Tyler Cowen on the Economics of Big Business, Progress, and Pandemics

With us today, we have economist Tyler Cowen from George Mason University. In addition to being an accomplished researcher in economics, Tyler is the author of several bestselling books, including The Great Stagnation and more recently Big Business: A Love Letter to an American Antihero. Tyler is the author and coauthor of one of the best economics blogs out there, Marginal Revolution. He writes a weekly column in Bloomberg News and is also the host of a great podcast, Conversations with Tyler. Tyler, welcome to Policy on the Comms.

Happy to be here. Thank you.

Let me start by asking a couple of questions on big business. So let's just go to the title. Like, you call big business an anti-hero. And what is it to love about it?

Well, the big news of today when we're recording is that the American pharmaceutical company Pfizer has come up with a vaccine against COVID-19 that is more than 90% effective. That's pretty awesome. Big business did that. We're recording this over Zoom. That's a big business. Amazon, the NBA have performed much better over the course of this pandemic than say the United States federal government. So I feel in our society, big business is somewhat underrated.

Is underrated as an anti-hero from what sides? What are the parties of society that tends to be skeptical or critical about big business these days?

Well, the progressive left, it's a major theme of their arguments is to be anti-big business. It's hard to find any cases where they will say anything nice about business. But to be clear, often the right wing is just as guilty, just in different ways. Donald Trump will yell at businesses, tweet at them, pick on them, say they're evil, you know, meaty is the enemy of the people, this business can't be allowed to outsource. So the rhetoric as a whole is more pro-business, but the actual behavior in many ways is just as bad, and it's not respecting the underlying legal foundations that enable big business to prosper.

How about us as a business, us meaning universities, professors, what's our general predisposition toward big business?

Well, universities are among the most left-leaning institutions in American society, so their anti-big business rhetoric tends to go in the direction of the progressive left. Just, business should be taxed more, should be regulated more, should have a lower overall status. For major problems, you look always to the government. So, I mean, academia, from my point of view, is a very slanted perspective. Ordinary people on the street have a better sense of big business than do academics on average.

Yeah, I was gonna ask you about the performance of big business during the pandemic, and you already alluded to it. It's been impressive to me. At first, when we're going into the lockdowns in March, I was concerned of big disruptions in supply chains and so on, and I'm stunned by how smooth things were. From their perspective. And I don't know, do you have any—

Companies in particular have done a phenomenal job. Arguably, our major tech companies are the best-run, best-functioning institutions human history ever has seen. I know people can be afraid of them for that same reason. But how much they have knit us together, supply chains up and running, given us means of communicating. Classes have kept on running in highly imperfect forms, I get. My goodness, better than nothing. And it's been a relative success of adjustment. And again, most of that thanks, I think, goes to the private sector. Our government has done a pretty poor job at multiple levels.

Would you say that businesses in the US are better run in some ways, or did we learn anything about that during this crisis, or it strikes you as no major differences across countries?

There are longstanding indices of managerial quality and productivity. The United States is a clear number one. I have not seen an empirical study across nations during the pandemic. It seems intuitively obvious to me American business, because it is so strong in tech, has really done remarkably well and almost certainly extended its lead in those regards.

So just to close on this one, the news of today, the Pfizer news, but it was also news from a smaller bio company in Germany, right?

Correct. By two immigrants, children of Turkish guest worker parents. Amazing.

Amazing, right? And do you understand the details of— were they working in collaboration, or those are two separate news? I haven't kept up.

They work in collaboration. So Pfizer, in terms of making it and distributing it, is a much, much larger company and with much stronger roots in the United States. The original work and idea comes from Germany, a wonderful example of the benefits of globalization.

So speaking of it, I guess it was a good loop in globalization here. You were— you talk about pandemic way before COVID was around us. You had some written about it, you had examples in your book, in a textbook for undergraduates, on pandemics being potentially a counterexample to the positives of trade. Give me a sense of your, sort of, what sparked your interest about pandemics and what was the reason why you were maybe thinking about this even before all the world started looking at a real problem?

Well, mostly it came from studying history, right? Pandemics recur fairly regularly. So in around 2004, 2005, I wrote a long policy paper for Mercatus, what we should do to get ready for the next pandemic. And to me, this really seemed quite urgent. Avian flu was a possible risk at the time. I think general knowledge of history is the key input. We're very short-sighted and we have short memories. Arguably, the last two pandemics, not counting HIV/AIDS, which is in somewhat separate category, but we're 1968, 1957, and it's a long time ago. People forgot and needed to be reminded. And in fact, we did screw it up. Badly. And at some points in time, US was ranked as the nation that's ready to respond. And I guess we were on the biomedical front, but not otherwise.

Yeah, it seems that— one of the things that— we're going to go back to COVID in a second. But one of the things that strikes me as a big criticism of the US is it has to do actually with our system of government, of federalism, where it becomes very difficult to coordinate a lot of these things, right, a lot of these actions and processes. You don't have a clear plan ahead at a time. There's 50 units and perhaps even more than 50 units because when you look even within state governments, a lot of the public health apparatus might be in counties or might be in cities. And it's just— there was no coordination, no real ability to have an organized plan.

Being a large nation, it's very hard to stop it in every place. So what New Zealand did, what Taiwan did, also shutting their borders, that worked. Quite well, in fact. I don't think the United States could have done the same, or Brazil for that matter. So that's our problem. We still could have done better. We did work very hard to make up for it on the biomedical front with astonishing success in terms of speed.

So, so just going back to the textbook example, right? So how would you rate up after our learning now and during 2020, Would you change at all your views on trade and immigration given the lessons of 2020, or not really?

Well, I think 2020 has shown if you're a not-too-large nation and you can contain the virus early, then you should shut your border. And it pains me to say that because I'm a big fan of immigration. I would gladly, you know, at least triple what were the prior levels of immigration. I still hold that view. But during a pandemic, if you can keep people out, there's a big advantage. And we saw this with Western Europe in August. People came back from vacation. It significantly accelerated the spread of the virus. They have much larger problems after they thought they had it under control. I wouldn't say this is a totally new view of mine. I did suspect it was true before 2020. But seeing 2020, I'm fairly convinced that at least for a set of countries, They need to close and lock their borders. That said, very large countries, it just may not work, period. You can't necessarily keep everyone out.

Yeah, I think one of the only large countries that would have an easier time with that would be Australia, right? Again, the island.

Exactly.

Helps a lot. All right, so just wrapping up on big business. Big tech these days is a lot in the news and there's a lot of hoopla around their managing of big media and so on and so forth. But just a while back, you had some conversations on whether or not big tech was close to a monopoly or close to something that would deserve some sort of antitrust scrutiny. So how would you summarize your argument? I think it was against that, right? You think that that's not necessarily anywhere close to being the case that we need to be checking them for antitrust?

Well, the major tech companies typically have either a free product, such as Google or Facebook, or the other activity they do to generate revenue selling ads, they face a lot of competition and offer really very low prices. So I think that's the overall framing of the antitrust question. If you just ask me though a very specific question, like have Google and Apple committed particular antitrust violations, I think the odds are they have. I don't think the answer is to split them up. I don't think the answer is to have punitive penalties. I don't think you can say they're totally innocent of antitrust violations. So the way Google allows people to pay for search results or elevates its own connected businesses in search, the way Apple manages its App Store, my inclination is still not to actually trust antitrust authorities to get the remedies right. If someone says there's a case there, I mean, I would agree largely. So it depends how you frame it. If you think like the whole company is some big monopoly, it ought to be dynamited, I'm very strongly opposed.

And you think that this is now something that was, are we moving at all that way? I fear that both sides here seem to be particularly skeptical, both sides of political spectrum seems to be particularly skeptical of big tech these days. And do you see any movement? I don't know, what's your expectation in that direction? Do you think that now under a new administration we're gonna be less or more aggressive towards them or?

Department of Justice recently filed a suit against Google, or it is, there's a suit coming against Facebook. I actually think with Biden winning, although the Democrats are more skeptical of tech intellectually, we'll have divided government.. There's not the sense like, oh, tech helped Donald Trump steal the election. I actually think it will be this long, drawn-out, stupid battle that won't lead to very much, and that the landscape has changed. That said, once an antitrust suit is open and all the different states are in on it as well, many different things can happen. Political risk to the major tech companies does look much higher now than it did, say, a year ago. My best guess would be either the government doesn't win the lawsuits, or they settle in a fairly quiet way, or the thing drags on and is ugly but doesn't fundamentally change the sector. And their share prices reflect that in the last week or two.

That's right. That's right. Let's change gears here to talk a little bit about progress studies. A little over a year ago, you wrote a piece in The Atlantic with Patrick Collison, co-founder and CEO of Stripe. Argue that we need a new science, a new science of progress, and what do you mean by that?

Well, as you're an academic yourself, as you know, so much of academic research is to carve out a small piece of territory that will get you good enough letters to get tenure, and no one will really object to. I would like to see fewer people do that, and to produce synthetic knowledge that has direct practical value And say within economics, my field, I think the field economics of science, right now it's not one of the top 20 fields. I'm not sure it's one of the top 40. I think it should be one of the top 3 fields, say. That to me would be progress studies. So people can point and say, "Oh, this person's doing this, that person's doing that." It's true, but there needs to be a fundamental elevation and revaluation of research work relevant to progress. I think we're actually starting to see some of that, but I'd like to see a lot more.

So when you say studies related to progress, just like trying to understand the cause and effect of the progress that we have experienced, or—

Right. So every economist, in my opinion, should spend a fair amount of time studying what caused the Industrial Revolution and what caused the East Asian economic growth miracles. It's not that I feel I have the answers or that everyone has to agree. Those are now topics that many people study, many people don't think about much at all. To me, those should be totally central to the curriculum.

And so, do you blame economics for not being paying attention to this or other social sciences as well? It strikes me a lot of social science, including economics these days, have a tendency to try to focus on problems, trying to understand Oh, we have a problem here, let's try to understand the causes of that problem. We have another problem there, let's try to understand the cause of that problem, as opposed to look for the big picture of like, well, we have a lot of good things that happen, let's understand the reasons why the good things have happened. Would you agree with that, the general assessment?

Uh, yes, I know economics better than any other field, of course, but my sense from what I know is all of the social sciences have this problem. And there's plenty, in fact, on sociology of science, as you can see. If you want to, say, read a good book on how could we improve National Institutes of Health, that's very hard to do. It's not the kind of question people work on. So that, to me, is deeply strange.

And do you think that that somehow relates to the— our lack of understanding of progress is potentially one of the reasons why productivity has been decaying. Maybe that's a bigger question, right? Productivity— you write about productivity decays not only in an academic space, but I think in academic space, something that you worry a lot about as well, right? You, you, um, um, could that be a government science policy?

Could be better. Regulatory policy could be better. Uh, I'm very moved to see how rapidly we made progress on a vaccine. That to me is one sign things are turning around. Government did actually call in Nobel laureate Michael Kramer and ask him, "Well, tell us how to get a good vaccine quickly." And he told them, and they basically did what he recommended. So we are seeing some very positive signs, and I give Michael Kramer a lot of credit for having worked on that to begin with. So it's not all doom and gloom on the research front. But again, I would like to see most academics work on problems of progress, whereas now it's still a minority.

So let me give you an example of something that I do here at UT. I teach a class where, where it's a class about policies, evaluating policies, and that's like the, you know, the slogan of our center here is always trying to understand trade-offs about, about changes. And, and, but it's, this is a class to freshmen, so, so they come in and, and, and I try to talk to them about the fact that a policy is an attempt to change the world around you. For you to change the world around you, it's important to understand where you are and understand the facts around you right now. So we, we start by talking about progress, about, about exactly the, the, the sort of hockey stick, right, of human, human progress since the, the Industrial Revolution. But even before I start talking about that, I have a survey with them where I ask a bunch of questions about, about state of the world. And, you know, this is not something new. You know this by lots of other people have worked on it, like Hans Rosling and some others, to demonstrate that people have a very doom and gloom view of the world. They don't understand that things are much better than they actually think they are right now. And that's all fine. We understand that. And it is kind of nice to have the contrast of, okay, here's what you think and here's what reality is. And students get, you know, a good reaction out of that. But my, my, one of the concerns I have, and I don't know if you share, is that that is a different— it's very rare in the experience they will have at universities these days. I think the students are going to come in and, and the sort of like doom and gloom view of the world is going to be emphasized in a lot of their, the classes that they will be taking and, and a lot of the rhetoric around the university. In particular, I think the notion around critical race theory it's somewhat incompatible with the notion of progress studies that you describe and you think about. I don't know, have you thought about that? Have you thought about that general aspect of the social sciences? How does that play a role with our students?

You know, I think progress studies is a very different emphasis from a lot of what goes on in the humanities. I would stress I do see plenty of room in progress studies for people to study what you might call racial progress. Using rigorous social science, I'm all for that. Critical race theory to me seems like a less constructive emphasis. So, you know, that would be another area. That should be part of the picture, you know, not something outside of it. So we've been talking about scientific progress, but it's not the only form of progress, right? Right. Progress in discourse, progress in gender relations, progress in race relations. Many other areas. One thing I always loved about Brazil, I know it's not exactly where the country is at right now, but your motto. I mean, how is it you say it in Portuguese?

Ordem e Progresso.

Ordem e Progresso. You say it properly, say it.

Ordem e Progresso.

Yes, and what does that mean in English?

So it means order and progress, which by the way, my wife, she's an American, she's like, oh my God, that's the most fascist thing I've ever heard in my life. So she thinks it's a fascist motto. But I can see, I understand you. Go ahead.

Brazil early in the 20th century fell in love with modernism, not always its better sides. There was too much Auguste Comte, Brazilian mentality. But this idea that it was a nation committed to progress. You do see in like the dams, the scale and scope of building, the ambition of what the country can be. It doesn't always work out well, I get that. But I've long admired that side of Brazil without wanting to embrace every part of how Brazil has done it.

We used to call Brazil the country of the future, and the future never arrived for us. That's one of the problems we face, but we still are the country of the future. It used to be a thing that people say in Brazil quite a lot. All right, let's turn to the pandemic now. First of all, let me thank you for the amazing coverage that Marginal Revolution has had in terms of just so much good stuff there and learning a lot about what was happening in the world, following through your work with Alex. It's been really great. But I want to get back to March, and I was looking forward to having this conversation with you because I was a little bit surprised by your— I guess if I were to predict your reaction to what we saw in March in terms of government interventions. I was surprised that you were less skeptical of their value than you were quickly. So, help me understand your thinking through that, thinking through what we saw in March, what are the things that you're looking at, what were the initial maybe epidemiological models, what are the evidence that you're looking at that made you so convinced or more convinced that the strong actions that governments were taking were somewhat justified and warranted?

Well, I don't think all of those actions were warranted, just to be clear. But keep in mind, back in March, we understood much, much less about COVID-19 than we do now. So just to mitigate risk, I thought that was a case for locking down many things, not all things. We had seen two particular cases. One was Wuhan, China, where the number of deaths was very, very high. The city completely had to grind to a halt. And then there was Northern Italy, where again, you had a much higher death rate than what we've seen since then. And the beginnings of the problem in the US came to the New York City area, where again, the death rate was quite elevated. And I thought, and still think, at that time in March, the idea of locking down a significant of human-to-human interactions through the business sphere was the right thing to do. I think if New York City had done that 2 weeks earlier, we would right now be in a much, much better position with many fewer casualties, much less spread, uh, much less political disruption. And the Northeast of this country didn't lock down soon enough. There were all kinds of crazy overreach, like, oh, you can't go to the park, And even then it was clear to me, we didn't know now what we know about outside being relatively safe, that, you know, people going to the park is an outlet. It will stop them from doing other more dangerous things. So we way overreacted. That general kind of response I still think was the right thing to do, and it helped us buy time. During that time we learned what is more safe, what is less safe. And when we reopened, you know, we managed okay. Not as well as we could have, not enough testing, but we did manage in some manner.

So, I mean, I guess, you know, when you say that the actions that we saw in March, the more aggressive actions, maybe it should have come a little earlier, especially in the Northeast once— and but so you'd agree that those temporary measures that allowed us to learn a little bit gave us some time to prepare. Do you think the timing of them in terms of the— because one of the things that I observe is that there's geographic variation in when the pandemic hit certain places, right? But we sort of all went into a panic and lock it down at the same time. So I think there was a lot of damage that was done by Texas, for example, locking down in early, mid-March, where it wasn't here yet. We just didn't have enough of a spread here. So that created, for example, the fatigue of 6 weeks later, we're like, well, we need to do something else. And we open, and then of course it hits us because this thing is already everywhere. There's no stopping from getting to Texas in a way that— so then we have our wave in the summer that was pretty bad, but somewhat managed under— without any other extreme lockdown.

So much of the country locked down too early, and the Northeast clearly locked down too late. That's how I would put it.

But wouldn't you agree that it was almost impossible to know when to do it? It was like, we don't have the models. Um, but that's why I want to touch on the epidemiology here. There was a lot of quick trust given to a set of scientists that, quite honestly— and I think you rated them quite poorly in your writings as well— that were just not ready for it. They didn't have the right models. They had models that were, you know, cartoonish in some ways, uh, that did not really help public policy in any meaningful way.

Sure. But, you know, I wrote at the time most of the country is locking down too early. So I don't think it was impossible to know that. And if we had taken that first 2 months and used it to build up testing capacity, it would have been quite easy to know when different places should lock down. I don't think one should infer from all this, well, the whole lockdown was a mistake. We did many parts of it badly. We could have done it much better, obviously with more testing, but even just more common sense. And it's not what we got. And I agree about lockdown fatigue completely. So by the time these places maybe should have been locked down, they were like, we did this 4 or 5 weeks. We lost a lot of jobs. We got nothing. We still don't see any virus. We're not going to keep on going. That's understandable.

Right. And that, I think, created a whole problem of any kind of a— attempt to do something later would be very difficult, right? Because the prescription of that policy in the first place didn't do anything other than harm.

Mexico is a country that didn't really lock down at all. Their casualty rate is very, very high. So again, I think some degree of lockdown was called for. I wouldn't— even the bad way we did it, I wouldn't trade in our response for that of Mexico. Brazil also had trouble. As you know.

Yeah, but I actually think Brazil is in some ways, um, did somewhat relatively the same as the U.S., and which is striking to me that a country that starts with a much lower, much lower health status and, you know, doesn't have as good hospitals and have enough healthcare capacity, he has been able to manage, um, at the same level of death per capita, I suppose.

You have no winter. Right, practically speaking.

We have no winter break. That's right. That's right.

And we had our worst problems in a coldish part of the country when it was still quite cold. So the seasonal variable in retrospect seems more important. People mentioned this at the time, but it does seem a bigger deal.

All right. Do you think that the surge that we're seeing right now is mostly, mostly coming from that?

The surge in the United States? Yes.

Yes.

And Europe is weakest in the south, but the European surge It's seasonal, but for a different reason. I think it's August vacations and subsequent spread rather than necessarily being cold. The European Mediterranean is not really that cold right now. Parts of it are having very severe problems, and that seems to come from vacationing.

And do you— how do you look at what the UK is doing right now, or other parts of Europe? Do you think that their lockdowns are still the right prescription?

Are they locking down too many things too severely? Again, it depends exactly where you mean. So you say the UK, but Scotland and England are themselves in very different positions. London and the north are in very different positions. If someone says Liverpool needs a pretty serious lockdown, I'm inclined to agree. It doesn't mean the whole country should lock down everything, and Scotland probably shouldn't lock down much at all. So it's really a very finely grained set of decisions. Which most countries have not done so well with.

Right, they've been too blunt and too centralized in some ways, right? Not taking advantage of the information locally. So would you say that the US, again, going back to our discussion on federalism, that maybe the lack of coordination might have hurt us, but perhaps the lack of coordination also gives us the ability to do the implementation of these policies in different ways, in different times, potentially, if needed?

Yes, I think our response in the long view of history will look somewhat better than it does right now.

That's interesting. Now, let me ask you about economists during this time. You saw a lot of a flurry of papers by economists early on, papers on trying to use a lot of the— I mean, if you look at epidemiological models, they're not very different. In the use of partial differential equations, for example, than a lot of economists use in macro, for that matter. So you saw a lot of macroeconomists writing papers early on trying to modify the models that were, were being put forward by epidemiologists. And, and so that was kind of a positive thing. I think the field of economics came to, to, to the help of this new problem that not a lot of people thought about and, and provided good knowledge. Now, I don't see those papers or that knowledge really being being put forward in front of policymakers. I think that the epidemiologists that were the first ones that policymakers talked to are the ones that are talking to them right now still. For whatever reason, they are the experts and they're the only ones the policymakers look to. So how would you rate the response by the profession, by the economics profession on— so that was a positive, I would say, but I think that they have been not as vocal or as participant in the decision-making process as I would have hoped.

I don't think those papers have had impact. As you were saying, I think the problem is fundamental. I guess I do blame the profession as I would blame epidemiologists. The key decisions are about what we would call public choice, like what will people actually put up with? Is this sustainable? So you can solve for the optimal whatever at the wazoo. But if you don't have a sustainable plan, people will rebel against it as they did in Europe, as they did in many parts of this country, not Vermont, I get that. So it should have been public choice economists doing the work. So I don't think our response on that was helpful. It was not worse than the epidemiologists. Really helpful response was the work Michael Cramer and his team had been doing for some time on advanced market commitment. And that was like an A++ home run. And we're seeing the benefits now with the new vaccines.

So the— I'm thinking about somebody that I thought has been doing good work, but I don't think has had the impact that I expected, Emily, Emily Oster, on the work that she's been doing on schools, trying to point out the high trade-off that we're paying here, the price that we're paying on having schools closed, for example, and the sort of data suggesting that the impact of school openings are not particularly bad on the dynamics of the pandemic. But I just felt that the profession as a whole did not spend enough time trying to make the exact same case that she was making, at least for the area of study that she sort of focused a lot on, right? Children and raising children, etc.

So, um, Emily's work on that, I'm not convinced we currently know the final answer.

Oh, I agree that we don't know the answer, but we do at least have some information that— I mean, maybe I am too skeptical of the value of lockdowns in particular for younger folks. But I think we learned some lessons throughout the process. I think there's variation already on school openings versus school closings. There's variation on what universities did. And we observed that the variation doesn't seem to correlate very strongly with any any big improvement or a big, big, big worsening. I think that a lot of it happens the way it's going to happen, and we don't have much control over it. So the attempt at least to put that information together, even though I agree with you that we don't know, we don't know the final, the final answer, uh, will be very helpful to help mitigate the process. And I don't think we saw enough of that coming from the econ profession.

I looked at all of that work. I advised my own university to stay open in hybrid fashion We did. It's actually gone pretty well. So I mean, that's my inclination. But still, I think we will know much more, say, 2 years from now.

That's true. Once everybody's vaccinated and we are— we are—

exactly.

Yes. The other thing that I like to bring up is that you made a prediction, I suppose. You called that we're going to go into a yo-yo model. I think you're pretty right. I think you just got it to be what we end up ending up here, right, of this, the cycles of, of the virus coming in and, and a little bit of locking down and then opening up. And, and, but, um, the very beginning, without the massive testing process, nobody seemed to be actually have to be able, uh, being capable of doing in a way the test and contact trace necessary to really put a lid on the, on the pandemic. Um, it was almost like unavoidable, right? You're gonna lock down You're going to open it up because nobody can stay locked down for that long. It's going to come back, going to lock down again, and we're seeing these waves coming in. What do you think could have— would have been possible, really, to have accomplished to avoid this? Assume we did the right thing in locking down in the first place at the right timing. Do you think it would have been possible to have effective testing and contact tracing done through the government in order to have this been a better outcome in the end.

We could have had more rapid tests more quickly if— excuse my sneeze— if not for government regulators. I mean, the tests are still there and not approved. So we could have done much better. Now, contact tracing, I certainly can name countries where it has worked. I tend to doubt it could have worked that much better in this country. Or in say England. So I'm for it in the abstract. It's not a thing I've been pushing for the United States. It's just culturally very alien to us and people are not inclined to cooperate. You can cite the successes and, you know, I'll acknowledge that. So I just think more rapid-fire testing, including at home, could have made a big difference. Even on the yo-yo, I've been a little surprised at how much risk people are willing to bear. I thought everyone would be just a bit more terrified and more staying at home. And about that, I don't think I ever wrote down my prediction. I know mentally what it was, and on that I've been wrong.

Interesting. So you think it's the— let's say a college student. Do you think that they are being too risk tolerant?

Well, it depends how they're behaving. So there is some—

The typical one that you're seeing out there, they seem to be going to parties. They don't say— I don't think that there is a big change in behavior on those students for the most part.

I think that's both a prudential and a moral mistake. It's a moral mistake because it's unlikely they're totally segregated from older people. It's a prudential mistake. And I know people who've been hit by this. A chance of long-term damage. I'm not sure what that chance is. Look, a vaccine is coming. Just to say to yourself, I'm going to have, you know, 8 or 9 months of my life where I either don't party or I only party with people who are very safe and I'm very close to. Like, is that so hard? You know, would people in 1957 have found that so impossible? But to me, it's a kind of social deterioration, how poorly we've performed on that. So a wide-scale ignoring of what should be a stronger social norm.

All right, so moving forward, what's happening? What's happening next? Do you think that this is it? The vaccine is going to come in in a month, we're going to start getting vaccinated, and we're out of the woods in a couple of months, or—

No, not a couple of months. The question is how rapidly delivery and distribution will go. Given our performance so far, it probably will take somewhat longer than people are thinking. So, you know, maybe kind of normal Americans are starting to get vaccinated in March, which is more than a couple months. It's within sight. And then how many people will want it? How long will it take? How will the cold storage facilities work? There are still major, major challenges. This is a very definite turning point. To think that an awful lot of things will be normal by September is, while not a certainty, it's the best default assumption. Someone just invited me to give a talk in Wyoming in late September.

I'll think about whether or not I'll do it, but COVID, if I say no, it won't be because of COVID So, so in that, in that I actually didn't have that question, but you mentioned this and I, I think this is a good point. Do you think we're going to see a big change in our business now, in particular universities and going around giving talks? Um, I find it what we're doing here today, you're visiting, you're visiting us, you know, at Texas. Of course we're missing a big part of that, those interactions. It'd be nice to have you here, have you go to lunch with us, talk privately and so on. Uh, but the, the, I think we quickly turn into this model where we have these conversations over, over online. You're going to give a talk online, this this afternoon and lots of people can show up and watch later because it's recorded. Do you see a big change coming our way? I mean, that's sort of like permanent changes staying?

I see a big permanent change if you mean business travel, business conferences, and academic talks. I think at least a third of the physical travel will never come back. And it's a lot. How about classes? I think it's ultimately for the better. I'm not saying it's for the better right now. But you'll have greater choice. So people who want to travel can travel. It'll be easier on departmental budgets. You'll have these other people, like we all know Zoom, and no one will think it's weird. You'll have all these great Zoom talks. So it will have ended up as a pretty wonderful adjustment.

And how about the teaching side of it? You mentioned the adjustment wasn't, of course, perfect. We're giving something up. But you also have been a big proponent and investor— not investor financially, I don't know, but like, uh, you've been putting a lot of time and effort into online education through Margin Revolution University and the resources associated with your book and so on. Uh, do you see this, this being like a shock that is going to basically demonstrate that, listen, this works and we can do a lot more with these levels?

And again, I don't think face-to-face will disappear at all. If you do 25-30% of your degree online and you live on campus and you have all those other benefits and you get to know your professors, that will be the world to come. And again, I think after some while it will be clearly better than what we had been doing.

I just fear that universities are so conservative and so tied to the ways they do things that it's going to be— they're going to fight it off. Our administrators are going to be fighting it off, any kind of movement in that direction. But I'm hopeful. I'm hopeful that at least I've learned that I can do a lot of different things in my teaching that can be complemented and improved by the online.

A lot of these schools, I don't know about yours, mine actually is fine, but a lot of them are strapped for money. So when there's a cheaper Zoom alternative, I mean, they're conservative, they're terrible, they're bureaucratic, it's all true. At the end of the day, this forced their hand. And then the fiscal constraint gonna stick some of it.

That's true, that is true. Uh, all right, before we wrap up, I have to— I mentioned my wife earlier, she's a big fan. She made me promise that I would do a round of underrated, overrated with you.

Of course.

Okay. All right, absolutely. All right, so we'll start with a tough one: climate change.

Well, you need to specify what exactly the question is. The risks of it are still underrated, if that's what you mean. Because I think the pandemic has shown we're fools in how we respond to crises. So whatever you think of the objective data, I would say the human response as a problem is still underrated. We're not going to respond optimally. So I say underrated as a problem.

Underrated as a problem. OK, I'm going to try to be more specific. If you look at the Pigouvian tax that we should be imposing on carbon in order to to solve this externality?

Overrated.

Overrated, okay.

Look how much progress we've seen, like electric cars, Tesla, solar, battery, without much in the way of carbon tax. Like, you can either do it or you can't. And yes, as an economist, I believe in elasticities. In this particular case, I think they're somewhat overrated. I'm fine with the carbon tax. I don't think it's a difference maker. Not a thing to go to the mat for. It's a marginal improvement. At the end of the day, I think we'll do most of it without a carbon tax.

Brazilian food.

Brazilian food is one of the world's greatest glories. Pork and beans dishes of like minestes might be my favorite. Meat in southern Brazil, I think, is better than Argentina. Even to something you wouldn't think, like the sushi in Rio or the Italian food in São Paulo. Like A++ world class. It's one of the great parts of the world in which to eat. I love palm oil, moqueca, you know, from the northeast. Like, where does one stop? Just like the oranges, the fruits, the manioc flour, sandwiches. My goodness, so many glories in Brazilian food, maybe even underrated by Brazilians.

I would like that answer. I love that answer. I love that. I thought that you'd be, you'd be like, oh, you understand how vast and the number of variety of foods we have, and that's really great.

Order in progress, right? You see it in the cuisine.

Exactly. All right, Northern Virginia.

Drastically underrated. So you can still afford to live here. Winter isn't that cold. You have 3 airports, incredible, amazing ethnic food with great diversity. You're near Washington, but also away from it. There's so many trees here. You can buy like a very nice home, clearly under $1 million in a way you cannot in New York or California or Boston. So I think it's, at least for me, the best place in the world to live, but not just for me. The nice things it has, it has wonderful parks, public libraries. Uh, it's hard to beat.

Texas.

Time here is pretty reasonable, pretty low.

Sorry, Texas.

I'm not sure if it's underrated anymore. I mean, it's been underrated. I wrote this big story that was on the COVID of Time magazine predicting what a bright future Texas would have.

When was that? I don't think I read that one.

It was like 8 years ago. I'm not sure. And you just look how many cities Texas has that are growing like crazy. But it seems to me by now this is well known. It's become properly rated, but the bullish story is still true. Like, I'm not repudiating that. It's just so obvious everyone knows it.

So finally, getting rated on Marginal Revolution.

Getting rated on Marginal Revolution. I think it's underrated. Like Steve Levitt once told me, the one thing that did the most to sell copies of Freakonomics would be Marginal Revolution covering it. So I'm not sure everyone knows that, but it really goes a long way, publicity on Marginal Revolution. People have no business being nice to me or nice to me, so maybe actually it's overrated. Like people who are like tenured at Harvard, they're working harder to be nice to me than I am to be nice to them. What does that tell you? It's weird.

Well, I can tell you that, I can tell you that my highlight of my, of my 2020 has been being called excellent in Margin Revolution, not by you, by Alex. But that was, that was, uh, definitely a highlight of my career. So I think, I think it's underrated.

Thank you.

All right, Tyler, thank you so much for joining us, and, uh, look forward to your talk this afternoon.

Catch you later today. Thank you. Bye.