Progress, Classical Liberalism, and the New Right | Tyler Cowen | Ep. 62

Today, I'm pleased to be joined by Tyler Cowen, who is a professor of economics at George Mason University and a faculty director at the Mercatus Center. Tyler was named as one of the most influential economists of the last decade by The Economist and Bloomberg Newsweek. Dubbed him America's hottest economist. He co-writes a blog at marginalrevolution.com, which I highly recommend, and hosts a podcast, Conversations with Tyler, also highly recommended. Recently, Tyler wrote a Free Press article titled "Is Classical Liberalism for Losers?" And I'm delighted that he agreed to discuss it with me here today on Human Progress Podcast. Tyler, welcome.

Happy to be here. Hello.

So Tyler, for those people who are not familiar with you, with Human Progress, perhaps we can start with the basics. What is classical liberalism? Where did it come from and why?

Everyone has a different definition. I can tell you mine. If you believe in capitalism, limited government, free trade, sound money, and want to do your best to bring about peace and believe in free speech and toleration, uh, I would consider you a classical liberal. Now, which of those get emphasized to what degree, you'll find differences of opinion. Uh, libertarian, I would say, is a much more radical classical liberal seeking to minimize government as much as possible. So there's a kind of spectrum here. Uh, but for instance, Cato, I've always regarded as being classically liberal. And I'll start by pointing out I went to my first Cato seminar when I was 15 years old.

Wonderful. And let's give it a bit of a historical background. Usually people talk about liberalism emerging in the 18th century. There is some connection with Swedish anti-monarchical movement, Spanish anti-monarchical movement. Do I have it more or less correctly?

Well, it depends what country a person grew up in. I see a lot of the roots as being in 17th century England, but by the 18th century, Swedish classical liberalism is in full bloom and influencing policy. Uh, you know, a lot of the Spanish classical liberals, they tend to see the monarch as their friend, so they're less democratically oriented. You know, across cultures, what exactly is it that counts or does not count? But I put the center of it in the Anglo world, if I had to say.

Okay. And Smith and Hume would be the first ones to actually use the word liberal in terms of referring to the values that we hold, or is it even— does it go further back?

My friend Daniel Klein just wrote a whole piece on this, and I can't remember exactly what he found, but I was surprised that the word comes as late as it does. And if I recall Dan's results correctly, it postdates Hume and Smith in terms of common use. And a lot of it came in Spain in the very early 19th century, liberalismo. But check Dan's article.

I will. Okay, so let's now sort of look at the political spectrum and see what distinguishes classical liberals from American and European conservatives on the one hand, and maybe American liberalism, what is understood by liberalism today in the United States? How would you, where would you, where would you sort of look at the differences?

These words can be so confusing, but when I hear the phrase American liberalism, I think of a turn that happened in the 1930s with the New Deal and somewhat earlier in the progressive movement, where people who were broadly liberal fell in love with the idea of big government, and over time wanted to make government bigger and bigger as an alternative means of realizing some liberal ends. But over time, the attachment even to all of the liberal ends sometimes tends to fade. So American liberalism and classical liberalism, they can have a fair amount in common. They're going to believe in democracy, some form of capitalism, but American liberalism has much more faith in government does less public choice analysis, and it's just less suspicion of concentrated power. They want to use concentrated power to attain some liberal ends. Now, conservatism, uh, used to be simpler than it is today. So we're now in the age of Trump. I would say that's not conservative at all, whatever you think of it. Traditional conservatism of the sort I grew up with often was religious. It was socially conservative. In the sense of having particular views on abortion or gay marriage or what kind of norms were permissible for society. And it often wanted to use government to enforce those norms. And furthermore, it tended to be quite hawkish on foreign policy in a way that classical liberalism, you know, may or may not have been. But that would have been the differences, say, in the 1980s. Now it's all so muddled. I'm not sure who it is I should call a conservative. In many ways, the people I used to call American liberals have become the new conservatives. They want to kind of bring us back to what America was under Obama or under LBJ and undo some of these recent kind of from, from the Trump side revolutions.

Yeah, of course it does get very complicated. Uh, my friend Jonah Goldberg, who writes for the Dispatch, uh, for example, he says that because American founding is basically an expression of classical liberalism, an American conservative is somebody who protects the founding and therefore American, uh, and therefore classical liberalism. But, you know, on the edges.

I mean, that's partly true, but when we get to the slavery issue, which has always been important in our history, uh, the good classical liberals were the radicals on that and not the conservatives. And they should have been the radical abolitionists, and indeed they were. So I think that matters as well. We're not simply the conservatives.

Yeah, there's another thing which, which I started noticing recently, and that is that now we have two kinds of classical liberals. There are the original classical liberals who see their roots in the 19th century, and then we have classical liberals who are contrasting themselves with the liberals of today by looking back to the 1960s and saying, no, I'm a classical liberal because in the 1960s I believed in the freedom of speech and things like that. You know, I thought that was—

that's right.

Um, okay, so we talked about the philosophical differences. Uh, what about practical differences? For example, in your article, you note the different way in which classical liberals and non-classical liberals perceive the use of force and the power of the state. So practically speaking, what distinguishes classical liberals?

Well, classical liberals recognize that some government coercion is necessary, if only to enforce property rights., but also to finance some number of public goods. You can debate what they are. For instance, I would include support for science in that category. I'm not sure everyone at Cato would agree with that, uh, but nonetheless, there's going to be some coercion. But you're just very suspicious of that coercion, and you want to keep it to a minimum because you think it is corrupting both of human individuals and your institutions., and you would like to rely on competitive and decentralized mechanisms as far as is possible. So there's a perfectly legitimate set of questions. Well, how much coercion do you need for which set of public goods to help that proceed as well as possible? So one reason, for instance, I want government to support science is I think we'll have a stronger national defense and we'll be better positioned to protect America against possible enemies. Uh, but still, I want to remain suspicious of coercion. And when I look at the entities, say, that support science, although that's a genuine public good, I think they're typically quite bureaucratic, poorly run, overly stultified, too conformist, and various other critiques I would apply to them. I still think it's better than nothing, but this fundamental suspicion of coercion, I think, here is critical.

Right, and draw it out a little. So, whereas somebody on the left is willing to use the power of the state in order to accomplish their ends, and as we are seeing now, today's American conservatives, if you can call them conservatives, are very keen on using the power of the state in order to accomplish their aims, like going after Harvard or whatever else.

That's right, and I think both these leftists and rightists, there's something about the coercion they enjoy. It's a kind of putting down of enemies or crushing someone or winning a battle or lowering someone's status and doing it with power. And however much they proclaim the opposite, I do think often, but not always, there's just a kind of glee in the feeling that somehow they're doing that collectively as part of some side or project together, but using force. Well, that's somewhat repulsive to me, that intuition, I have to say. I recognize it's sometimes necessary to do that. Uh, but I, I don't really ever like it.

When I was preparing for this interview, I, I talked to a friend of mine and, um, he said that, um, well, he asked the following question: if classical liberals— so we know that classical liberals are not comfortable wielding power, but don't classical liberals need a strategy to dismantle the administrative state or greatly reduce the power of the state and its influence? Otherwise, classical liberal efforts 'in politics will always be ineffective.' What do you think of that?

Well, first, that word 'always' makes me nervous. That's rarely a good word. But the term 'a strategy' makes me nervous. I would use the plural 'strategies.' Like, clearly people need to plan things, but the notion of an aggregate strategy in the sense that maybe the Democratic or Republican Party would have one, I think that's a mistake. I think the classical liberal vision has never been, "Well, we'll keep on electing our governments for 20 years in a row, and by the end of the 20 years, they'll have made all the changes we want." Frankly, I don't think that's realistic. What I see in history is that there are these periodic classically liberal moments. The American Revolution or the collapse of communism would be two of the most visible. They come along every now and then. They achieve tremendous good when they happen. They're motivated by classically liberal ideas, but they're not some kind of periodic or ongoing continual rule where you just push everything you want through by force. It's a bit of every now and then you get your way. And I'm prepared to live with that. I don't think, frankly, we're gonna do any better. But still, those revolutions or the abolition of slavery, they can do so much good. We should just totally be on board with trying to bring them about.

Right. So be grateful for the occasional but consequential successes rather than have a program, a constant program. That's right.

Or take the post-World War II rebuilding of Western Europe, which really went remarkably well. Uh, there were some classical liberals behind it. There were movements toward free trade, free migration across the nations, but you wouldn't say it was mostly done by classical liberals. There was this very broad coalition of people who just wanted better lives together and social democrats. But nonetheless, compared to how that might have gone, it did go remarkably well. And in part it went well because it borrowed some key classical liberal ideas like, well, Germany needs a lot of economic growth, or we ought to get rid of these price controls quickly. And again, it just made a huge difference in terms of human welfare and liberty, even though the end result of these big government social democracies were, you know, by no means entirely thrilled with. But that's still a classical liberal victory.

So it was the ideas that won because of their own inherent benefit, rather than because there was some sort of classical liberal movement which won an election after election and put into practice, that sort of thing.

Yeah, we got a largely capitalistic Western Europe instead of a socialistic or fascistic one. Again, a huge triumph, also good for America. And you would give classical liberal ideas and some particular liberal politicians like Werner Erhard tremendous credit.

So in my—

Ludwig Erhard, I'm sorry.

Ludwig Erhard, yeah, uh, the rather obese, uh, cigar-smoking successor to Adenauer. Yeah, um, in my In my 20 years in DC, there have been countless occasions when I asked my progressive friends, you know, you're so keen on the power of the executive, you are determined to expand the power of the executive. What will happen one day when you're going to get a GOP president whom you despise and who is going to use all of this power against you? And I never really got an answer. And now when I talk to my more MAGA-oriented friends, I asked them the same question: what will happen when all of this power ends up in the hands of a Democrat you really despise? And so the question I have for you is, what makes classical liberals special in terms of thinking in the long run, in terms of appreciating the second-hand and the— sorry, the second-order and the third-order consequences, always thinking 'How is this power going to be used against me?' Why is that a classical liberal feature that the right and the left doesn't have? Are we mentally different?

I think as personality types, we're more analytic. Uh, we also tend to not actually be in the position of seizing power, so it's an easier attitude to hold when you know it will never be you. Those would be two differences off the top of my head.

If you want, can you tell me more about the temperamental, uh, temperamental distinction? I mean, you said more analytic. Is there any other, um, are there any other parts to this classical liberal personality that goes beyond just being more analytical?

Well, classical liberals tend to be better educated. They're much more likely to have an understanding of economics and to think in terms of economics. I think they're fairly high in openness in the sense they're a bit more correlated with some individuals on the left. And I think their natural desire to be busybodies, and I mean even outside the realm of politics, you know, they're people who hate the community board meeting at the condominium or like the departmental meeting in academia. It's just a personality trait and it carries over into their attitudes about government. Those would be my observations.

Um, something occurred to me as I was listening to you, and that is the, the classical liberal openness. So there seems to me a bit of a tension between, uh, openness and then Chesterton's fences. So somebody like, um, Friedrich Hayek, as classical liberal as they get, um, toward the end of his life especially, maybe because he was growing slightly more conservative, he had a renewed appreciation for tradition and not breaking down Stevens-Fences. So how open-minded should we be? Um, how much appreciation for the past and for tradition should we have, do you think?

I think we need both strands in a classically liberal movement. Many people who are quite religious and have a great respect for certain things from the past and say would be very skeptical about polyamory or single-parent families or whatever, or you know, maybe excessive use of smartphones, and that that's something quite important for them. And then there's long been a kind of more libertine side of the classical move, liberal movement, maybe represented most extremely by Ayala on the internet, but just people who really want to push the limits of toleration. You could say Nick Gillespie over at Reason. And I don't think either side is completely right or completely wrong.. But there's things in both you can learn from, and I suppose that's how it should be.

Yeah, I always thought it's interesting that the two sides of the argument do tend to get along. In other words, classical liberalism seems to me quite a broad church. The following question is an involved one, so I'll try to break it up, but in your article you do credit classical liberalism with a lot of good things. So let's try to go through them one by one. Uh, what sort of impact do you think classical liberalism has had over the last 2 or 3 centuries on politics, morality, and economics? Let's start with politics.

Well, many more places in the world have become democratic. I don't think democracy is any kind of cure-all, but I think in most instances, once you can get it, you don't want to give it up. So if you look at Latin America today, there are exceptions, but most of those countries are democratic. And I feel that's a better path than the autocracies that many had several decades ago. Again, it's hardly a conversion into victory, uh, but you're less likely to have, say, torture and political disappearances, people thrown unjustly in jail. I think you're more likely to have better economic reforms. I know that's not in every case, but overall it's true. And that would be a good series of political victories, still extremely incomplete, but I'll take them.

Morality. You've already mentioned abolition of slavery, but I assume there are other aspects of classical liberal victories that you would approve of.

Well, toleration of gay individuals, which again has not happened in every country in the world, but in a large number of places it has happened. I was just in Mexico. Several times in Mexico City, I saw two men walking together hand in hand in what appeared to be a romantic manner. Uh, this occasioned no comment or notice from anyone. Uh, that would not have been true several decades ago, and that's just happened in much of the world, and it's clearly much to the better, and it's proven quite stable, and, uh, it's great.

Classical liberalism and Industrial Revolution especially seem to be coterminous over the last 250 years or so. So how much of a credit do you give to classical liberalism for the great enrichment?

Well, quite a bit. I mean, if you want two recent examples, these are maybe more statist countries than Cato might like, but if you look at Poland, it was very poor when communism fell. Now it's approaching the living standards of England. I think it will bypass Japan in a year or two if trends continue. Uh, it's not exactly classical liberal, but it kept capitalism and trade, and it had, you know, it's part of the EU. It's a pretty stable country. Uh, Poles are just much, much better off. Ireland, when I was a kid, was thought of as a third world country. In some sense it was. Now again, it's at Western European living standards. It's an entirely stable democracy. Between the two Irelands, you have peace. And a workable agreement, maybe someday a framework for reunifying. Again, a huge victory. It has a lot more regulation and government involvement than I would like, but mostly what's making it work is this mix of capitalism and democracy and toleration. And those two cases, like, it's, it simply worked, right?

Um, and I guess we can't, we cannot just be satisfied with saying classical liberalism, prosperity. We need to talk really about the mechanism through which classical liberalism in economics produces prosperity. What do you think is that mechanism? I mean, I know I've read you, I've read Deirdre McCloskey, I've read many other economic historians, but I think we need to make it clear to the listeners how it happens.

Well, incentives and property rights and trade, but there's a big accidental element to it, I think, a lot of luck so that Ireland hit on the idea of the low tax regime for corporations. Well, yes, it was skill in a way, but I think also luck. And a place like earlier Hong Kong had the good fortune of being in Asia, surrounded by a lot of countries that were growing rapidly. That helped their economic growth. You could say the same about Singapore. So I don't want to minimize the rule of luck in this. It's quite important. So Poland and Ireland— good, did good things, but they were in the right place at the right time also.

What would you say about the following simplification, that in any country where people have been given more of an opportunity to have a go, to just get on with their lives without too much oversight, without too much, too many regulations, simply liberalization in a sense of people being free to do whatever they please with their lives, that that is the mechanism classical liberalism provides in order to get to a prosperous future. Would you be satisfied with that kind of, um, simplification, or is it more complex than that?

While that's broadly true, I'm not satisfied. If you look again at Latin America, which has seen a lot of liberalization in many parts, there's still some way in which they have failed to solve their human capital problems, and there's a great deal of underexploited talent I'm not saying I blame classical liberalism for that, but I'm not sure liberalism has solved that problem. It's partly social, it has something to do with family relations and family structure. Uh, there's some way in which some East Asian economies that in some ways might have been tougher or more interventionist or more statist, uh, did very well on that problem and say Mexico hasn't, uh, even though Mexico, you know, in some dimensions had smaller government. So I think there's this other element, you could call it culture, family, society, where you'll do much, much better if you have the right, you know, cards in your hand. And Latin America for the most part has not. And I don't think we've solved that problem.

That's interesting. You talked about culture because of course there are alternative explanations out there. Vying for dominance in terms of how did we come to great enrichment. For example, you have somebody like Gregory Clark who emphasizes the importance of higher IQ amongst upper classes in England in producing the Industrial Revolution. You have people like Joe Henrich who discusses the role of the Catholic Church in banning cousin marriage and basically creating the kind of nuclear family and individualism that we associate with the West, you have Robert Allen's explanation for great enrichment in high-wage economy, you have Max Weber and Protestant ethic. So why not those other explanations? Why classical liberalism?

Well, I have particular opinions about each of those. Uh, some of them I think are partial important factors, like what Henrik says. On Greg Clark and IQ, I'm simply not convinced by his data. If you look at England today, especially northern England, it seems somewhat below average in conscientiousness. And I wonder, like, where did all those genes go? Did they all go to the United States? Uh, I'm not sure. But I don't think it's correct to say classical liberalism is at the root of the success. I think, if anything, classical liberalism was a result of earlier successes. It was a kind of luxury good that people figured out once they got a bit wealthier and a bit more educated. And I think there's something quite fundamental that happened in England. It starts being measurable between 1620 and 1640, before classical liberalism was that big. It's some mix of relatively free labor markets, uh, protection from outside invaders, a strong enough nation-state, enough market incentives, something else cultural hard to put our finger on, and they just got some sustained economic growth that didn't stop. And eventually the surplus accumulated, they get a scientific revolution, and then intellectually they do great things with that. And classical liberalism is part of that intellectual explosion from the scientific revolution, but the economic growth predates it in my opinion.

That, that period in English history that you just described, cannot that be also called as a period of relative liberalism? Meaning when you compare England at that time to other countries in Western Europe, that it was still a freer place. Therefore, we could talk about liberalization of society even if we don't have classical liberalism emergent as a philosophy at the time.

I'm not sure what the right framework is. So I think of the Dutch Republic as having been freer than England. Now, the Dutch Republic was wealthier in terms of level, but it did not have the same trajectory. England had a bloody civil war. They killed a king. There was a fair amount of religious strife and oppression. You have the Glorious Revolution. Are we going to allow a Catholic leader? Cromwell for a while as a tyrant. I don't think it's a simple story of more liberty. It's relatively more liberty, but also there's some use of state power to carve out a larger trading area and more dynamism, which ends up putting England in the lead before a lot of other places. So I'm never quite sure how to read that history. I don't think it's all falling on the side of freedom, I'm sorry to say.

Fair enough. Um, nonetheless, your, um, your, um, your article and the flow of this conversation in general presents classical liberalism as being generally beneficial, uh, to the world, to society. Why in that case are classical liberals always in minority, or seemingly to be in minority? Why do we not have more classical liberal politicians who achieve a great deal of success um, why don't we have majorities in all countries, um, proclaiming the virtues of classical liberalism?

There's a number of different questions embedded in that. First, I would point out that politicians give up power and influence when they embrace classical liberalism, so we should not be surprised if that is the exception. Often it happens only when it has to happen. So the New Zealand revolutions of the 1980s and '90s In large part, they happened because the country was broke and the Labour Party had no alternative but to embrace ideas from Milton Friedman. And we're not close to that point now, so politicians, say, in America probably will not embrace classical liberalism. But at the level of the citizenry, simply the point that many of the arguments are quite abstract and require— I wouldn't quite say IQ is exactly the word, but they require some mix of mental temperament and willingness to be tolerant and thinking abstractly and analytically that have never been a majority amongst people, as far as I know. So, uh, again, we shouldn't be too surprised if it's perpetually a minority point of view.

When you saw opinion polls show that 80% of Americans rejected President Trump's tariffs and agreed that it was the wrong way to go, Is that, um, is— what is that a part of? I mean, that is obviously a very abstract concept, a notion of comparative advantage. Um, is the result of school curricula which have been talking about Smooth Hawley as being a contributor to the Great Depression for 100 years? How did we end up with this one classical liberal concept being more or less embraced by, by almost all Americans, uh, and other classical liberal concepts don't have that much of a penetration of the, of the, of the mind.

Well, I'm never sure what to make of polls. You can run polls where most Americans will not support the Bill of Rights, and yet we've more or less managed to keep them. Uh, my sense is very few people understand comparative advantage. I'm not sure myself that's the key idea here. A lot of people in the American public do equate tariffs with high prices. Trump's rollout of the tariff plan and all the switching back and forth was done very ineptly. It just came across as a very bad idea. And Trump has been falling in the polls for other reasons, a lot of which are just how he presents himself, charges of corruption. So I don't have the sense that, oh, all of a sudden people understand tariffs. I would be surprised if that were true.

You already touched upon this question in your previous answer, that the United States is not in such an economic mess where classical liberals would come to the fore, would actually win elections. Um, but I guess I wanted to ask you about, about Javier Milei. Here is a classical liberal/libertarian who manages to actually win the presidency on the back of classical liberal ideas. He wasn't hiding what he was going to do, and he managed to persuade half of the population, over half of the population, to vote for him. So is Milei's success simply a, a result of the dire economic situation in Argentina and the sense of the people that they have nowhere else to turn? And can that be a sort of experience or experiment that can be applied to other countries, or is it really just very particular to Argentina?

I think in large part it is the country was desperate and had nothing else to turn to. But I think there was also this element of luck that Milei realized, maybe from observing Trump, there was some new way of campaigning, which is just to anyone older quite strange, maybe entertaining, but you would think, oh, that could never work. But in his case, it did work, and he kept on doubling down on it in a period where his political opponents in Argentina just behaved like normal politicians. So his brilliant tactics combined with desperation in Argentina. I think that was a lucky coincidence. I do think we'll see it in other places, but I don't ever expect to see it in a majority of cases.

Let's bring it back to the United States a little bit and let's talk about people whom you know well, and that's the titans of the Silicon Valley, techno-optimists of this world who have risen to prominence in the last few years. Are they on the right? Are they classical liberals, or are they a mix? And, um, why do you think they have moved from their previously held center-left position?

Well, they're generally very eclectic thinkers. I'm not sure they were ever center-left in the traditional sense. Maybe earlier they were some mix of quite left-wing or quite right-wing ideas, but I think just being in California and having to live under the reign of the woke Over time, people hated it and they saw that it made running their companies impossible. So there was an intellectual rebellion of sorts. And anyone who lived in California and saw that under many years of Democratic rule, you know, the city's become much worse and too expensive and crime goes up and many other problems. Of course, people would rebel against that. So I think that's what drove it. But I don't think there's any easy categorization of where they have ended up as a group.. And I think as a group of people, if I had to generalize, they simply change their minds a lot based on data. It's mostly a good thing. I'm not sure many will ever be classically liberal with capital C and capital L, but they've all been exposed to classical liberal ideas, and I think I've learned a lot from them.

The person who springs to mind who most answers the kind of descriptions that you have given would be somebody like Marc Andreessen, who actually Tyler Cowen in his podcast does talk about changing his mind on the role of government in running, be it California or the country as a whole. Are there any others that you would feel comfortable naming who you think are much more on your wavelength?

I'm reluctant to name names when I've had private conversations.

We don't have to go into that.

But I would just say, I think, Most of the people you've heard of have digested significant parts of classically liberal ideas in a good way.

How? Where did they get them from?

The internet. I mean, some, you know, partly from me, but from Cato, from Mercatus, from all over. The internet is where ideas live. Most of all, Twitter, which I know can be terrible, or X as we call it now. But people will try on all kinds of ideas, and when they make sense, a lot of what makes sense is going to stick.

Many classical liberals are wondering whether their cooperation with the cooperation of the Silicon Valley titans with the Trump administration, whether it will lead to greater rent-seeking or alternatively in moving society toward greater freedom. I guess there is always that suspicion that people are simply saying, yes, we believe in freedom in order to get personal benefits rather than really believing in it. But what is your impression?

In general, I think sincerity is underrated as a political motive. If you're asking me to predict what we will actually get from the Trump administration, I think in some key areas we will get more freedom, and also we will have more corruption and more rent-seeking. We're going to get the bundle of both.

So in the last part of this, um, of this podcast, I want to move to criticisms of classical liberalism. Um, it seems to me that increasingly both left and right deny that we Americans— I'm, I'm a naturalized citizen— are better off today than we were yesterday. Conservatives point to the 1950s, progressives point to the 1970s as the golden ages. Are they right?

No, I mean, they're just wrong. In the 1970s I lived in, it was fun. But it was much worse than today. There's no serious comparison. And I don't just mean life expectancy, just actual life, crime rates, what you could afford to buy, how much you could travel. Again, it's not close.

Can I ask you, why do you think that somebody like, for example, Bernie Sanders or Oren Kass can go on TV and basically say, oh, life in the '70s was so much better, or America in the 1950s, if you are listening to maybe some people on Fox Um, how do they get so many people to agree with them if the data is so obviously indicating that life today in the United States is better than has ever been, economically speaking?

Well, I haven't much heard these people on TV because I don't watch much TV. I mean, Sanders, I just think he's a politician. He's on a kind of cycled automatic pilot. I'm not even sure how much there's thinking behind it at this point. There's just an incentive to go negative on things you're opposed to as a sort of symbolic statement of something, that something has gone wrong in America. And you get the same from Trump, right? Make America great again. Uh, Oren, I know a little bit. I think he overly romanticizes male manufacturing jobs, which were never that great to begin with. At the time, I recall all the market critics saying how terrible these jobs are, we need to get rid of them. They're full of injury and, you know, not enough bargaining power and the work is so tedious and there's all these hazards associated with doing it. And they were right. I mean, I didn't think government was the way to achieve that end. Rather, you want just prosperity and jobs get safer, more comfortable, more creative. Uh, I don't know what Oren thinks we can get back to. Service jobs pay more than manufacturing jobs. People don't want those jobs for the most part, and America's future is as a services economy. And let's, you know, use markets to create a better yet version of that.

One more question on this subject. Um, let's assume that we are right, that life in today's America is much better than the public perception of it is. We still have to answer, why is the public perception so negative? You've already talked about Negative sentiment contagion. And I want to ask you about that because I have— my thinking goes as follows. People generally prioritize bad news. And we are living in a hypercompetitive news environment where you no longer just have 3 TV stations or a bunch of news— you've got now newspapers, you've got TV, you've got radio, you've got countless websites. And if you want to grab those eyeballs, you really have to offer them the worst possible news first. And actually, there are some studies suggesting that inclusion of one additional negative word in a title increases the click-through rate by 2.5%. So that to me suggests that there is sort of a competitive drive to the bottom where at the end of the day, you only see the negative news because that is what the people are going to read. And what they are going to see. And consequently, people will never get a chance to see anything optimistic. Do you broadly agree with that, or, or is your analysis of the negativity sentiment contagion different one?

I agree with everything you just said, but I would add to that there are a bunch of things that have gotten worse, right? So addiction is a problem. We can measure that. Deaths from addiction has been rising. Substantially for quite a while. I think the last year it's now been falling, but until then— teenage mental health is harder to measure, but I suspect it's worse than it was, say, 20 years ago. I see this in my undergraduate students. A lot of what we build is uglier than, say, in the earlier part of the 20th century. I'm not sure why that is. I've written about that, but it's still a puzzle to me. So some of the negative impressions are true. I just think it's easier to focus on the bad things than the good ones.

If the news cycle continuously delivers bad news only, or primarily the bad news and ignores the good news, is that market failure? Because we are talking about a very competitive news environment, or is it simply a reflection of human nature, that we have evolved to prioritize the bad over the good?

I think it's both of those. People often want to read about the bad as a kind of talisman so that they feel protected and that their expectations cannot be dashed on the rocks. And individually, that might be rational, but collectively, the result is people are too pessimistic about how their society is evolving.

Can you expand on that a little bit? This is the first time I heard that, so I just want you to expand on the last 2 or 3 sentences a little more.

Well, it's like best-selling books. Very often they predict doom. If you write a book saying things are fine, it's not going to be a bestseller, even if you're correct. So some of it is that people, they're anxious when they have something good, and they're afraid of losing it. So the way psychologically they protect themselves from the fear of loss is to anticipate the loss, play it out in their minds, chew it over, And then they feel they've done what they can to protect against it, and they use things like books, clicking on media stories, as a way of producing those psychological defenses.

But the fact that our minds have evolved in the Stone Age, they have evolved in, uh, in a period of human evolution when things were scarce and life was objectively much more horrible. You die every minute. Is that mind basically ill-suited to function in a world of superabundance?

Well, I would say imperfectly suited. Like, we are still doing pretty well. We live in America. It's pretty awesome. But it's always at danger because our minds are synced to something earlier when scary threats were truly much scarier. Than they typically are today. So that's a problem, but I think it's manageable because, like, how many countries in the world where you say, you know, if I were born there, that could be really be a great country to live in? It's some number of dozens, and some of the other countries, you know, maybe are getting there. So it doesn't look all that terrible to me. And when I was a kid in the 1970s, I didn't think the world today would be as good as it was. I thought we'd still have communism. India would remain quite impoverished. I know now it's in between, still very poor, but nothing like how it had been. Uh, extreme poverty is way down. It was not obvious that that was going to happen. So it's gone relatively well, I would say.

Next two criticisms of classical liberalism come from your article. The first is the as follows: critics say that classical liberals are temperamentally incapable of putting up much of a fight when it comes— when faced with threats from the far left. And so classical liberals are presumably headed for destruction. Um, how do you answer that particular criticism?

The far left does not rule many countries. There's plenty of things they do in media and academia and areas where they've had a lot of influence that are bad, uh, But even just the American center has done pretty well against the far left. So I don't like so much of what the far left has done, but it's not like they've taken over everything. It's just this, it's this Trumpian right-wing talking point that's largely a myth in part to justify how they want to use power to restructure society and the economy toward their own ends. It's just not nearly as bad as those people would have you believe.

It was very interesting that conservatives, or the right in the United States— we, we don't really know what conservative means anymore— but that the right had a complete meltdown right at the time when they were beginning to get some serious successes, um, in, in public policies, such as, for example, uh, reversal on Roe v. Wade, um, greater degree of educational freedom, and so forth.

Yeah, or there's this tendency on the right, say, to tell people that Harvard is totally corrupt and worthless and we could just destroy it, nothing would be lost. And I would say so many of the charges against Harvard are correct— the political correctness or the antisemitism— but at the end of the day, there's tremendous value coming out of Harvard, most of all in the sciences, uh, also in economics. You just don't want to wreck that And to tell people that it's not all crummy and rotten and terrible, to somehow psychologically the current right is not able to bring itself to that point. They've so talked each other into the state of negative emotional fervor. Uh, there's just this massive collective cognitive defect. Or you see it also with vaccines. They just all have to be so terrible. You know, they're killing all these people through heart conditions when we know scientifically COVID is more dangerous for your heart than the vaccines are. Uh, it's the same pattern again and again and again, and it's just destructive politically and even personally, I would say. You see a lot of people on the right almost purposively driving themselves crazy with different worries, and often there's something to the worry, but they just flip out and go off the deep end with it.

One of the criticisms levied against parts of classical liberalism is— classical liberals— is that we've dropped the ball during COVID that we were far too accommodating to the government shutting down society, shutting down families, friendships, economy. Do we have something to answer for?

Well, who's the we? I think we should have reopened schools much sooner than we did. Some states did that. I think once vaccines were available, all restrictions should have been lifted. We didn't do that. A lot of classical liberals called for that. Do I think we should have done nothing through government, you know, once the pandemic arrived? I would say no. That has made me— my views controversial in classical liberal circles. I think classical liberals themselves have long recognized that during a pandemic, certain actions are a public good, and government should take them. But there's some point where you just have to reopen, and you've done what you can by getting the vaccine for people. I was all for Operation Warp Speed, uh, and then we needed to just completely liberalize, and we didn't.

Going back to Harvard, um, is the future of American universities Hillsdale College, meaning not taking any government money? Because it seems to me that So long as Harvard and other universities do take government money, they will either be subject to pressure from the left or from the right. That the cat is out of the bag, you cannot put it back in. What do you think about that?

I don't think there's room for many Hillsdale Colleges. I think if you have a small number, they can raise a lot of money on the grounds that they don't take government money. And I'm all for that. That's a great business model, so to speak. But you can't have 50 schools doing the same thing. There are not enough conservative, libertarian, and right-wing donors to go around. So I think the current model of Harvard will remain. Harvard and other such schools will just be tortured for decades to come, and they'll be less effective, and their energies and attention will be drained. And that's all unfortunate. I don't favor torturing them, but I do recognize in large part they've brought it on themselves by viewing themselves as something politicized, and an agent of political change before being a scientific research and educational institution.

Two final questions. The first one, uh, addresses the second criticism levied against classical liberals from your article. The criticism goes something like this: there is something inherent to liberalism itself that makes it vulnerable to its own collapse. In other words, the freedom liberalism facilitates— sorry, the freedom liberalism facilitates, it is also its weakness. It is so free, so open, and so tolerant— now I'm quoting you— that is vulnerable to attack by people who seek to destroy it, whether that be religious fundamentalists, the most extreme element of the woke, or other intolerant movements. So how should classical liberals deal with people who refuse to play by civilized rules?

Well, you have to be out there with better ideas. You're not always going to win, but freedom does mean Marxists, Kanye West, other parties will have freedom of speech. You've got to deal with that. You're not going to get more of what you want by trying to ban those people. It will be used against you. So it's this ongoing perpetual struggle for more liberty or less liberty. I think I'm mostly optimistic. I worry about a major war coming to the world. But if that does not happen, I think the chances are quite good that we will end up as a somewhat freer society over the next several decades.

If you live, for example, in Britain and you encounter, well, men marching through the streets calling for Sharia or advocating for the slaughter of the Jews or what have you, Is there a space for more than just offering better arguments? In other words, are we destined to live with people who, um, well, frankly, if they took over, it would be end of liberalism as we know it, end of many of the freedoms that we cherish.

Well, I think ethnic enclaves in some instances can be quite harmful. I sometimes say the problem with Northern England is it doesn't have enough suburbs and enough cars. So if you have Muslim migrants from, say, Pakistan, put them in the suburbs. It's what the US has done. We don't have Pakistani ethnic enclaves. Pakistani per capita income here is quite robust. Assimilation has gone pretty well. I know there's some other differences across the two societies, but I feel Britain could have done a much better job than what they've done.. And just, oh, this ideal of the European city, you're in the center, everything's walkable, everyone's together. That's such an ideal. But when you take in a lot of migrants quickly, it can be pretty crummy. And, you know, Northern Virginia is a much better model than, say, Bradford or Birmingham. And I don't know how they get out of the mess right now, but I think you need to really ponder what has gone wrong in other decisions and try to address those. I don't think you can do nothing.

Why are Americans so much better at assimilating foreigners, especially people from very, very different cultures than is our own, than Europeans? Is it the nature of the immigrants themselves? In other words, we are getting most of our immigrants in the United States from Latin America, where the difference between our culture and theirs is relatively small, whereas the Europeans are getting them, say, from the Middle East in Africa where the difference in culture is relatively big. Is, is, is that the issue, the, the nature of immigration, or is it how they are being assimilated, or is it a combination of the two?

Well, it might be both, but if you take people from India in America, I believe, you know, median household income is $150,000, which would be the highest for any group in human history that I'm aware of. And those are Hindi from India, more Hindu than Muslim, but both. The second wealthiest group would be Iranian Americans, who I think in the range of like $120,000, $130,000 a year. Some of those are Jews, but mostly it's Muslims. Not technically— well, that's gone great. So it's selection from within those groups, but also America to begin with has been a blend of peoples, and the fact that we're more religious than Western Europe, I think actually makes us more hospitable to Muslims in particular. Protestantism and Islam have some funny things in common, and we have freer labor markets, and it's just a bigger country where it's easier to spread out more. We're not a country of ethnic enclaves and everyone packed into cities. You know, maybe New York was that way in the 1920s, but it's not what America is as a whole. And the suburbs and cars are just very healthy human things that help people ease their way into a new country. I would say it's all those factors and then some more.

We may be getting into— I don't want to push you into too controversial territory.

No, no, please do.

But you did mention selection. Is the fact that we are getting, say, the top of the crop from the Middle East and from India and from Africa and from China, is that the reason why we are doing better in terms of assimilation? That this is not your average immigrant who, say, ends up on the shores of Europe.

Well, we're not always getting the top. Maybe we should do more to make sure we're getting the top. One thing people have suggested as a factor is family-based immigration, which the US has had since 1965. It's much criticized, but if you have your family as a source of support, maybe you have less need for these local clubs and organizations, and you can actually assimilate better. So I think we have immigrants from a number of countries, and Mexico would be prominent here. There's a lot of evidence that there's not, on average, much positive selection from Mexico. We're getting a kind of typical selection. So many Mexicans have come, it's not really the elites who move here. The elites live in Mexico City. You have this incredible life, why would you leave that for the United States and give up, say, your servants? Uh, even then, assimilation has gone reasonably well. It's probably been a bigger problem with Central Americans than with Mexicans. So there's a lot of complex factors here, but it seems we do it better even when we don't have positive selection on our side.

All right, last question, which I'm pleased to say we are right on time. Um, so again, turning to criticism of classical liberalism, and now I would like to move beyond your article and ask you to address a criticism of classical liberalism by Patrick Deneen, Tyler Cowen, who believes that classical liberalism is unsustainable because it depletes the moral and cultural capital it inherited from pre-liberal traditions such as Christianity and natural law without replenishing it, replenishing it. So as classical liberalism progresses, it undermines the very conditions such as trust, civic virtue, and shared norms that allow classical liberalism to function in the first place. Leading to a liberal anti-culture that cannot sustain itself in the long run. So this is a very important criticism of classical liberalism on the right. What do you think about that?

To me, those are just a lot of words. Like, what's the evidence? The forms that trust take, they always change. So we live in a world where you do an Airbnb or just walk into an Uber and don't really think twice about it. That's a form of trust. At the same time, the people who live across the street from me, I couldn't tell you what their names are. I do actually kind of trust them just because they're in the neighborhood, but who knows. If you ask, do we see, you know, the Western world collapsing— Japan, Sweden, many other places, most of the United States— because there's not enough trust? I don't see that. I do see a huge problem in our politics. Uh, I don't know how to fix that, but I see a lot of ways in which trust just keeps on going up.

Thanks for taking the time, much appreciated, and have a wonderful weekend.

You too, take care.