The end of our 50-year stagnation | Tyler Cowen | The TED Interview

Hello there. Welcome to The TED Interview.

I'm Chris Anderson. Now then, today we're going to take a look at the world through the lens of economics, that invisible hand that shapes so much of what happens around us. Our guest is the widely read, widely quoted professor of economics Tyler Cowen. Among many other things, he hosts a popular blog called Marginal Revolution. Now, Tyler has a theory which I find pretty interesting. The world has spent the last several decades in stagnation. Like there's been this long period of stagnation and now we are starting to emerge from it. So in the tech circles where I normally live, most people don't really think there has been stagnation.

I mean, hello, the internet.

Hasn't that just been an explosive force in society? But Tyler Cowen argues quite persuasively that there has been really quite a strong time of stagnation. And he also has made an argument that it is lifting now and that we can actually be quite hopeful about the coming decades. So we talk about both his argument for and the implications of what is going to come next. We cover so many other things as well, some of them quite controversial. Inequality. Could it be less bad a problem than people think? Artificial intelligence. Is it going to kill jobs or create them? Universal basic income. Now, is that a great idea or not so much? The surging economies of India and China and what they could mean for the world's future, and so much else. So hold on to your hat. There's a lot to wrestle with in this one.

Let's dive right in. Tyler Cowen, welcome to the TED interview. Thanks for doing this.

Happy to be here.

I want to start with you and, and your story. Tell us about you. Where did you grow up? How did you get interested in economics?

I grew up in northern New Jersey from a family that started as working class but moved into the upper middle class. I was deeply interested in economics and also philosophy from quite a young age. I would say 13 or 14. Uh, before that, I was a professional chess player, actually. That was my first job, starting when I was 10. And I switched to—

Professional? Professional?

So how—

wait, wait, wait, you could make money as a, as a 10-year-old playing chess?

I didn't start making money till I was 11 or 12, but I was champion of the state of New Jersey— not for my age group, but just of the state when I was 15. So I won a lot of prize money and I gave lessons. So it was a job, right?

Wow. Well, we could, we could have a long conversation about, about chess. And in fact, maybe we should at some point, because I think you've used chess analogies to explain some of your thinkings on the future of artificial intelligence, therefore. So maybe, maybe we'll come back to that.

Sure.

But yeah, so go ahead.

Say you are growing up in a family that's moving into the middle class., and I decided I wanted to spend the rest of my life, uh, reading and writing books and dealing with ideas. So becoming a professor was the way to do that, and I just kept on going. So there's more to it, but I think of myself as a kind of infavor more than any single other thing, more than an economist actually.

So was there a specific piece of information or development in your life that made economics come alive to you and think, wow, that really I've got to spend more time on this.

There are two fundamental points of economics that I think are extremely valuable and actually very, very hard to learn, though they sound simple. The first is there is almost always a trade-off, and the second is that incentives matter. Now, almost everyone will nod when you say those things, but to think through consistently in those terms, uh, it takes a lifetime to, to advance with that program.

What is economics? I mean, is it more than say, the study of capitalism?

Here's how I think about economics, but please do not take this to be the canonical definition because it's not. If you approach problems in social science by starting with the division between preferences and constraints, then you are using the economic way of thinking. That's my approach. So it's not about money, not even about prices, not necessarily about markets, though it ends up being about markets often, but this logical move that we're going to sort of write down here's what people want and then write down here the constraints and then start trying to solve for some kind of equilibrium.

Okay, what people want, constraints, that's another way of saying incentives and trade-offs.

Correct.

Give me an example of those two things in play in a way that might be surprising to people.

Well, let me start with a simple example. So let's say there's rent control in a market, right? You can show under fairly general assumptions that will lead to a shortage of housing and a decline in the quality of the housing stock. That is not so controversial. But let's say you take a question like the incidence of a tax. So say you put a tax on capital, right, which we might be doing more of in the United States. How much of that tax is borne by the capitalists? How much is borne by the worker? How much is borne by consumers or maybe some other set of parties like landholders? Then you need to build a more realistic model. You also need to bring data to bear on the question. And whatever answer you get from that, it will not have been obvious from the beginning. And that, I think, is a quite useful feature of economics. You can use it to analyze problems of that kind.

So just to dig into that a bit more, even if you thought what was fair was that the less well-off people in that equation deserve the least tax, that it's not an absolute no-brainer that you implement on that basis because there can be knock-on effects that may ultimately damage the lesser-paid people in that equation.

That's correct.

Tyler, we're in a moment where millions and millions of people around the world, certainly in the generation coming up, are kind of sick of capitalism. They're angry with it. Many would say they really don't believe in it. Some would say they think it's actually evil. So what's the case that capitalism is actually good for the world?

Well, capitalism has to be combined with an effective mixed economy. And if you look at this during COVID times, I would argue many, but not all of our governments have failed to protect us against COVID. That has led to a great deal of anger, but it's not fundamentally anger about or against capitalism. I think in 2021 there is probably more capitalism in the world than there ever has been. Now, capitalism leads to what Schumpeter calls creative destruction. You replace one set of jobs with another. It leads to often high income inequality, but the fundamental nature of a lot of income inequality is simply that very successful companies can now sell to the whole world So Apple iPhones and iPads are sold in most countries. So Apple as a company and its shareholders, they earn much, much, much more. To me, that's overall a good thing. And I don't think it's the main phenomenon that other people are angry about. Now, should there be progressive taxation? I would say absolutely. But is anger against Apple shareholders our main worry in terms of polarization or social disorder? I don't see it.

I mean, there's social psychology experiments that seem to show that people prefer a situation often where they'll accept a lower amount of income or goods of some kind for themselves if the distribution of those goods is fairer than a larger amount when the person in the next door room gets vastly more. That is a valid piece of human psychology, isn't it? As far as it goes.

I think that's mirroring the intuition I have that individuals care primarily about local inequality. Did the person down the hall get a bigger raise than I did? And if you ask yourselves, which are the countries that people actually want to move to, or which passports would they bid the highest for, it is essentially the mixed democratic capitalist economies such as the US, Canada, Australia, southern England, Switzerland. And I think that's basically the correct intuition.

So I guess the key question here, um, is to to what extent does the same system that is giving these huge amounts of wealth to some people, is that same system genuinely making things better for many others as well? And I think if you believe the latter, then it's much easier to be comfortable and say, you know what, this is how the system works and I should just be focused on the fact that at least my life has got better. But if people don't feel that, this is often the right-left debate, certainly in the US and elsewhere, the debate between those who say, well, if we cut taxes, we create jobs. Yes, it makes some CEOs much better off, but it creates a flourishing economy, so it's a good thing to do, versus those who feel just that the cutting taxes primarily just helps those who are already rich.

I think you have to ask what tax. I would stress there's a lot we can do to improve the system, but the key question is which countries are the engine of innovation for the entire rest of the world, including in the current moment, say, vaccines or antivirals. And again, it's essentially the wealthy capitalist democracies. And it is very good for the rest of the world that they are allowed to exist and continue on more or less their current terms. But let's by no means say, oh, it's all as good as it could be, right? No way is that true.

So, so you said something there that I think is interesting about how the economy can basically spread innovation.

Absolutely. Look at the Green Revolution in South Asia. Look at the spread of mobile phones throughout the world, which has also helped businesses, kept families in touch. Those advances ultimately sprang from earlier innovations from the wealthier countries.

So let's pull the camera back and hear a story of, I'm going to say the last 100 years, because you've written about this in such an interesting way of how the world powered by a growing global economy, basically spread an enormous amount of innovation, an enormous amount of new exciting products to many, many people for many years. And then in your version of the story, for reasons which I'm hoping you'll explain to us, kind of shuddered a bit to a halt. You wrote this book called The Great Stagnation. What is your narrative of how we should think about just the big picture, the last 100 years, let's say?

If you look at the data from the United States and Western Europe, rates of innovation slow considerably around 1973, and we're not sure why that happened. But if you go back, just a simple thought experiment: my grandmother was born in 1905, when most Americans lived in rural areas, didn't go to high school. There was no radio, de facto no cars, you couldn't fly in an airplane. Clean water was not to be taken for granted. And the first 50 years of her life, going up through 1955, literally all of that has changed. Not for all Americans, but for a significant percentage of the country, completely changed, right? Her first 50 years.

In what way?

Well, you— there's a good chance you would have a car, right? You probably did not live in a rural area. You were in fact likely to finish high school, maybe even go on to college. The chance you had electricity was extraordinarily high. That you had a radio was almost certain. You would be on the verge of getting a television. So every area of life, not just one or two, changed radically over her first 50 years. Now take my life. I was born in 1962, right? I'm 59 now. But my first 50 years— you could even take my first 59— a few things changed. Like, I have an iPhone, my parents didn't. But so much has stayed the same. Like, I grew up being carted around in a car. Now I drive a car. My car is better, it's safer, it has side airbags, better sound system. Uh, I sit on a sofa now, I sat on a sofa then. Rates of completing college and high school depends how you measure them. Maybe they're up a bit, but so much of the country works on the same principles Again, I would say computers, internet is an exception, but other than that sector, life hasn't changed nearly as much.

So what you just said there runs counter to a huge panoply of sort of people who've spoken at TED who are obsessed with technology and believe that it's almost in the nature of certainly technology, but many would extend it to human culture, human history to have accelerating change. I mean, the big idea at the heart of it is that each piece of innovation creates sets the conditions by which the next piece of innovation can happen faster. And so, you know, the obvious examples like, you know, the printing press, it spread all this knowledge and so that things sped up, you know, the arrival of computers created tools that would allow much more rapid innovation. The internet connected us all and spread innovation and so forth. And, you know, it's backed by things like Moore's Law, where the fundamental engines of distribution of information doubling in power at a shockingly rapid pace. Um, and yet your argument goes fundamentally against that. It says that that is missing the wood for the trees.

Correct. I think it's relatively small changes compared to what my grandmother saw. Now note, the US government collects statistics on the value of innovation, and as best we can measure it, in the 1920s and 1930s, innovation was adding value at a rate of about 2 to 3% a year. In more recent times, we're actually lucky if the value added from innovation is 1% a year, and sometimes it's half a percent a year. So that's a big difference, especially when you compound it. So I think the numbers support my view and the anecdotes support my view, but I absolutely would admit computing power is an exception to the slowdown.

Could, could someone push back and say you're confusing the difference in innovation that is sort of felt physically and in the physical environment versus what matters much more today is not that. What matters is what happens in the knowledge environment, in information and sharing, and that that is actually much more powerful. And that the tools that we use to measure that aren't up to the job. So to give an example of that, suppose it were the case that you signed a deal with your fairy godmother to pay her $1,000 a year and in return for her coming every year and giving you a gift. And year one, she shows up and she gives you a month's supply of groceries, and that's amazing. And then the next year, it's actually two months' supply of groceries. And then the third year, it's two months' supply of groceries and a shiny new tractor for your farm. And the fourth year, it's, and so on. And every year she brings you something extra, but she never charges you any extra. Now, in that situation, the way that productivity is measured, the way that economic growth is measured and so forth, there would be no economic growth and no measure of productivity, even for her, because she's charging productivity, as I understand it, tends to be measured by the amount charged by, you know, for the products sold. So it would look like there had been no increase in productivity, despite the fact that very obviously there'd been somehow, you know, in this case, magic, an amazing increase in productivity. Does that make sense so far? Because obviously a lot of people would argue that what technology has been is the fairy godmother of our time. 30 years ago, I paid $1,000 for a computer that could just about word process and maybe lay out a magazine on a page if you were really lucky. You know, now I, I buy a computer that is the Hitchhiker's Guide to the Galaxy. I mean, it's got access to near infinite knowledge.

Well, most goods and services are valued in the marketplace, right? So they are picked up in GDP. Now, some are not. So if I spend my time playing around with Google or reading Wikipedia, that's a free good. I do it a lot. I enjoy it. It's not in GDP. Uh, what's striking to me is if that information is so valuable, you would expect productivity in all these other sectors to be rising radically. Yet you look at, say, construction as we measure it, productivity seems to be falling. You look at medicine in the US, at least productivity highly uncertain, super expensive, life expectancy even before the pandemic falling. And you can go sector by sector by sector. You don't see general gains, but you look, say, at the 1920s and '30s, you have radio, which is free, right? Later television. And that seems to suffuse gains throughout the entire economy. But here's the good news. In my opinion, we are probably getting out of what I call the Great Stagnation actually right about now.

So I want to come on to that because I'm very, very intrigued to hear your views on that. But just pushing back one more time, I think David Brooks wrote an interesting column when your book came out, The Great Stagnation. He offered an alternative explanation for the fact he said, what if it's just the case that we've got a generation of people now who don't need and don't want to turn all the benefits of the latest technology into economic gains? They just want to enjoy them. What if there's a generation now that understands that there's more to life than just income and that we should be somehow measuring progress, if you like, in a more subtle way than just counting the dollars?

I think there is something to that, though it is hard to verify. Uh, I'm not sure that people today are happier in the way that David postulates, and David now thinks that they're not, that they're less happy. But I think part of the problem is simply we are a people, a nation, and a government with a lot of debt. So if we had a much higher savings rate and much lower debt, we could play that strategy much more effectively. But I would also make the point that if you think about compounding growth rates over time. A difference of, say, a percentage point a year over some number of decades leads to a very radical difference in living standards. And that someday we will regret having been so complacent. Our descendants will regret it for us.

What you're saying is that even if that story I told was partly true, that you've got people who are kind of just happy with the feeling of these extra goods that the fairy godmother of technology seems to be bringing us every year, that they're ignoring the macro picture, which is that there's this debt accumulating at some point when some critical mass of global investors, bondholders, bankers, whoever suddenly get nervous, the whole system can come crashing down very, very fast. And there will be no ATM for you to, you know, get your pizza to watch with your Netflix and possibly no electricity and no internet. And that, that, that in other words, we actually can't be complacent about this, that the underlying productivity numbers really do matter.

Correct. And I think another factor outside of David's calculus, but it's that you have other nations that are less complacent. Arguably, China is one of them. And if we sit back and don't innovate very much, we'll find ourselves in a world ruled by powers who are not as pleasant as we would like them to be. So I don't think we can just, you know, sit in our lounge chair all the time.

Okay. So you wrote about stagnation and then more recently you've written about the possible end of stagnation or us emerging from it. Give What is your argument there?

Well, we're speaking in 2021 in April, and it is obvious that the very best vaccines work extremely well. It's hard to calculate the number of lives they will save, but when you look at what's going on in Delhi and India, I think you have to count that number in the many millions. GDPs of many countries were knocked back by 5 to 10% in some cases. The vaccines will allow a much quicker reversal of those effects for most of the world. And even sub-Saharan Africa, which probably hasn't had that many deaths, has suffered some of the biggest GDP hits. So if you were to add up the economic value of even just the mRNA vaccines, but take the vaccines in general, it is enormous. And I think we have to call that a major, major breakthrough and more or less announce the productivity slowdown due to this emergency probably has come to an end. And I also believe it's not just a one-off thing. There'll be more to follow. But even just that one advance seems to me so large in importance that my story, oh, not that much has changed, it seems this year no longer to be true.

But I mean, the vaccines may have saved us from an awful problem getting an awful lot worse. But what's the argument that they've done more than simply restore us or go some way to restoring us to where we were a year ago?

Well, it depends what you take as the baseline. If your mental model has a baseline where pandemics never come along, you might not be that impressed. I think we've just gotten lucky since 1967 that other than HIV/AIDS, we haven't had a major pandemic. But HIV/AIDS killed, what, 35 million people? And we might now get a vaccine for that as well. So if you view pandemics as something fairly regular in human history, you'll see this as a very big deal. And again, it's a general technological platform that likely, although I would say not yet certain, it's going to lead to other advances. And I think it's part of a general series of advances in biomedicine based on superior powers of computation being available to a broader number of researchers that is leading to progress in many areas, not just vaccines.

Would you try and argue that there's almost a pattern to history, that it sometimes takes a massive jolt to sort of shock humans into coming together and doing the kind of innovation that actually will make a long-term difference. So it's kind of a cliché that the, what happened during the Second World War, many of the sort of technological platforms were built then that, that helped transform life over the next couple of decades. Is part of your argument, this might be perhaps on a slightly lesser scale, but it might be an example of that where we, we got shocked into doing something. And that thing that we did, creating these vaccines has a knock-on effect far beyond just the vaccines themselves. Themselves?

I have become increasingly convinced of that view, yes. And I think lying behind these advances— so the emergency of the pandemic is the shock, but you have this earlier period of investing, say, in cloud computing, other methods of rapid computation, which then become available to top researchers. And, you know, 2 years ago it's like, oh, that's nice, you all can publish more papers. It didn't seem like that big a deal. Now people see it's a big deal And I think we're applying it to everything. And I would predict, but with some considerable uncertainty, I think the next 20 years in biomedicine will be quite phenomenal. And just the fact that we're living through them is this great historical privilege, and we should be paying close attention. It's like living through, you know, putting a man on the moon, say, or, or winning World War II, or, you know, whatever else you might think is a great historic event. We're in that now, I think.

So, so I'd love you just to expand on that a bit, because what I think I heard you say is you're looking at cloud computing through the lens of academic research, scientific research, and that until this year, not really that big a deal. But so, so what, what specifically happened this year that you think changed people's minds in the scientific community?

Well, people saw the power of the vaccines. They understood the nature of the emergency, the requirement for speed, and they saw that powerful computation really did come through. I'm sure you know the stories about once all the preliminary work had been done, the Moderna vaccine basically took them 2 days. And that's just mind-boggling.

Yeah, indeed. So the rapid sharing of information there played a key role in your view.

Absolutely. So social media, computation, just open preprints, people being used to using the internet. Maybe they had, you know, just written their grandmother on social media and sent photos of the family dog. But that kind of communication has turned out to be a big deal.

And you yourself, Tyler, chipped in with a remarkable initiative during this time called Fast Grants. Talk about that, why you did that and what happened with it.

Fast Grants was founded by myself and Patrick Collison early in April, so we saw that a pandemic was spreading, but we realized that existing structures for supporting scientists were far too slow. So to get an answer on many grant requests then, or even now, can take 6 to 9 months. Our governmental bodies right now are refereeing, uh, grant proposals that actually were put in before the final results for the vaccines were released, right? Surely those proposals are in some way obsolete or the process is too slow. So we worked to design a process of getting money to top researchers within a number of days. We set up a rigorous panel of 20 referees that worked very hard, and we had an infrastructure that was able to referee, gather proposals, and get the money out again, literally within days. And in my view, it was critical that we had this kind of rapid response, given that at the peak of the pandemic, 4,000 Americans were dying a day, jobs were being lost in the millions, GDP was plummeting. You know, we all know the whole story. Hmm.

I mean, I think that project was incredible. The Audacious Project, which is a collaborative for raising funds to support bold philanthropic ideas, identified that project as one of the key interventions that ought to be supported urgently, and it was, it was honestly, it's amazing to see how quickly you were able to disburse that money. Tell us a story about whether any of those scientific research efforts actually materialized into something that moved the dial.

Well, I think the most obvious success the project had was SalivaDirect at Yale University. So they developed a workable, much quicker, much cheaper version of the spit test, something that would cost, say, $10 to $15 instead of $150. As earlier spit tests had cost. They were not able to get funds from their own school of medicine at Yale, which is actually a very rich university, so they came to us. We gave them money to get started, again sending the money out within days, and they developed the spit test that works. If you watch the NBA playoffs in the bubble last year, the NBA used that spit test and in turn gathered data on the spit test. It's now a factor in labs all over the country and indeed the world. My own university, George Mason University, is using that spit test to have reopened. So that's had a very visible and direct impact.

I think it's a fantastic initiative. I'm curious why you ended up being one of the key people pushing it. People who know you from your blog and from your books might think of you as, I don't know, a kind of dry pundit who loves to sort of opine and figure out and reason about what's interesting today and what to make of it. Often people don't associate that skillset or that with someone actually saying, oh gosh, I'm actually gonna get involved here and do something. How did you end up deciding to do this?

I'm very happy to be underestimated in this way, but I've done a lot of project management my whole life. So I've been director of Mercatus Center, a nonprofit at George Mason, which was the home of Fast Grants. I think that's for 23 years now. So I'm involved in doing things almost every day. There's a not-for-profit, totally open access website for educating the world in economics. It's called Marginal Revolution University. So I think in a way, project management is the main thing I do, and what people see of me It's the kind of epiphenomenon.

And do you think that there's joy in it, as it were? Like, do you think that someone who has had an economics mindset and was minded to think about their incentives and what was in their interest would actually be wise to include some projects for the general good in the mix?

I think of myself as a person obsessed with learning, arguably in a weird or sometimes even obsessive way. I also think there are so many things you cannot learn unless you're out there doing something, getting feedback from the world. So it's not just about reading books or talking to people on your podcast, but you have to try things, right? And deal with other people and manage projects. And it's that integration of theory and practice that to me is the best way to learn things.

People often talk about you learn stuff in order to do something positive with it. You kind of flip that a bit and say by doing something positive, you actually learn from it. There's a sort of virtuous cycle there. It's interesting. All right, so let's go back to the end of the age of stagnation and arguments for— so you've spoken about the extraordinary effort to make vaccines and that that could actually usher in many other improvements in medicine.

What, what else?

What are the other pieces of the puzzle here?

Well, there's now serious talk that the malaria vaccine will work quite well. A trial just concluded a few days ago. I think it was at 77% efficacy. Not all the final results are in, but it seems likely that will work. There's talk of significant progress against HIV/AIDS, talk of significant progress against cancer. So I think by having so many human minds communicating with each other using the internet having this incredible computing power at their disposal, it's going to have a lot of payoffs. It's not just, oh, we got lucky with mRNA. I think that's step one of a bigger story.

Right, right. Is one of the things of significance that happened in the cloud this year that— this is perhaps an unfair word to use, but let's say that the tyranny of scientific publication where papers can't traditionally be published until they've been peer-reviewed, which again puts in often a many months delay between research breakthrough and final publication, that to some extent that got broken by the pandemic because of the sense of urgency that people were publishing stuff that was labeled as not yet peer-reviewed, but nonetheless, it was sort of, let's peer-review this live. Is that a significant development? And does that spread into other areas of scientific advance?

That is significant. It has earlier roots, of course. And I think the general lesson is in scientific institutions, we simply need more diversity. More diversity for choosing who gets into a program, more diversity for choosing what gets put into a top journal, more diversity of standards for who is tenured and promoted. And I'm not referring per se to racial or gender or ethnic diversity, though that may well be a part of it, but we need more weirdos, more people choosing unconventional paths. If you look at Professor Karikó, who is a major force behind the mRNA vaccines, her papers were rejected She never earned more than $60,000 in a year. Finally, she triumphed, but only after keeping at it for 20 years. So we need to do more to encourage people like that who have unusual ideas and are not seeing acceptance. And greater relevance for preprints is one of the things we should do.

Yeah, the people who we choose to make heroes, we should pay attention to that.

Correct.

She is clearly like a global hero. So let's come away from the area of medicine and talk about other pieces that have given you confidence that we may be having a much more rapid growth, exciting future where innovation plays an important role.

Well, the other major area would be green energy, and this is more speculative. We don't have something up and running quite as good as the mRNA vaccines. We just have an increasing number of years where the costs of solar and wind power seem to be falling 10 to 15% a year, and that compounded gives you a kind of Moore's Law Those methods, not in every area, but in many places, they are on the verge of being entirely economical or even cheaper. Many individuals, myself included, would not have predicted that 10 years ago, but I see it with my own eyes. I wouldn't say we've succeeded on conversion yet, but even notions such as electric planes, which were laughed at not long ago— again, we're not sure how well they'll work. We're not sure what their range will be. But they seem more feasible. Cost of battery power is falling. The notion of having really solid batteries within electric vehicles— Toyota claims they'll be marketing that this year— that almost certainly is going to work. So we've seen major advances there as well. Those would be my two areas: biomedicine and green energy.

It's so interesting when you, when you think about incremental cost drops. For a long time, they just seem— well, that's, that's not that big a deal. It's just cheaper solar. But it becomes a big deal when suddenly it is unquestionably the case that some combination of solar and wind and batteries, let's say, is cheaper than any fossil fuel alternative. Like for someone who is concerned about the future, who really believes that there is a climate crisis coming, that's obviously a huge deal because it gives real hope that we might avoid that. But I think you see potentially other big benefits and just like if you imagine a world where energy was both clean, but also so cheap that you could almost ignore the price. What does that make possible? And when you dream for a minute, it makes an astonishing number of things possible, starting with very low-cost water desalination so that you could irrigate the world's deserts, for example.

New cities all over the place, right? Think of the gains from that. I think it's hard to predict how such a world would develop, but it's correct to see it as a series of developments that would end up being significant for virtually all economic sectors, just to say electricity and fossil fuels were. Starting in the late 19th, early 20th century. So it could and probably will indeed spread everywhere, even though it may start off in energy and biomedicine.

And what about computing? I mean, you, you've said that, you know, the internet is the kind of exception to the stagnation that happened, but in general, you know, you said the numbers indicate that the computer revolution really never translated fully into sort of certainly into productivity numbers. Is there an argument that that could be changing now as machine learning tools get more and more sophisticated? Sophisticated. Artificial intelligence is popping up everywhere. Does any of that excite you?

Oh, of course. I think it's more than an argument. I think we've seen it with the vaccines. I would call it a fact. So if you think of early internet, early social media, you know, they're fine. I'm not one of these anti-Facebook people. I'm fine with Facebook, but it's not the greatest thing we can do with the internet. And a lot of the more ambitious things we can do with the internet, well, it might be scientists communicating over a WhatsApp channel. And that's Facebook too. So we're just using it in better and better ways. And I think in relative terms, the costs of bad internet use, they're actually falling.

But how, how do you grade the sort of the trade-off between there's all this power coming, could, could there be too much power coming too fast so that, you know, millions of jobs are blown away and we get an unintended effect of massive social disruption that way?

Well, possibly. But look, if you go before the pandemic, the two most robot-intensive societies, they were both at full employment. They're probably both headed back to full employment. So those kinds of changes typically don't affect jobs as rapidly as you would think, because people repurpose what they do as, you know, software or hardware changes within a business. So I think if we get monetary and fiscal policy right, that's a big if, but if we do, I'm not that worried about mass unemployment.

I mean, you, you've, um, you're passionate about chess. Is your study of what's happened in the chess world with the arrival of computers an analogy here?

Yes, and here's, I think, the most interesting point about chess. Chess was somewhat considered to be a dying game, like, oh, they do that in the former Communist Bloc, nerdy people do it, you might teach your kids. But watching chess over the internet, it turns out, is really fun because you can compare what the humans do to the computer commentary. And it's made chess wildly more popular. Queen's Gambit was a big hit, and chess is now like a hot thing. It's the rage. And I think it gets at the point that it's really hard to predict a lot of long-run effects of the internet. Like, who would have said chess would make this huge comeback?

When Garry Kasparov came to TED, he said that you know, he had the, I guess, humiliation of being the grandmaster beaten by Deep Blue, IBM's computer Deep Blue. But he said, you know, he said that, look, what's exciting is that human-computer teams are far more powerful than any single computer. One, do you believe that to be true? And is that a stable truth, or is that just a temporary sort of foothold where we can keep respecting ourselves a bit, a few years before the next level of accelerating AI, where suddenly, you know, forget the human part. This just slows everything down. Just, just give it all to DeepMind and let it do its thing.

I think it was true when Gary said it, but I don't think it's true anymore. So there was a period of time when the different computer programs were all quite different, and you could have a human kind of at the master board asking like the 7 different programs the same question and deciding which computer was giving the better answer. But now the different programs, they're a) better, and they've learned so much from each other they tend to agree more. And when a program plays a program, so, so, so often the result is a draw, which means they're actually not that far from perfection. So I don't think right now the human can add value, not plausibly. So you're more likely to screw it up, and let's just leave the computers to choosing the chess moves at the moment. But again, it was correct when he said it. I, I've discussed this with Gary, and, uh, I'm not saying he was wrong. He wasn't.

Someone, someone might listen to that and say, but isn't this then a bit of a canary in the coal mine warning of of what could happen in many other areas. Like right now, it's very easy, I think, to make a case of how AI is opening up incredible opportunity for new types of human empowerment. There's all manner of ways in which technology empowers people to do their job in a more interesting way. But we might just be in a middle chapter before, like chess, that the computers get that much smarter still and say, I actually don't really need your help. You're kind of a little slow and buggy. Just go back to watching YouTube and let me get on and fix things. Is there any reason why that won't turn out to be the case?

One thing we've learned from the internet, I think, is just how many weird jobs there are or could be. I was reading the other day about a man. It's his job to watch paint dry and see how well the paint dries. Now, maybe that someday will be done by a computer. That's easy enough to believe. But people as consumers, they want such weird experiences or special events. And the notion that there's truly an unlimited demand for human labor to supply those events, I think, is a bigger lesson than just, oh, the man watching paint dry will someday be be replaced by a machine with, you know, great vision and machine learning.

But do we want a world where that's what humans are doing, watching paint dry?

Well, that job I think will be automated. Do we want a world where most humans work in the service sector? I would say we have it already. It has its problems, but compare it to the old world of dirty, unsafe manufacturing jobs, which I, you know, I was told in the 1970s we need to get rid of these jobs, they're so terrible. Now that a lot of them are gone, it's like, oh my goodness, what a horror. The manufacturing jobs are gone. You know, I think we've just gotta take what's happened and, and realize it's probably for the better and let's try to build a better, saner version of it.

So, I mean, you know, the fallback position as technology replaced various jobs was, well, just move up the food chain. Humans have their extraordinary brains. We can find fulfillment by tapping more deeply into that. We think better than anyone else. And now the argument would go, uh, that's not gonna be true for that much longer. So what can we do better than anyone else? I mean, love, care, uh, marketing.

Let's call it marketing, right?

Marketing.

But also the nonprofit sector, trying to alleviate poverty throughout the world, providing special services to people, cooking food. There's just so, so, so many things humans do better where it's not even close. And most people want to work in some manner. They might want fewer hours or a better job. But if you're in some John Lennon, you know, Imagine-like world where everything is produced and scarcity is gone, you just need a modest amount of income distribution to everyone to have a pretty nice world. So I'm not worried about that.

Does that mean that you could be persuaded that universal basic income is a good policy?

It would be far beyond the time horizon that I typically think about policy in. So practically, no, but someday maybe.

Why practically no now?

People want the social networks. They get it. Jobs. They want that social affirmation. Work from home has been great for many people, horrible for others. I think we want diverse outcomes, not everyone staying at home and not having to work. So if guaranteed income is just you send everyone a small sum of money, you know, that's fine. But if it's actually we can send everyone so much money that they don't have to work, to me, that's a recipe for unhappiness. So I would rather take another direction. I want to see humans have drive, curiosity, ambition, make the most of the most human side of themselves.

Couldn't you argue that if you took money out of the equation, the basic needs of life out of the equation, that people would very quickly figure other things to dream about? We have these incredible brains. Why should we be spending our lives scrabbling around to make enough money to feed ourselves and our kids?

I think people still want lives with trade-offs. That means lives with something like money to express those trade-offs. They don't want achievement to be free or effortless. And I think to a surprising degree, we will replicate a lot of the past struggles, sometimes frustrations that we have today. And that's okay.

Tyler, talk to me about economic growth. Like when people think of reasons to hate capitalism, the perceived obsession with relentless eternal growth is one of the arguments that's really put forward. So someone like Kate Raworth, who's been on this podcast and has spoken at TED, would argue that eternal growth almost violates the fundamental rules of biology, that trees grow healthily for a while and then they have to stop growing and they spend most of their lives in a sort of healthy stasis. And if they didn't, biology wouldn't work, you know, obviously the end of the forest would die, whatever. And that the obsession with growth and only growth with no end in sight is kind of, instead of backing healthy biology or more like backing The Biology of Cancer. What's your view on growth? How should we think about it?

Well, right now our societies are engaged in a number of unsustainable practices. Climate change would be the most obvious result of those. We're only going to get out of that by innovating, and innovating means growth. We need new innovations to lower our environmental footprints in some critical ways, and those are coming out of capitalist economies. Now, is there some alternative dream vision where we all become more like hobbits and the world has only 400 million people? And our carbon output is very low? I mean, yes, but A, who wants it? And B, do you really think that's where we're going to succeed at arriving? I say no. I think we need more growth, more innovation, more clean energy, ultimately be able to be in parts of the Earth that are not now currently inhabitable, or possibly even someday other planets or orbiting space stations, whatever it will be. And that will protect the long run of humanity's future, not damage There's no way to go back to Hobbitland. And even if we did, you know, our geopolitical rivals are certainly not going to do it.

Well, it's interesting that you mentioned other planets there, because I was about to say, you understand the math of exponential growth. Right now we live on one planet. And the core argument is that at some point, maybe already, you exhaust the resources of that planet and you're just digging your own grave if you imagine eternal growth. How much do you believe in the counterargument to that, which I've heard expressed certainly among technologists and others? The key that that is missing is the speed at which the economy is dematerializing. Is that, is that a key component? I guess my real question is, help me picture a world in which growth continues forever and that that is a healthy thing.

Dematerialization is a key component of what would make ongoing growth possible and desirable. But another factor is just aggregate population. So I'm actually worried we won't grow enough people over the next few centuries. There are plenty of countries, typically the wealthy ones, where total fertility rates are below replacement. And as in Japan, populations are shrinking. Now, I'm not sure that will continue, but the point is, it's not that we're likely to have a world someday of 300 billion people. And where do you put them all and their energy footprints? It's quite easy to imagine a future that is much richer than today, that maybe has a few billion people., much lower carbon footprints, a lot more dematerialization, a lot more safety valves, protection against asteroids, green energy that's fairly safe. And that's a pretty remarkable world that beats Hobbit land. I mean, that's what we should be aiming for. And if anything, I'm worried we're not going to have enough people. I don't want a world with 3 billion people. I want a world with 20 billion people. Let's try to make that work.

Well, so talk a bit more about dematerialization. Uh, I threw in the term. How should we think about it and what aspects of it excite you, or what examples of it that you've seen are impressive to you?

Well, in an earlier America, most capital was what you would call industrial capital. It was machines and factories and things that would chug and also things that would pollute. Today, most capital in the American economy is what we call intangible capital. It could even just be, you know, a trademark or a brand or a series of work processes. It pollutes less. It's typically on average more pleasant to work with. With. It's been an enormous change in the numbers. It is highly likely to continue, and it's overall largely a good thing. It's certainly a good thing for the environment. And I think it is part of the processes of innovation that make steady ongoing growth both possible and desirable.

I've made myself unpopular at parties sometimes by just saying to people, look, the way to think about growth is to think about human creativity. Human creativity doesn't have to consume anything. It can just be a patterning of what is here already. And yet you can put an ever-growing number on it, the more sophisticated and imaginative it becomes. So who has come up with ideas in your world, in the economics world that you think are under the radar, more people should know about these ideas?

I'm not sure anything is under the radar in 2021 with Twitter and an internet, but I take a lot of inspiration just from people who have been doers like Elon Musk Peter Thiel, Patrick Collison, long list of such people. They are also theorists, and I think that is somewhat a neglected point. They have theories about the world driving what they do, and to unpack those theories and to think of those as intellectual and not only practical contributions, I think is something a lot of academics miss out on because they're so hierarchy conscious.

Quite a lot of people in the current environment would sort of categorize the three people you mentioned, um, maybe as sort of part of the bro culture of Silicon Valley. And kind of roll their eyes a bit. What do you make of the current cultural moment? Do you think it's terribly destructive that you just can't hear each other? Or they could see nothing exciting about the three you've mentioned. They would just say that they're the antithesis of everything they want to care about. Is there any chance that we ever get back talking to each other politely again?

I don't know. You know, maybe we'll never be that polite in a world with the internet, but a lot of that can be ignored. And I would say, you know, side with the doers. If you don't like what they're doing, that's fine, but try to improve on it. And just criticizing it or labeling it with some cliché, I think it's a sign you're signaling, well, I don't really want to do anything myself, is what you're saying. And like, why do you want to go through life that way? Do something better. Like, I don't agree with Elon's vision for Mars. I'm not going around criticizing it. If people ask me, I'll say what I think, but I don't want to dump on it per se. You know, I'd like to see it refined and improved. Into something that I think is more likely to work. But I would want to stress, just to be clear, you know, to be good at things, you should do your utmost to learn from all parts of the world, spend a lot of time in places like India, Africa, wherever you can get to. And if you're just like following these people who are called the bros, you will be an impoverished thinker. But it's part of this broader mosaic, and you should be obsessed, you know, with other sources and influences as well from all over the world.

Right. So if the only people you were excited by were in Silicon Valley, then there might be some legitimate cause to criticize, but that's just not the case. You are, you are interested in cool ideas from people wherever they are. I mean, talk to me about what's the most interesting idea in economics or business that you've seen recently that's come out of India or Africa?

I think what India has done as a country, again, this is all pre-COVID, but has shown that there are ways of mobilizing large numbers of laborers effectively to get large projects done in a way that would have seemed inconceivable not so many years ago. So the biometric scanning of most of the Indian population, again, I think there are some valid criticisms you can make of the effort and the vision, but the extent to which that mobilization has succeeded by new methods of organizing labor, something the United States cannot do, other nations cannot do, and just how like India will distribute, you know, lunch meals using this elaborate system of organizing the delivery of lunchboxes and the like. Those are major innovations that don't look technological, but they're deeply intellectual, institutional, organizational, and we should be trying to learn much more from them.

Yeah, it's notable in healthcare how many innovations that deliver healthcare services and products at literally 100th the cost of the West.

Yes.

I find it very exciting to see that.

I think as world regions go, I'm most bullish about India as a frontier area for innovation India and migrants from India. There's currently some magic in the air, maybe a bit akin to what Central Europe might've had 1910, 1920. And I think it's just getting started.

That's interesting. I mean, over the last 20 years, India has done amazingly well. It's not grown as fast as China. And some people would say so far China with its strong central direction and so forth has kind of got its act together better in terms of massive infrastructure investment rollout, et cetera. I think India's soon going to overtake China as the world's most populous country. How would you predict that the sort of the China-India, those two different races to the future play out?

I think China will have higher average living standards for the indefinite future. It's more like a well-run country in some way, and I think they'll largely fix their air pollution problem. But I think citizens of India and Indian migrants will be far, far more innovative innovative, they're aspirational in a different way, and they're much more closely tied into the Anglo-American world and the English language internet, and all that will make a huge difference. So in terms of talent, I would bet on India, but in terms of like GDP rankings, uh, I would bet on China.

Hmm. So if you could pick one thing, Tyler, that gives you hope for the future, how would you encapsulate that?

There is more more talent in the world today that has a chance of doing something good than at any other time in world history, and by a considerable magnitude. So if you go back even a few decades, say you are a potential genius born in Nigeria, South Asia, China, most parts of the world, your chance of making a difference was almost zero, and it was through no fault of your own. And now, by no means everyone from those regions, but really a great number of people from those regions are making major contributions, and that's just going to continue and accelerate. And that seems to me more important than any other factor.

I've never forgotten a conversation I had with Nandan Nilekani, who was the co-founder at Infosys in India, who spoke about— he said, most people who come to India see only this massive problem of a billion hungry mouths. What they miss are the billion minds. And the potential of those minds. It's almost like in, in life, so many people are focused on fear of what could go wrong. They see problems. Very few people think the way you just articulated about what could be, about the potential, the hidden potential, really. I mean, the potential does seem amazing. The potential for unintended consequences also there. Do you have any reason to think that the unintended consequences won't be as bad as the potential that you just referred to?

Well, I think most people want good lives first and foremost. That's a very positive influence. Most people demand some kind of accountability from their governments, including in China. Uh, that's another positive influence. I don't think there are any guarantees it all goes along a good path. I worry about like nuclear accidents, risk of nuclear war. India in particular, what strikes me is when I go there and talk with people, there's such an intense desire for engagement. And no one I speak to ever quite wants to agree with what I'm saying. They want to incorporate it into their way of thinking, but also make it their own and not like have it be mine. And they've signed on to something of mine. So this strong desire for a kind of intellectual, spiritual, emotional synthesis of perspectives, but to take it to some higher level of like depth and profundity seems to me in the world right now, fairly uniquely Indian and just super impressive. Of— that's like my subjective cultural impression when I go there.

I was just speaking last night with a group of tech leaders, innovators, and policymakers in Indonesia, and I was so struck by their excitement about the future of their country and how innovation was the key. That by figuring out what is the right pathway forward for them, given that they're on a different track to every other country, and because of the moment in time that we're in right now, what is the exciting pathway forward? And it was really inspiring to me to hear them talk so hopefully about the future and that it was there, it was there to be imagined. It does sometimes feel like in the West, we've forgotten what it was like to be in the '50s and in sort of, you know, like to believe in the possibilities of a nation to imagine, invent, to grow, to take things further than they've gone before and to be excited about it and proud of it. I mean, that, that, The solution to the climate crisis, if it happens, is going to happen in huge part because of what happens in China, in India, in Indonesia, and I guess somewhere like Nigeria. You know, these are the countries where we should be obsessed with what's going on there. We should be sharing as much knowledge as we can. We should be celebrating their successes. We should be understanding their problems and working with them to try to turn this terrible challenge into surging desire for innovation to do things better than the West has, for example. Tyler, as we wrap up here, is there any other idea that you would like to seed into the minds of people listening?

Well, I would just say I generally respond to emails, and if you have a question for me or comment, suggestion, whatever, please feel free to write me. My email is online. And thank you all for coming this far with us and having listened.

Well, I'd certainly echo that. It's been a really, really interesting conversation. Thank you, Tyler, so much for your incredibly fertile mind and for spending this time with us. Thank you.

Thank you.

So that is Tyler Cowen. You can check out more of his thinking at his blog, Marginal Revolution, or his podcast, Conversations with Tyler Cowen. Tyler Cowen. Now then, I always enjoy hearing what you think. So if you have any feedback on this episode or the show in general, or ideas for future guests, please write to me directly at tedchris@ted.com. So that's T-E-D-C-H-R-I-S@ted.com. The TED Interview is part of the TED Audio Collective, a collection of podcasts dedicated sparking curiosity and sharing ideas that matter. The show is produced by Kim Nyrdefeyn Petersør and edited by Grace Rubinstein and Sheila Orfano. Our mixer is Sam Bair. Fact-check is by Louis Leonidas. And special thanks to Michelle Quint, Colin Helms, Nicole Bodie, and Anna Phelan. And thank you to you for listening. We'll see you next time.