Episode 19: Tyler Cowen on Maximizing Growth and Thinking for the Future

Hello everyone, welcome to the Mindscape Podcast. I'm your host Sean Carroll, and today we're going to be talking about an interesting take on ethics and morality on a societal or even global level, but not talking with a philosopher, talking with economist Tyler Cowen. Tyler is well known among people who read the internet. He's an accomplished economist and author, also the host of his own podcast called Conversations with Tyler. But perhaps if you are an internet person, you know him best for his extremely successful blog, Marginal Revolution, that he runs with his colleague at George Mason University, Alex Tabarrok. Tyler has a very distinctive style on the blog. It's pithy and provocative, and he specializes in turning an economist's eye to a wide variety of issues, from things like global trade that you would expect economists to write about, to how to enjoy music or read books or what to order in a restaurant when you go visit a foreign city. This kind of perspective is very, very useful. And Tyler now turns his perspective in a new book called Stubborn Attachments to the question of how we should act as a society so as to be good consequentialists. Uh, he's not a firm consequentialist when it comes to morality. Some of you may know that two great competing schools of morality or ethics are consequentialism, that says there's some act that you do, and whether your act is moral or not depends on what its consequences are. Typically, you're kind of a utilitarian You want to increase the greatest good for the greatest number, or some other measure of utility aggregated over people, as opposed to deontologists who have rules that they follow, and it's not the consequences that matter, it's the rules themselves. So in his new book, Tyler says if you're a good consequentialist and you want to sort of increase the greatest good for the greatest number, it's not just people today that matter, it's future generations that matter just as much. And so if you believe that, that's not arguable assumption, of course. You could typically discount the future generations because you don't know as much about them, but he says there's no good reason to do that. And if that's true, then what we know from empirical studies is that if you have economic growth now, then eventually everybody benefits. Economic growth now doesn't benefit everybody today. It's unequally spread in its, uh, benefits. But ultimately, if the whole society is doing better economically, then generally almost everyone gets better off, and therefore, if you care about future generations, the moral thing to do is to work to increase economic growth today. Now, you can argue with this, and of course, it's not quite that naive. If you concentrate on short-term economic growth and destroy the planet, then you haven't increased anybody's utility. So you have to be careful about those kinds of risks that you'd be taking. And so these are the issues that we'll be talking about on the podcast today in a very wide-ranging conversation. I do want to apologize a little bit, both to listeners and to Tyler, because I mixed up the date when we were supposed to have our conversation. As a result, I was less prepared than usual, and we also had tech problems. We couldn't use Zencastr, which I usually use. We used Skype, so the audio quality is not what it, what it could be. So Tyler was great, the conversation is extremely useful, but I wasn't quite ready myself to dig in as deeply as I would really like. Nevertheless, it's— that's still just, you know, compared to what I wanted it to be. The conversation turned out great overall. There's a lot of food for thought. You may or may not agree with it, but it does what good sort of thought experiment philosophy, economics, and so forth should do. It pushes your brain in directions that it might not usually go. And there's a detour at the end of the conversation into the many-worlds interpretation of quantum mechanics, which I'm sure everyone will like. So with that in mind, let's go. Tyler Cowen, welcome to the Mindscape podcast.

Thank you for having me.

So, um, I wanted to start with sort of a higher-level meta question. You're an economist, of course, but not just that. You've written some books about, you know, how to think how to order lunch like an economist. How important is that being an economist to how you think about yourself?

Well, it's a lens through which you see the entire world. So I think in general, too many academics, they segregate their research from their lives and they treat them as two separate things. But if you're going to do economics or philosophy or political science, you want to realize, you know, you should live what you preach in some sense. So I think that's been an important part of what I've tried to do in my life.

So what does it mean then in your mind to think like an economist or to live your life like an economist?

That when you see a situation, you try to ask, "Why did this come about? Is this the result of some kind of more generalizable model?" You ask, "What here are the preferences and the constraints? What are the incentives facing the individuals?" Just some very basic categories you start applying. You throw them at the problem. So you go to restaurants and whenever they have only 3 dishes on the menu, the food is really good and you wonder, "Well, why might that be?" That's thinking like an economist.

Well, I mean, I— that was more or less the kind of answer I'd expect you to give. And I think it's interesting because probably if you talk to people on the street and ask them what— how economists think, you would hear words like money and finance and budgets, and none of those words appeared in what you just said.

Money is only one thing that people value. We also value respect, recognition, love, friendship. So a typical economic question: if you're sitting in a movie and you're bored, should you walk out? Because you've already paid for the ticket. You're not getting that money back. It's a sunk cost. So basically, you should go.

So basically, economics is a way of being a rational person, sort of fulfilling your desires in terms of your— maximizing your actions to get whatever incentives, whatever desires you have. Is that right?

Or sometimes it's a way of understanding why you're not a rational person. So we're never going to approach that model and maybe we shouldn't kick ourselves too hard for that. But again, it's just organizing categories to put your thoughts into and help you see patterns across different decisions.

Right. I mean, economics is in an interesting situation sort of vis-à-vis the public imagination. It's a high-status occupation in many ways compared to theoretical physics, which is what I do, which is in different ways a high-status status occupation, but economists have a lot more relationship with policy or business or things like that and they get criticism for things like, you know, imagining that people are more rational than they really are or being more interested in the bottom line than in more— less tangible values. What do you say to people who have those critiques in the backs of their minds?

Many of those critiques are correct. Economics is part science but it's also part art and maybe a lot of people are two-thirds rational. Maybe the most rational people are those who have a lot of money on the line. So that gives economics some predictive power, but you need to approach it with epistemic humility. And you know, most people did not predict the financial crisis or the Great Depression for that matter. And you know, it's not a forecasting science. It helps you see patterns, but it's also not the only way you can see more patterns.

That's an interesting thing you just you mentioned about people being more rational with more money on the line. I can certainly understand why that might be the case. Do we have evidence that that's actually true?

There's a Chicago economist named John List, and he did a study of people trading baseball cards. So a few people trading the cards who are not used to doing this, once they own the card, they value it as much more just because it's theirs. Like, they identify with the card. It's mine. But professional traders are, in a sense, more ruthless. They're more willing to just buy and sell at whatever is the best price.— and this kind of result has been replicated a number of other times. So it does seem to be true that professionals with money on the line, they're closer to at least a naïve economic conception of rational maximizing behavior.

Interesting. Is this related to the fact that, you know, if you're shopping for a house and you put a bid in on a house and someone bids it at more than you're willing to spend so you lose it, you're very sad even though technically speaking you should not be sad that you— you know, you should be more or less indifferent to paying exactly the amount that— that you would value the house at.

Correct. And under some assumptions, you should be sad when you win the house, because that means you have winner's curse. You were the highest bidder. You're the one who overestimated what it's worth more than any of the other people.

And what is it— so how do we bring that to the lunch table? What does it mean to go into a restaurant and eat like an economist?

You need to figure out who in the restaurant can you actually ask what is the best dish. Will they take you seriously? How do you establish your credibility? If you just walk into a Chinese restaurant and say, "What's the best dish?" they'll actually serve you the worst one. They might approach you with a certain amount of contempt. But if you tell them you've, like, been to regional Chinese cities and talk about different regional cuisines, get their attention, they're more willing to help. So it's a question of learning how to communicate. It's as much sociology as economics, getting back to the limitations of economics. And being a good judge of people is worth at least as much as knowing a lot about food, I would say, because the key question is whom to ask.

Right. Now that's a very good point. I do— so I disagreed or I had questions about one of the points you made in one of those books. I forget which one it was, but about the specials on the menu. I believe that you made the point that if you look at a menu and something is in a box and it looks like they're trying to push it, that's the thing you should not order. Is that correct?

On average, there are exceptions, but at least your initial instinct should be to shy away from it.

And what's the rationale behind that?

If they have a special, often it's something they're not used to making. If it's one of their best dishes, you wonder why isn't it just on the menu. Sometimes they're just trying to get rid of the stock left in the kitchen. Uh, there are a lot of reasons to be wary of specials. In particular cases, say, well, something is in season. Truffle is a certain kind of mushroom, then maybe take it more seriously. But it could just be an experiment and you're the guinea pig.

Well, and maybe you value that. That would be okay if you're that kind of person, right? You like being the guinea pig.

Sometimes you like stories. Like really, really bad restaurants can be the best meals of all for that reason, right?

That's true. Or movies and so forth.

Yes. That's right.

Did you—

Yes.

Would you say that you've always thought like an economist more or less and you've just become more professional about it as you've grown up, or is it something you discovered along the way?—

When I was very young, say 10, 11 years old, I was a chess player and then I thought like a chess player, which is not totally unlike thinking like an economist. But chess players, they learn how to calculate or think things through many steps. They also learn very early on a lot of their decisions are wrong. That's good training for doing many things. So first I thought like a chess player, then by age 14 I started thinking like an economist and philosopher. And then I've just worked on building that up and in some ways trying to cure myself of thinking like an economist and think more like a sociologist.

Well, that's an interesting point because I've always wondered about the fact that as professors, as academics, we're forced to choose our specialty fairly early in life, right? I mean, what are the chances that you're going to figure out when you're 15 or 18 years old what you should be doing for a living? Are you happy with the choices you made along those lines?

Oh, very much so. But again, as you're a professor, there's this dangerous poison. You're used to telling people things and being a kind of authority, and you need to get out of that mindset by having all kinds of obstreperous friends who tell you you're, you know, full of crap. And you need to keep balance because there are so many incentives toward thinking you're right and not so many toward realizing you're wrong a lot.

Have you been successful at having obstreperous friends who tell you you're full of crap?

It's not for me to judge. You'd have to ask my obstreperous friends like how obstreperous are they really because a lot of people think they do this and it's part of the mindset of thinking, "Oh, I've succeeded at everything including having obstreperous friends." So only the friends know for sure.

Where would you say— this is probably an unfair question, but do you think academics err too much on agreeing with each other or disagreeing with each other? There's incentives for both in some sense.

There's way too much conformity bias in the social sciences, at least. People who just kind of show up at the lunch table, they talk about local politics or small talk. They more or less assume they agree with each other. They don't think all that carefully about a lot of their views. They don't integrate it with what they know about economics, and they just kind of sleepwalk through intellectual life in some ways.

Right.

Don't read that much outside their fields.

Well, good. So I was going to say, other than the obstreperous friends, what is the toolkit? What are the things we can do to try to be awakened from our dogmatic slumbers, do you think?

Well, if you're a professor, try to hire really good colleagues. My school has done a great job at that. Some of my obstreperous friends are my colleagues. But also have a good relationship with your family. They're not exactly your friends, but typically they are people willing to tell you when you're screwing up in different ways. So cultivate those connections in ways that also help your career and not just your family life. And always confront yourself with reminders of like your own mortality, that like what you think is important in a given moment is not a very reliable indicator. As much of that as you can. I try to hang art on the walls of my home actually to remind myself of my own mortality.

That's good, yeah. And you mentioned sociology as something maybe that you're learning more about or trying to think more like. But philosophy certainly shows up a lot in the new book. Is that a professional interest in philosophy or is it just something you can't avoid if you try to do economics?

Both. You can't avoid it. When I was 14 years old, I thought I might even become a philosopher. Prudence took hold. It's much harder to get a good job that way. But philosophy for me is an interest almost as great as economics and this new book, Stubborn Attachments, It's an attempt to outline the philosophical foundations of our economic judgments, like why is capitalism good? Why are rational choices justifiable at all?

So I have to confess, I'm going to ask the most obvious question: what are the attachments that we are stubbornly attached to that you refer to in the title of the new book?

Well, I argue we should be stubbornly attached to the idea of economic growth.

Okay.

With compounding returns, it is more powerful than any other utilitarian factor in boosting human well-being. And the other thing we should be stubbornly attached to is human rights, which in some instances are absolute. You simply should not violate people's rights no matter what. And those, you know, two blades— economic growth and human rights— if we follow those and we're all stubbornly attached to them, things will just turn out wonderful and not really so much pursue other values.

—right—

at the macro level.

You know, I thought— I can say, I think I really enjoyed the book, by the way. And, you know, it's very short. I encourage listeners to read it. Um, uh, it's a set of big ideas that I hadn't quite come across before, and it's one of those books— whether you agree with it or not, it's worth taking seriously. Can I ask, do you— how much of your intention when writing a book like this is to provoke people to think differently in addition to saying things that are true?

Somewhat, but the main intention in any book I write is to provoke myself to figure out what I think at all. So they're like unsolved problems in my mind and I only work them out by writing about them. So it's a very selfish endeavor. Maybe I should have the reader more in mind, but I don't. It's not so much a didactic purpose, but more directed toward me.

Yeah, I don't know. I mean, I feel the same way also with the podcast. I know that you're also a podcaster. I mean, my personal podcasting goal is to have conversations that I enjoy. Do you find Do you find that not only for books but for your wider communicative strategy?

Sure, you know, my podcast, Conversations with Tyler it's called, I'm not paid to do them. Even indirectly, I don't think they earn me any money. So I better enjoy it. But the main reason I do it is partly to ask people questions, but it's also to focus my own reading. Right. So if I'm studying like Paul Krugman or Larry Summers or Kareem Abdul-Jabbar, I learned so much reading about them. So it's the improvement in my thinking before the podcast ever happens that's the biggest gain for me.

Exactly. I definitely find the same thing. And so I think we have the time here. I want to really dig into the philosophical presuppositions in the new book. So you mentioned there's a sort of consequentialist aspect to how you're thinking. We should do things to get some large good. But you're not a pure consequentialist. You want to— soften that a little bit with some rules, some rights. I mean, how specific can you be about how we mix this goal of being utilitarian or consequentialist with human rights or other rule-based deontological guidelines?

Most of my book is about the consequentialism, and I think I say in the preface, I'm something like a two-thirds utilitarian. Usually consequences are the thing that matters, But, you know, should we slaughter large numbers of innocent babies just to boost GDP a bit? I definitely want to say no. So I'm carving out for the reader a kind of protected sphere. These are the things we shouldn't do. And then in the space of what's left, I'm trying to figure out what's best. And I, again, I keep on coming back to this idea of compounding returns. Right. If you can get compounding returns, you're probably doing the right thing. I'd say that's the core point of the book on the practical issues.— and also with your own education, your own knowledge. Like, are you learning in some kind of compounding way over time? If you're not, you're probably not getting very far. Right.

I want to get into compound returns in detail, but I think that there's this prior claim which I thought to be, you know, the most substantial one, that you think that we discount the future consequences too much. I mean, I know that economists professionally discount future predictions a little bit, but— as utilitarians, people often try to get the greatest good for the greatest number of people alive right now, and you're saying people alive 100 generations from now should count for almost as much. Is that right?

Once they arrive, they are no less real. So imagine that Cleopatra, several thousand years ago, had decided she would take an extra helping of dessert, knowing that this would lead to the death of 3,000 people today. I mean, discounting could in principle justify a decision like that, but I think that's indefensible. So, you know, as individuals we often discount out of weakness, like, "Oh, I'll go to the dentist another week later." But at the societal level, to really care about the future and our descendants and make decisions to reflect that, including, say, on climate change, the rate of savings, how much we innovate, we're messing up. We're myopic. And there's plenty of laboratory evidence that human beings can be very myopic.

So let me just get exactly the substantive claim though. Should we— when we add up our utility—

Zero.

Discount them at zero. Okay, that's good. That's a very specific number.

Now you discount for risk. If you're not sure something will happen, you downweight it accordingly. But you don't discount it just because it's further away in time. Okay.

I mean, what do you say to the various, you know, suggested puzzles that utilitarian approaches get themselves into? You know, if every life is worth a little bit and you're not discounting the future at all, should everybody just have as many babies as they possibly could? You know, or the repugnant conclusion I'm sure you're familiar with. Do you have strategies to get out of these?

I do think we should aim for institutions that encourage people to have more children. Subsidizing education is one way of doing that, making sure that living in major American cities, or say London, is affordable, is another way of doing that. And the fact that these policies can sustainably support more people is a reason to do them. I don't think you simply want to boost numbers for their own sake. You want people to want to have the children, to raise them properly. That's more likely to boost economic growth than trying to make the whole world, you know, like some kind of teeming slum. But absolutely, the numbers should count. And the richer we are, the more people we'll be able to support with our resources.

Right. Okay, so is there a principled defense of heavy discounting? I mean, I know people take it for granted and you're saying we shouldn't discount at all. What is the counterargument? What are people saying that, you know, we shouldn't care about 5 generations in the future nearly as much as today?

Well, people sometimes confuse the perspective of a corporation with that of all of society. So if you're a corporation, and you're doing budgeting and you're calculating in monetary terms, for a lot of purposes you should use various kinds of discount rates. That is not incorrect. But if you're talking about happiness or well-being and all of society for the distant future affecting entire lives, that's when we should apply the zero rate of discount. So most of the criticisms, I think, come from people confusing the corporate case with the societal case. Is it fair?

I had the image, so I want to see if you agree with it or not, while reading the book of you being the temporal version of Peter Singer, right? Singer has made— tried to make the case where you should care about a life of a person thousands of miles away who you've never met just as much as a person you see drowning in a lake. Is that analogous to what you're saying about future generations?

Correct, and I once interviewed Singer. It's on BloggingHeadsTV, and I found him very short-sighted. It's all about redistributing wealth now. Rather than increasing the size of the pie and the human race over time. Okay. And that's the wrong perspective. I want to increase the size of the pie, which also means you can afford more redistribution, I might add.

Right. So you think that he's figured it out with respect to space, but not yet with respect to time.

I hope I have had influence on him.

I'm not so sure. Okay, that's very good. Okay, so that's the sort of— well, let me— I guess I'm not quite satisfied with my own personal understanding of the balance I already mentioned between the utilitarian part of things and the deontological part of things. So you invent a concept called WealthPlus. Could you explain that?

WealthPlus is similar to what we today call GDP, but there's some problems in GDP. It doesn't properly account for the value of the environment and it doesn't properly account for the value of leisure time. So I just want to adjust GDP a bit. To make it a finer measure. That's wealth plus, basically. And over time, a much richer society is going to be much happier, much better off, more creative, more rewarding than a much poorer society, even if it's not at first. If you look at countries that have, say, a third or the fifth of the per capita income of America, I mean, they're really much worse places to live. And you see this in terms of where people want to migrate.

And is wealth— one of the nice things about GDP is it's very quantifiable. Do you think that there's an equally precise, even if not accurate, formula for wealth plus?

Sure, it can be hard to measure the value of the environment. Leisure time, it's pretty easy to measure the value of. But, you know, let's come as close as we can. And for the most part, actually, wealthier societies are also cleaner. Not in every regard, not with respect to carbon, but for the most part, regular wealth and environmental quality, they actually move together. Try visiting a really poor country if you want to demonstrate that point to yourself. So the imperfections of measurements, I'm not sure they're actually the main problem. It's getting people to want to do it.

Okay, and then we— but we don't simply maximize wealth plus, there are also rights that we won't trample on in order to do that. Is it— Right. Do you have— how clearly delineated are those rights? Or are you just happy at this point to say, we're sure there are rights, we can talk about them?

The latter. Like I said, the rights are not the main focus of my book. I think it's worth people spending much more time talking about that, but if someone says, "Well, I want to maximize something. I'm going to force every woman to have 9 children," I would say that's a violation of rights. Let's look at ways of subsidizing societies so they become wealthier to support more people and more resources.

Right. I mean, in some sense, I would associate deontological approaches more with a kind of libertarian political outlook in the sense that let people do what they want and let the consequences fall where they may. But are you sort of being a libertarian consequentialist? Is that a thing that exists?

It exists now. I would say that's very close to my view. You could say I'm a small libertarian, but I don't think taxation is intrinsically evil. I think there are a lot of public goods which governments should actively supply. In some cases, such as infrastructure or subsidizing science, I don't think we're doing enough right now. But our governments are very bad at many things, like say running the New York City subway. Mm-hmm. And we also need to liberate private enterprise more. But government and the market, they're not always substitutes. You wanna look for policies that actually boost both of them at the same time. Right. Okay.

So if we buy the idea that conventional approaches discount future generations far too much, your second big idea you bring in is that the best way— maybe I'll exaggerate this and you can correct me— the best way to help the future generations is to maximize our rate of economic growth right now. Is that right?

Correct. And to hand down to them high-quality institutions. Which will help them maximize their rate of economic growth. So you want sustainability of the growth. That's why the environment is important, because a bad environment can threaten sustainability. So it's like expected value looking forward. And is there— if you have a society growing, say, at 3% over time, over 100, 200 years, that will be much, much wealthier than a society growing at 2%.

Right, and that's the miracle of compound growth.

And again, that's due to compounding.

Yeah, exactly. Right. And is this— I mean, is it— is this— what can I say? Uh, the claim is that if you have lots of economic growth, more or less everyone benefits, right? It's not just— you know, we could imagine in principle economic growth where a tiny slice of people benefited a lot and a lot of people didn't, but empirically that doesn't seem to be the case. Is that what was on in the back of our minds here?

Over time, virtually everyone benefits. In the first year, not everyone benefits. A lot of people are thrown out of work, all kinds of problems which you can see on the evening news any night. Uh, but if you look at countries that devote themselves to economic growth, such as South Korea or Japan, and you look at where they are now compared, say, to 70, 80 years ago, I absolutely think it's correct that virtually everyone is better off. But not in the given year, right? Clearly not.

People get upset. Yeah. And is that— so what is the theoretical or empirical argument as to why that is the case? I mean, we should— if this is going to be a major policy driver, we should try to understand why it is true that everyone benefits rather than some nightmare where one person gets all the wealth and everyone else suffers.

Humans can do things with resources. They want to produce for other humans, sell things to other human beings. Economic growth is exactly that process of figuring out which goods and services other people want. And if you have more of it over time, again, real incomes will rise, wages will rise, people will take better, more rewarding, and safer jobs. They'll have more choice as to, you know, whom to marry. Healthcare will be better, education will be better, there'll be less infant mortality. There's so many angles of our lives become a lot better.

Well, what is the connection between having more choices about who to marry and economic growth?

Well, say you have an agricultural society, it's poor, everyone lives in a small village, you're not very mobile, you don't have railways, odds are you'll marry someone right in your village. You know, if you're gay, probably there's less toleration of being gay than there is in most countries today, and you might marry someone of the opposite gender and not actually want to do that. Pretty common in human history, and capitalism has eased a lot of those constraints.

Okay, so the argument is something like there's a kind of cosmopolitanism or even sort of a liberalism of values that goes along with increased economic prosperity.

And it will over time make virtually everyone happy, maybe not misanthropes, right? Right. So I don't think you can say everyone is better off, but— if the misinferences are the main problem, I feel things are looking pretty good for economic growth.

Well, so what— so how do you think about cases like China, for example, where they're getting a lot of economic growth with less political or social liberties than we have here? Do you think that that's going to be a temporary condition and the greater prosperity will lead to greater liberalization or is it just the price we pay?

There's a common pattern in other East Asian economies. You see it in Taiwan, you see it somewhat in Singapore, you see it in South Korea, also Japan, that at some point of wealth, people demand democracy and it's given to them. Now China is about arriving at that point. Uh, it's not clear they will actually democratize. Uh, I very much believe it would be better if they did. I don't think China should have been a democracy all along. It probably would not have been stable. So I think the Communist Party has actually done a pretty remarkable job there, and we should credit them for that. But it's a tyrannical, also somewhat inefficient institution, and it needs to reform and evolve into something much better, as say Taiwan has done. We'll see if it happens. It's not guaranteed.

No, right, it's not guaranteed. I'm sure that there are arguments back and forth, so I was just interested in your perspective. I mean, one person might say with greater economic, uh, prosperity comes more resources, people can talk to each other, they can share ideas. They can add— they're going to demand more say in how the country is run. Someone more pessimistic might say that, you know, we have technologies and, and means of control now that might make a repressive autocracy more stable, you know, harder to rebel against. Do you have feelings about this?

The wealthy Western democracies so far have been quite stable as democracies. I don't see any of them evolving into the Chinese model. The Chinese model arguably is becoming less stable. Power is more centralized in China than it was even a few years ago. All that ability to have surveillance, I think, will prove destabilizing rather than a good thing for them. The idea is you give everyone a social credit score and get complete cooperation. Right. I don't think they'll be able to make that work. So, I mean, there is a kind of competition of systems going on Not only do I favor the capitalist democracies, but I would be willing to bet on them, and in a sense I have with my life choices.

Right. So what does it come down to in terms of straightforward policy prescriptions right now? What are the things that our country should do to maximize economic growth as opposed to some of the alternatives?

We should regulate most of our economy much less But that said, many parts of the environment we should be tougher with regulations. We should spend more money subsidizing science. In some cases, build more infrastructure and simply culturally move to a situation where it's possible, say, to build the Golden Gate Bridge in 3 years as we once did, to build the Empire State Building as quickly as we did, to put a man on the moon in basically 7 years starting from scratch. We've lost a lot of those capabilities. It can take us decades just to, like, extend one subway line in Manhattan. So some of it is we need a cultural shift, but those would be some of the policies I would change.

I mean, why is it— why does it take us so long to fix the subway in Manhattan? I'm in Los Angeles where we're not as— we're no better in terms of new subway lines, but at least New York has existing ones. No, you're much better. You think?

I don't know. You've done a much better job than any other American city. Still poor by Chinese standards, I might add. Uh, there are so many overlapping authorities that have to give a go-ahead for the New York City subway. Right. It can be labor unions, it can be New York State, Port Authority, different commissions, and getting them all in sync and the public and how you pay for it just takes a long, long time. And we're like way past an optimal point on that curve.

Do you think this is just a sort of natural human inclination to the love of bureaucracy? You know, once you have things that are institutions that have existed for a very long time, people write rules and implement them even though they're no longer really applicable?

Yes, that's natural. But even within the US, some places are much better and worse than others. So don't think that what we have is inevitable and cannot be changed. It can be changed. Right. And our country not long ago was much less bureaucratic as well. Okay.

But how does it— so what about— you do talk in the book about the distribution of wealth, especially government governmental mechanisms that redistribute it. I might guess, although I don't remember seeing in the book, that you'd be against something like a universal basic income on the theory that that would help people right now in some way, but maybe slow down economic growth long term, and therefore it would be a net negative in this non-discounted view.

I don't like the idea of paying people not to work. I also feel it doesn't make— say people who are disabled or very old, or maybe they've lost their parents— this is what we should do, but not do it for everyone. The best kinds of redistributions are those that say educate poor children or fix up their health or end malnutrition, and those also boost wealth. So if you follow the lodestar of boosting wealth, you'll be led toward the better rather than the worst redistributions. Okay, so it's not that—

we should be afraid of redistribution in general, but you want to give people the tools to make better lives for themselves and then wealth will increase across the board.

That's right, but I'm way less enthusiastic about just taking money from rich people and giving it to poor. If the incentive on both sides is to work less and create less, then I generally don't want to do it. I would just say stick with wealth-enhancing redistribution. There's plenty of that we can do. It's very powerful.

Tyler Cowen, do you have feelings about the level of inequality in the US today, or is it— is level of inequality irrelevant and it's more about incentives towards wealth creation?

I look more at incentives toward wealth creation. Inequality is an ex post measure of a big distribution. I would just say look at concrete barriers against opportunity, and there are many for today's poor, and let's take more of them away. So in that sense, inequality matters a lot. But don't focus on the distribution. So if rich people get richer and the poor people are no worse off, to me that's fine. Right. Yeah.

There are certainly other people who disagree with that, but I get— I think I'm on your side there. Yeah. So you'd be very much in favor of, you know, better education, especially for poor people, better— maybe better healthcare also to get people out of the risky times early in life. And then so everyone can grow up more or less healthy and well-educated and try to make a wealthier country.

Air pollution, lead in the water, to me these are very big issues even in the US, certainly for the world as a whole. We give them far too little attention, actually, which is remarkable. So we should reorient our thinking on redistribution to the most effective kinds.

So you said more support for scientific research. I'm not going to argue with that, but what about more support for other kinds of intellectual endeavors, whether whether it's humanities or arts or other things, how do those factor into wealth creation?

I would put it this way. We're not sure always how the arts and humanities factor into wealth creation. It's not as clear-cut as science. The system we have now is we have state universities which indirectly support those a lot and states compete with different systems. When we're not sure what's exactly the best thing to do, then I'm keener to have federalism in these competing experiments. So I like the idea that our universities, if they're public sector, they're done by the states and not by the federal government, especially for the arts and humanities. So I would say I don't know the right answer, and when you don't know, that's the way to approach it.

And how do we, um, how do we fit the goal of increasing human rights into this? Uh, you know, over history, we— I think we can argue that we've increased human rights, at least in the subset of liberal democracies and so forth. Do you think that just comes along for the ride when we increase wealth, or is this something we should be separately agitating for, or are those not really competing ideals?

They mostly move together, but not in all cases. In the United States, our rate of incarceration is disgracefully high. Hmm. And even though we're much healthier, that doesn't seem to have stopped it. In some ways, it helps us afford it. So I feel we should take dramatic action to say, limit or end the war on drugs, change the incentives of public prosecutors so they're not always trying to ask for higher and higher sentences, that voters need to not always just leap at the candidates who claim they're tough on crime. That to me is probably the biggest violation of human rights in our country right now. Right. I mean, we— would be our penal system. Yeah, we— and again, a lot of the people are guilty, just to be clear, but they don't deserve the treatment they get in most cases.

Right, and they're guilty of breaking laws that we made up, right? Some of those laws are not even very good laws.

Sure, some of them, they're just— a lot of them are just genuinely guilty of real crimes, but still, the idea that because you committed armed robbery 3 times, you have to join a gang and maybe you'll be gang-raped in the shower and you'll have this horrible existence, that to me is not right.

Is that— do you have an explanation in mind as to why the United States is so different from its fellow liberal democracies in that aspect?

I think we have a much more violent history where firearms were intimately connected to settling and taming this nation, and we have stayed in that culture. And then we're just very diverse and we're a very large country, and, uh, we don't have always very strong pressures for social conformity. So the upside is we have more creativity, but also a lot more people behaving in crazy destructive ways. And I don't really have like a big picture fix for that. Right. So let me ask—

I'm going to shift gears here a little bit back to the idea of not discounting future generations. As a cosmologist who thinks about the whole history of the universe, I have in mind we're integrating all of the wealth plus or whatever other measure we have over the course of many, many, many years. And I get the argument that due to compound returns, if the rate of growth is a little bit bigger now, that has huge effects in the future. Another thing that would have huge effects in the future is, you know, the end of civilization, right? If we ruin the planet or something like that. Is— right, is this fits in with your philosophy? I guess is why you keep bringing up the environment. Presumably the prospect of truly disastrous climate change, if that is something that could happen, uh, would be something that in your philosophy we should work very hard to avoid, right?

Yes, also we should spend more, say, on asteroid defense, or at least developing those capabilities. And— By the way, as a cosmologist, if I can just interject— Please. What's most likely the best theory of the universe? Is it string theory? Is it something else? Is it many worlds quantum mechanics? What's your opinion? Oh, I have very strong opinions about this.

So it depends on the detailed definition you have of theory of the universe. I am a strong proponent of the many worlds interpretation quantum mechanics. Um, I think it's by far the simplest, and I can even give the sales pitch for that if you want, very briefly. But that's a framework, right? It's not a specific theory. Um, the— we still need to understand what the laws of physics are that push the wave function of the universe forward, even once you've given me many worlds. So you could be a string theorist and believe in many worlds, or not. Uh, I used to be pretty optimistic about string theory. These days I'm less so, for a number of reasons, and I'm I'm more thinking that we just need to not take something like strings and quantize them. We need to look at quantum mechanics from the start and find gravity and spacetime and the universe within it, if that makes sense.

And what makes the many worlds different universes? Is it that they're branching based on quantum states? Yeah, exactly. And if so, does the number of worlds rise very rapidly.

It rises very rapidly.

As time passes.

Yep, it rises very rapidly. And it's every time that a quantum system that is in superposition becomes entangled with its environment, the universe branches. And that happens a lot. It's still nowhere near so many universes we have to worry about running out. Even if it's a finite number, we can estimate the total number of universes we're allowed to have. It's way bigger than the number of branching events that have occurred.

Set me straight on my worry then. If we apply an Anthropic Principle, does this continual increase of branches mean we're very, very close to the end of the universe as we know it? Or the multiverse?

No, you know, in some reasonable measures, we're halfway in some sense. We will— your intuition is right. If we keep on branching, there is a limit past which branching ceases to make sense. It's very, very much like the growth of entropy in a system. So if you start very orderly and you let entropy go, it will increase. Eventually, you would hit equilibrium, and equilibrium means entropy can't grow anymore. Likewise, there will be a place when branching can't happen anymore, but it's going to be very far in the future.

But aren't we likely to be living in the most branched universe, maximum branching? Because we could be in any number of different world states, so we're probably in a very densely populated part of the multiverse with a lot of branches, and that means it's pretty close to the end, or is that wrong?

No, I think that's wrong.

I'm not telling you it's right.

I'm just worried about this. No, I get it. I think that there is a reasonable anthropic argument, as you imply, that universes like ours should be dense in the space of universes. But this is a very interesting question that, intentionally or not, goes exactly back to this temporal discussion we're having. Is it in any sense reasonable to say that we live at a typical time in the history of the universe? And I think the answer there is no, exactly because we're so far away from equilibrium. You know, you can— I think you can make an argument that you live in a typical place or time if things around you look more or less the same. But in space, things look more or less the same from, from megaparsec to megaparsec. But in time, the universe is evolving very rapidly. So we're sort of, just by evidence, we have no reason to think that we live in a typical time in the history of the universe.

And do you think physical space is infinite in the universe we have? Um, I— Not the multiverse, but you get what I'm asking, right?

Yeah, the observable universe is absolutely finite, and the— our best theory says it will remain finite. There is a horizon that has a fixed size, and we'll never be able to see beyond it. There are deep questions about whether or not there is any such thing as what is outside that horizon or not, which we don't know the answer to. Sure.

There's a whole literature on infinite ethics. How do you do ethics if the number of people is infinity? I suspect it's simply not tractable, but I've been reading more on this lately.

Yeah, no, I'm thinking along the same lines, which is why, you know, it's part of why I asked this question. You know, how— if you do take as a posit that future generations count just as much as current ones, Don't we have to think very deeply about the future of consciousness and uploading into computers and living in a simulation and the end of the universe? I mean, doesn't sort of creating as many conscious observers as quickly as possible just so they can be around for as long as possible become a very worthwhile goal?

I'm all for creating more conscious observers. When you say as quickly as possible, you need to wait that for stability. But I do think it should be a goal. I'm not sure settling other planets will ever be possible. But insofar as it might be, I would favor that. It also diversifies against risk. I think there's quite a good chance, you know, we all won't last another 800 years, but still, in like year 300 or 400 from now, we can just make things much, much better than it otherwise would be. But the idea that we're just going to have like a million more years to play around with physics and the cosmos, that strikes me as unlikely. I think we'll destroy ourselves.

A million's not that long, cosmologically speaking, right? Or even biologically speaking. But for humans— For humans, it's very, very long.

We haven't had— if you think of weapons of mass destruction, the chance they're used in a major way in any year is quite small. But just, you know, let enough years tick off, and at some point it will happen. Absolutely.

So I mean, that's my biggest worry. I think that's a very big worry, and also I was recently impressed upon the danger of solar flares for destroying our, uh, uh, the civilization as we know it. You know, solar flares happen all the time. They're not that big. But it's very plausible that there is a long tail, and, you know, once every 1,000 years, a solar flare comes along that would completely wipe out the electrical grid. If that were true, we would never know, because 1,000 years ago, there was no electrical grid, you know, to exist. So I think these existential risks are individually far out, but collectively very worth taking into consideration. That's exactly my view. And what do you think about simulations and uploading brains? You know, do you think that those will count just as much as conscious, feeling creatures to whom we should give weight when we calculate WealthPlus?

Well, in a computational sense, arguably we're simulations now, so I'm not sure that the distinction between we real people and the simulations is well defined. So if they're conscious, intelligent, sentient beings with emotions and complex lives and goals and plans, they should count. A lot of non-human animals Probably should count for more than we count them. You could dream up creatures that I'm just not capable of understanding and I couldn't tell you how much they should count or not count for. But in the meantime, we sort of know what we have to work with right now.

But it does suggest a strategy for maximizing something, which is work as hard as we can to make artificially intelligent creatures. And then send them on spaceships with the ability to self-reproduce and scatter them throughout the galaxy, right? So, you know, we have as many— we have a bulwark against existential risks that is as strong as we can imagine if we've put our artificially intelligent creatures around every star in the galaxy.

I favor trying to do this. I'm not sure how possible it would be, but subsidizing science now will get us toward that goal, right? It's not right before us, but if we invest much more heavily in basic science, we'll have a chance. So I favor trying to do panspermia. I would like to see also private philanthropy get more involved, self-replicating von Neumann machines powered by different, you know, stars around the galaxy, you know, let it rip, send biological material around with more advanced technologies and probes that attempt some version of terraforming, but like in the short run, We have so many problems to solve that just mean making better science now. Right, right.

And the solutions, you know, doing the things that you just listed, all of which sound great, like you say, we don't know the direct path to doing them, so maybe just learning some basic science and technology is actually the best strategy for the short term, right?

And getting people to respect the notion of like doing things quickly and doing them well, like American science so effectively did throughout most of the 20th century, and not losing that culture. Which is not really just a money thing, it's a mental thing.

It is, you know, in my personal—

so rates of productivity growth, yeah, were much higher than they are right now. And scientific progress, other than like tech and Moore's Law, it was mostly much more rapid. It was.

And I— there's two— look at how the airplane— sorry, there's— I think there's two things going on that I'm not sure their relative magnitude. One is, you know, with the Manhattan Project in World War II, physicists sort of like myself got a lot more credit than we deserve for making the world a good place, or at least affecting the outcomes that happen in the world. And therefore, we were flooded with money, and it was good. We could do a lot of research even if it didn't pay off immediately. And that's sort of gone away. It's been a while since a great physics discovery has changed the geopolitical landscape like that one did. The other one is that, as I say in my book The Big Picture, the laws of physics underlying everyday life have been been figured out. You know, we know what atoms and particles are. The discoveries that we get in fundamental physics these days don't lead to any technological advances. The technological advances come from higher-level things: condensed matter physics, biophysics, chemistry, and things like that.

But I see some retrogressions, like with nuclear power, which is quite green. You look at how planes advanced, airplanes, in their first, say, 60 years compared to how they've advanced in the last 40 to 50 years. Right. It's a big difference. We're still flying planes basically designed in the late '60s, which no one at the time would have thought would have been the case. So I see, you know, traffic is much worse. A lot of areas where we're just content to be quite mediocre.

And for the planes— Some of it's a policy problem. Yeah, I mean, I wondered about the planes. What is it with planes? Is it just the sound barrier, or is it just that we haven't tried very hard to make better airplanes?

Planes? Some of it is regulatory, some of it is I just think it's a hard problem. Uh, there's a move afoot to re-legalize supersonic transport. There are sonic boom issues. Uh, I think probably we can deal with those, or just we should be more willing to tolerate them. So we should aim for a world where you can get in kind of a mini space shuttle and go from New York to Tokyo in 3 hours. It does seem not that far away if we choose to do Yeah, I don't know if you've ever seen the Man in the High Castle series on Netflix. No, but I know the book.

Right. So the idea is based on, you know, the Axis won World War II and the United States is divided up between Japan and Germany. It's set in the 1960s and all the Germans fly around on supersonic transports as a regular thing. In that alternative history, that technology was developed much more quickly.

Sure. I mean, another area where you see slowdown just recently is life expectancy. So in 2015 and 2016, in this country, life expectancy fell. That's awful. Is that right?

I didn't know that.

That was not the case throughout earlier parts of the 20th century. Now, by tiny amounts, but it's not advancing. There's a CDC report you can read that shows this, and again, in, say, 1961, that A, would have been impossible, and B, would not have been tolerated. It would be like a big national campaign to turn this around. Now, like, even well-educated people, they're not aware of this. To me, that's a cultural failure.

And is it— that's the United States, or is that, uh, developed countries?

That's the United States. Okay. Other countries, it's mostly still advancing. Now, life expectancy is hard to measure, there's ambiguities, but still, that it's even possible for our CDC to measure it as having fallen 2 years in a row. To me, it's astonishing. It's a public health issue. We're not taking good care of ourselves. There are opioids, and science is not advancing fast enough to undo those problems. That's one way to put it. Yeah. And no one really gives a damn.

Yeah, no, that's a weird— we certainly spend a lot of money on those last few weeks of our lives, right? And that's a weird thing that maybe other cultures don't do as much. But extending the profitable part of our lives is something we're less good at. Correct. And so—

So I think there's a lot of ways in which we're screwing up and could do better.

Yeah, I mean, so what do you— do you— how have people reacted to the book? Is it— the book is out yet, right? Is that correct?

It's not out yet. It comes out October 16th. Okay. So it has not been reviewed yet. Early readers quite like it, but obviously they tend to be people who already know me. Maybe they're not objective. But I view this book as kind of the culmination of my thought on a free society, thinking about it, actually writing the book over a 20-year period. So it's like my most important book to me.

And yeah, so like I said, I thought the ideas in there are wonderful and provocative and I remember taking a graduate philosophy course with John Rawls when I was at Harvard and he said his goal is not that he be correct. But that there be no mistakes in the book. So what he meant was, you know, there's some axioms, there's some starting points, and you can disagree with that, but from the starting points, you should derive the correct conclusions. And I didn't see any obvious mistakes in your book. I think that people can probably disagree with some of the initial starting assumptions, which is fair enough, right?

Thank you. I'll tell you what I think was Rawls' big mistake. It had to do with economic growth. He was overly enamored of steady state, stationary state of John Stuart Mill, and he thought growth was possibly unjust because the first generation generation, they were the worst-off people, and to be asking them to save and help grow the economy, he worried that might be wrong. And that's very different from my view, as you know. And that, I think, is the weak spot in Rawls that most people don't talk about.

Well, when he puts us in the original position, maybe one of the things that is not there is you're not supposed to know who you are in the world, right? But maybe secretly he implied that you knew when you were in the world, and if you imagine there's this whole future ahead of us that we haven't been to yet, then maybe the decisions we made would be different if we could make that future better.

I think he should have admitted it doesn't work across generations, and I think in his later political liberalism, he at least implicitly more or less says this. But since you brought up Rawls, I just thought I would give you my take on it. That's perfectly fair. Brilliant thinker and writer, but I think on economic growth, he's underrating it.

Yeah. And so I guess there's an obvious clash, you know, once the book does come out, which probably just so we know will be just before this podcast is released. So people will have a chance to read it if they want. I presume that people who are more directly interested and focused on human rights, social justice, things like that, economic justice, will resist the conclusion even if they don't, you know, go through all the steps. Is your response to them simply, you know, you're fighting for economic justice and human rights, but it's just for future generations just as much as us?

That is absolutely my response. I've tried to write this book to, you know, in part persuade people there's a somewhat different vision of economic justice involving the future.

And there's a— you have a great story. So just to sort of wrap up here, I really do want you to share the story of where the profits for this book are going to go.

Uh, there's a fellow I met in Ethiopia. I call him Yonas. He was my travel guide in Lalibela, which is a famous Ethiopian city with old stone churches. And of all the people I met in Ethiopia, he struck me as maybe the smartest and the most stable. He had good English. He supports a family of— his income is really quite low. I visited his house. And, uh, I pledge to send him all of the royalties I receive from this book. So I will get nothing and he will get all of it. So if you buy my book, you are helping to support Yonas and his family of 10 people, including his children, his parents. And, uh, to me that's a very worthy cause. I argue in the book we should be more altruistic at the margin and think more about, like, other people. And that's my chance to do something for him, but also for the future, at least the future of Ethiopia— so I think I said at the beginning, I very much believe people should live what they write and that's part of my highly imperfect attempt to do that.

I mean, I can't help but be the curmudgeonly one who asks, you know, this is not really in the tradition of effective altruism where, you know, you should spread your wealth a little bit more widely. So in some sense, are you, you know, setting an example just as much as you're actually trying to help the world with this gesture?

Well, I'm directly helping 10 people. I wouldn't say that's widely, but it's more than just one person. But I view it as, myself, as venture capitalist. You know, who will steward the funds most effectively? And I'm making a bet on Jonas because of the time I spent with him.

Sounds like a good bet to make. Tyler Cowen, thanks so much for being on the podcast.

My pleasure. Thank you for your insights on physics and all the questions. My pleasure. Thanks.