looks to me a lot like that thing expanding, expanding its reach. That, you know, governmental technology of appropriation improves along with other technologies. And so there comes a point where it's better and easier and more comfortable for yourself to try to join the other government regimentation machine than to be out there in the kind of entrepreneurial and positive sum machine. And so my understanding of the middle income trap is that that's where it comes from.

But Ireland breaks out, right?

It seems scarily persistent. They used to argue that divergence worldwide was largely the result of of internal and external colonialism plus Lenin, right? That if you were externally colonized, your colonizer really didn't care about your economic development. And if you were internally colonized by, say, an elite that regarded the rest of society as its prey and thought it was separate because they were descended from the conquistadores of Castile, they regarded the rest of the country as not just their prey, but the acquisition of knowledge and social power by the rest of the country's Manifestly dangerous. And you combine that with, you know, Lenin's extraordinary success at organization and his pupils and their theological belief that the market must be damned to hell forever, and you get almost all of the divergence that we've seen since 1870. And then in the generation after World War II, I could say, well, you know, failure to converge after the end of colonialism, that's because they've kind of destroyed state institutions and building a state is a complicated thing and you have to reward your friends in order to maintain control and establish— like Henry VIII stole the monasteries and, you know, stealing entrepreneurial wealth is a good thing to do if you're trying to maintain a stable state and things will settle down. And then I could say, well, African retardation, there are special problems of sub-Saharan Africa related to long-run destruction of social trust and so forth. But, you know, now I've kind of run out of excuses for why middle income and other traps persist. And, you know, maybe the fact that I've run out of excuses is combined with the fact that we've actually seen substantial convergence in the world since 2000. But, you know, on the other hand, the coming of Xi Jinping's new imperial China and the coming of Narendra Modi's and what looks a lot to me like National Hinduist India. Those make me think that, you know, perhaps the middle income trap will continue to be much stronger than I would wish or than I had hoped 5 years ago when I was in the mood of, I've run out of excuses.

Now, you served in Treasury under the Clinton administration. Let's say you're called into the UK and maybe you have been. So the Truss regime tries a mix of spending hikes, and tax cuts and markets don't like it. You're asked for advice. There's probably a recession coming. Is it that you actually recommend austerity? What is it you tell them to do right now?

Oh boy, that's a good question. That's a hard question. I confess I was surprised by the fact that the fiscal theory of the price level suddenly showed up outside of Whitehall and camped out and set up its tent.

I understand.

In such an impressive way.. And you know, it's the problem of is the fiscal theory price level really true or have we have the wrong group of people in charge of money in financial markets?

And their debt-to-GDP ratio, it's only at 80%, right?

Which is, you know, I mean, Milton Friedman hoped that noise traders would lose money and go away, right? Simply because they were being irrational. And you know, it was Larry Summers who pointed out that rational people don't maximize expected wealth, they maximize utility. And, you know, as a result of that insight of his, I actually have had a good career in economics, which I might well not have had otherwise, being as scatterbrained as I am. But I think that insight is much deeper. It's not just that there'll be a lot of noise— noise trading will be persistent. It will be that the largest and most influential financial players will be people who have not only taken, you know, positions that are overly risky in a beta sense, they will be overwhelmingly people who have massively failed to diversify and who have been very lucky 3 times in a row. And who as a result think that they're absolute geniuses. That we're selecting for a market in which the celebrity participants, at least, are people with positively bad financial judgment, prone to bubbles and enthusiasm. And relatively right-wing in their politics because, you know, the right wing will offer them low taxes. The great and good financially of Britain have been told for 15 years that austerity is an important thing to have. So that's why you need to have us rather than the Labour Party in control. As near as I can see, the result has been a Britain that's 10% poorer as a result of a failure to make public and private investments over the past decade and a half. And another 10% poorer because of the disaster of Brexit that was never supposed to happen. That was just supposed to demonstrate that Boris Johnson was on the side of the little people of England. And maybe the fiscal theory of the price level was only there because they believed what Cameron had told them, and that maybe you could actually bull through this. If I were advising Liz Truss, I would say, go back and tell the European Union it was all some horrible mistake. We've come come to our senses.

But they wouldn't take them back at this point, right? They can't credibly commit to staying in all the time.

They can't credibly commit to staying in. And, you know, it is the only obvious thing to do to massively raise British total factor productivity, is to get back into the European Union quickly. Otherwise, I do think you need a substantial boost of public investment. It would be very nice to take advantage of the forthcoming recession to actually get it done. You know, when private spending sits down, public spending should stand up. There needs to be a long-run plan to definitely finance it, given that, as John Maynard Keynes said, that the animal spirits of investors depend very much on investors' attitude toward and confidence in the soundness of the government. And a hatred of investors for Leon Blum or the Labour Party is powerful factor that must be taken into account. I would indeed say that a Conservative government that can credibly promise substantial future wealth taxes to keep the deficit under control in the future is the right road forward to Britain. I do not see how the Conservative Party, as it's currently constituted, can make such long-run promises, and I certainly do not think that those whose credibility is needed for Britain to avoid a very nasty inflationary spiral over the next 10 or 15 years would trust the Labour Party at all. We're likely to find that it happened to Léon Blum, or it happened to François Mitterrand. You know, attempt to move left and find yourself having to tack right very, very quickly.

What's your favorite novel?

I would still say it's Thomas Mann's The Magic Mountain, but I'm not sure whether that is actually my favorite novel or whether that is a novel that reminds me of one of my favorite favorite time, or is there a real difference between them?

Yes. What is your favorite movie?

I'd have to say I'm a sap, and I still have to say that I admire Casablanca extraordinarily much. I wish my favorite movie were The Seven Samurai, but when I'm sitting down, even when I'm not exhausted and actually want to watch a favorite movie, I do find myself turning to Casablanca. So my revealed preference.

Do you think there's any novel or movie that is really quite good for understanding economics? Or is the seen versus unseen distinction too much of a distortion, that in novels and movies there's too much intent and not enough invisible hand?

I would say Red Plenty by Frances Spufford is a wonderful novel about economics.

What's your favorite video or computer game right now?

Oh, I don't have a favorite computer game.

Civilization gone?

I don't dare. Yes, yes, yes. I mean, as I say, the fact that in late 1993, I had to decide between being a Civilization addict and a Deputy Assistant Secretary of the Treasury. And do you know, at least if I'd managed to figure out how to win consistently at God level in Civilization, I might feel I had accomplished more than I did at the Treasury. I might not. But I microwaved the disc and have not played a video game since. It's not something I trust myself with.

Does UC Berkeley have the right amount of intellectual diversity?

If it were the only Berkeley, I would say yes. I would say that an American educational system that has even 20 places in which I'm as far right on the faculty as I am at UC Berkeley would not be a terribly healthy situation, and I think we're in that situation.

How much has religion influenced your political and economic views, if at all?

I would say formally and consciously, not. The problem is that I know too much about the genealogy of a great many ideas I hold to be very dear. So I would say unconsciously, absolutely enormously.

What from Christianity or elsewhere do you think you've drawn upon the most?

I might say you should ask Rabbi Hillel to teach you the entire Torah while standing on one foot. You know, that, that what is hateful to others, do not do to them. Or maybe Bill and Ted, you know, be excellent to each other and party on, dudes.

So, Kantianism, but filtered through religion.

Well, except I would say religion is filtered through Kant and emerges as Kantianism. I would say that it comes from elsewhere.

Sure, but he had his own pietistic background, right? That's probably not a coincidence. The history of this book, if I understand it correctly, there's a director's cut of this book hidden away somewhere. Is that correct?

I have not yet managed to assemble the director's cut. There's a cutting room floor. It has 600 pages including index and so forth. There are another 400 pages that exist in disorganized form, and then there are the notes and quotations and outlines for another 500 pages.

Will we ever see them?

The Lord willing and the creek don't rise, yes. You know, the question is, which part should I add to and come out next? Should it be the one that's really about industrial research labs and modes of production since 1870? Should it be the history of the Malthusian world? You know, should it be parallel to the Unbound Prometheus? Or should it be very much the Schumpeterian industrial creative destruction book? People can vote. Send me emails with your votes.

And last question, what else might you be planning in addition to possible sequels?

To write, I would say that possible sequels, pretty much all that I'm planning right now.

But Substack, you're going to stay on Substack, go back to blogging, do more on Twitter? There's other choices, right?

Substacking is blogging, except that Substacking is blogging where you have explicit permission to send things to people's email inboxes and also to have a rather large tip are.

And is Substack or blogging better? Substack, the post seems longer to me. Blogging, it seems shorter and more about scrolling. Which do you prefer?

I thought blogging was more fun. I like being a squirrel. I think, you know, if you believe Ezra Klein, that we need to be more Gutenberg-ish because the social media audiovisual world is really one in which you have to declare who are your enemies in order to get listened to, and that that really is not a healthy foundation for a public sphere. I think I have a moral obligation to help Hamish and company push Substack forward in the future, and that it would be nice if they succeed in their long-run project for world domination.

Brad DeLong, thank you very much. And again, everyone, the new book is Slouching Towards Utopia: An Economic History of the 20th Century.

Thank you very much. Tyler Cowen for inviting me and please read and think about and, you know, criticize the book and criticize the book, please harshly and mercilessly, because that's about one of the few ways I'm going to learn things in what's left of my life is to read incisive and merciless critiques of my book. And I definitely do want not to stop learning things.

I think you're too hard on Hayek. That's my critique for today. But Brad, thank you very much and look forward to seeing you next. Thanks for listening to Conversations with Tyler. You can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. If you like this podcast, please consider giving us a rating and leaving a review. This helps other listeners find the show. On Twitter, I'm @TylerCowen, and the show is @ConversationsWithTyler. Tyler Cowen Convoes. Until next time, please keep listening and learning.