The World According to Tyler Cowen

Hello and welcome. You're listening to the American Interest podcast with me, Richard Aldous. For this week's episode, American Interest Executive Editor Demian Rusik and Assistant Editor Aram Sibarim sat down with Tyler Cowen, the polymath economist from George Mason University, to talk about, well, pretty much everything as it turns out.

Take a lesson.

Tyler Cowen, welcome.

Thank you.

Thanks so much for joining us here. Here at the magazine this year, and last year, but we're— one of the themes that we're trying to grapple with is a perceived sense that liberal democratic capitalism is in some kind of crisis. Is there a crisis?

Crisis? What does that word mean? There's been a crisis my whole lifetime. People have fallen apart because Brexit happened and Trump was elected. I didn't favor either of those outcomes, but I think both systems have shown they're fairly robust. In the United States, the economy is fine. I'm not crazy about the course of the entire world, but I think most of that is simply the less free nations being a higher percentage of global GDP rather than any very particular mistake we've made. And Brexit will happen. The United Kingdom will be poorer. It's just not the end of the world. You see people on Twitter, you know, "Oh, I don't love Great Britain anymore." It's crazy. I mean, they'll be fine. So I've become more optimistic than most people. I feel I've stayed put. They've just gone crazy.

So it's— do you think there's technology that's driving this craziness? That Twitter and the sort of communication sphere? Where's this broad nervousness coming from? Or is it just that there's more change than usual and people are just made nervous by it?

The Morton-Gurry thesis is that with the internet and social media, you become disillusioned by your elites. I certainly think there may be something to that, but I don't think it's been demonstrated. The most plausible alternative hypothesis is just globalization really works, but non-liberal countries becoming richer has an impact as well on us. And that's what we're seeing. So how much it's that, how much it's the Gurry thesis, I don't know. But those would be my two leading candidates. But I think also the intellectuals, they have kind of gone crazy, and they're made crazy by social media because they bicker with each other. And I'm not sure ordinary people think it's that much off track. So maybe one can just challenge the premise as well.

You wrote, um, I guess it was last year, uh, your book Stubborn Attachments. You tried to lay out a, uh, a theory, uh, sort of the groundwork for how you see the world. And, and, you know, I, I guess presumably a part of this capitalist, would you say liberal capitalist, not necessarily democratic, but yes, a liberal capitalist system.

Oh, but I do believe in democracy. I don't discuss it in that book, but.

Could you maybe summarize that case for us a little bit? I mean, I think it's an interesting moral case for this, and I think it's good for our readers and listeners to have that, especially in light of, I think, some of these worries that are obsessing people.

In that book, I tried to argue that democratic liberal capitalism is a rational system that can be fully philosophically defended. And my basic argument is that economic growth is a good thing over the long haul. It's a very, very good thing because we should not discount the future by very much. And that richer societies are just much better than poorer societies across many different margins. So this argument works for a pluralist. And then you look around and you ask, well, which are the societies that deliver sustained economic growth the best? And it turns out they are, for the most part, liberal capitalist democracies. So I think one should be pragmatic, but it's clear to me what the better winning systems are, and I'm all for them. And that to me feels philosophically justified in a way where there is no crisis. You don't need a complicated Rawlsian argument. That was the core thesis of the book.

So it's a work of moral philosophy.

Yes, I would say so. And I worked on it a long time, about 20 years.

20 years?

And it's a very short book, but I just kept on refining the argument, paring it down.

It's very interesting. Well, so as a work of moral philosophy, you wouldn't necessarily expect there to be a that much question of politics. But one thing that jumped out at— for me reading it is the question of the nation doesn't really appear. I mean, you talk about civilization. You talk about humanity and welfare and how one measures these things. But the unit of the nation doesn't explicitly appear in the book. Is that by design or— Can you talk about that a little bit, given, given sort of how the nation seems to be making a comeback these days?

I wanted to keep the argument simple, but I would fully accept and indeed emphasize the units that have delivered economic growth are nation-states. Now, not every nation-state has gone well, but a nation-state seems to be a prerequisite, at least under current technologies. But I was more taking that for granted. I don't quite get what the alternative is. Now, do we need more international conventions on some global public goods? Well, probably. But it's still fundamentally a game of nation-states.

It has this, you know, again, whether it's a crisis moment or not, are you concerned about this resurgence about the discussion about nationalism, especially on the right, you know, this national conservatism movement and how people sort of are latching onto this thing. Is that something that concerns you, or is it more sort of part of the normal political discourse?

Well, I'm not quite sure what they all mean. I strongly suspect some of them would concern me greatly, but not the nationalism word per se, other things they believe. In a way, the mystery to me is why nationalism ever seemed to go away, and I don't think it did. We still organized political matters at the national level. Almost everyone in the world in the wealthier countries has been mostly a nationalist. Now there's the European Union as a separate project that's not quite nationalism, but it's its own thing. You can make sense of it within a framework of nationalism. So people stopped pretending this for a while, and that pretense is over. So the people who call themselves nationalists, they do make me nervous, But I don't mind the word per se.

You also wrote what might be considered a kind of sequel to Stubborn Attachments, a book praising big business. In brief, why is big business good?

Big business pays higher wages. It innovates a phenomenal amount. It gives us reliable products. It makes the world a better, safer place. It spreads prosperity throughout the world. It tends to favor peace. We've gotten to the point where in America today big business is grossly underrated. You see this in the rhetoric of Elizabeth Warren, Bernie Sanders, but also Donald Trump. He's very happy to go after business with his pitchfork on Twitter. So it seemed to me, uh, one should write a certain number of contrarian books, and this is a contrarian book that should not have been contrarian at all.

Uh, to that point, in recent years some conservatives have begun to rethink their largely negative views on labor unions and sectoral bargaining. Some have even begun to flirt with these ideas or even outright embrace them, at least in limited contexts. Uh, where do you fall on these matters? Do you think strong unions, sectoral bargaining, and big business are compatible?

Well, clearly they're compatible. They were extremely compatible in the America of the '50s and '60s, but I think people just haven't been paying attention to the data. So I don't see how unions can come back in a big way, even if you want them to. They work better in old-style manufacturing jobs. But look, there's a significant literature— like, is there a wage premium for union jobs? Well, I've known for decades it's about 10 to 15%. The unions, they pay more. But on the other hand, the firm hires fewer people, possibly, and it means to some extent higher prices for consumers. And you do a big cost-benefit trade-off. I think a lot of the unions we've had have done some net good, but not that much good once you take the costs into account. And I feel I've always been at that point, and people have swung wildly, first for unions and against them, now for them again, and they're just not looking at the facts. They're wanting to feel a certain mood about unions. And I would just say, look at the research. There's some benefits, but don't go crazy telling yourself this is going to be the next difference maker.

In the book, you You note that part of what makes American capitalism so innovative is creative destruction, the fact that more efficient firms can easily displace less efficient ones, and indeed you say that in America it's especially easy for them to do that. You also cite several studies that show that involuntary unemployment is a much bigger source of unhappiness than working, or for that matter divorce or separation. Is there a tension there? In that— in that— involuntary unemployment is most likely going to be a structural feature of a system in which there's lots of new firms displacing older ones.

Well, there are plenty of economies that don't have that much creative destruction. I mean, Jamaica is one example. At times, unemployment in Jamaica has been at around 30%. There may be some of those people are working in black markets and the like, but a big problem— stagnant economies ultimately do poorly with their labor markets usually, or the jobs just become so terrible as under communism, where maybe everyone could get a job, but it was just awful. So I think your best chance is to try to be something like America or Japan, where a lot of the time you're close to full employment. Uh, keep in mind creative destruction in America has gone down by most metrics if you look at the work of John Haltiwanger. So I don't feel that now we have too much of it. There was this one big unprecedented thing, the China shock. Probably we didn't respond very well to that, but we're not gonna have another China shock 3 years from now. So I would say we blew it on the China shock, although it was a mistake easy to understand. Now we're pretty close to full employment. We've never gotten it perfectly right, but we've done better than most countries.

Mm-hmm.

The China shock is often brought up alongside the fact that rates of suicide and drug abuse are rising in the United States and life expectancy is falling, uh, whether or not those two things are related. What, in your view, are the most important explanations for these trends? Um, yeah, and do they complicate— and, and what do you think the implications are, if anything, for American capitalism?

From what I read from secondary sources, suicide and opioids are the two main reasons why life expectancy has fallen. Note, it's fallen a very small amount. I'm not sure those results are confirmed, but they seem likely. You know, I don't think we understand suicide very well. I think eventually we will figure it out, and the rate of suicide in our civilization will be much lower. Some countries have a pretty high rate of suicide. They're not obviously worse countries. Than those with a lower rate of suicide. So I don't look at a higher rate of suicide and leap to any conclusions. Opioids, I think, has been a failure of policy. There have been suggested, you know, 10, 20 different things we could do to somewhat alleviate that problem. I don't think any of them is a magic bullet. I suspect in any advanced civilization, drug problems will be worse because drugs will in some way be quote-unquote better. And I think as a matter of personal ethics, people are far too tolerant of all kinds of drugs. And what I recommend is, you know, people be more like Mormons and just not let it near their plate. And you have people all the time, you know, smoking marijuana, taking cocaine, pretending it's a semi-acceptable thing. And I think people should just voluntarily treat it like the plague. I don't think it's a great solution, but other than that and a whole bunch of policy changes, like change electronic medical records so we know who is overprescribing and who has gotten what from what other doctors. A lot of technical fixes that probably will only solve the problem a bit, but we should do them all. So there you go. But I think addiction is an underrated issue. It's stressed in Homer's Odyssey and in Plato. It's one of the classic problems of public order. And we've been treating it like some little tiny annoyance, like a gnat. But it's central to the whole role of like, what's a liberal order?

You write in the book, the most recent one about big business, that there are these superstar firms such as Amazon that pass on tremendous benefits to American consumers. What do you make of the counterargument that some have leveled that, yes, but the people who staff Amazon packaging plants often live, you know, work in terrible conditions. There's reports that some of them have been forced to pee in trash cans. If the consumer welfare generated by Amazon is only achieved at the cost of worker dignity, why I think superstar firms are a net moral good.

Anecdotal descriptions will typically make things sound worse than they are. I would say this: there's a lot of communities where old-style manufacturing jobs have gone away, and the new jobs for Amazon are the best that are there. It's fine to see that as a structural problem, but not blame it on Amazon. In passing, I would note, I mean, I've either peed in trash cans or wished I had a trash can to pee in. So, you know, if we're going to get very literal about it, like, that's not actually an abuse. Yeah, like, I know what an abuse is. There There are plenty of abuses in the workplace. That's not one of them.

Mm-hmm.

Do you— I'm— okay, go ahead.

I was just gonna say, sort of related to that, Oren Cass has argued that American economic policy has tended to put the interests of consumers before the interests of workers. What do you think of that, and what do you think of his normative case for switching to a producerist framework in our economic discussions?

I think it all needs to get more specific. So I don't think, for instance, that tariffs on the whole create better jobs. So to the extent there are recipes for creating better jobs, I'm all for those. You could view state universities in this country as educating people, in the longer run creating much better jobs. That makes perfect sense to me. I don't see that Orren has come up with a new idea that really works and is something we're not doing a lot of now. Now if you say, well, the state universities, they're failing us, they've ossified, they're not teaching the right things. I mean, I would agree with that. I think we could improve our current fixes, but I think he's skating too much at a general level, and it's sort of like, you know, put it on the table, show me what you've got.

So in Average Adult, in Averages Over, your previous book, now 3 books ago, right?

Something like that.

Something like that. There was a sense that, you know, the creation of permanent underclass is a likely outcome of the progress of technology. I mean, I'm not sure if you'd put it exactly in those terms, but you're on our board, our colleague Bill Galston in the Wall Street Journal reviewed the book very harshly.

That's Bill's vivid imagination, and I confronted him about that, and I can't speak for him, but I took him to be somewhat apologizing. I never called it an underclass. I think in this country and many others, there will be large swathes of people who decide voluntarily not to be that ambitious.

Yeah.

And they will kind of stay somewhere between middle and lower middle class and actually do fine and often be quite happy. Yeah. And just not climb the ladders of success. Uh, there are different ways one can evaluate that normatively, but to call it an underclass, I think, is misleading. Ambition is distributed in a funny way, and not everyone is going to have it. And the people who don't have it, there's not some future where they're paid like $300,000 a year, but they'll do fine. They'll have a higher per capita income, say, maybe than Belgium today. Like, is Belgium just a big underclass? I wouldn't say that.

Do you think that anything about the arguments that the rise of Trump, we'll call them the economic sort of analyses for resentment, economic resentment fueling Trumpism. Do you think that's an overstated thing?

It's probably wrong. I don't think we know. I'm much influenced by Eric Kaufman's book Whiteshift, which portrays immigration as a major cause. And there's some data, like the people who voted for Trump in the Republican primary, their median income was $70K. So it's all supposed to be economics? Like, if you're just saying, well, it's one of the 13 factors, yes, yes, yes. But it seems to me discussions of what is behind the rise of Trump, it's one of the worst areas for, like, truthful, accurate commentary in the whole world right now. I would hardly believe any of it. I want to see serious work with data put up against alternative hypotheses. You should just dismiss most of what you read on that topic. It's probably junk.

So I mean, that's interesting because then clearly you think the Democrats are barking up very much the wrong tree by, you know, floating the Bernie and the— not that you'd really ever be sympathetic to necessarily Warrenism or Bernieism, but you'd think that this is more than just misguided economic policy. Politically, they're barking up the wrong tree, you think?

Probably, but keep in mind how few factors predict electoral success. So it seems too late for there to be a recession. But if there were a recession now, I mean, Bernie would probably beat Trump, no matter what you think of whatever your theory of politics is. So a lot of different outcomes are possible. It seems to me that the betting markets, serious political science seems to think Biden has the best chance of beating Trump. And Americans are pretty centrist and sensible, and that's compatible with that. But don't think, you know, Bernie winning couldn't happen. And Trump winning, right? That was a shock. I don't just mean in 2016, I mean go back to the 1980s where Biff is this character in Back to the Future II, and that's Trump. And it's like it's a joke that he becomes president. So, you know, never say never.

You've written that this increasing antipathy towards big business stems in part from our tendency to treat corporations as people, which then causes us to blame them for things that in your view, aren't really their fault. You also note in the same chapter that our entire economic system paradoxically depends to some extent on treating corporations that way, and that this is a tension. Can you elaborate on that?

Well, say you call, you know, Apple, wherever, and you're on the helpline and they leave you waiting. Now that's ultimately a profit-based decision on their part. What's the value from serving you right away as opposed to making you wait 7 minutes? And people resent that they're part of that calculus. I get it. I've been on the helpline, I'm frustrated. You feel your friend wouldn't make you wait for 7 minutes. It's probably true. And so people get upset, but I think it's the wrong standard. They ought to be a little more detached and understand that a system of rules where how good the helpline is— yes, it depends on profit and it's not always good for you— is simply the way things work. And that's hard for people to appreciate that as an abstract rule because When it's bad for them, they remember it. When you get through the line quickly, you forget it, and you're not much time— you're not spending much time waiting in line. But that said, it's because you think of companies as sometimes like cool or friendly or sympathetic that you support them. So there's this contradiction embedded in support for the liberal order itself. I don't think it will ever go away. I would just like to nudge us a bit to be a little more analytical about it.

Just to clarify, it's one thing to say it's a mistake to treat them as our friends. Would you agree though that corporations are corporate agents despite not being persons in a literal sense? Do you think that group agency and group moral responsibility are coherent concepts as attached to corporations?

I guess it depends what you mean by that, but say, do I think you should have the right to sue a corporation? Of course. In the legal sense, absolutely.

I guess in a moral sense, is it coherent to say a corporation wronged me?

I'm not sure there is a moral sense. I would say there's a pragmatic sense. And in the pragmatic sense, it's fine. And maybe we get into trouble if we push too hard on any other senses.

Okay, okay. So switching gears a little bit, in his forthcoming book, "The Decadent Society," Ross Douthat argues that the West has entered a period of quote, economic stagnation, institutional decay, and cultural and intellectual exhaustion, even as it has maintained, quote, a high level of material prosperity and technological development. Do you agree with this assessment? Why or why not?

First, I love that book. Ross is one of the best writers around, period, from any point of view. He's, uh, you know, maybe the best columnist in the world, which is pretty impressive, right? I think it's hard to pin down particular hypotheses about big social changes, but when I read the book, I found myself nodding a lot in general sympathy. But the data-driven side of me, you know, has some skepticism just as to whether there's any actual malleable explanation for some of these trends.

Yeah, I mean, uh, again, the, uh, I was just actually looking up the, the book, uh, that, that, uh, you wrote actually before, the, the one that was about the The Great Stagnation.

That was 2011, I think.

2011.

Before averages over.

Yeah, and I saw a blog post on Marginal Revolution recently. You were also saying, I believe, that certain trends are also coming to an end and we're not sure where they're going to be headed.

That's right. It's possible the Great Stagnation's over right now.

And that a new sort of, new trends are about emergent and we're getting a new kick in the seat of the pants, you think?

I would say we don't know, but for many years it seemed obvious that it was not over, and now at least it's an open question.

Any, any, uh, thoughts on what we should be looking for?

Well, tech is starting to pay off, and people hate tech in a way they didn't 5 years ago. That's a sign tech is in a way quite powerful, not in the coercive sense, but just reshaping our lives. And, uh, that's at least some chance that there's a speedier rate of technological progress. And I think in biomedicine The stuff isn't yet there in the, oh, my doctor gives it to me way. But the advances you read about secondhand at the research level seem pretty phenomenal. So to think that biomedicine, green energy has gone much quicker than it seemed 10 years ago. And then big tech. Again, I'm not claiming it's over. I'm just saying I can see a window where it might be over in a few years' time.

Has Trump been good for the economy? Of course. And could you then talk about like what do you think the actual impact of individuals on these sort of bigger questions are? I mean, this goes back to stubborn attachments to a certain extent, measuring what any individual sort of act could have on larger prosperity. But Trump has been good for the economy because for deregulatory reasons or?

I don't think so. I mean, most presidents don't influence the economy much. And I'm not sure Trump has much, but his main virtue in this regard is simply that he's not a Democrat, and the Democrats have gotten worse. And he's off with his own tomfoolery, which I find quite offensive and bad. I'm quite opposed to it. But it does mean he hasn't screwed up the economy, and that's the good thing he's done. The deregulation, which again, I'm all for, but that change in the flow relative to the total stock, I mean, that's tiny. I don't blame Trump for that or anyone. But it's not really mattering. I do think there's a general sense that businessmen have, like, Trump, he's crazy, he won't come after me, I can go do my thing. And that's one factor that's helped. That would be most of it.

Um, many on the socialist left, uh, and some on the kind of post-liberal or nationalist right have also, in addition to unions, uh, begun making a lot of arguments about workplace democracy as a check on corporate power. Do you think any of these proposals have merit?

I mean, there's so much you need to unpack there. So corporate power, if you look at the federal budget, most of it is determined by voters, not by corporations. Are there all kinds of small things like subsidies for Amazon that are rent-seeking and bad? Of course, stadium subsidies. I'm against all of those, by the way. But it's just not the main feature of our political system or our government. So corporate power, as it's called, is much weaker than one thinks. And some of the issues, most of the issues where companies have some influence, like immigration, freer trade, corporate power is a positive insofar as it shapes outcomes. So I don't think we need this separate thing, labor unions, to like counteract corporate power. And going back to our labor unions discussion, I don't see in a service sector economy What those unions are supposed to look like and why they should be sustainable. I just don't get what people have in mind there other than some kind of fuzzy nostalgia.

Co-determination. Do you have any— I mean, it's not exactly labor unions, although there's—

well, I mean, there's too many people with the right to say no in current America as it is. So we need to get things done speedier and with fewer obstacles to create more veto points. I don't favor that.

Does that imply a bit of a critique of the American political system, which is built in large part around veto points that some argue does constrain economic growth and makes it very easy for sort of regulations that hurt growth to come to fruition?

It's a partial critique, but mostly veto points have been good. Every now and then a big issue comes along where you don't want veto points, so Right now, maybe that's climate change. And on the policy side, I really haven't seen any progress on climate change. But you know, you look on the tech side, there's a lot of progress. Electric cars, batteries, solar power, now small nuclear reactors. And maybe that's because we have veto points and these things have not been overregulated. So it's not that other countries have actually done better, so. I don't want more veto points, but they're still underrated in some regards.

Yeah, so China, China is not the answer, certainly, in, in having this idea that certain people lionize this, you know, uh, uh, well, right, uh, almost, or the Singapore— again, not to complicate it too much, Singapore very different from China, but the Lee Kuan Yew sort of, uh, ability to make decisions and, and, uh, you know, strip out those veto points. That's the veto points have been underrated by you.

You'd say yes, but I would know— I mean, China is in a very different position, and some of what they've done with fewer veto points has been very good. I just don't want it for America. It's, you know, should China have a looser sense of eminent domain than the United States? Probably. They needed to urbanize. So I think they went too far, but I would grant that much of what they have done has succeeded.

So maybe let's talk a little bit about libertarianism. Sure. You had this post recently on Marginal Revolution about state capacity libertarianism.

Everyone asks me about that. I didn't think anyone would even read it. It was like in the Washington Post, the Guardian, people are still writing me about it. I thought it was all trivial, actually.

Do you feel like you've evolved as a libertarian? I mean, as you were writing that, you were maybe reflecting, you said at the beginning of the post, you know, You've been studying libertarianism as a movement your whole life. Has it been a— so it was just very obvious and trivial. Was it reflective at all of yourself as you were writing it, changes?

Well, somewhat, but keep in mind I'm 57 years old and the way I feel now, I more or less felt by the early '80s, say when I was 20. So it does reflect my own evolution, but that evolution has largely been in place for a long time. It's not some new thing I thought in the last few years.— and the people reacted so much to it, positive, negative, whatever. I think it shows in a way the discourse is backward.

It seems that state capacity, which is the whole point of state capacity libertarianism as you describe it, is in part libertarianism is compatible with state capacity and we should build up state capacity in certain regards. Right. State capacity implies at least a certain degree of state power. Many Americans claim to be distrustful of state power. Do you believe them? And if so, how do we alleviate that distrust?

I think they should be distrustful of state power, but just as there are some periods where you want fewer veto points to get a few very particular things done, if you think about, say, nuclear power, if that ever were to happen, which I strongly favor, I know it would happen in a pretty non-libertarian way, and I'm still, yeah, let's push the button, this is important, there's a lot at stake. I then would hope we go to a system where the veto points are stronger once again, once we've made our energy supply greener. So, you know, it comes and goes and it's path-dependent.

There's also some evidence that immigration reduces social trust, at least in the short run. Would that imply that state capacity libertarian is more restrictionist than traditional libertarianism insofar as there's a need for social trust as a prerequisite for building up state capacity?

I think it depends on how you do immigration. There are ways we could do immigration that would boost social trust and bring in more immigrants. Not higher social trust for every single neighborhood, but for the country as a whole. So I know Putnam's work. I accept his micro results neighborhood by neighborhood. But when you look at the longer-run benefits of immigrants, which he's not measuring, uh, I do think state capacity libertarianism is compatible with a pretty high rate of immigration. Also to keep America as a viable military power, where China has, you know, 1.38 billion people, India has plenty of people. So we need to be competing on the numbers game too, to keep our place in the world. So that's another reason, again, not measured by Putnam, where state capacity relies on some pretty high numbers. We're not New Zealand.

Can I ask a question about that? It's, it's, um, do you see state capacity libertarianism as an American phenomenon, or is it applicable beyond America, specifically on the—

beyond America. Absolutely.

So, you know, can you talk a little bit about how you see the challenges of immigration, say, in Europe compared to America? Do you see them roughly analogously? Is there a cultural component that Europeans, you know, for, again, nation-state reasons, historical reasons, cultural reasons, compared to the American experience, are less perhaps able to make the moves that you would favor?

Oh, I think it's very different. They have more restricted labor markets. They're more hostile or at least suspicious toward their potential migrants who might be Muslims or from Africa, who are of course closer by. And there will be more and more water vehicles trying to land in southern Europe. And America is bordered by Mexico, which is essentially full of Christians who mostly assimilate in due time. So it's easier for us. We should take in more immigrants from afar. They assimilate better, but still Europe The EU has open borders within the EU. That's a phenomenal achievement. So Europe has done something nowhere else has. But I do think it will eventually prove to be the case, somewhat already, that if particular nations in the EU want to partially secede from Schengen, they will be allowed to do so somewhat quietly. And that is necessary. I don't want to quite say I'm for it, but I recognize it's necessary and I'm not against it. Let's put it that way.

In recent years, some conservatives have begun to lobby aggressively for industrial policy, and with few exceptions, traditional libertarians have condemned these efforts. What's your take in brief?

We already have industrial policy. First, it's the military, which has had tremendous spinoffs: nuclear power, the internet, a long list, partly the airplane, partly the computer. I'm all for that having happened. I think our procurement cycle is much worse. We should try to fix that. But that is American industrial policy. And then we have the world's best universities, strongly supported by our government and state governments. And those two have ossified, but they've been effective industrial policy, though people don't call them that. And I don't see why we need this new thing where, like, lower-level bureaucrats sit around and decide how well electric cars are going to do. You know, I would direct support at basic science and not have government do much to pick winners. So I think we've had a good industrial policy.

Okay. And many libertarians also argue for the decriminalization or outright legalization of sex work. I'm just curious, this has been kind of an increasingly hot topic. What do you make of their arguments and how comfortable should we be with the Introduction, or if you prefer, further entrenchment or involvement of market principles into one of the most intimate spheres of human activity?

I'm sympathetic to that. You know, it's been done in New Zealand. It seems there it's gone fine. But again, we have a system of federalism. I'm not sure the whole nation should do it all at once. Let some states try. The experiment in Nevada, if anything, seems to be reversing. So I would give it a shot. See if people find it a better outcome.

What was the experiment for Nevada?

Well, there are some counties in Nevada where prostitution is legal, but I think it's heavily zoned and regulated, and the tendency is toward more regulation, and it's in retreat. So, uh, there's plenty of evidence that seems quite solid that sex crimes against women go down when they can do prostitution legally. That to me is a major factor, not decisive, But if you can stop a lot of violent crime, and it's not then obvious what is worse off. There's claims, oh, it leads to more trafficking. I'd have to study that more, but I guess I'm dubious. I think that the benefits would likely outweigh the costs.

Interesting. So in this last section, sort of a, you know, I think it's a Tyler Cowen—

Underrated versus overrated?

We will get there.

We'll definitely get there, but it's just sort of a, you know, You are, I think, one of the most interesting and diverse— diversely interested public intellectuals, so sort of a little bit more all over the place.

Aaron, go ahead.

Alright. Is economics a science, dismal or otherwise?

Science? What's a science? I think it's halfway between science and art. I get suspicious by the people who make claims it's all very scientific, and most papers you read you really can't quite trust. I don't mean any aspersions against the authors, but it's hard to figure things out. But that said, the people who think it's all nonsense and you can just do what you want or print all the money you want or MMT, I reject that too. So having the wisdom to know where you are on the science-art spectrum is part of the art of economics.

Is there anything currently for sale that shouldn't be in the United States?

Well, alcohol? I don't know. I don't think it's feasible to ban it, but the evidence that it destroys lives is phenomenal, and I think we should shun it socially to an extreme. And it's one of our great crimes as a society that we don't do that.

Really? And so implicit in that answer is kind of a rejection of the normal libertarian line that you can't ban things, that just makes the problem worse. It sounds like you think that in principle, bans can be good and effective.

Of course, and during Prohibition, you know, rates of death from liver disease and the like went down. Now again, I get we can't do that, it won't work, we tried it, but at the end of the day it seems to me like— I'm sure you can buy cyanide somewhere, but people just don't keep cyanide around the house, and they just are abhorred by it. We should treat alcohol like cyanide.

Interesting. Who are, in your estimation, the 3 best novelists around today and why?

Around today? Well, Elena Ferrante, she's around somewhere, if it's a she. Carl Knausgaard, the first 2 volumes of "My Struggle." And Michelle Houllebecq.

Houllebecq, yes.

And then "Three Body Problem" from China. They're the 4 best, I think, by far. I can't narrow it down to 3.

The most recent Houellebecq book, how do you rate that in, in the, in the, in the general?

I think it's awful. I didn't like it. A lot of critics have panned it, but, uh, his fame is secure.

Yeah, you're reading the, the one right now.

What— is there anything that all three of the novelists you listed have in common, or they all are for, or are they all good for different reasons?

I think they're all highly conceptual, and they all would do a great podcast. Language permitting. And I did a podcast with Canaskar. He was awesome.

You're arguably a progressive in the narrow sense that you think life has gotten and will continue to get better as time goes on. Correct. Material progress is easy to measure, but what about moral progress? Is this a coherent concept, and if so, do you think we are more moral today than we were 40 years ago?

I mean, who's the we and what is more moral?

Let's say American society.

So we treat gay individuals much, much better. Race is— has gone better, not nearly as much better as it should have gone. I don't think we treat animals better. I know there's a lot more rhetoric and veganism and so on, but actual on-the-ground treatment, it seems there are more animals in factory farms. So I think it's issue by issue. On most issues, we're better. Gender issues, we're definitely better. But still far from perfect. Animals and climate change are the big cases where we're much worse, and those are significant.

Um, has the quality of movies and, uh, and novels gone up or down?

Well, Hollywood movies, the quality's clearly gone down in the last 15 years. Too many tentpole franchises, possibly talent's been drained away to television. I think that's a big and noticeable change. But for the world as a whole, movies are as great as ever and there's plenty to watch. So I'm not a pessimist about the genre, but Hollywood is not what it was, say, in the 1970s. And then you said books?

Novels, yeah.

Novels.

Yeah.

Harder to compare, but I'm not pessimistic. So I named 4 authors who to me stand among the all-time greats of any era. So Hard to add them all up and compare to some time in the past. You know, maybe novels peaked in the 1920s, possibly. But now's a very good time for fiction writing.

Do you think that part of the explanation for the quality of movies going down has to do with globalization and the fact that Hollywood is now trying to appease countries like China?

Absolutely.

You think that's—

More CGI, more things explode. No sex in movies. Now I'm not saying sex in movies is good per se, but there's something about mature themes where sex enters into the story and that's now a no-no. So it's like, well, I'll do Captain Marvel instead. And I mean, some of those movies are good even, but they're not that interesting. And it's harder to be creative with human drama. And comedy is harder in a globalized world. Romantic comedies seem almost dead. Sleepless in Seattle is a distant memory, right? So, yeah.

Uh, in 2017, you wrote a much-discussed blog post explaining why you don't believe in God, uh, or didn't believe in God at that time.

Still don't.

Okay. What were some of your reasons, and have you changed your mind about any of them?

I don't remember my reasons. Uh, my main reason is just that I don't believe. I don't think it's an absurd belief. I don't think it's impossible. I'm not sure the terms are well defined. I wake up in the morning and there's a bunch of things I don't believe in, in a kind of absence of belief way, and that's one of them. So, uh, I just don't see that the case for believing is that strong. Is that what I said then?

That sounds about right. I just, I remember there was an exchange with Ross Douthat that involved Bayesian probability, which was interesting.

You know, it struck me at the time, now it's coming back to me, People who believe in a particular God and a particular religion, they're reluctant to speak of it in Bayesian terms. So if someone said to me, "Well, I'm a Catholic. I think Catholicism is true with probability 2%, but all the other religions are true with 1%, so I'm a Catholic, but it's still 98% chance I'm wrong." That would actually make perfect sense to me. But I've never met a human who feels that way. It's like if you believe in a specific thing, it's bundled with high certainty. And that to me doesn't make sense. And I was challenging that.

Interesting. You also further back wrote a paper that laid out an economic and rational choice approach to the autism spectrum. Do you think society has grown more or less tolerant of neurodivergent individuals?

Overall, more. But that's one of these complicated questions. Looked at, say, guardianship for people who are disabled, autistic, whatever. There's no available number on how many people suffer under guardianship status. And you might think, well, some of them need to, they can't take care of themselves. But it's pretty clear that not all of them need to. Like our judicial system makes a huge number of mistakes with, you know, murder trials, which are taken far more seriously. So in terms of actual treatment Some dimensions probably are worse. But if you just mean, like, tolerance from a lot of smart people, it's probably better. But the old days where everyone just thought you were weird, like, maybe that was better yet. So I'd say we actually shouldn't be sure, even though, like, rhetorically, you would get all kinds of people like, oh, you know, this and that. But I'm not sure treatment's better.

What's a book? Let's say in the social sciences broadly, that hasn't been written to your knowledge that is crying out to be written?

Well, any kind of synthetic applied knowledge, like how should the United States reform its funding of science? How should the NSF operate? The NIH? There are not like current good books on those topics, and they're immensely important. There should be many more books on YIMBY versus NIMBY. Uh, how much do housing restrictions slow down economic growth, for instance? There's research being done on it, but there should be much more. That's social science.

Real, real—

so most areas are—

uh, real quick on the subject of science, um, you also wrote a paper very recently arguing that the rate of scientific progress has been southward. Yes. Um, what do you think are the most important reasons for that, and what do you think the implications are for society, politics, the economy?

I think the rate of progress in many areas of science has slowed down because of greater bureaucratization. It's harder to be an inventor in your garage. You need big teams to do things. Big teams, just more moving parts, but they're also more likely to be regulated. And the area where there's been very rapid progress, like tech and social media, it has been garage-style inventors. Mark Zuckerberg in his dorm room, He just did it, right? So I don't think it's easy to fix. That's partly why I'm interested in reforming the funding of science. But undoing bureaucratization has not succeeded in many cases. Sometimes you just need to set up parallel structures that do new things their own way.

Are you working on a new book? Do you have a project that the book— what's the next Tyler Cowen book that needs to be written?

Tyler Cowen. It is being written. It's on what do we know from the social sciences about how to identify talent. So if you think of talent as a binding constraint on projects, every institution has things it wants to do. It can't find, say, project drivers. Or you're a magazine, you want an article written. It's like, who's going to write it? You're stuck, right? You must have this conversation every day. So we could deploy our talent much better in this country, around the world. And this is a book on that. And oddly, there's not a single really good book on what do the social sciences know about spotting and evaluating talent. Mm-hmm.

And do you, do you think part of that is because, as you were saying earlier, economics is kind of halfway between a science and an art?

Yes. And it's a hard problem. So there's not some simple formula like hire all the people with green eyes that's gonna work for you.

Right, right.

But that people aren't even trying strikes me as a kind of crime. And there's all the justified weeping and wailing about poor kids growing up in poor circumstances. Well, okay, one should complain about that, but at the end of the day, someone has to wake up and say, I'm going to figure out a way to hire and mobilize these people. And that's what my book is trying to help people do.

Ready for some underrated or overrated?

I would say I'm ready.

All right, uh, big tech.

Well, way underrated in the United States right now amongst people who are politically active, but if you mean by actual American citizens, it's probably rated about correctly. They love Amazon, they often use Facebook, Google has, you know, become a verb, and that's all justified.

Uh, dating apps.

I met my wife on Match.com about 17 years ago. She and I were both early adopters. And the curve of use for dating apps, like what percent of marriages, it's just going straight up right now. So they're still underrated. And they could— I haven't used them in a long time. I suspect they could get a lot better.

The US manufacturing sector.

It's underrated. I mean, manufacturing output in this country is basically at an all-time high. So people complain that it doesn't create enough jobs, but you know, an earlier generation complained how terrible those jobs were and we need to get rid of them. So at some point you've got to ask, like, what do I really want? Those are mostly jobs you do want to get rid of. I get the transitional problem. There was an article, I think on Bloomberg today, people managing a Taco Bell In some places you can be paid $100K. It's way better than working in a factory along a number of fronts. So I would say US manufacturing underrated. Am I worried we cannot build a ship on our own? Yes. Should the military and government do something about that? Probably. Rare earths, we shot ourselves in the foot with too much environmental regulation. We could undo that. So there are things to be fixed though.

International law.

Again, you have to look at it case by case. Our current administration doesn't respect it enough. We will need international law to address climate change. So there's been too much trampling on the notion. It's easy for politicians in most countries to mock it and be nationalistic, but it needs to make a comeback.

The Jacksonian tradition in American foreign policy.

I've never liked it. I've never liked Andrew Jackson, starting with Indian removal. And I think our experience with Native Americans— I mean, he called it Indian removal, I wouldn't call it that— has shaped too much of our foreign policy. And it's something like slavery we just ought to repudiate. Now, I'm not an isolationist. I'm not a non-interventionist. But I don't like the Jacksonian tradition on much of anything. I think he was a fool and a jackass.

Higher education, underrated or overrated?

Again, it depends by whom. If you poll Republicans, they seem to underrate it. But if you look at where they send their kids, they behave like other people. So it could just be they want to poke left-wingers in the eye by saying it's all terrible. It's probably become underrated. People think it's like all just some big scandal and all political correctness. Like, a lot of those complaints are real, and I'm against all that stuff, but I don't think it's the main story of American higher ed. Not now.

Uh, borders— the geopolitical kind, not the out-of-business bookstore.

You mean like a legal border, like the U.S. border with Mexico? You need borders, uh, so— but you also should know you don't want to enforce them too tightly, that some flow of non-legal Immigrants is good for your economy and it's a source of cheap labor. And don't force anyone to stay, but if kept within reason and distributed in the country in the right way, it's a big plus.

So do you think it's, as an issue, it's overrated at the current moment?

Well, by Republicans it's way overrated. You know, build the wall. But the Democrats to me are insane. Like, let anyone in, never send anyone back, have no standard. De facto open borders. If they really meant it, I mean, it would literally destroy the country. I think you could boost immigration by a factor of 2 or 3 and still have some people who can't get in illegally cross the border and tolerate that within reason, and things would be fine.

Religion's effects on human flourishing.

It's one of these— people who are religious, uh, think it will be wonderful for you, and it won't. But people who are hostile to religion just don't want to talk about it, like Democrats now just don't want to talk about religion, often white Democrats. The evidence seems pretty clear that there's even a modest causal effect religion is good for you. Not overwhelming, but it's a positive. And everyone either over- or underrates that. No one really gets it right.

Uh, China's economic prospects going forward.

I think they will slow down to 2 to 4% growth. I'm not sure what the rest of the world expects from them. So I'm not sure how they're rated. People will invoke either a very weak China or very strong China for their own partisan political reasons. They're really good at finding talent, to get back to the topic of my next book. They're really bad at politics and transparency. And often the best thing you can say about China is China will always surprise us. The country numerous times, whether it's, you know, Taiping Rebellion, Communist Revolution, the Great Famine, it's done these weird about-faces, the Deng's reforms, and hardly anyone predicted them. So China will always surprise us is the best answer to most questions about China.

How about India?

I would say India hardly ever surprises us. So you look at Indian history for centuries, it's fairly linear, right? Obviously it's colonialized and then becomes independent, but all the other colonies became independent at sort of that same time. It grows, but not at a very high rate. It's full of religions, cultures, languages. It's not very well governed. It's super diverse. India never surprises you. In a way, that's the surprise.

Is it? Is, uh, um, Let's talk about democratization then. Chinese democratization versus say India under Modi.

I don't see any reason to think China will democratize. They never have. The elite there don't want it. The people with money don't trust their own median voter. Standards of living are still going up. It's a Western conceit to think democracy is inevitable. Maybe someday, yes, China will always surprise us, but this one, I just don't see it coming. And Indian democracy, you know, for a long time it's been democracy without accountability because so many people vote on the basis of party, ethnicity, caste, something quite particularistic. So if you don't judge governments on the basis of delivering the goods, you get highly uneven results. So that now the Modi government does bad things, everyone's like all aflutter, but I'm not surprised at all. I don't really think it's anything new. And I think people are misreading the situation. They're correct to criticize it, but they're kind of falsely idealizing some India of the past, like maybe even just 5 years ago, that never existed. It was only— to the extent it was free and pluralist, it was through state incapacity. And that's not that good a thing.

You recently wrote a review of Charles Murray's forthcoming book on the biology of race, class, and gender.

Yes.

Underrated or overrated, the evidence that genetics plays a non-trivial role in economic inequality between groups as well as between individuals?

Well, groups is a very tricky concept. So we know within families there's a lot of heritability of different skills, including IQ. So if identical twins are a group, and they are, uh, yes. If you are asking me, do I think like heritability of IQ is a major factor explaining differential levels of development around the world, I don't think it is. You look at a place like Ireland in the 1970s, it was very poor. It had much lower measured IQ than did England. It was called like a backward country. It was viewed as full of problem people. Now IQs in Ireland are higher than in the UK, and somehow that happened magically. Presumably it's environment and different incentives, and I suspect that's true for most or all countries.

Overrated or underrated, the probability of nuclear catastrophe?

Way underrated by almost everyone. I'm not sure it's underrated by the North Koreans, but because it hasn't happened in so long, people have forgotten it. But it's the world's number one problem. It's the one thing that could really end civilization. Accidents, as you know, have come very close to happening in the past. So if you let the clock tick for long enough, you're gonna have some kind of accidental exchange. That to me is the most terrifying prospect before us, much more than climate change.

Any thoughts about, given the international system and the difficulty of tackling these, any sort of insights or thoughts that you've had about how best we should even think about tackling it?

Well, it's hard to get information on what we're even already doing, but the general notion that we should work with countries, including enemy countries, to improve their surveillance, or with allied countries such as Israel to improve their second-strike capability. Uh, we should do that. We can do it. It's not that hard. Uh, we may be doing it already in ways that are not very openly discussed, but I think there's a lot in principle we can do.

Okay, do you want to do the top 5 issues?

Um, yeah, sure.

Yeah, just so you listed, uh, it's a nuclear Nuclear number one. Number one.

Possibly bioweapons as a number two. I don't know if climate change is third, but it's in the top five. Demographics are in the top five. More people is a good thing. And just our own general stupidity. Those are my five.

On the demographics real quick before I get to the last section. What do you make of all the attempts to boost fertility in, say, like Hungary, right? Do you think there's any way to do this with government policy or?

Well, I favor them when they work. So Singapore, it doesn't seem it's worked. France, it seems it's somewhat worked. I can't speak to Hungary's. In principle, I'm all for it, but I recognize it seems it fails more often than it works. So I don't want to advocate policies that will fail, but I'd love to see us find a way to make it work.

Okay, last section is underrated or overrated for particular people. So first name, Friedrich Hayek.

Well, he's overrated by his partisans, but grossly underrated by almost everyone else.

Okay.

But the Austrians, you know, the people who support it, they're like these deities where you sort of study their minor works for these little glints of genius. And I don't know, I don't think that's a good way to go about learning economics. Like, it's one thing you can do, but overrated by their supporters.

Uh, John Rawls.

Uh, very much overrated. He didn't understand economic growth. He wrote far too many pages. The Basic Instruction doesn't make sense. Uh, it's a super deep and rich book. I get that. But ultimately it's right place in the right time, and people wanted a justification of a certain kind of social democracy and liberalism. But in terms of the framework, there's very little in there that's influenced me or that I think is correct.

How about Rawls's foremost critic on the right, Robert Nozick?

Still underrated. I knew Nozick and he was just brilliant. His early articles are some of the best philosophy ever done. Anarchy, State, and Utopia, the first section on the state is phenomenal. The famous parts of the book are less interesting. I don't think philosophical explanations or the examined life or important books, but he was phenomenal. One of the smartest people I've met.

John Maynard Keynes.

I suppose underrated. He was a polymath. Polymaths tend to be underrated. A phenomenal writer. I'm not a Keynesian in macroeconomics, but you read him, it's so fresh and startling and just fantastic. So I'd say underrated.

Okay, uh, Barack Obama.

Barack Obama, again, it's one of these by whom. He's either overrated or underrated. I don't think he'll go down as a consequential president. He was too weak on China and Russia. Uh, he was entirely sane and non-corrupt. Uh, wonderful that America, you know, had a Black president. Probably a very admirable person, but I'm not sure he gave our country at the moment what it needed.

Mm-hmm. Uh, probably gonna be the same kind of answer, but Donald Trump.

Again, people are just crazy when you bring up the name of Trump. Uh, if you live on the coasts, he's underrated, but you know, by his supporters, he's overrated. He is, uh, not what I look for in a president, morally or prudentially. And to me it's scary to think he might get another term. But there is such a thing as Trump Derangement Syndrome. And most of the criticisms of Trump are totally unreliable. And you like go to the New York Times op-ed page and there's like 7 op-eds up about how Trump just did the most terrible thing killing this fellow in Iran. Probably one should be agnostic. You know, Obama assassinated dozens of people by drone in multiple countries for many years. And that was like, ho-hum. And now Trump kills someone who's clearly probably more evil than any of them. And I don't know how it will shake out, but I don't just think this is Trump, this must be terrible. And the reaction in the media to me is just quite dishonest and self-serving. And in that sense, Trump is underrated.

Last two. Slavo Žižek.

Way underrated. So I had breakfast with Žižek before my dialogue with him. And he's one of the 10 people I've met who knows the most and can command it. Now that said, he speaks in code and he's kind of quote unquote crazy and his style irritates many people and he never answers any question directly. You get his Hegelian whatever. He has his partisans who are awful, but ordinary intellectuals don't notice him and he's pretty phenomenal actually. So I'd say very underrated.

Last one, Tyler Cowen.

Well, by whom? I mean, I guess he's overrated by me, right?

Highly rated by us in any case.

Okay, thank you very much.

Thank you very much. This was really a treat and a pleasure. Thanks for joining us.

My pleasure.

Excellent.

That was Tyler Cowen talking to Damir Marusic and Aram Sibarjian, and you can find a transcript of that fascinating conversation on theamericaninterest.com. That's it from us this week. The show is produced by Demian Marusic with Shaun Keenly. Do join us again next time. But for now, this is me, Richard Aldous, saying thanks for listening.