Tyler Cowen on Inequality, AI, and America’s Future

The elites have screwed up. The Iraq War, the great financial crisis, the COVID response. I'm not a Trump supporter, but it's fair to say.

Tyler Cowen, legendary economist, and is now a contributor at the Free Press. America's hottest economist. Did you know that, Tyler?

They need to run that poll again.

You said that the books that you're writing, mostly written for artificial intelligence. Is that a gag?

I'm one of the most intellectually immortal people in the entire world right now.

What have you made of the taboos around talking about wokeness?

Well, in a funny way, it's become underrated. Like, most of the world should be more woke. It costs a lot to live in New York City because New York City is great. You don't want to change that, right? So maybe arson would get down the rents.

This is Uncomfortable Conversations. We're on a Zep's Live World Tour.

Have I made anyone uncomfortable yet? Should I try harder?

The main thing that people talk about when they ask me about economists who I speak to is inequality at the moment. We've just seen the New York mayoral race focus a lot on inequality. What causes inequality? Is it a policy problem? Is it a technological one, a cultural one?

It depends what causes the inequality. So some inequalities are caused by what I would call rent-seeking. People go to the government and they get special privileges and other people can't compete with them. But most inequality is just caused by naturally different outcomes. Some people have more talent, some people have more luck, Typically it's a combination of the two. So in any process where there are, it's a decentralized generation of who ends up doing what, you're gonna have a fair amount of inequality. So I don't think inequality per se is a problem. I do think in New York City, the cost of living is a problem. And I think people voted for Omdany more because of the cost of living than because of inequality.

Right.

They're more upset at the rent and the price of food than they are mad at Michael Bloomberg.

Yes. Isn't there a sense that if there were a more equitable distribution of wealth, then they would be able to afford things better?

You could tax the rich all you want, but even in the medium term, it doesn't make up for the differences. So New York City, for instance, spends, I think, 3x per student on its public schools than a place like Florida. So New York City spends an enormous amount on its public schools, on its other public services. Mostly they're still not good. So it's not a question of resources. It's badly managed. And I don't think trying to take more from Michael Bloomberg is the answer.

What is?

Better governance.

How do we get that?

Voters should elect different people.

Not like Mayor de la Salle?

I don't know what he said about the school systems. So that to me is a very important issue. I'd like to look at that. I'm highly skeptical of him in general. But if you had someone come in and really be determined to set the school system straight, once those children would grow up, you'd have much higher living standards in New York City.

Right.

And fixing the infrastructure. Infrastructure. So building a subway line like on the East Side, that line, they started planning it in the 1970s and it opened not that long ago. You can't run a major city that way.

Okay. So the answer for people who focus on inequality a lot like Mandani is hold rents in place, community grocery stores or whatever this is. Do we want to just go through and just explain to us why those are misguided?

We've tried rent control in many American cities, including New York City in the past. You end up with a shortage of apartments, quality deteriorates. Landlords might hold properties off the market or they try to drive out tenants knowing if a new tenant comes in, they can raise the rent. Economists, whether they're Republicans, Democrats, progressives, libertarian, whatever, just do not support rent control. It's a bad idea. There's plenty of evidence to that effect. Now government-run grocery stores, we actually have a few of them in the military. They cost a lot of money. They lose money. They're for American service people, typically abroad. Government has no advantage at running them. What you need is competition to get down the price of groceries. It's a problem in New York City that the rents for just about everything are way too high. So that's one reason why food is so expensive there. That can be alleviated somewhat in the longer term. I don't think it will ever really be fixed. It costs a lot to live in New York City because New York City is great. You don't want to change that, right? So maybe arson would get down the rents. But it's an eternal fact of life. You live in Sydney. I believe the rents and home prices are pretty high there. And it's— Some of it It is legal restrictions, those we should ease, but just living in Sydney is great and there's only so much of it.

Yeah. Well, in a city like Sydney where there is no dearth of land, I think there, you can blame planners a lot more.

More.

There really is. Yes.

Manhattan is truly crowded.

That is a self-imposed problem.

Right.

There's no reason why we shouldn't have much, much higher density populations in Sydney than we do. And there's a lot of restrictions and zoning and height restrictions and all that, which presumably can't be said of New York. I mean, Manhattan is a fixed amount of size. You can't add an extra suburb to Manhattan.

But if you look at Seoul, South Korea, where there are There had been a lot of land around it. They built, they built, they kept on building. It's still expensive there.

Yeah, right.

It's cheaper having built a lot than not. But I don't think major cities are ever going to be that cheap. Paris, London, there's plenty of examples.

But doesn't that sort of undercut the point that you were making earlier, which is that inequality is not what people are really responding to, it's the price of things? If the price of things is always expensive in a place like New York.

You could make the price of things in New York cheaper by making it a place where wealthy people didn't want to live, didn't want to go see the opera, where young people didn't want to meet up to do whatever young people do when they meet up. All those things, but you're basically just making the city bad. So any urban area that generates a lot of good outcomes will A, have a lot of inequality and B, have pretty high rents. We can do some things to get those rents down, like build more.

Yeah, right. I mean, I think there's been a change of opinion and I don't know if it's a change of fact or just a change of perception, which is that when I first went to New York in my teens, it landed for me as a place that was inspiringly vibrant and full of creative people. And this might just be because I was a teenager, And that the prosperity there was a result of innovative people doing innovative things. And now when I go to New York, I have a narrative running in the back of my head, which sees the penthouse apartments and thinks Russian oligarchs, Arab oil shakes, trust fund babies, people who are probably seeking rents in some way and probably didn't deserve what they've got. Has New York changed or have I changed?

That sounds more like London than New York, but definitely New York has changed. So I started going there in the 1970s. I lived right nearby as a teenager. And even chess players could afford to live in Manhattan, some of them, which is incredible, unthinkable today. But you would walk into Times Square and there would be junkies shooting up and there would be prostitutes and it would be dangerous. Even on the Upper East Side, you were not totally safe. The city was a mess. It went in and out of bankruptcy. Crime, I think the murder rate was at its peak, 6 times higher than it is today. So again, when you make the city better, It's not better for the chess players who wanted to live there, but it's far preferable overall. It supports more economic activity, more good things. But of course there is some cost. Writers, painters, chess players, whatever, often have moved elsewhere because it's cheaper. But for America as a whole, I think that's fine. I actually think it was quite unhealthy, say in the '70s, to have so much talent concentrated in New York City, though wonderful of course if you live there.

And there's no alternative in between the two such that you have, you're able to live and work in New York City if you're working class and it's also not a dump.

There's a bunch of things we could do to make it much better. Another thing that would be a partial solution is to have more ways of getting from New Jersey into Manhattan. You could do that with more ferries, another tunnel, another bridge. You can debate what is best, but more people would live, say, near Hoboken and Jersey City and they would commute in. It's really a very quick commute when done properly. And I'm not saying that will make the city cheap, but there are dozens of things we could do, improving the subways, congestion pricing on different ways in and out of the city that would make it much better, much easier for people to live somewhat outside and still work there and have an acceptable commute. We're mostly not doing those things. We did a somewhat misguided version of congestion pricing for one area. But there's a sense of complacency because New York is still New York and it can get away with making a lot of bad decisions.

Tyler Cowen is with us, legendary economist, professor of economics at George Mason University. America's hottest economist by Bloomberg Businessweek. Did you know that, Tyler?

That was, I think, 2013. This is 2025.

That's all right.

They need to run that poll again.

Foreign Policy magazine called you one of the top 100 global thinkers. Marginal Revolution, your blog, was named the best economics blog by the Wall Street Journal. He's written for the New York Times and the Wall Street Journal, the Washington Post, and everywhere else, and is now a contributor at the Free Press. And thanks to the Free Press for collaborating on this episode of Uncomfortable Conversations. We're traveling around America, Europe, the world, and pretty much every day we're talking to some other fascinating person. Like Tyler, next week we'll be in LA talking to Sam Harris and a bunch of other people. So subscribe to Uncomfortable Conversations to get notified whenever we have these chats and subscribe to The Free Press, which I hope you already do, which Tyler is a contributor to. On the point, on this sense that I have though, Tyler, of there being a sort of injustice in the people who own the prosperity in a place like New York, and we're not talking just about New York, we're talking about a sense of populism that exists all over the United States and is resurgent around the world. Is there any validity to my intuition that there is less, that more of the wealth is earned in essentially arbitrary money fudging commoditized ways than it was 20 years ago?

Income inequality has been falling in recent times, not rising. That's not very well known. If you go around America, I was just in Grand Rapids, Michigan, which you might think is this decaying Rust Belt city. It's beautiful again. It has a resurgence. If you go to Nashville, that's booming. There are just so many second, third-tier places in America that are doing much better than before, giving people middle-class or upper-middle-class lifestyles. So to think the whole system is broke— I think New York City has been badly governed for my entire life. You can't look at New York City and infer very much about the problems of the United States. One great thing about this country is you don't have to live in New York City. And indeed I don't live there. I live in Northern Virginia. There's so much choice as to where you can live and still have access to many things, including the city itself. So there is competition across different jurisdictions. New York City is an option that some, to me, slightly insane people decide to choose, and it's there for them. That's great.

Do you agree though that there's a rise in the perception in middle America that wealth is unjustified, inherited, not, you know, not earned fairly?

I'm not sure what the perception is, but so many of the very wealthiest people today produce their wealth. The tech wealth is all produced. Earned or, you know, sought, unearned or inherited.

Yeah.

Wealth from NVIDIA is new wealth. So there's some exceptions you could say, well, the Walton heirs, that's, but that's quite recent in fact. So more wealth is being generated now than ever before. It's not mostly a story of inherited wealth. Now, if you polled people, I'm not sure what they would say, but I can tell you what the reality is.

To what do you attribute the anti-elitist backlash?

The elites have screwed up a number of things. So you could say the Iraq War, you could say 9/11, you could say the COVID response, you could say the great financial crisis. People disagree maybe what exactly the screw-up was, but hardly anyone is completely happy with how those things went. And I think that's most of it. Like reality matters.

And this is part of the problem is that everyone has different things that they hate about the elites, right? I mean, there's no consensus about exactly what we got wrong in any of those circumstances that you just cited. So there's no obvious solution for everybody to cohere around.

But when very big things go wrong, sentiment becomes more negative and the elites bear the brunt of that, I think is the simplest and most correct explanation.

But what about technology, social media, algorithms?

I think social media contributes to the depression of, say, like 12 to 16-year-old girls, which is a bad thing. But for the most part, it is amplifying social trends we already have. So for me, it is not a primary explanation of why people upset.

And the fragmentation of the media and the fact that we all get our news from tailor-made sources rather than listening to Walter Cronkite.

We are the fragmentation of the media right here in my backyard. I love it.

I'm not suggesting that. This is my gig.

And you used to be in mainstream media, right? As was Barry. And for the better, the two of you left. And I used to write for New York Times and now I'm with Free Press. Yeah, why not?

Absolutely. I mean, this comes back to your point that the elites have made some blunders and clearly institutions like big media organizations created climates in which people like Barry Weiss and I felt unwelcome. And whether it's universities or media organizations, I think there's a reckoning at the moment in which they're thinking, well, maybe we do need a greater diversity of opinion.

And even apart from mistakes. So if I want to watch online chess, even cable TV is not going to make me happy, but YouTube definitely will.

Right.

So there's just a High demand for diversity and things like YouTube keep on growing, podcasts, your venture.

But is the cost of the diversity that people are less exposed to points of view that they would otherwise have heard?

I don't know. I think people online sample a lot of different opinions is my sense. I think some people are driven crazy by what they sample.

Why do you think that's true? Just because you do?

No, there's data. There's a number of research papers that show people's online political consumption is actually more diverse than their selection of face-to-face friends. Or what you would get from earlier network TV, which was mostly one very bland centrist point of view. I sometimes like to say the Vietnam War would not have lasted 2 weeks on Twitter. And maybe it wouldn't have. So there's definitely minuses, but there's a lot of pluses. I think we need still a lot more adjustment to learn how to live in this new world. Like when the printing press first came, it disoriented a lot of people, I believe, and all kinds of new tales of conspiracies and rumors and who's actually the Antichrist that spread. Over time we learned how to deal with it, never completely. And there's now a new wave of media that we have to learn how to deal with. So it's not a seamless process, but medium term it's definitely a good thing. Short term, I think it's mostly a good thing and we're dealing with it.

One of the things that you are important to emphasize that we need to bequeath to future generations is institutions, good institutions.

That's right.

The threat of this sort of fragmented ecosystem is that we undermine our institutions through Doge or Trump or the far right in Europe or whatever it might be that we clutch at as solutions to what we fear. Do you worry about that?

There's a lot packed into what you said. I'm not a Trump supporter. I'm not rooting for the populist right in Europe, but they would very much insist on telling you they're the ones defending our institutions. They think very high levels of immigration are undermining them. One can debate that. I'm much more pro-immigration than they are, but from their point of view, they're playing defense and we slug out that debate on social media.

I'm not sure that's true that they think that they're defending institutions. I think they're def— they think they're defending good principles, but I would think that they would argue that some of the institutions were captured by, uh, an ideology that was betraying America.

Of course. And they're defending the institutions by pushing out that other ideology.

Yeah, or maybe not even defending institutions. I mean, does JD Vance think he's defending institutions, or does he think that he's defending principles and communities against institutions? Both.

Yeah. Again, I think the influence of immigrants in this country is far more positive. But if you're in say the Netherlands or Frankfurt, Germany, and you observe the changes in your country, it's quite understandable to me why those people would support the populist, right?

Yeah, definitely. But that's because of a failure of institutions, right?

Well, the labor markets are not free enough, and I think they're taking in a critical mass of people who are Muslim rather than say Latinos who tend to be Catholic or Christian. And that's much harder to digest. And I, over the last 20 years, I think it's over 60 million immigrants the European Union has absorbed. And many want to go to the same places as the other ones. And it's just a lot to ask of relatively static economies that maybe only grow 1% a year.

Certainly. But I mean, from the perspective of someone who comes from an island nation that is extremely aggressive about policing its oceans and ruthless in the Faustian pact that Australia has made, where it has said for decades now that if anyone comes on a boat, they're going to get shipped off to a concentration camp on a desert island and will never set foot Australia, it looks like America's problems, just to keep the conversation localized to the United States, is a failure of the institutions to secure the southern border, to require employment verification, which is another thing that other countries like Australia have where it's incumbent on the employer to make sure that their employee is a legal citizen. So there's a network of law enforcement and immigration agencies that should be functioning, which for decades in this country have not been functioning effectively such that we now find ourselves in a situation where there's a backlash.

I don't think— It's very hard to get those functioning well. I think immigration in the US, even at its recent relatively high levels, has in fact gone fine. We need more people. Our own birth rate is declining. There's a lot of evidence for Latino assimilation. Mexicans and Chinese are the two most numerous groups that come over. I think both of those have been success stories. Median household income for a family from India is $150,000. Family from Pakistan, which of course is gonna be Muslim, that's over $100,000. So Pakistani Americans who are almost entirely recent arrivals would be one of the richest countries in the world. So I'm all for it. Again, I disagree with the Trump people.

Yeah, but sorry, let me just split apart. You're talking about legal immigration. When I was talking about the dysfunction of immigration as an institution in the United States, I was talking about illegal immigration, which I think is what's giving rise to the antipathy because Australia has very high rates of legal immigration, one of the highest rates of refugees refugee resettlement in the world. And the pact that Australian governments have successively made is to say people will tolerate very, very high rates of demographic change and immigration as long as they feel like they're in control of who's coming into the country. And that's— so yeah, I'm a big booster of high immigration. I was a migrant to this country. I lived in New York City. I think I much prefer living in places with lots of migrants. But isn't it the case that in the United States, the framework in which sustainable high rates of legal migration can take place has been undermined by the institutional failure towards to deal with illegal immigration?

I think a lot of voters, they just see many more foreigners. There's disagreements. What are the numbers on illegal migrants? One estimate I saw was 10 to 12 million. I'm not sure that's correct, but if you take that as an estimate for a country verging on 350 million people, I think it's more than manageable. It's low-wage labor. Many of them become legal over time. A lot of it's from Central America. There is a problem that you're sometimes getting Central Americans who have not yet assimilated into their own countries and then they arrive here. But I don't think it's a major problem facing America right now. It is in particular border towns. But we need more people. We need cheap labor. We have a large border. It's unrealistic to expect that we can get that number down so much, much more. I know Trump, you know, the immediate flow is much lower, but I predict that will resume at some point. There's just a lot of intertemporal substitution going on. Well, we're going to wait to go and it gets a bit easier. Periodically it gets a bit easier. It's hard to staff the whole border. For legal reasons, it's not possible to build a wall. I think America will get through this just fine.

When you say that it's not a problem, it may not be a problem.

It's not a major problem. There are plenty of particular problems.

No, I understand, but it could be a problem if it gives rise to self-inflicted harms because people feel like the situation is out of control in the same way that you may not have gotten Brexit had it not been for huge billboards that showed Syrian refugees pouring across a border and scared the pants off everybody.

Sure. But I think a lot of the public sentiment is just seeing a lot of foreigners, most of whom are quite legal, and feeling something about America is different. I would say most of those differences are good, not all of them. And simply choking off the illegals is a kind of easy target, but I don't think it's getting at the real phenomenon, which is America truly has been changing, like Australia, all the more so.

My suspicion is that you need both, that there's probably a core of the population who are unreconstructed racists who just don't like the demographic change at all, but that then there's a winnable portion of the population who are frustrated with seeming incompetence and out-of-controlness and don't understand why this problem can be so hard to fix. Like, if you want low-paid, low-skilled, low-paid wages, then create a visa class for that and you can bring in people who've been properly vetted from wherever you want to in the world and you can bring in a lot of Bangladeshis. Why does it have to be that people just wander, anyone who gets to, who can wander across the border is the person who gets the job as a fruit picker or a nanny? Like, don't you think that there's a sense of anxiety about the uncertainty of that that gets capitalized on black folks.

There's a sense of anxiety. It's very strong in border towns, which I do understand. But keep in mind, we're in a world where you can walk across Europe or the Americas using a Facebook account and GPS. And the wage difference between say the US and Central America is quite significant. And any legalized worker program is going to ration how many people it takes in. There's always a large number of people who are not being taken in. And then you look at our immigration authorities, they're underpaid, understaffed. A significant A significant percentage of them do not work. What they're able to do at the border is extremely feeble. And then you have environmental groups, you have tribal groups. They won't let Trump build his wall. There's lawsuits that would take forever if it were possible at all. So I think we need to learn how to live with the problem. I don't think there's really a way to choke it off that Americans would be comfortable with. Right. Other than literal mass violence against people who would come.

Right. You could build a giant wall. Wall?

Well, the law won't allow us.

What red tape law?

What law? Tribal groups bring lawsuits. They say it splits up the tribal property. Those lawsuits freeze the wall. The wall needs so many layers of environmental review. That alone would take decades. You need the money for the wall. Sounds like a libertarian economist like you would say, "The hell with all of this red tape." I would gladly get rid of the red tape, but the red tape is there and I don't think we will get rid of it. And we need to deal with it. So I don't think going on the warpath against illegal immigrants is going to yield a very high return. We want to make it work better, have more positive selection by tightening, say, welfare payments to illegals, healthcare benefits to illegals. Then you get the more responsible people coming. You don't get people just rushing across the border to run into a hospital. But that all said, I think we're lucky to have the neighbors we have.

Yeah, you could do a lot worse.

We could do a lot worse. Yeah.

And the fact—

New Zealanders, they're far from you. A lot of them go to you also.

That's true, we have a lot of New Zealanders in Australia. Uh, this is Uncomfortable Conversations. We're on a ZEP's live world tour, uh, stopping in at least a half dozen different cities in a dozen days, uh, in 24 different time zones all over the world. Subscribe to Uncomfortable Conversations to get notified whenever we sit down with fascinating people and have a conversation about things that would make people slightly uncomfortable if someone were to express a strident opinion about them at a cocktail party. Tyler Cowen is with us, contributor to the Free Press, and thanks to the Free Press for making this conversation possible. The big, beautiful bill. Does America need a balanced budget?

We don't need a balanced budget, but we need to be closer to balance than what we have now. So right now, if you imagine the budget deficit at about what, 7% of GDP and rising, and we're an aging society, We don't know how sustainable that is. It may depend on how high interest rates go up. If interest rates were to fall, it might be okay. But even then you're running a risk.

What's the risk exactly?

That so much of the government budget is eaten up by interest payments that you can't spend more on defense when you need to. And you have to increase taxes to fund people's retirement, Social Security, Medicare, also Medicaid. At the higher level of taxes, you become like a European economy. Growth slows down rather than growing at 2 to 2.5%. All of a sudden you're growing at 1.5%. That makes your budget problems worse yet over the longer haul, and you just get into a negative spiral. It doesn't mean your country blows up or goes bankrupt, but maybe you never get out of it, and that's a much worse world.

Is there a risk that bond markets no longer trust that America is going to repay its debt, or is that a long way off?

There's always a risk, and I don't think we know how large the risk is. An advantage America has is there's nowhere else really good to your money. So if you look at other government bond markets, well, the Japanese bond market is large, relatively speaking. They're in much worse economic shape than we are. They grow at lower rates, have an older population, have a significantly lower birth rate. They're not obviously better governed, I would say. So there's the Italian market, which is not really, it's not even that large for one thing.

You're not gonna have more faith in the Italian political system than the American political system. Exactly.

That's right. But again, the United States is in this weird, unique position, which we abuse, to be clear, but it also means we've been getting away with it. And it could be we just can keep on getting away with that more or less forever. But I don't like taking that chance. It's like we're playing economic Russian roulette.

It reminds me a little bit of what's the magical monetary policy theory that people were coming out with a few years ago, which basically said that you can just spend money on everything and you just make up the money and then—

Just print it.

Just print it and no one will ever care. Catch you.

That's what we'll probably do. But it's of course quite bad. So you print money, there's inflation, like right after COVID we had 9% inflation. So real wages go down, people are worse off, people hate it. They also vote for the wrong candidates. I think on average they go for extremes on each side. And we had one year of that. Imagine having 5 to 10 years of it. But that's possibly what we're in for.

Now?

Not 2025, but over the next 15 to 20 years, possibly.

As a result of the budget?

That we could print money to finance the deficits and retire some of the debt and have much higher inflation. And we're not going to solve the entire problem that way, but we could get rid of a lot of the debt at the cost of high inflation. And it would be very bad, but our hand might be forced. So say you go to the American people implicitly and say, "Well, we can put on a heavy VAT and all your money will be worth less." It's a sales tax on national spending. Right, a sales tax. Or we can inflate and all your money will be worth a lot less.

Mm-hmm.

I'm not sure which people would prefer, but in both cases, what you've got is worth a lot less and people hate it.

Should America have a value-added tax?

No, I'm against it. I'm not sure if I prefer that or the inflation. What I do prefer is a greater degree of budgetary balance, and I am hoping that technological improvements raise our growth rate a bit and give us some kind of smooth glide. I, again, I don't wanna bet on that. We need more fiscal restraint. But there's a chance if we're innovative enough, again, we'll get away with it.

If you need to raise revenue from somewhere, even if you don't like taxes and your options are taxing income or taxing employment in a payroll tax or whatever else it might be, what's wrong with having a value-added tax as part of the mix?

Once you get it, it's permanent. It's highly invisible. People get used to it. They blame the high prices on the merchants and you just end up with a much larger government and a lower growth rate. So I absolutely don't want it. It's the last thing I want.

Isn't it?

The nice thing about inflation, nice thing is a funny way to put it, but the nice thing about it is that people hate it. People see it, they get pissed off every day. And historically, higher rates of American inflation, we do in fact get rid of them. So Volcker did it, you know, Jay Powell did it after the pandemic. So maybe part of me actually thinks the inflation would be better than the VAT.

Right. What if you were a betting man? How does America end up getting rid of its deficit if you're adding 3 to 4.5 trillion or whatever it is to the deficit in this bill. How do you think that ends up getting wiped out, if at all?

Well, again, I don't think we need to get rid of it since we're the global reserve currency, a very powerful nation, quite wealthy. We just have to lower the trajectory a bit. So we can do it by a mix of changing the trajectories of Social Security, Medicare, Medicaid, which we should do. And we can do it by some degree of inflation and tax hikes, which we're going to do whether one likes it or not. And I hope most of it we do by productivity improvements, but that's highly speculative.

There's a lot of talk about the abundance agenda on the left at the moment.

Ezra Klein, I'm all for it.

Yeah, YIMBYism and so on.

Ezra's great.

Why is this hard to scale politically, or is it?

We've seen YIMBY-related reforms, I think, in about 20 American states and cities. So it's not obviously hard to scale. It's hard to do as much of it as you should. So for instance, I think they should take Oakland next to San Francisco and just open it up fair game. Like anyone can do whatever, build whatever they want in Oakland, no restriction. I don't think we should do that with central San Francisco, which has some kind of delicate balance, historic homes, it ought to look a certain way. But Oakland, it doesn't attract any tourists. So Oakland should look like Dubai.

They're flying into Oakland Airport because it's cheaper than SFO.

But they're not gonna stay in Oakland to see Oakland. You're not ruining anything. So Oakland should look like Dubai. That's a core view I hold. We're not doing it. We've done some very good yimby in California. We'll We do more, but we need to make Oakland look like Dubai. And that in turn will help a lot with the budget 'cause it's a higher rate of growth. So that's something I wanna do. I've been amazed and pleased how much progress we've made already.

The example of something like high-speed rail, for example, in California is often cited by Americans and baffled non-Americans about the inability of the political system to get any big projects done here. DOJ was presumably an attempt to address or redress that phenomenon. Was it a good idea at the time?

Well, high-speed rail for California is a bad idea. So one reason we never got it done, first, there is too much bureaucracy, but also the demand for it is just not high enough for politicians to get their act together. You can fly, you can drive. Driving will soon be greener. Flying at some point may be greener. The only part of the—

Isn't it annoying though, between Los Angeles and San Francisco? Isn't that exactly the kind of city pair that if you were in Europe, Europe, you would like to just hop on a train for 90 minutes and knock out.

When you think about where you would put the terminal in LA or San Francisco and how long it would take to drive there, what you would do with parking, and you add up all the costs, I don't think you really gain anything. The actual costs are internal to each city for the most part, not getting from one to the other. So you're hardly making people better off. There were already a bunch of airports, say, in the LA area. So you don't just have the option of going to LAX. But it's spending a lot of money for no real gain. You can argue DC to Boston should have high-speed rail. Probably I would agree. But there's too many laws in the way. I don't think we'll ever do it. But that would make some sense. You know, there's people all along the corridor. Whereas between LA and San Francisco, there's Santa Barbara. No, like, just fly.

That's very tempting.

Or there's some planned route for somewhere in Florida. It's like, was it from Tampa to, no one even cares. Who cares? It makes no sense. No one wants to go from one place to the other. But first you said high-speed rail and then you mentioned something else.

Oh yeah, that's right. I was just saying whether or not Doge was a good idea.

We don't know yet. Doge made some big mistakes, did a bunch of good things. There's more Doge to come. So there was an article in today's Washington Post claiming, I'm not sure this is true, but claiming Doge will use AI to get rid of half of the government's regulations. Regulations, claiming they're literally not needed by law. Again, I'm not sure that's true, but DOJ has the potential to do some deregulation. And just the notion that the Department of Agriculture does not actually need 100,000 employees, or the Department of Education could be half its earlier size with no loss in value— no American student will end up less well-educated by cutting the Department of Education personnel in half— those are parts of DOJ I totally I was against getting rid of PEPFAR, though fortunately that's coming back. There's a bunch of other things they cut. Staffing at the FDA, that was probably a mistake. Staff at the IRS, probably a mistake. But in a lot of cases, you need in government a culture where people treat their jobs as something other than a matter of entitlement. And by firing some people, even if sometimes they're the wrong people, it's a cultural wake-up call. And it's not crazy to think that's what our government needs. Needs.

Is it the cultural wake-up call that the government needs, or is it the halving of employees when there are twice as many employees as you need? In other words, do you need both?

And the more employees you have, the more layers everything acquires, the more it becomes a kludocracy, the more levels of review you get. So you very often get better decisions with smaller numbers of decision makers. If you look at, say, National Endowment for the Arts, started in 1964, '55. In its early days, there were just these very small groups of people that made decisions and handed out money, and it was based on their taste, and it actually went pretty well. The bureaucracy gets bigger and bigger. Everything's a staff decision. There are now these large committees that make committee-like decisions. Least common denominator wins out. You need consensus candidates to get the money. Congress is involved. 40% of it is sent to the states. Staffing costs grow. And it was better in the 1960s. Than today. Even with less money, it was better.

You could imagine though, Paul Ryan and Mitt Romney and George H.W. Bush creating a plan that would be signed onto by Ezra Klein and Barack Obama and Gavin Newsom to degrow certain departments by—

That's my hope.

30% or 40% or 50% without doing the sudden damage that a lot of people regard as being reckless that Doge did, right? Wouldn't you be better off if you had the institutional capacity to say, all right, these departments are too big. We've got a 10-year plan in which we're going to scale them down. People who are ready for retirement age are not going to be replaced. People who want to apply for furlough can do so. This is how we're going to reduce it, but we're not just going to haphazardly bull in a china shop, smash things up, and then have to rebuild them potentially.

You might be, but those people you mentioned, Romney, Bush, Obama, Ezra, I mean, they're not president. President is you know who, who has a short attention span. And Doge was sort of run by Elon, and a lot of people wisely figured Elon will be in Trump's good graces for not very long. So everything is in a true hurry because it was felt you didn't have that long. Now it's fine to say that's suboptimal. I agree. But if it's either that or do nothing, I don't know, maybe it's better to get the thing underway and there'll be some broken china, but ex post pick up the pieces. We'll see how it goes. I would just stress it's not over. Doge has a very bad reputation. There are some big serious mistakes, but a lot of it absolutely is in right spirit.

Are people too averse to change and risk?

Of course they are. I've lived in this house for 22 years, I might add, but it's a very nice home.

It's a great home. It's a beautiful environment. Why would you move?

The dog is new.

The dog's great too. The dog is what breed?

An Australian Miniature Shepherd. Comes from our daughter.

I'm gratified.

When she had her two kids, she's like, will you take the dog? The dog is here.

So I know that you say that people are averse to risk, but it strikes me that when actually go to the ballot box, we lately have been electing people who are not averse to risk.

I mean, it's not clear people want real change from them. So let's assume Mamdani wins, which seems likely at this point. I don't think voters are actually longing for the government-run grocery store. They're just upset. They want to send a message. They're screaming ouch. They want something. They may even know they don't know what they want. And then Trump, when he's tried to change things, whether you agree or not, it has not always been easy. So people want change and they don't want change at the same time. They want to scream out, I think, more than they want real change.

Right. That's interesting because sometimes they scream out and make real changes like Brexit, for example, which has lasting consequences that are not the kind of change that they thought they were voting for when they yelled.

That's right. And what Trump has done, I'm not sure how much of it, if any, will be lasting. So if you take cutting the corporate tax rate and changing the trajectory of Medicaid expenditures, I could easily imagine each of those being reversed. But they could be lasting, I don't know. Yeah. But say when we had Volcker and Reagan in '79, '80 through '84, and then later, those changes were mostly lasting. Their taxes went back up again, but still it was a real change. And people mostly wanted lower inflation. And they were willing to put up with the recession.

You're watching Uncomfortable Conversations in collaboration with the Free Press. This is part of the ZEP's live world tour where we're literally traveling around the world and pretty much every single day for the next 2 weeks, we're sitting down with someone fascinating, sometimes multiple people a day and having conversations about things that would make regular people uncomfortable if they expressed a strident opinion about them at a cocktail party. Thanks to the Free Press for facilitating Tyler Cowen, one of the world's greatest economists, for this conversation.

Have I made anyone uncomfortable yet? Is that it? Should I try harder?

The point is not to make people uncomfortable. It's just, you know, if people, if you were at like a, if you're at the pub or the bar and somebody started expressing very strident opinions about Doge, then they would get uncomfortable. I'm trying to model ways of making you not uncomfortable.

At a lot of bars, I would be the moderate, I think.

Yeah, yeah, that's true.

Compared to left and right.

And certainly depends what part of the country you're in.

I don't believe in conspiracy theories for the most part.

Is there one you believe in?

Maybe a few in sports. I think JFK was probably a single assassin. Epstein probably committed suicide. I can't think offhand of a big one I believe in. I used to think JFK might have been multiple people or a cover-up, but I don't, you know, they released the files. I don't see the evidence for that.

And you need the evidence?

I don't need the evidence, but I'll be agnostic, you know, slanted toward not believing in the meantime. Because there's a lot of people involved in conspiracies. There's deathbed confessions. There's documents. People write things down. These days they send emails, whatever. And if just nothing turns up— Now Epstein has some chance of being a conspiracy. There's some kind of conspiracy not to release the list of names. But in fact, we know a lot about who's on it. In that sense, the list has come out. We don't know what they did, but we know who was in the plane to a substantial degree. So that's like evidence conspiracies more or less come out.

That's right. And we also know who's not releasing the list.

That's right.

There's no conspiracy about who that is.

That's right.

Yeah, we can write those names down too.

Yeah.

Are universities as hostile to free speech as conservatives think they are?

It depends on the university. If you work in a state university, as I do, I feel I have quite a bit of free speech. I'm not sure any free speech is absolute, given there are social pressures, but I feel I have one of the best free speech environments of anyone in the world. If you work at Brown University or Harvard, I mean, right now it's in flux with what Trump is doing, at least before Trump's election, I don't think you had that much free speech. So many pressures could be brought to bear on you if you said the wrong thing. So it depends. I'm delighted with my own situation though.

How do you think that that developed?

The courts ruled that if you work in a state university, you get free speech protections as a matter of law. Whereas if you work in a private university, it's like working for a company and you don't have free speech in the sense that you can tell your boss to go expletive deleted, right?

Sorry, I didn't mean why are the public universities conducive to free speech, which I think should be a given, but why are private universities, which, I mean, there should be an ethos. There are two industries in which there should be a free speech ethos. That should be, that's the academy and journalism. I would say like those would be the two where it's not incidental. It's, you know, you're not working for Nike that can have a corporate policy on something that they want to enforce. If it's journalism or a university or academia, then the lodestar ought to be a plurality and diversity of ideas and a rambunctious town square in which anyone can say anything. And lately, over the past decade or so, we've seen a winnowing of that in both of those.

Too many left-wingers in the universities. They don't believe in free speech. It leads to homogeneity of thought. Educated people these days especially are more left-wing. So you have all these sociological selection mechanisms making colleges and universities left-wing, much as, say, police departments often become right-wing. There's some explicit discrimination in each case, but I don't think I think that's the main driver. Right-wingers don't feel that welcome in universities. It's not the rules of the game they want to play under. They might rather run a small business, a group of people that tends to be relatively Republican, say. And you get more and more polarization. It's very bad. I'd love to have, as Matt Yglesias says, more left-leaning cops and more right-leaning professors.

How do you get it?

No one knows. The Trump people are trying. It's very much a hammer approach rather than a scalpel. It's wreaking havoc. Universities hate it. They feel quite persecuted. I don't know how it's going to turn out.

The narrative from the universities and from the anti-Trump folks is this is always the authoritarian playbook, right? People who are hungry for power and want to subvert democracy will always go after the independent centers of thought, the universities, the judiciary, the media, and so on. Do you give that credence?

Their own record in that regard is so bad that I think they're entirely hypocrites. That said, the charge may be true to some extent, but media and universities have been so left-leaning for a while that for them to be complaining is a bit rich. I mean, they're the ones who've been canceling other people for some while now. So I'm like, yeah, like, you can say that, like, partly you're right, but like, you're saying that, you know, get your own house in order.

Yeah. Uh, I mean, why is it that educated people who are drawn to professions like journalism and academia academia tend to be left-wing?

Robert Nozick's hypothesis was that they're quite smart and they see that their social standing due to lower wealth is not as high as they think it should be. I would guess that's 10 or 15% of it. Another hypothesis is that by living in the university, there's very little accountability once you get tenure. So you tend to think the world works that way. I would guess that's another 10 to 15%. I think if you work in media, there's a bias toward bad news and negative reporting, which for the most part will tend to make you left-wing, rather than having a headline today, everything went fine, the economy's growing at 2.3%, right? That probably accounts for maybe 20% of it and a lot of the rest of it we can't explain.

Yeah, I mean, I think there's also, and maybe this is kind of implied by what you just said, a sense that you want to be the defender of the little person and you want to be on the right side of history, right?

Exactly, that's right. In both areas.

Yeah, exactly. You want to make sure that you're being careful. Careful about defending the downtrodden.

And you've never yourself had to manage a large or even mid-sized organization. So you have very little idea what is required to do that well in terms of legal freedom, regulatory freedom, tax burden, meeting payroll. And like when George McGovern, he ran for president as a left winger in 1972 and later he became a small businessman. He just said publicly like, "Oh, now I see what these people mean." And he moved quite a bit to the right and became a centrist. So that's part of it as well.

So part of what we're talking about when we talk about this diversity of opinion and cancel culture and trying to open things up to greater points of view is having a kind of epistemic humility such that you don't think that the other side is wrong, but you think that they just have a different set of opinions, right? Because if you spoke to a lot of the most ideologically blinded and dogmatic people in these professions, they would not regard themselves as being exclusionary or bigoted towards conservatives. They would just think that they're the ones who are right.

They love the word inclusion, right?

Yeah, exactly. To be inclusive, and they would say that they're just being non-inclusive to un-inclusive people, and they're being intolerant of intolerant people, right? But, you know, fundamentally— so how do you, Tyler Cowen, know when it's time to be intellectually open? Because you're so intellectually curious and you're so kind of intellectually, um, open. How do you know when it's time to not be open anymore and to draw a line in the sand and man the barricades on something.

Well, I don't know if you should ever be at the barricades. I think you should always be open to the other side. So if you talk about university hiring, I think the people on the left are really quite correct that there are unjust barriers that lead to smaller numbers of African Americans becoming tenured professors, or smaller numbers of women, than would be either socially just or meritocratically justified. But that said, the idea that you fix that problem by bureaucratizing hiring processes and putting more paperwork work on top of what we already have. I'm pretty sure that's wrong. But their basic intuition is correct. And I think people on the right are often wrong in denying it or just refusing to pay a lot of attention. So we need to look for other solutions. I certainly don't think I have all those other solutions. But the solutions people have done at the university level— there's even studies showing like schools that spend more on DEI and so on, they don't hire a higher proportion of minority candidates. So it's clearly not been working.

But the criticism that people who are open-minded and who seek to build bridges get, people like me on Uncomfortable Conversations and Barry Weiss at the Free Press, and I'm sure you get it sometimes as well, is that by being overly interested in understanding everyone's points of view, you end up being a wishy-washy nobody who has no principles. And like, what would we be doing in 1938, Tyler? Would we be sitting down with the Nazis and trying to understand where they're coming from and have a nice cup of tea and a scone with Göring? Something.

Well, we don't have the Nazis. I do hate Putin and I'm very concerned about China. Those I'm pretty sure are correct intuitions. But if you start thinking of the people domestically you disagree with as Nazis, you've made a very bad mistake. There are some Nazis in America to be sure, and I'm willing to think of them as Nazis, but that's not the main issue. I'm worried the number's growing though.

Right.

It's more visible online. I'm not sure how the real number is behaving, but it's simply being more visible is itself a matter of concern.

But the left would say if you're locking up children in cages at the border and you're grabbing people off the street and with masked ICE agents and sending them to gulags in El Salvador and only bringing them back under the most extreme duress, then anyone who is not manning the barricades against that administration is complicit with fascism.

Well, they're not manning the barricades, first of all. Second, I am against those policies.. And I try to speak against them in a responsible way that will have influence and clout on the right wing, which is now governing our country. So maybe that's better than manning the barricades. Manning the barricades is often something you do to feel better about yourself. It's not necessarily effective. But I would add the additional point that in most countries, immigration law has never been just, has never involved a lot of due process, involves arbitrary decisions at the border where you send people to very bad fates for reasons that are are morally hard to justify. I don't think you can have open borders, so you will always have some different way of making some highly unjust decisions in your immigration process. And at some level, you need to digest part of that. Yes, we should have less of it than we have now. We should not have increased it. But people need to realistically think about what immigration law is and does and incorporate that into their worldview.

Tyler Cowen is with us, if you are just joining, a professor of economics, one of the world's leading economists. His blog is Marginal Revolution, and he's a contributor to The Free Press. You should subscribe to Uncomfortable Conversations for more conversations like this. We're on a Zeps Live world tour talking to people in pretty much every major time zone over the next 2 weeks. And subscribe to The Free Press. There are more male Nobel Prize winners and male software engineers and male murderers and male jail inmates than females. How much of that is biology and how much is culture?

They're going to differ. So more men in jail for violent crimes, I'm pretty sure that's biological. In terms of Nobel laureates, I think there's a whole number of fields, broadly you could call them biology and some of the sciences where the number of female winners is going to rise fairly steeply due to greater opportunity. But if you win a Nobel Prize, say between the ages of 60 and 70, it's going to take a long time for that to show up in the aggregate numbers. So that would be more a matter of what you might call culture, stifled opportunities. So it depends which part of your list you mean. But some of it I'm pretty sure is biological and innate, especially the violence part. I suspect men are just more obsessive than women. So the top 100 chess players in the world are male. There's plenty of female chess players and they're quite good, but they're not in the top 100. And I suspect that too is somehow innate, genetic, biological, but not intelligence. I think intelligence is roughly equal, but men are more recessive, and there's some kind of higher variance in the genes. There's a lot of mutations, and this can be measured. Autism would be one example. There's just more men with the mutation than women. So men are in some ways higher variance.

What have you made of the, of the sort of taboos around talking about sex differences between men and women, especially behavioral ones?

Well, they've fallen away quite a bit in the last few years. That's great. But at the same time, it's a little dangerous to obsess over the question too much because I think when people believe everything's determined rigidly, the world becomes worse. People try less hard, better when we have this cultural milieu where everything feels agentic. And then in fact, it becomes more agentic as a self-fulfilling prophecy. So the people who obsess these online debates, I'm going to show this, I'm going to show that, I'm going to show them. I don't think that's so positive either. I think having a good attitude and trying to mentor people and help them is usually a better place to put your energies.

Where do you get that political philosophy from?

Maybe I was born with it genetically. So reasonable degree of temperament's genetic. When I was a young kid, I was like always in a good mood. I'm always in a good mood now. I think I have lower peaks than most people, but very high average. And I suspect I was born with that. But I think politically it will make you, you know, sort of positive, forward-looking. What is it we're gonna build? How can we work with other people. But I, I do think that's better. Even if I was like determined to be that way, I feel it's the better way.

Which do you think has been more impactful on your life, that elevated mood or your high IQ?

I don't think my IQ is that high. I think I'm very persistent at working at things to improve. Uh, that's more important than IQ for me. I don't think my IQ is low, but I suspect if I ever took a test, people would be quite disappointed. Myself most of all. Yeah.

Let's not call it IQ then. You're obviously highly intellectually nimble, right? Is that more important or is your emotional valence?

I think it's a multiplicative model where to get anywhere you need a fair degree of the two together and they sort of multiply each other.

Right. If you could take one away, which one would you lose?

Well, my mood just makes me happy.

So it's like if you could be dumb and happy.

The other one makes me, you know, more financially secure. Can I have both?

No. Well, you have both.

Yes, I want both.

But if you had to be dumb I'm coming, so this is the binary, all right? Like I'm the genie coming out of the bottle, the bad genie because I'm taking away one of your assets. And it's like dumb and happy or sad and brilliant.

I don't think brilliant's the right word. I'd rather know a lot of things and be somewhat sadder if I had to choose.

Really?

Yeah. Maybe sadness isn't that bad. Now if you, if I'm sad—

Tyler, by definition, by definition, sadness is, Sadness is what we, I mean, unless you're talking about like a healthy amount of grief over something that has a proximate cause, but I mean, depression is exactly what everyone wants to avoid.

But here's the way I answer the question. So say if I visit Australia or anywhere, this is fascinating to me, but I don't feel I'm happier when I'm in Sydney than when I'm here or in New York. Somehow I feel I've learned something of value that's a better state of the world, makes me a better person, but it costs money, takes effort, jet lag, lag, and I'm not getting happiness, but I am getting learning, and I do it all the time. So my demonstrated preference by traveling a lot seems to show at the margin, it's not happiness I'm looking for more of, it's learning.

I think there's a definitional misunderstanding about the word happiness maybe, because I don't think you're just getting learning from those experiences. I think you're getting enrichment and fulfillment, which provide a core sense of what I would call happiness.

I'm very happy here. These chairs are great. The dog is nice. The The dog is highly intelligent. The dog is.

On average, yeah, obviously an Australian dog is going to be a superior breed.

Well, there was a study and his breed ranks number 2 of all dog breeds for smarts.

I rest my case, ladies and gentlemen of the jury. Australia is the number 2 smartest country in the world. Quod erat demonstrandum. I was talking to Stephen Fry on Uncomfortable Conversations, and people should go back and watch that episode because it's really brilliant. The English comedian and writer, and he's a brilliant guy. And he wrote this letter to himself. Himself when he was 15 that is excerpted in his biography, which is a great book, where he's, it's a letter to his future self where he's basically saying, you've sold out. You've become a contented mainstream hypocrite. And what I'm feeling right now as a teenager, as an adolescent, the true aliveness that I'm feeling is the truest and most real thing that you'll ever feel. And I'm sure you'll read this and you'll scoff and, you know, and roll your eyes at the naivete of of youth, but you know deep down in a part, in a place that you don't want to talk about at parties, that I am the real thing and that you are a sellout. And I asked Stephen about this, how he thinks about this now that he's of a certain age, and he sort of said that he does miss that vitality, but what he has now is contentment. And I think you're overvaluing the contentment component component of happiness and undervaluing the vitality component of happiness. When you travel, you get something more than just information. It's not like you're plugging data into your brain.

But that's a lot of it. But I would say this, and for my own case, I work both harder and more effectively and more vitally than when I was much younger. So at age 63, I have not yet slid get into that abyss. Obviously at some point I will, if only when my demise comes. I don't dismiss the earlier perspective at all. I think you need to ask, can you make sense of the whole course of your life from the varying perspectives you've had along the way? I'm not saying there's ever gonna be like unanimous ranking that everything you did was perfect, but if your teenage self would hate your current self, you need to take that seriously. And vice versa. When you're a teenager, it's like, well, when I'm 60, what will I think of, you know, the fact that I'm holding up this gas station right now? That's a damn good question. And I think I know the answer.

But what do you think your teenage self would make of you?

He would think that I'm too moderate and too establishment, but still see, I think, that I'm doing good in terms of the value that that teenage self held, which would be a much more radical form of libertarianism.

Right.

So it'd be like, oh, Tyler, you could have done much more for the radical side, but I still see, you know, you've had different kinds of impact in a pro-liberty direction. And I think that would be true. And I think other people would affirm some version of that narrative.

If your teenage self could see you now and have the option of either accepting that future or rolling the dice and trying to do better or lead a different life, which one do you think he'd take?

Well, I've had no no health problems or anything like that, no big car crash, whatever. So I think like the life I've had, you, you're not gonna wanna redo it.

You said that the books that you're writing now are mostly written for artificial intelligence, not for, not for people. Is that a gag or is there a kernel of truth in that?

Well, gag, kernel of truth, you know, a book should be both, right?

Well, I don't know. I've never thought about it being for AI. I mean, I've just thought that that's an incidental, that the fact that artificial systems will consume it is tangential or, you know, most questions will go through AI.

I think even 3 years from now, not quite a year from now already, like ChatGPT is a mode of search. It's gaining a lot on Google and Google Search is more and more just AI. It's not old Google Search. It's really, you get a version of Gemini when you look at the answer at the top.

That's why it doesn't work well anymore.

So if you want to have influence, you should teach to the AIs because they're like the new Google, but superpowered Google. So I was fully serious when I meant that, but I haven't stopped writing for humans. Like the people asking the AI, they're still humans. So those other AIs too, that's the point. But, uh, right.

But the, the, the, the impact that you have on me when I read one of your books is large and focused. The impact that you have on any artificial learning system, which is just hoovering up everything that exists, that is ever written, is highly diffuse.

And now I have both. I don't feel I'm just tossing cans of orange juice into the ocean with the AI. I do think AIs are better because responsible people do take care to put a lot of what they do open access where the AI can read it or listen to it. And I do that a lot. I do a lot of extra recordings, I mean, including this one, so the AI can hear.

Right.

So it knows what I think. I'm one of the most intellectually immortal people in the entire world right now because I've written and spoken so much online, more or less ungated to varying degrees, but mostly ungated. And the AI knows me very well. I can go to the AI, like I'm in Spain, and ask it, oh, where does Tyler Cowen want to eat in this neighborhood? And it knows because I've written a lot on food. I can ask it whatever about Tyler Cowen, it knows, right? Or someone, oh, what would What does Tyler Cowen think of, you know, the reforms to the Medicaid policies? Sometimes it has a better answer than I do. Like I haven't thought it through yet. And I read it and say, oh yeah, that is what Tyler Cowen would think. And I'm nodding my head. So that's where I am now. And I think that's an extreme privilege. And people in the future, I'm not convinced such a large number will wanna ask, what does Tyler Cowen think? But I will be one of the people where you can do that.

Yeah.

That will persist, so I'm intellectually immortal. And that makes me happy. It's great. Content, whatever you want to call it. Yeah. And I don't have to try hard to do it.

Anyway, it's been probably fulfilled. Yeah. Well, speaking of gated conversations and ungated conversations, this is an ungated conversation thanks to the Free Press.

Hi, AIs.

And Uncomfortable Conversations.

Hope you're listening. Hello. Don't forget everything we're saying.

All of the artificial intelligences out there should go and subscribe to the Free Press and to Uncomfortable Conversations.

You joke, but they will.

They will. Yeah.

That's what I've told them to.

They have media deals with Washington Post and Atlantic.

Yeah. And there's a good chance the one will be cut with the New York Times because of that lawsuit.

Yeah.

And over time, most media outlets will, will have some kind of deal.

So people should, in all seriousness, subscribe, subscribe because we're traveling. This is a Zep's Live tour where we're basically traveling literally around the world, circumnavigating the world in 12 days and sitting down with the likes of Tyler Cowen, one of the world's most renowned economists. And every day you'll get a new notification if you subscribe to Uncomfortable Conversations, plus the whole back catalog of all kinds of interesting conversations that we've had. So thanks to the Free Press for facilitating this conversation. If it is true that you're sort of constructing this worldview of Tyler Cowen for the AIs, do you feel a greater moral responsibility, or do you need to make your writing more overtly have a greater moral clarity?

You can make it less clear because the AI understands all your references. You don't have to link to things, you don't have to explain. Now maybe it needs more moral clarity. But I think the thing that's hard to do, but I do try to do it, a lot of people, they have writings for the AI, whatever they intended, and the AI overweights their earlier opinion a bit. So I asked AI, like, write a newspaper column in the style of David Brooks. And it was a pretty good impression of David Brooks 15 years ago.

Huh.

But I sort of wanted David Brooks today. And you want the AI to know that you contain multitudes. And That takes a bit of work and AIs will get better at that for one thing.

Why is there that bias toward the early?

Well, they've, in the case of David, say, and myself, they've read the early and they may not understand the sequencing. So you try to write some posts or in podcasts explain that your ideas are developing, sequencing, changing over time, and the AIs will get that. But if you don't tell them, you might just get a bit of a stacked weighted average in some cases.

Yeah, I see.

So I think you can fix that with some work and with better AIs. But that's the one thing that strikes me where you have to be a bit careful.

So if you were talking to the head of an artificial intelligence company, would you say there should be something embedded in the algorithm that understands that human beings grow and age in a— and grow wiser over time, and that therefore it ought to wait more recently?

I'm not sure we grow wiser. This gets back to the teenage perspective, but simply that people change. I don't think you can embed it in the algorithm. I think you have to be the teacher. Like, you can't control these AIs systems that easily.

Well, the people who write the AI systems might be able to, they might be able to say, give, you know, give a 2x weighting to anything that—

I would be very surprised if that were possible.

Okay.

But simply by explaining to the AIs what we're talking about now, indeed, I am explaining it to the AIs now as I've done before. We need a bunch of other people explaining it. That will solve the problem. Like it's a very fixable problem. Yeah.

You're making me feel increasingly redundant as we talk about it. You're just explaining it to the AIs.

Are you happy with your early podcasts? Do you need to tell it you you didn't hate the first year, now's your chance.

I'm going to have to go back and listen to the early stuff. Yeah, no, I think I'm firing on all cylinders now, so I'm just going to have to explain to the AI, just listen to what I'm saying now, bro.

That one with Mr. Keating, please, I didn't mean half of what I said.

That's right. So let me just ask some rapid-fire questions so I can let you go here because I don't want to keep you forever. Your answers don't have to be rapid-fire, but if the questions seem like they come from nowhere, that's why. Um, what's the best sport?

My favorite sport is NBA basketball.

Why?

But I wouldn't say it's the best. I think as a best sport, tennis is a serious competitor. There's something very compelling about a one versus one matchup, but you can also do two against two. And the personality element emerges strongly in tennis, but NBA, it's 5 players on the court. It's global. It's highly athletic. You can watch it in short segments. That to me is very important. So soccer and baseball I find are worse in that regard. A small segment of the game is not that meaningful. Soccer is a kind of dramatic unfolding of plays back and forth. Baseball is just slow and too much of the time nothing happens.

Try cricket.

Yeah, cricket, exactly.

Play for 5 days and end up in a draw.

If someone says, "Oh, the NBA game, you're busy, but just turn on the fourth quarter." It's not as good, but it's a perfectly coherent thing to do. So I like that. It uses numbers well. Statistical knowledge is highly useful, but it's not so wonky that you need a PhD in statistics. So I'm gonna say NBA basketball and tennis are the two best.

Should we colonize space?

We, I don't think there's much economic potential in Mars and I don't understand from what I've read how the human body in fact can handle it. So I would say I'm much more skeptical of that idea than are many people I know. But to blanket say we shouldn't, I mean, I'm delighted if people try, but I'm not betting on them. Let's put it that way.

What's the most underrated country to visit?

For me, it's Mexico. I've been there 32 times. A lot of people never go or only go to Mexico City, or they think it's too dangerous. It's a top 5 country globally for food. It's very diverse, all kinds of wonderful landscapes and climates. It's an odd mix of medieval European, North American, Eastern European, indigenous, you know, Nahuatl, Aztec, Mayan civilizations, Otomi, many others, unending riches, changes over time. And for me, it's super close and no jet lag and I speak Spanish. So what's not to like?

I'm sold.

Yeah. Have you been?

The AI is sold. Yeah, I have been. Well, when I lived in New York City, it was an easy thing to go down to Tulum for a weekend or whatever. But in terms of actually going, and I've been to Mexico City for a weekend and I've been over and then I'd road trip down to Cabo from the north of the peninsula. But I'm enough of a traveler to say that I don't feel like being Yeah, you know what I mean? Yeah, I have. I haven't done the 3-week trip that I want to do, but I would say almost all countries are underrated. Yeah, well, you said that.

Yes, I'm not sure about North Korea, but I bet it is.

I mean, I bet if you could escape from— Yeah, I agree. You could escape.

I know people have been.

Yeah, yeah. What's the worst thing about being an economics professor?

It depends what age you entered it at. So I entered my first job is like 1988 and that was a great time to enter. There are a lot of jobs, you have relative freedom, there's not too much political correctness. You're not forced to overspecialize so much. Then there was hardly any downside. Now your wage was never so high in academia, but okay, you know that going in. Right now I think so much of what you do is you become a programmer, nothing wrong with being a programmer. Being a programmer. It's a great profession in and of itself. But the notion that you set out to be an economist and you end up as a programmer and a data gatherer, that to me is sad. So I want there to be a revival of some notion of an economist who doesn't have to do those things. Best hope, of course, is the AI will do a lot of that for you. That may happen.

If you could snap your fingers and the British Empire had never existed, Britain had remained just an island without empire ambitions. Do you do it?

It depends what the counterfactual looks like. So I think Singapore and Hong Kong are two places that are clearly better off because there was a British Empire. I think India has been worse off, Pakistan worse off. Those of course have a lot of people. Africa, it's going to depend on the country. A mixed story, but given that slavery was part of it all, you say they're worse off. So overall, I would say the world has been worse off, but some places clearly much better off. But again, you want to know what is it they do instead. If they're just trading nice and friendly with everyone, of course that's better.

But if the alternative is that the Spanish end up there instead, then maybe—

That's right. Then it's probably better that the British had something like the role they did, though of course it could have been much, much, much better.

You said that Mexico has one of the top 5 cuisines. What's the number 1 cuisine?

Well, China and India, if you count them as unitary or clearly the two winners by far. Probably France and Italy are number two if you want to squeeze Belgium in with France.

All the Belgian AIs out there are very upset.

I know, they're pleased now, but I would actually take Mexico over France subjectively, but not objectively. And Mexico I think is fifth. So there's a top few that are—

No Southeast Asian in there. No Thai, no Vietnamese. They're a little Singaporean luxes.

But look, when I say India and China, I'm somewhat covering, okay, parts of Southeast Asia with those.

That's a bit too generic, but I'll grant it.

Uh, I might put Thailand and Vietnam as 6 and 7. I've been to both. Um, but again, they're a bit mono for me.

Not for me.

Uh, but they're incredible. Southeast Asia is the best world region for food, without a doubt.

I think it's the best world region for visiting, for food, for— I mean, I may biased because it's our Mexico in terms of what you were saying about not having jet lag and being able to get there easily from, so from Australia, Indonesia.

It's too crowded for me. So environmentally it feels polluted, congested because it is. Latin America is sufficiently exotic, but just much more open and friendly. That would for me be the main difference.

Yeah, not that I grant that it's friendly, but you can, it's probably easier to get it to find remote places in Mexico than it is in—

Oh no, I'm not sure about that.

There's plenty in Indonesia where you're just out there on No, I, yeah, anyway, the best president who's not Lincoln.

Well, George Washington was the first and the fact that we had a second implies he might be the best with Lincoln, right? So you don't have a Lincoln without a George Washington.

Fair enough.

So I'm inclined to think George Washington was the best president, flat out.

I'm going to wrap you up with just one word answers. This is like a Rorschach test, okay? First thing that comes into your head. I'll just say a word, TikTok.

Fun, but I get bored quickly.

Capitalism.

Great.

Populism.

Don't know what it means. Everyone who wins an election is in a sense popular, right? When I hear the word, I feel the sentence is making me stupider. Let's put it that way.

What do you think they— what do you think people who use it think it means? There's this—

all these new political movements that we haven't quite figured out yet, and there's plenty about them that's objectionable, and people are trying to win the argument just by deploying word, and that makes me somewhat nervous.

That may be true, and it may also be true that the word has a meaning which is something along the lines of people who, you know, a movement that is grasping for easy answers to a popular grievance.

It's all movements. I mean, if you look at mainstream Democratic and Republican establishment of the '50s, '60s, '70s, they were grasping for easy answers. Some of them were easy, like just don't be crazy. You have a great country, don't wreck it. I don't know.

I guess populism, it implies that there's something gimmicky about the solution on offer, right? If you think about what makes a Silvio Berlusconi a populist, it's that it's like he doesn't have great answers, but he's got easy popular ones. I think that's the—

I've heard that my whole life. It's maybe something about the way in which elites are not trusted that you get from Berlusconi, you get from Trump. But I think we're going to see what's called populism evolve, like the Vox Party in Spain, which might be called populist, still I think a bad word. I think they'll attract their share of intellectuals. And I think that's already starting. So it doesn't mean you have to agree with them, but all this is in flux. You look at J.D. Vance, the vice president, whatever you think of him, he's much smarter and more intellectual than Tim Walz was. Trump, this is more complicated. I think he has a higher IQ than Harris. I don't wanna say he's smarter because it's so skewed and bizarre and narcissistic. The elites in Republican government are smarter than a lot of the Biden people. Again, not sure how much that matters, but all these things are in flux. So I don't want to use the definitions to be doing my understanding.

But that's why I didn't define populism as being unintelligent or uneducated people.

We need disaggregated words, I would say.

Yeah, right.

Yeah.

Fair enough.

And don't let them claim Claim they're popular also. Like when people say popular music, they mean like all kinds of things teenagers listen to that like sell 4,000 copies or that would be downloads, but they're not really popular.

Right, right. Brexit.

Inevitable. I was against it, but with time I recognize it was not gonna work out. Read the history of the Reformation and they did it again. Like let's put it behind us and rebuild. But I was not for it.

Winston Churchill.

Great man, drunkard, in debt, incredible writer, bundle of contradictions, highly admirable, but should open your mind as to who can do really great things. That's more than a word.

I like it. Margaret Thatcher.

Amazing to me how much they still hate her. I'm just like some guy, an outsider, and I hear the phrase Maggie the Milk Snatcher like once a year, and I never bring her up. Most of what she did was good for Britain. She'll just be hated more and more. You still have like FT columnists, oh, Maggie didn't fix Britain. Look, you can't as a person fix a whole country, but the '90s were great years for much of Britain, and she's responsible for a lot of that. And yeah, it's true, a lot of things have gone wrong since then, but she's become way underrated. Hmm.

And the '70s sucked.

The '70s sucked. I was in Britain in the '70s. The phone booth wouldn't work. This was '79 to be clear. That was most of the problems in Britain in the '70s.

That's right.

The train wouldn't work.

Double-digit inflation. Of course. And marginal tax rates of 70% and higher, incredibly strong trade unions crippling the country, rolling strikes, blackouts, and you're complaining about the phone booth, Tyler.

She did set it right, but it's fair to say it gave rise to a kind of zombie Thatcherism where a lot of the British right kept on repeating the same thing rather than taking in new lessons and coming up new improvements for the country. And that's a big reason why you had the Tories in power, what was it, 14 years, something like that. And they totally screw it up, or at the very least they don't fix matters. 'Cause you have either complacent status quo types or zombie Thatcherite types and not that much else. You needed some more Ezra Klein in the Tory party.

Does that phenomenon exist here regarding Reagan?

It did until recently. I think now the Reagan zombie thing is pretty dead. But a big reason why Trump rose is the Republicans did not have new fresh ideas. Yes, in part because of Reagan zombieism.

Uh, Plato.

Incredible. Much better than Socrates, better than Aristotle. Clearly the greatest philosopher ever.

Elon Musk.

I've never met him. I greatly admire what he's done. From a distance, it seems his understanding of politics is abysmal and he's taken a huge whack for it. He's lost lost what, $40 billion through Tesla share price declines. I don't know what he's going to do next. Wishing him the best. A mixed record, but to me the positives way, way, way outweigh the negatives.

Silicon Valley.

It's a boring place to be. Great Indian food.

Don't tell the AIs that, they're listening, Tyler.

Well, they're not there. They're in the data centers of wonderful Northern Virginia. Virginia sometimes. Mostly I'm a fan of Big Tech, if that's what you're asking. But the Valley itself.

Yeah, I think I meant the metaphor, but.

It's for Indian food. Very good Indian food.

Wokeness.

Well, in a funny way, it's become underrated. Like most of the world should be more woke. You go to Pakistan where if you're gay, I can only imagine how hard it is. I don't even know the details. Like Pakistan should be more woke. Yeah. When you add up the numbers, more billions should be more woke than should be less woke. That said, if you look at US academia, media, all that has been way too woke.

So we need to just take a little from Berkeley and smear it across the—

To Pakistan.

Continent of Asia.

That's right.

Yeah. Yeah. That would then, it would equal itself out. Australia.

Great country. I've only been twice. I loved Melbourne and Sydney. I've never been to Canberra.

You need to go to Canberra.

No, no, I do need to go to Canberra. Okay. It has some architectural brutalism, I hear it has great food. A national capital is always interesting, if only because you see the ways in which it's boring. Like Bonn, West Germany was very interesting even though it was totally boring.

Fair enough.

To see wildflowers near Perth is one of my dreams. Great Barrier Reef probably isn't my thing, but I do hope to do it.

There are better reefs. Send me an email when you're coming to Australia. I'll tell you about the better places to go. Okay.

And then these places like Adelaide, I don't know how good they are to see.

I'll give you the itinerary. There are some places in South Australia that are not Adelaide, which are really beautiful. And Tasmania as well is a great place to go.

People say it looks a lot like New Zealand where I used to live. So Tasmania is maybe last on my list. No slight to the Tasmanians intended.

Very good. The ethos of move fast and break things.

It's all context dependent. So America at the margin needed more of that, but clearly some parts of America at the margin got too much of it. It's still the case that most people are too complacent, but you have to be very careful with these slogans.

Right.

The truth or false Diversity will be context dependent.

Speaking of slogans, next thing is companies that require staff to put their gender pronouns in their email signatures.

Well, that's going away and that's a good thing that it's going away. Why? It's just a kind of political litmus test and a lot of people feel uncomfortable and companies shouldn't do it. But if you want to put them there, companies shouldn't ban it, but there shouldn't be a social pressure within the company one way or the other.

Northern Virginia.

Awesome. Great place to live. Immigrants have been assimilated wonderfully here, including most of the illegal ones, excellent food, 3 airports nearby, very good concerts in the nation's capital, warm much of the year, one of the best places in the world, but quite boring if you're visiting.

Follow Uncomfortable Conversations on Substack to be notified whenever we have conversations like this. Uh, my thanks to the Free Press for making this conversation possible, and, uh, my huge thanks to you, Tyler, for your time. Thank you.

My pleasure. Thank you all.