Tyler Cowen on The Great Stagnation, plus debate with Michael Vassar

Okay, welcome back. Tyler Cowen is next. He is a professor of economics at George Mason University and a prolific author. He's most famous perhaps for his blog, Marginal Revolution, where he publishes an astonishing average of about 5 posts per day. But over the course of his career, he's also published 15 books, more than 60 journal articles, an introductory economics textbook, and an extensive ethnic dining guide for the Washington, D.C. area. He also writes the Economic Scene column for the New York Times and contributes to the New Republic, the Wall Street Journal, and many other publications. His most recent book, The Great Stagnation, has become the most reviewed and debated economics book of the year. It's dedicated in part to Peter Thiel, And the book examines an apparent slowdown in US economic growth, life expectancy improvements, and overall technological change. Tyler is here today to present his provocative argument that technological progress has slowed and that techno-optimism is misplaced, at least for now. Please welcome Professor Tyler Cowen.

Tyler Cowen.

Thank you. It's very much an honor for me to be here. I'm going to get to some numbers in a bit, but I'd like to first talk about the modern world, what kind of world we live in, and how it's even possible at all that there could be a Great Stagnation. So this is a, a slideless part of the talk. But what are some of the things that have gone wrong or that have been harder to improve? The first idea I came upon when thinking about the Great Stagnation is this notion of the plateau, that there are some things at certain margins, it's simply hard to improve them a lot more. So I think sometimes about my sofa at home. At home, I have a very comfortable sofa. And if you go to people's homes that are maybe a bit older, their sofas aren't as comfortable as mine, even adjusting for income. But when I think, how am I going to make my— How am I going to make my sofa a lot better? Basically, a sofa can only get so comfortable, is one way to think about it. Now, I may believe that 60 years from now, my sofa will read biodata from me and tell me when I need to go to the doctor. So there will be some future breakthrough. But I see in the world today, there are a lot of areas where we're at various plateaus. I think also, you know, what was the big breakthrough of the mid-to-late 19th century? It was blending cheap fossil fuels with machines. This gives us air flight, it gives us the car, it gives us a lot of trains, and those in turn bring benefits of their own. But if you think, say, about the car, the next step of the car, say the flying car— we're very far from the flying car. Flying cars aren't safe, flying cars are expensive, flying cars don't fly is a big problem. So my tires are better, the car's safer, the sound system's better. We're getting these incremental improvements, but again, no breakthroughs. So I think of today's world as somewhat being a world at a lot of plateaus. Another way of putting this point is to think about what are growing sectors and what are sectors that are already fairly mature. In recent times, large and growing sectors have been healthcare and education. And these are pretty stagnant sectors. So something like making food cheaper, for a lot of the 20th century, wasn't stagnant. But food is already pretty cheap. A can of Goya beans, very tasty, it's very cheap, you could make it a little cheaper, but even if that can were free, I'd only be a little better off. So the areas where we need improvements, healthcare and education, basically in those areas we are working with people. And the general lesson of modernity is that working with stuff is a lot easier than working with people. Stuff is malleable. You can tell stuff what to do. You can, you can kick stuff. You can scream at stuff. You can move stuff around. You don't have to get the permission of stuff. But all the great advances in working with stuff, which are truly real and vital and phenomenal, but a lot of those are behind us, and at the current margins, we now have to work with people. And that's another way of thinking about why there's been a certain amount of stagnation. Working with people is harder than working with stuff. Uh, another force that comes to mind has to do with the nature of science and what the individual scientific mind can grasp. And there are a few ways of putting this concern. One way it's sometimes expressed is to worry that today science is overspecialized. Now, it may be optimally overspecialized. That is, the amount of knowledge in chemistry or mathematics or economics is so vast— that the individual scientist has to specialize and "over-specialize." There's nothing wrong with that. There's no other way to do it. But it still could be where, at a margin, where the individual scientific mind in a lot of areas cannot very easily grasp the whole. And that makes it harder to produce big advances. So I contrast this to the mid-to-late 19th century culture. Of the inventor, you know, in his garage banging out something, and really understanding every step of the process. And I think when the individual human mind can oversee a bigger part of something, it could be that innovation is easier. There's an extreme version of this point, and that's to worry that perhaps today we're on the verge of a state of affairs where individual minds no longer grasp science. So I don't think we're quite there. So if I think of economic models, The smartest economists, and even people not that smart, can understand our best economic models. Maybe they're not very good, but we can understand them. We know how they work, we know how they tick, we know how the parts hang together. But the models, as they get more complicated, we have to face up to the possibility that we're living in a unique time where minds can grasp science, but maybe 50 years from now, science will not be graspable, in a lot of areas by individual minds. So scientific advances may come from AI, but we could be at this funny in-between point where we can— our minds can just barely grasp what science is telling us, but we can't grasp it well enough to be making these large major breakthroughs. And that's again related to this notion of overspecialization. Uh, 3 or 4 other factors behind stagnation. One is what I call rent-seeking. There are plenty of innovations, basically, in ripping people off. You know, it may depend on your politics or the story you wish to tell, but you look at the financial sector, you look at the healthcare sector, you look at the education sector, in this country they're all malfunctioning. They're not necessarily that innovative at making our lives better, but they're very innovative at people ripping each other off. You look at politics. There's a lot of innovation in politics. Washington today is very different from Washington 20 years ago. I'm not sure that's for the better. So somehow there's been a shift in the allocation of human talent. A lot more has gone into people ripping each other off, and perhaps less into broadly based innovations that will elevate everyone's standard of life and advance the technological frontier. Peter Thiel very often blames regulation, as does Michael Mandel, another stagnation theorist. Think of it as pebbles in a stream. We keep on passing more regulations. Maybe on a one-by-one basis, a lot of them appear justified, but if you put too many pebbles in the stream, the stream gets clogged up. So if you ask a simple question, "If we had to build today's energy infrastructure with today's regulations, no grandfathering in, no status quo bias," basically, we couldn't do it. So here we are, trying to build tomorrow's energy infrastructure with today's regulations. And we can't do that either. There's too much litigation, there's too much NIMBY, there are too many permits, there are too many levels of government that can tell you no, and this is simply making it very hard. Energy itself seems to be a major issue. Two of the key turning points in the history of recent stagnation are 1973 and 1988/1999. These both coincide with energy shocks. Price of oil goes up a lot. Fossil fuels become more expensive. That costs a lot up front. It also means it's harder to work with stuff. Think of working with stuff as the easy thing to do. Working with humans is the harder thing to do. Gets harder to work with stuff. And as it gets harder to work with stuff, we invest more resources in the less productive sector. We invest more resources in learning better how to rip each other off. And we have an energy problem. You can think of it as if maybe nuclear energy, like, might have been, would have been, could have been the next big thing, but it wasn't. It could be it's too dangerous. It could just be people are afraid of it. There's some different explanations there, but it didn't really become a world-altering revolution. And you can think of the current stagnation as, in a sense, the nuclear dream that never came true. When you read people writing about the future, say in the early 1960s, It's remarkable how much they overestimate the progress there will be. When you read people writing about the future in the 19th or early 20th century, it's remarkable how much they underestimate the progress there will be. A final factor I'd like to mention behind stagnation is just, uh, our educational system. We know it's failing at the lower end, but maybe more important is that it's failing at the upper end. It doesn't look like it's failing. Kids who go to great high schools, they go to Harvard, they earn a lot of money, they do fine, whatever, happily ever after. We all know that. But when you think about, are we really training the top 1% to become major innovators and inventors? I'm not sure that we are. It could be we have a culture which is too egalitarian somehow, maybe not nasty enough. I don't personally want it to be nastier. But when you go back in time and you look at the history of a lot of great innovative efforts, Or you look at the management styles at Apple. It's not all nice and respecting each other. You look at mid-to-late 19th century Germany, a phenomenal innovation powerhouse. It was a somewhat authoritarian culture, anti-egalitarian in ways I and probably most of us would find objectionable. But nonetheless, it delivered the goods in terms of innovation. Overall, what I find stunning is to compare the world we live in with the world of invention and innovation, say, 1870s, 1880s, which is when the big breakthroughs really started to come. In those days, the 1870s, whether here in Europe, most people did not finish high school. And get this, they did not have peer review. They did not have resumes. They did not have LinkedIn. There wasn't much in the way of wealthy foundations. There was no internet. There weren't many, if any, good universities. The per capita standard of living— it's hard to compare over time, but to be sure, the United States per capita, say in 1900, was a poorer country than El Salvador is today, by available measures. And yet those people back then, they kicked our butt when it comes to innovation. They so thoroughly crushed us that we should be embarrassed And here we are parading, we have these wonderful things, our wealth, our freedom, our egalitarian culture, we have our foundations, we have our grants, we, you know, we email our scientific buddies, and yet these supposed bozos back in 1874, you know, were eating our lunch. And I think that's a very important, very significant lesson, which we as a culture have not yet digested. We do not sufficiently value, love, honor innovation, we have not made a kind of theology of it. Rather, we have moved in the opposite direction. Now that's my portrait of the modern world. Let me just show you some pictures of numbers, and then after that I'll close by talking about how we might get out of this mess. Uh, that's my book, which lays out some of these arguments. Uh, this is median family income. There are a number of ways you can read this graph. It's a little complicated. Let, let me give you two ways of putting it. Since 1973, median family income in this country has gone up less than 30%. Since 1969, male wages at the median have gone down. Stunning facts. It is true our lives are better in some ways that are not captured by these numbers. It's absolutely true. Crime rate is lower. New York is more pleasant. There's some fun stuff people back then didn't have. But nonetheless, no serious economist back then would have predicted this. This is the number one sign of growth slowing down. Here's some other numbers. This is something called TFP by economists, total factor productivity, sometimes called multifactor productivity. This tries to measure how much of economic growth comes from new ideas. Not how much comes from women working longer hours, or someone taking a second job, or people saving more, but how much comes, mana from the sky, new ideas, being discovered or invented. And at about 1973, this starts doing very poorly. This is set up in terms of logs. To make this a little more intuitive for you, say in the best years of the '20s and '30s, TFP was often running over 3%. Every year from new innovations, you'd get like 3% a year falling from heaven into your lap, even if you didn't really do very much yourself. Since 1973, you have an awful lot of years where TFP is about half of 1%. Lately, TFP's been running at about half of 1%. The late '90s are an exception, but most of the time, by this measurement, this admittedly imperfect measurement, we are innovating at a rate at about one-sixth that of the better years of the 1920s and 1930s. And yes, the '30s were the Great Depression, but they were still a remarkably innovative time. This is the single most depressing graph I can think of at this point in American history. 1973 is the breakpoint. Here's high school graduation rates. They peaked in the late 1960s. This, to me, says something is badly wrong with our high schools. Uh, again, the more serious problem may be at the higher achievers' end, but that's harder to measure. But basically, our K-12 education system is dysfunctional, and this is starting to hurt us. Unemployment now is very high, as you all know. But the funny thing is, there are a lot of firms that would love to hire more workers. They just can't find workers with the training they need. You have the odd phenomenon in Silicon Valley that there will be acquisitions, or mergers, or takeovers, not to get the products of the firm being taken over, but just to get their workers. You take the firm over, throw away their products, keep the workers. That, to me, says something is badly wrong with education. And it gets back to the notion that it's easier to work with stuff than people. In 1900, 6% of Americans graduated from high school. To get that from 6% up to like 70%, I don't wanna say it was easy, but we were working with the more easily educable students. And now we're at the margins of the people who are more recalcitrant or less interested or maybe less intelligent or not brought up in the right culture, whatever the problem may be, but you see it right here on this graph. Job growth by decade. Complicated graph. Just focus on the bottom red line. That's the new millennium. Zero job growth. It predates the financial crisis. That's a big ouch. Of course we've had growing population. For whatever reason, labor market's not working. I would say we have not had a new enough— new things to produce which are really grabbing people's attention. And some of the things we have had just don't take many human jobs to make. I'll get back to that. Ugly graph. Here's another one: crop yields. You all know about the Green Revolution. It's less commonly known, Green Revolution more or less ended in the early '90s, and agricultural productivity since then has gone up at a much slower than average rate. So even when it comes to food, progress seems to be slowing down. I would not say it's a big problem in America, because the goya beans are still cheap, steak is still pretty cheap, but around the world, this has been a very serious issue. It's another reason to be concerned. Ah, life expectancy. I'm a big fan of Sonja Aronson's work. I do think there will be future breakthroughs, but if you look at the rate of growth in life expectancy post-1950, it's much slower. It's at about a third of the rate as pre-1950. Think of the big advances. They're like clean water, vaccines, and antibiotics. Most of that is the earlier part of the 20th century. That was the low-hanging fruit. We're now on to some tougher problems. Yes, I do think we'll someday cure cancer and there will be future advances, but in a lot of areas of medicine, progress has slowed down. Antibiotic resistance is coming upon us. We may even be losing ground. Public has somewhat lost faith in vaccines. It's again not an altogether encouraging story. Here's just some graphs on our dysfunctional healthcare system. Let me skip those. The bottom line is we're spending a lot of money, we're not getting better results. When you look at the great stagnation in the US in particular, I think a lot of it is healthcare. There have been advances in healthcare, but we're just paying way too much for them. I think we're running the risk of moving to a world where all of the gains, or most of the gains, are captured by the elderly. Nothing against the elderly, I'm approaching that period myself at some point in time. But nonetheless, when the world is such that people aged, say, 0 through 60 or 65 don't see a lot of gains from growth, even if your old age is much more pleasant, there is still something in the political economy of this which I think will prove problematic. Retirement today is a lot nicer, jobs are less tough, people are more able to get around, to travel, old age is much better, that's wonderful, no need to deny that. But we're veering perilously close to a world where older generations are getting all the gains from economic growth, and I think that's not healthy. More on the healthcare system. It's a mess. No need to read that. Looking forward, you know, we're getting older, and I think there are two forces racing against each other. I'm not sure which will win. The good news is that a lot more countries are getting close to the scientific frontier. I think they're not as close as it's sometimes claimed. So, like, truly new ideas coming from China and India, we don't have them yet. There's still a pretty small number of countries on the frontier that can do something really new. There's North America, there's parts of Western Europe, there's Japan, probably Australia and New Zealand, Israel, and that's about it. And even a lot of what happens from those countries happens in this country. And just all those countries, I think, except for Israel, they're getting older, and they're getting older pretty rapidly. So most innovators are fairly young, and if our populations are getting older, this is again a cause for concern. But the good news is a lot of potential innovators in China, India, Brazil, Turkey, wherever, are coming online. Who is going to win this race? I would say we don't know. But so far, we're losing this race. China and India, they make things cheaper, but they're not producing that many new ideas. So far, we are losing this race. A way to make this intuitive is that by the year 2030, the average age structure in the U.S. will be like current Florida. Now, 2030 is not that far away. In 2030, you can imagine what Florida will be like. So we're going to become much older. We need to worry. All is not lost, because other countries have a lot of young minds that will be coming online. So anyway, that's the basic nature of our predicament. Living standards aren't going up for the average person nearly as much as they ought to be, or perhaps could be. What's my view on how we're going to get out of this Great Stagnation, which now has lasted almost 40 years? I think there are a few options. I'll review them very briefly. Well, let me just say one other thing about the Internet. The one area where there's been fantastic progress is the Internet and telecommunications, like the iPhone. I have one. I bought one the first day. It's great. But basically, that's it. Earlier in the 20th century, you had equally remarkable advances in communications, including radio and TV, and even silly things like typewriters. It was a big deal at the time. What we're trying to do is run a capitalist system on one vital sector, and otherwise, a lot of rent-seeking and privilege-grabbing and stagnant growth and spending too much on healthcare. That's the world we live in. But this stuff, it's great. No need to deny it. But here's the way to put it. We know the final outcomes are kind of unimpressive. So the more you think that iPhone, whatever, is great, the more you have to revise down your sense of how these other sectors have been doing. So you can be as optimistic about the last 10 years of this as you'd like to be. It's fine. I am too. But it just means the other sectors have actually then done all that much more poorly. Anyway, ways out of the Great Stagnation. One possibility is, you know, the genome being sequenced and biotech and medicine. This, of course, is possible. I'll just say, if you go back and you, like, read Business Week 10 years ago, 12 years ago, people then thought it would have happened by now. There was a lot of optimism about sequencing the genome. The science has advanced phenomenally. In terms of marketable products, it's just a trickle on the market. It hasn't happened yet. At some point it'll happen, but I think of that as an area where it's actually going to be pretty tough. And you see some ways, like obesity, where on health outcomes we're going backwards. So I'm not an expert on healthcare, and I don't deny there'll be a breakthrough, but it's not actually the main area I look to in the next 10 to 20 years. What about energy? I think we could have breakthroughs with green energy, clean energy, maybe some kind of fusion. I think it's far too overregulated. I don't see it happening right now. I actually see some backward progress. Say, nuclear power is not very popular. Hydroelectric's not moving forward. Wind, we have the technology, people just don't want to do it. It's up to them, but, you know, we're not really making this happen. Solar, we'll have to see. Again, fossil fuel prices have been pretty high. That says to me solar is not just around the corner. One area for a possible breakthrough, it's not discussed often enough, but I think are drugs. And I don't mean pharmaceuticals, I mean drugs. Like really fun drugs that are safe and not low social status. Tyler Cowen. But I actually worry about this. This is again a kind of implicit race, drugs against tech. We're all focused on tech, but I'm worried that drugs will beat out tech, and there'll be all these fun drugs which are safe, and 2 generations from now, they'll be way too popular. Maybe people will be happy, maybe I shouldn't worry. I don't like it aesthetically. I wanna see tech beat drugs. I'm afraid drugs are gonna beat tech. So drugs could be a big winner. I'm afraid of that. I wanna see a great stagnation in drugs. The most likely area is artificial intelligence, which are— where I think you see on-the-ground successes now. I don't think they're quite the things you might pull out of science fiction movies. A lot of them are pretty prosaic. But I think it's here. I sit down, I play chess against Rybka, and Rybka beats me every time. And that's been the case for a while. And when you go back to the 1970s and read skeptics like David Levy, on computer chess. They thought it would be very, very hard. It turns out we've solved a lot of those problems. We have algorithms which work now. Google is a kind of AI. Match.com, Netflix are all using AI. The notion that AI will be embedded in things that work— it may not look like AI, it may not be that you ever marry a robot or whatever in that direction, but I think you can tell a pretty convincing story about AI that doesn't require a major new breakthrough but simply further improvement of what is already working and already influencing our lives. I think what that future will look like will be very interesting. In the last few months, I've started a book on it. In this book, I'm trying to bring together ideas from economics, ideas about chess and the practice of chess. There's that famous Soviet saying, "Chess is the drosophila of artificial intelligence." meaning that's where things happen first. So let's look to chess to see how AI is actually gonna work, because Ribka, Stockfish, Houdini, all those other programs, they're fantastically strong. We all know about the Deep Blue match and so on. To me, this is a reality. It's not utopian fantasy. It's happening now. It will continue to happen. And furthermore, it's not very regulated. You can just do your AI. There's some general business regulations you face, but it's not like trying to build a refinery in Arkansas or something. You can do it.

Tyler Cowen.

I think in that future, it's going to be not a question of stagnating medians, but a question of the distribution splitting. There'll be a polarization of incomes. So a lot of people will be much better off. And then there'll be some people who have to compete against the smart machines. And they could still be stagnant or maybe even be worse off. So the new story will be about not a stagnant median, but rather a splitting distribution with a lot of large gains. And we'll all have to ask the question, which will be the focus of my next book. How can we get as many people as possible into the gaining part of that equation? Anyway, there's time for questions, but that is my quick take on the Great Stagnation. Uh, you can buy the book outside, and you can read more of me at my blog, marginalrevolution.com. Anyway, thank you all for listening. Yes, question? It seems to me that— it seems to me that almost every area of stagnation that you described, there is a part of the culture that deliberately works hard to make that stagnation happen. I teach in a college. And the whole deconstructionist, nihilist liberal arts department works really hard to suppress the creativity of the engineers and the architects and the designers, and I think their ideology is winning with the students, and they have produced this nihilist generation. Would it be worth attacking that nihilism? Uh, that's a good question. I face similar issues, uh, in my academic life, so I, I understand pretty well your point. But I, I always tend to ask, what's truly the forcing variable here? So there's a lot of hostility towards science, but why aren't the pro-science forces stronger? And I'm not sure that the pro-science forces simply making rhetorical moves is enough to do it. I think in part there's some broader social equilibrium where a lot of forces have left the defense of science because they, at some implicit level, feel science is offering them less. And thus they're moving into other ideologies. So maybe the Great Stagnation is in part a cause of that development. There are just fewer reasons to ally yourself with science. Uh, one of the encouraging things about singularity thought is that it's putting forward a new vision where people can see new and better reasons to ally themselves with science. But I tend to think, you know, attacking the enemies may be a waste of time. It's really constructing the positive vision that's going to get the job done. Yes? A lot of people in this audience probably read Martin Ford's book, Lights in the Tunnel, about automation displacing a large number of people, especially with, you know, development of AI. I don't know whether you read the book, but— Sure, of course. It's a seminal book. Brilliant book. So can you comment on that, please? If you're curious, there's a symposium online I did at the New America Foundation a few weeks ago, where I talk in detail with him on his book. I like his book, I think it's brilliant, but I think he's too pessimistic. Robin Hanson, in one of his papers, has pointed out the returns from owning capital and owning machines, and how much you can do with that, and I don't think Ford has enough on that. I think if you can automate services like healthcare and education, there will be very strong gains for a lot of people. And even people who do not themselves work well with machines will get some significant real wage gains. So I think he's too pessimistic. I think his concern is a very valid one. Uh, but keep in mind, smart machines, they need people to work with them. And not all of those people need to be brilliant engineers or programmers. So smart machines will create a lot of new jobs. Uh, smart machines don't just get things right. There are long periods of transition coming at different speeds in different areas, and along the way smart machines need a lot of help, including, you know, help from the janitors or whoever it will be. So I think he's asking the right questions, but I think he's a little too pessimistic. Since I can't actually see where the mics are, I was supposed to call on you all, but why don't I delegate that?

Tyler, thanks so much for your thoughts. John Chisholm.

Hi.

Innovation seems to be one of those things that I think it's helpful to break it apart into its components to think about it rather than to view it in the aggregate. Let me suggest 3 components. Number 1, an underlying level of innovation that works by one idea piggybacking off of another, that it seems to me is undeniable that this is continuing to increase today as a result of the internet, the easy sharing of ideas, and has— and is part of a trend that's continued over millennia. The second component is one that you mentioned, which is industry by industry, and some industries have been held back by regulation and by privilege and so forth—healthcare, for example, and the collaboration, implicit or explicit, between large pharmaceutical companies and the FDA, which has kept out smaller competitors and thereby harmed innovation in those sectors. A third factor is the transfer of major segments of the economy from the United States to overseas, which has— such as manufacturing, and with it the innovation associated therewith, which has affected the rate of innovation in the United States, but if you look at the global level, Not so, and your household income chart looks at just the United States, I believe, and I think if you looked at the whole world you would not see that thing tapering off, but it would be continuing to go up. So this is a way of looking at the question that seems to me sheds light on it.

There are many points in your comment. Let me take a few of them working backwards. There's been median income stagnation in the US, but not in poorer countries such as China and India. Anyone— almost any country playing catch-up has done extremely well, and that good news is more good than our bad news is bad. We should all completely welcome that. But still, when you get back to the question, the countries on the frontier, the technological leaders— US, Canada, Western Europe, Japan— how have they done in terms of growth? It's a pretty dismal picture, and in the longer term, that picture being dismal will also hurt the countries playing catch-up. Japan is maybe the most serious case of stagnation at all. That's hardly ever disputed, but for more than 20 years they've had various gains in quality improvement, but growth traditionally understood basically has just stopped there. And I think that's a kind of wake-up call. People didn't think that really could or would happen, that you would have an advanced economy— not that they do everything right, but they have reasonably good institutions, They grew at a phenomenal pace after the Second World War, and then they just woke up one morning and growth stopped. Now, in Italy, which is facing a fiscal crisis, there hasn't really been growth for at least 10 years. The U.S. has certainly had some growth. It's had an odd distribution. It hasn't benefited its— of a typical household that much. You couldn't say that here growth has stopped, but it's become skewed and not nearly as useful as it could be. I think that's the way I would portray the picture. You mentioned outsourcing. I think we're at the point where the internet is still quite an immature technology. It hasn't brought a lot of the real gains to people. The real gains to people will be taking education and healthcare and making them much better and much cheaper. The internet has done some amount of that, but for the most part, it hasn't done that. So, what I would call the, the cognitive elite, people in this room, they tend to overvalue the internet because they see how good it is for themselves, and they already have pretty good healthcare and maybe excellent education. So the internet seems to be this all-important thing, but what the internet really needs to do is put education and healthcare in order. In due time, I think it will do this. But in the meantime, we're in this funny state of affairs where the internet allows a lot of outsourcing, which creates a jobs and wage issue, without yet delivering the commensurable benefits in the areas of education and healthcare, because the outsourcing is for the making of stuff, The education and healthcare are the working with people, which is tougher, and my view is it's all going to catch up to each other and we'll get those gains, but I don't think we have yet, and that's yet another way of framing why we've had this problem with median income.

Next question, two-thirds of the way back on the left.

Okay, you mentioned energy. I'd also like to point out that I expect there will be immense gains, technological gains, coming out of China in terms of public transport, especially high-speed rail, because they are able to implement systems we can only dream of. Also, yeah. China is an important issue. There's a new book out, it's called Racing the Red Queen, It's an excellent book. Basically, it argues— it's not written by a China pessimist. The author says China's doing pretty well, but they're just much further from the frontier than you think. And if you look at actual Chinese academic and scientific institutions, simple measures like rates of plagiarism, rates of cheating, integrity of research standards, uh, they're pretty far from the frontier in my view. And I'm actually more worried in the next 20 years about China holding together. So I think it will take longer than a lot of us have expected to get new ideas from China. Their high-speed rail is probably a boondoggle. I think of it as fiscal policy. It may or may not end up working. It could well be, 30 years from now, they were really, really glad they built it. Quite possible. But right now, they're a low-value-of-time culture, and the notion that China needs high-speed anything, when per capita income is like $4,000-something, only a little bit above El Salvador, That to me is a little funny. Think of it as an investment. It may pay off. Right now it's not an advance. It's a kind of fiscal white elephant. Next question right here in the first row. You mentioned across a number of industries the— we've been very innovative in ripping each other off. Do you see that as sort of a regulatory failure or a cultural failure or something else entirely? I think it's both. So think of 3 of the main rip-off sectors as being healthcare, education, and finance. All three are highly regulated. In a lot of ways, you can blame the regulations, but in all fairness, one has to note, in part, they may be regulated because there's a lot of ripoff going on. I think healthcare, you have an unholy mix of massive government-driven third-party payment, combined with the human imperfection of not thinking rationally about death and choice at the margin, and what a life is really worth, and you bring those two things together, and you just get a huge mess. So a doctor tells you, you ought to have something done, the doctor has a commercial motive, it's very hard to say no to the doctor. You've sat in the office, you pulled down your pants, you said, "Ah." You're in a vulnerable position, you did 17 things the doctor just told you to do, and now he's telling you, "Pay me more, or even better, have a third party pay me more," and you're gonna say yes to that too. It's a big mess, supply side is all screwed up. The healthcare problem is not about coverage, it's about supply side incentives, lack of competition, lack of accountability. We're pretty far from fixing it. You can blame regulation, but not only. It's human imperfection. Education, I just think, is generally hard for a lot of people. A lot of people self-educate extremely well, probably a lot of people in this room, but a lot of people just don't wanna learn. Uh, we're gonna have to solve that problem. If wage polarization continues, I think you'll see a future with a return to something like Victorian or military discipline. That a lot of parents will say to their kids, you know, our AI program read your schoolwork, did not pick you as an obvious future winner, and we're gonna send you to boot camp, because the wage difference between, like, being a good conscientious worker and being a failure is now so huge, you know, bye-bye for 2 years, go to boot camp. And I think we're gonna see this come back in the world to a pretty high degree within the next 50 years. And then finance. Finance is a tricky problem. My best guess is sometime maybe in the early 1980s, people in financial markets figured out different and new ways to play the game, "Heads I win, tails you lose." Some of the times, the loser's the taxpayer, and it's because of regulation and bailouts, but some of the times, it's actually creditors, or broader society, or pension funds, or other traders. And it's not only a regulatory problem, but they keep on playing this game, and it's kind of a drain of capital and a drain of talent. And venture capital's highly productive, but I don't think all parts of the financial sector are giving us the value they originally had promised because somehow, through complicated arbitrage across synthetic asset positions, there are ways to game the financial sector. The cat is out of the bag. I would say we don't know how to regulate it. You look at something like the Dodd-Frank Bill, it's a huge mess, doesn't solve the basic problem, may have some good elements, but essentially it's an admission of failure and I never thought that bill was really a very good idea. It's— regulators are showing They don't really understand the game that's being played.

Next question, standing up in the back, in the aisle.

You said it's easier to work with things than people, and a lot of the topics relate to how we repair the system, how we change things, that education system is broken, for instance, or the healthcare system is broken. But the healthcare system is partly broken because every year we get fatter, and the education system is an outdated system that won't take us into the next millennium? How much of it comes back to individual responsibility, and how do we build the leaders to lead the others? Assume that most people don't want to educate themselves, as you said, most people don't want to take that responsibility, but they want to be led that way.

How do we do that?

There's a lot to that, and of course a lot of the K-12 problems stem from its governmental nature. Which to me just makes no sense. No reason why that should be an area where we, you know, cut off competition at the knees. My optimistic but speculative vision is we'll have smart AI doing a lot of educational functions, and it may not even start here, it may start in Singapore or Denmark or who knows where, and the entrenched interests will never really lose the political battle, but people will just do end runs. So if you want to learn how to play chess, you don't go to a K-12 school, you maybe hire a chess teacher, or, you know, you buy Ribka, And Ribka does a pretty good job, actually. And that works. What does Ribka cost? It's $40. There are similar programs you can get off the web for free, with a little more time. So if you imagine education following that model more generally, people pull it down for an almost free price. And the real issue is, you know, not teaching people. Information is cheap. The real issue is motivation. The kids who don't want to learn, how do you get them to learn? And then we're back to the Victorian ethic and the boot camp. And parents seeing wage polarization and wanting to take some pretty drastic steps. I think they will do that outside of our current public educational system. I just think over time that system will be competed away. My speculative optimistic vision is not that that will happen in the next 10 years, but that it will happen in the next 50, and AI will be a large part of that story.

Next question, back to the front row.

Hi, my name is Yuri van Geest. Great talk, thanks a lot. You mentioned demographics as a key driver for innovation or lack of innovation. Totally agree. But maybe on top of that, what about the psychological and social-cultural drivers of innovation? For example, in the West, we are already quite rich so we don't try as hard as the South, for example. So isn't that one of the key motivational issues at hand What are your thoughts about that? Well, you know, maybe we've gotten softer, lazier, complacent. That's possible. It's a little hard for me to measure. I still do see, you know, the wealthier nations are the ones at the frontier, and when something happens, that's where it tends to happen. Silicon Valley is a pretty well-off place, and the people who do well there could have just coasted in some other job and pulled in $80,000 or $120,000, and, you know, had quite good lives. And they didn't do it. So I think the potential is there for these cultures of innovation, and you have one now in Silicon Valley. It's very live, it's very vital, it's very important. We just haven't built enough of those, but I'm not convinced there's anything in modern culture which is making it impossible to build more. Modern culture is pretty flexible, it's pretty diverse. There's a lot in it that's anti-innovation, or neutral, or doesn't care, That's okay. It seems to me diverse enough, you can pull out enough elements where you can build a pro-innovation, pro-science body of thought, emotions, almost a kind of theology. So again, there I'm cautiously optimistic, but I have to look at my own data and say Silicon Valley aside, there aren't enough cases where we've really done it, for sure.

Back left, 3 from the aisle.

In a lot of your graphs, the stagnation starts in the early '70s. What do you think happened in the early '70s?

I would say there are what you might call two waves of stagnation, to invoke a somewhat mixed metaphor. The most obvious stagnation is something like 1999 to the present, and that to me, when you look in the numbers, is completely impossible to deny. There should be unanimity on that. There has been a stagnation. For the last, say, 12, 13 years. Very bad, more of a stagnation than what came before. The broader period of time, in 19— since 1973, there's a kind of overall stagnation, but in between, y-you have some number of what appear to be pretty good years, and when I go back and look at them more anecdotally, I tend to be more and more convinced they are pretty good years. They were also offset by some bad years, uh, and the whole doesn't add up to that much, But it's not just stagnation every year, like 1995 through 1998. Partly it's information technology making retail more efficient. Those were pretty good years. They're good years in the job market. They're good years for median income. It just kind of loses steam. It's as if we don't have enough modules pushing forward. A lot of it's just information technology, so when that slows down in a smallish number of areas, there's nothing behind it. Sort of like a rugby wave, to pick up the energy and run with it. That would be my best guess. I think the immediate trigger in 1973 was the oil price shock, an event whose historical importance is still somewhat underrated by economists. I do not view the price shock as the cause of the whole stagnation by any means. It's just one factor. Think of the price shock— it's like when you have an argument with your boyfriend or girlfriend and then you split up. The argument reveals a lot of underlying problems. In a sense, the argument causes you to split up, but the underlying problems cause you to split up. The argument just shows you the problems. And I think of the oil shock as like that argument. We realized we had run out of steam. The moon landing was a kind of amazing last hurrah for that earlier culture of innovation. I remember it as a kid. I was 7. It was great. And I thought, my goodness, what's going to come next? So many of us thought that. And, well, we all know the subsequent story. There's been information technology and not that much else, and oil price was what kind of announced that there was less in our pockets than we had thought. Next question, third row on the right. We know— we keep talking about all the financial innovations that have happened in the last 20 years. Could you comment on the lack of innovation in the monetary system? Because what you're really talking about seems to me, when you talk 1973, That revaluation of the price of oil really was predicated on the dollar, which was the reserve currency of the world— still is, supposedly— but going off the gold standard, and then the entire world now became a fiat money system. How does that play into all of this? Well, the monetary system, it means a lot of different things to different people. There are some people, possibly you're one of them from your remark, who think monetary policy in this country has been impossibly bad. That tends not to be my view. My view tends to be, when it comes to money and finance, the relevant lack of innovation is that we somehow cannot very well monitor risk-taking by banks and other financial intermediaries. There's an informational asymmetry which we haven't solved. It means we don't regulate very well. It means shareholders don't have a transparent sense of what's going on. Bondholders do not.— and that inability to measure, track, and monitor risk. The pro-risk-taking technologies have so outraced the monitoring technologies, and then there's sort of privilege and laws and regulations surrounding this lack of transparency. And it's that, to me, not monetary policy per se, where we have failed and don't really have a new idea as to how to make finance work better for us.

We're out of time for questions at the moment. We're going to go into discussion. Tyler, you're right here. Michael Vassar is going to come out and join us momentarily, and we'll have a few more minutes for questions after the discussion. Michael Vassar, as many of you know, is the president of the Singularity Institute. Previously, he was co-founder and chief strategist at SirGroovy.com, an online music licensing firm. He's also worked at Aon Corporation, and the National Institute of Standards and Technology, and even served overseas in the Peace Corps. Michael's been writing and speaking about the safe development of disruptive technologies for a number of years. He has analyzed the risks of advanced molecular manufacturing for the Lifeboat Foundation and authored a paper called Corporate Cornucopia for the Center for Responsible Nanotechnology. He has a bachelor's degree in biochemistry and an MBA and he argues that information technology and biotechnology is enough to get us to the singularity, even if other fields continue to disappoint. Please welcome Michael Vassar, here to debate, or perhaps more discuss, The Great Stagnation with Tyler Cowen.

Hi, Tyler. So, I'm really happy to be speaking with you about this. I have a lot of things that I wanted to say about your book, and I talked to you about it a little yesterday, but watching your presentation today made me think of two other things which I thought were pretty important, and which may be digressions, so we don't want to stay on them for too long, but since this is the Singularity Institute, I noticed that there's a graph that's flat for high school degrees, and then you have a graph that's kind of flat for the GDP, but, you know, thinking, looking forward, What fraction of the GDP had a high school degree in 1950? In 2050, with all of these AIs, what fraction of the manufactured base will itself have a high school degree? Mostly a joke, never mind, fell flat. The serious question: you said that we don't know how to regulate finance, and Dr. Wiesner-Gross earlier on Tyler Cowen said something along similar lines. He sort of suggested that he sees this big complex system that is the financial world and the AIs that it uses, etc., as basically being an intelligent, more powerful than humanity system. And that— I would characterize that as the statement that, yeah, the singularity has happened, at least in the Vingean sense, fairly recently. We're out of the loop, which from my perspective does not sound like a basis for a lot of comforting predictions.

What are your thoughts? There's two separate issues there. Let me start with finance. My point, I guess, is a little less metaphysical than what this other gentleman is suggesting. I just meant to say that if you have one of our regulatory agencies look at a bank or look at Fannie Mae, you know, there was a whole agency devoted only to monitoring the mortgage agencies. And it completely failed. Some of it is an incentives problem, some of it is a knowledge problem, but we're just not doing a good job. We're not close to doing a good job. We passed a huge financial reform bill. It's not close to having fixed any of the problems, and we may have another financial crisis this year coming from Europe, and Dodd-Frank has really done nothing useful and maybe done some harm. Now, can one give this a metaphysical reading, the notion that there's some spontaneous order embedded in the financial world? Which can usefully be compared to an AI algorithm. I would just say I'm not sure, but the problem is there in any case. Now, in education, there are different ways you can read a stagnant or falling high school graduation rate. I'm well aware that in a first-best equilibrium, maybe the optimal graduation rate from high school is zero, or 10%, or 50%. I'm completely on board with that. But we're not failing because we're moving to that first-best optimum. We're failing because the institutions are terrible. So when that rate is flat or stagnant, it's because a lot of schools in this country are awful. So even though maybe in the longer run that rate should be much lower than it is today, so the approximate goal really should be that kids finish high school and are employable, and right now a lot of them are not.

Well, I've done my part on that. I worked in a high school for a year with actually 0% graduation rate, in the state of Ohio, which was quite a fascinating experience.

How'd they get it down so low? Did you impose tough standards?

No, they imposed extremely low standards. You have to be able to pass at the 9th grade level, and you would not believe how low the 9th grade level is, in 5 different tests, but the education was so dysfunctional that no one could. Anyway, yes, so we do have about as many people in this country in prison as have PhDs. Like, probably half the people you know have PhDs. There's an equal number of people for whom half the people they know are right now in prison. Fun to think about.

Uh, quick interruption. If Scott Brown and Dalip George are in the room, uh, you're wanted at your press conference, so Go there.

I have a question for you, Michael. I'll pose this and you can get back to what you want to say. And I came to this idea from talking to you. And for those of you who don't know Michael, I think he's a very profound thinker in these areas. But I've been pondering the notion that we could use future AI, plausibly near to us, to monitor ourselves and make big behavioral improvements. So you'd have something like an iPhone in your pocket, but it would read bio-data, it would somehow measure your mental states, it would tell you what you're doing wrong, and you would read it at the end of every day, every hour, every minute. I don't know, you'd be on a date, it would tell you about the other person, and at least some of us would take that feedback and get a lot of the low-hanging fruit of avoiding our behavioral mistakes, and that would make working with people suddenly a lot more productive. Do you think that's going to be possible, or do you think that's pie in the sky?

I think that that's pretty much Google's vision right now and that they're closer to it than people think, especially if you see the tech community as essentially part of a Google innovation complex the way I kind of do. So if that's the case, you go to TechCrunch Disrupt and every other company is pointing towards that vision or pointing towards some other vision of monetization of reputation and decision-making. So I'm not sure I'm happy about that vision. I'm not sure I'm unhappy about it.

Why are you not sure you're happy? I think I'm happy. I'm worried people will ignore the little thing in their pocket telling them what to do.

Well, in the met-doctor's office, that is definitely an issue, and I actually owe my thanks to Jan, who's speaking a little later, for the idea of a checklist manifesto app, which could perhaps help some of these problems. You've heard of the Checklist Manifesto. So indeed, when it matters, I really want to make the right decision. On the other hand, even if a statistical algorithm tells me that I should move to Missouri because there's this really cute girl there, and it doesn't want to tell me that because it just wants to set things up, its predictions say that we'll be happier that way, I'm not sure how I feel about my life being arranged like flowers in an ornament for my own benefit by, you know, a God that actually has my interests at heart. I'm not sure I'm against it. I really just don't know how I feel.

The alternative may be your mother, of course, right? Yeah, I don't—

not in my case, but anyway, yeah, it might. I'm not saying— I'm really unsure. But here's my question for you about that question. In The Great Stagnation, you focus on GDP growth, and I basically think, yeah, we're done with GDP growth, probably permanently. But Peter was talking about movement towards a— towards development, and his concerns that we should not have this concept of there being a development and we're going towards it. But I think that in people's heads, in their images of the future, in their visions for how life should be, there really is a kind of specific image which is generalized from the lifestyles of the rich over the last few hundred years and generalized from military effectiveness. Those are the two sources for metaphors, it seems, that give us moon landings as something desirable. And big parks with green gardens as something desirable. You know, having what the rich have and having what makes you a powerful military. And we've kind of got those things now, which makes it not impossible to improve our lives, but possibly difficult to improve our lives in ways that look like wealth. So the system Tyler just described could potentially make our lives stupidly, ridiculously much better. Like, it's hard to even imagine how much better your life could be if you always made the best decision about everything, intuitively, impulsively, because you had the right hunch and something was beaming the right ideas into your head. But I don't know what it shows up as on the GDP statistics.

See, I still think there's, there's more room for real economic growth of the traditional kind. If you just take the household budget of the typical household earning about $49,000 a year, maybe there's a kid or two, and you look at the role played by housing expenses and transportation, they're a pretty big part of that budget. And if you toss in a medical bill, uh, these are still remarkably good lives by the standards of human history in all ways, but I think people at that income level who appear to now be stuck there, if they were earning, say, $140,000 a year, would really have much, much better lives, just by having fewer material worries in terms of the tightness of the household budget. And I would like to see future economic growth make those people much better off. I think we can do it. It hasn't done it right now, in some ways. But the notion that we're all just operating in the mental dimension, and you'll build virtual reality, and people will just have fun and do the right thing and marry the right person, and your iPhone buzzes in your pocket when you're talking too much on a date. That will happen too, but I think those households, people below the poverty line all the more, to get them up to a higher level is crucially important. We can do it, it is by no means impossible, and it's still there to be done.

I, I mean, it seems to me that we have some data on this. There's this extensive field of hedonic psychology. Which does suggest that there's a budget which you have to get people up for the— below which wealth really does matter. But that budget seems to be pretty low. Now Tyler and I want to live in, I suspect, global cultural hub cities, and there's only a limited number of people who can fit into those cities unless we have better infrastructure and better transportation, etc. So we're willing to pay a pretty large fraction of our personal incomes to do that, and it makes all of our other expenses much greater. But that's kind of a Red Queen's race. That's kind of a zero-sum thing unless we get pod cars that transport 25 million people within a 10-minute commute of, you know, downtown Manhattan, which would be awesome. And I'm totally in favor of that sort of '20s vision of economic growth if anyone can figure out how to deregulate and make it possible. Possible. But I think Tyler might call that a prestige project. I mean, it seems— it's like the Chinese high-speed rail thing, only more so.

I don't want to accept what Michael is calling the hedonic psychology results here. For one thing, recent papers by Daniel Kahneman and Justin Wolfers, they imply you still get happier as your wealth goes up, even past the point where we used to think it flattened out. I'm very struck by how, until about 2 years ago, people who did the hedonic psychology result, they would always use the same example. They would say, "Once your income gets to about the average level of the income in Greece, you don't get any happier." Now, 2 or 3 years later, no one uses that example anymore. And why is that? There's downward risk. Some of the Greek wealth was an illusion. But also, when you do it backwards, you take a person earning, say, $160,000 a year, not all of that is converted into happiness. A lot of it is ordinal values which you turn into pursuits. They may not make you happy, but in abstract sense, you strongly desire that they be there. Maybe like some of your charitable giving. And then if you take that away from a person, you can see more easily the loss. So it's not just about happiness. Wealthier people have, produce, and enjoy a lot more good in this rich, diverse, pluralistic sense that I think we still want to build on for some time to come.

I totally agree. I totally do think that people can be better off if they have the cultural capital to use wealth in pursuit of reasonably coherent values. I tend to suspect that the school system, which, you know, we can all be known, actually was created not to a non-trivial degree to strip people of the cultural capital that would allow them to pursue things that might be more valuable than happiness. But that doesn't seem like the subject for the discussion. We only have 17 minutes, and the core point— on the core point, I think Tyler Cowen and I agree. That there has been an underperformance of technology and science relative to reasonable people's expectations before 1973, that there has been a fairly abrupt shift from a rapid to a less rapid growth mode due to certain technological bets not paying off, certain avenues of expansion, exploration, inquiry being shut down, like nuclear power. And some things just taking a little longer than they might have been expected to, or being blocked by copyright and IP, I think. So, that said, it's really hard for me to say with any confidence that I think life has not gotten better at a continuing or accelerating rate. You know, from 1973 to 2011, Essentially, no, I do not spend any time doing things that people did in 1973. Like, I would not eat anything that was available in a grocery store or restaurant.

It wasn't that bad. It was.

I remember, I remember 1987, 1988. I remember all of these foods that my parents were so excited by when they came out, these instant foods and You know, packaged foods.

Blame your parents. Seafood then was much better. Food is better now, to be sure, but especially if you add in obesity costs. I think progress in the food sector is not all that amazing. You and I have pretty special tastes. We are what I call infovoors. We spend a lot of time on the internet. We want very particular, diverse, niche things, and those things weren't in 1973. But I was alive in 1973. I ate food. Every now and then. And I don't see it as that far behind where we are now, even though now I love being able to get Bolivian food from the Cochabamba region whenever I want from food trucks, and no way was that possible way back then.

Well, let's talk mundane infovores. We are unusual in how much we read. The average American will apparently never read a book after graduating from high school or failing to do so. So Tyler and I are screwing up the average. We each force thousands of people into illiteracy, and I humbly apologize. So, however, ordinary introverts watch 4 hours of television, and I've seen the TV from 1971 too, and it's god-awful. And, you know, you get 1,000 hours of better programming, tell me the the actual utilon production of watching today's typical show is not at least a few dollars per hour greater than that watching a typical show from 1970, and I'll say, why aren't we watching reruns from 1970?

See, in my view, TV is mostly just something to talk about, and that's how most people use it, and it serves that function somewhat more productively, but not that much more. But I want to ask a question of you, Michael. This is the Singularity Summit. And I'm never quite sure what to make of the notion of singularity, and I feel you're the person to ask, since you're the president.

Well, thank you, Tyler Cowen. Okay, I— Now, the singularity—

let me first pose my question. The word has a lot of different meanings, and I'm not sure I grasp them, so I don't want to judge, like, the singularity. But the root of the word suggests that it's something unique. And when I look at the closest thing we've had to a past singularity, which to me is the late 19th, early 20th century, the coming of cheap food. To me it seems pretty gradual. It seems governed by ordinary economic laws. It took quite a while, and there was never a moment where the processes driving that, you know, someday woke up and said the connection is now complete, and anyone took over. It was— That's incredibly awesome. A normal state of affairs. Now why is the next singularity either deserving of the name singularity, or why won't it just be, you know, gradual improvement but at a more rapid pace? That's my question.

Wow, I think that was the highest density of intelligent statements that I disagree with that I have ever heard.

This is why I ask you.

Well, okay, first, when I think of the singularity, the analogy people in the Singularity Institute would tend to use would be less cheap food, or the early 20th century, 19th century, grandiose as that was, and unmatched in change since, as 1895 was. When I think of the singularity though, I think more in terms of the formation of the first self-replicating RNA molecule, or maybe the first symbiotic relationship between two life forms.

Yeah, I was not around for that. Yeah.

Or at the very smallest, maybe the invention of brains. These are like little things. So it's a low-frequency kind of idea.

Yeah. Okay. But if it's that low frequency, how easy is it to study or predict? Oh, that's great.

You can predict all sorts of things even if they have very low frequency.

Like the primes.

They become infinitely rare if you wait long enough. But you can still predict them. They're going to be just where this equation says. But anyway, the— no, I'm serious though. You predict things by analytic thought and deductive logic, not just by induction. Now, you are the ultimate fox in the fox-hedgehog dichotomy, and I hope that I'm not the ultimate hedgehog. In fact, I think he's probably in this room somewhere. But I do appreciate this, but I think that this is one of those places where, you know how when it's in the really hard predictions, you just have to be a hedgehog? That's the only way to do it.

Give me your best low-frequency prediction. Give you my best low-frequency—

that is a fabulous one.

So I'm gonna wake up tomorrow morning and the sun will shine doesn't count?

Ooh, lift one from Robin.

Pick any of hers. No, your prediction.

Give us your best. Robin's probably influenced my thinking more than anyone else. So lifting one of his would work. Okay, either economic growth will continue in the long run or it won't. Seriously. I mean, that would be a great one, you know, but we can't expect the status quo of it kind of going on in the— I mean, what I mean by that is economic growth continuing in the very long run is weird. It's weird to even think about. It implies something that's completely batshit crazy by any normal standards. Like, either we will have an amount of progress comparable to the last 300 years in the next 300 years, or we won't have an amount of progress comparable to the last 300 years in the next 300 years. But an amount of progress comparable to the last 300 years again, that does not put us on the Starship Enterprise. That puts us in the Q continuum. Let me give you—

let me give you my alternative prediction. I have more of a cyclical model of civilizational rise and decline, and I certainly do not think ours will decline anytime soon, but I do feel it will decline before we hit the point where thinking through exponential economic growth implies something absurd. So my prediction is that ours will decline before we get to that point.

Alright, and if so, then my concern is how soon, because when I see risk of decline looking forward using my models, it looks like the sort of Great Stagnation you're talking about would be the most immediate first candidate for a major risk, and also the last— least deadly. All of the other candidates look like everyone dies scenarios, pretty much. So, um, I'd like to know how you see a way of maintaining our institutions and our system of government and a high level of freedom in a society where there is ever-increasing unemployment, ever-real negative GDP growth and rapid real negative GDP growth with respect to things like housing and food and energy, which you've spoken about, and possibly a rapidly improving standard of living, but hugely improving manufactured output, hugely increasing product of goods, just no system for distributing wealth and security.

I sometimes call myself a utility optimist but a revenue pessimist. Mm-hmm. So I do think we're going to have more financial crises. One of them will be at the sovereign fiscal level for this country. It's happening now in Europe, and I think this will truly be terrible. But that said, I don't think unemployment rates are going up. I think they're Right now, steady at 9%. That's pretty bad. But there are actually a lot of democratic countries that have had unemployment that high or higher for decades. It's nothing to get complacent about, but it hasn't led to, you know, riot, revolt, and revolution for the most part. I think you see, historically speaking, a lot of quite stagnant eras which are fairly stable, including a lot of medieval times. Now, not all of medieval times is stable by any means, and certainly not all of it is stagnant. But the regularity I see is that it's the times of technological advance. Look at the early to mid-20th century. The most phenomenal era is also the most destructive. If you look at medieval times, again, new technologies bring certain problems with warfare. The 17th century, you have problems with technology and warfare. So I think the stagnant times can be pretty steady. It's quite possible a lot of people will look back on the Great Stagnation with, nostalgia. Now, that's not my view. I'm more optimistic than that. But I'm not worried about stagnation leading to revolt, and riots, and the like. We're getting older as a society. That's a very good predictor of stability. I think the patterns of immigration we've had, largely Latino, are also very good for the stability of our country, and falling crime rates. We— over the same period of all the stagnation, crime rates have consistently fallen, and they've fallen by more than people thought they would. It's not like the '60s where there's riots and people at Berkeley calling for the overthrow of this, that, and the other. I think politically speaking, we're in a pretty stable time, and we have a pretty big cushion for our scientific and technological failures.

Well, I really hope you're right. I can't let the unemployment ride, because the US measures unemployment so differently from other developed democracies, and— It really looks more like 18 or 19% measured the way anyone who was inventing the statistic not to hide realities would. But I do hope we're not facing riots and revolution. We do have people saying they're occupying Wall Street and people calling for a Tea Party and breaking the Republican Party in two. And, you know, I'm not sure. I haven't been there. You've been around for longer. You've seen what the '60s looked like.

Same times right now, in my view. You look at these Occupy Wall Street protests, maybe some of you were there, either holding signs or throwing eggs at them, I don't know what. I wasn't there, but they're privileged people, they go to these demonstrations, they put on weight, they meet each other, it's like Facebook, and that's fine, there is a real problem with finance, I don't mean to mock that, But I think you can in some way mock those as demonstrations from a kind of world historical point of view.

Alright, well, I really hope so, and I think it's probable that you know more than me about that sort of thing. On the other hand, when we're talking about the longer-term question of what is the singularity, I probably can help you, so let's work on a few meanings. Let's go. Great. The first meaning that I focus on is the one that Vernor Vinge used back in 1990 and 1992, in an essay that he gave about how his crystal ball clouded up between 2005 and 2030. So in 1990, Binge had this utterly astounding track record of predictions and predictive science fiction that really was trying to depict realistic worlds, and which matches the world we live in in a lot of ways really well. The best anecdote I have is a book— story written around 1971, '72 about a CGI movie of The Lord of the Rings, winning the Best Picture of 1997 or 1998. But I mean, this is back before anyone had heard of CGI, you know, so I think that he's got a lot of merits. His first story, "Run, Bookworm, Run," was essentially about a chimp with Google as a threat to world stability. You know, with like fully integrated brain-machine interface neutrino-based Google, but still. Anyway, so basically what he was saying is, "I've got a long track record of making, building a realistic model of how the world works and how it's going to change by looking at technologies in the lab, by looking at technical trends, looking at what governments do, the economic logic of these technologies, etc." And that lets me predict 2005. But every year that passes, it lets me predict less far into the future. It kind of looks like it's 1990 now, 2005 is 25 years away, or 15 years away. It kind of looks like by 30 years from now, by like 2020, 2030, I won't be able to predict any distance into the future using this method that works pretty well right now. What the fuck? And that, of course, led him to think, you know, one thing that the technologies that are being developed do suggest, from a huge number of lines, whether it's pharmacology, drugs Tyler was talking about, or brain-machine interfaces, or biomolecular biology, educational science and cognitive science, computer science, AI, management science, a lot of different trends— finance— seem to be towards the creation of systems that are smart, smarter than humans. And one thing that could be a game changer, could make it so that you can't predict the future from the past, would be if the basic uber-trend is towards the development of greater-than-human intelligence, which takes things in a completely different direction. That's how I would characterize Vinge's view, and I think that it's reasonably on, and it suggests that directing the values, directing the dynamics coming out of that greater-than-human intelligence, whatever form it takes, is the last chance we have to pull on the steering wheel and jam history in one direction rather than another, if we can figure out where we want to send it.

We're almost out of time. I would just like to note, Michael and I both wanted to approach this as rational Bayesian agreeers, taking into account that the other person might be right and we might be wrong. I don't know how much we've realized that, but we do hold to this as an ideal. This is yet another example of the influence of Robin Hanson. And the important point, I think, is belief in the powers of individual human reason really is a very significant idea, and I think that's the most general notion we've both been trying to get across. Michael, would you care to sum up on that?

Oh, thank you, Tyler. Yeah, I actually agree. This is, to my mind, what a debate ought to look like, and a really major motivation in my life is to try to give enough data set, a big enough data set of this, that people have some idea. When I first came to the US from Kazakhstan, when I brought my wife from Kazakhstan, I wanted to show her instances of rational debate that didn't involve me, and I couldn't find any in any book or TV show or media source. And I loped pretty hard, so I thought I should fix that.

Well, let's hope we can do this again and build up that stock. I hope so. Thank you all for listening.

Thank you, Tyler Cowen and Michael Vassar. Okay, a couple quick announcements. First of all, since Robin Hanson was mentioned a couple