Tyler Cowen - Silicon Valley’s Favourite Economist

. But it's obvious in many parts of India, there's massive progress and extreme poverty is really much, much lower. There's been no financial crisis. There's been no major setback. There's been no major war. It's all on track. Modi is a bit toning down. He's focusing more on economic reforms, which is good. So there's just so many things to be encouraged about. When I first went to India in 2004, it just wasn't at all clear how any of it would develop. And I've seen With a few exceptions, but just a very steady stream of positives. And it's been great. The South in particular, but also Gujarat, parts of Punjab, just these phenomenal success stories.

Thank you so much, Tyler, once again for taking out the time and joining me on the podcast. I want to start off by asking you about your recent post on cardinal utility and ordinal preferences, where you had mentioned that as capitalism reaches to a later stage and as economies advance, preferences and happiness sort of diverge. Like, what really— what we really want sort of diverges from what, you know, makes us happy. So on that, I wanted to ask, like, should we ever override preferences for the sake of happiness? Like, if someone makes choices that, you know, leaves them miserable, do we let them continue or is an intervention ever justified?

I can think of many cases where I would wish to nudge people. Maybe the word override is too strong, but if you look at the United States right now, we have a big problem with sports gambling. Some people, they gamble too much money on sports. You could say they end up addicted. They lose money. It's a problem for the whole family. I don't think it's possible to ban gambling on sports, but maybe we should discourage its advertising or make it a bit less easy because it makes a lot of people less happy. But those who really want to gamble on sports will still have the opportunity to do so. So I think we face this conflict often and, uh, we need some kind of balance. It does not always go fully in the direction of preferences, I would say. Or alcohol would be another example, right? Or marijuana. Well, you can't stop these things from happening, but you don't necessarily want to have free dispensaries right next to your grade schools, for instance.

Yeah, that makes sense to nudge them. I also, like, in that essay, you also sort of, sort of conclude in a way that it sort of leads us to more weirdness, not Necessarily addiction. And so on that weirdness point, does like weirdness have limits? Like if, you know, we all sort of go towards our own preferences, uh, does that fragment like shared culture? Can society function?

Well, maybe weirdness becomes the common factor. So if I think of myself, I buy a lot of classical music on compact disc. I still buy compact discs. That makes me weird. Not that many other people do it. Is that a political problem? No. Is it a social problem? Almost certainly not. If everyone just— does it make me happier? I'm not even sure it does. I just am curious to hear the music. If everyone gets weirder and weirder in those ways, I think it's fine. It's probably a good thing. It will support a lot of interesting creativity. And I think that's the path we've been on. You know, so what if we're all playing different computer games against our AI?

But what if it's goodness on a maybe a negative or a bad way? Does that— I mean, I can't think of an example right now, but that would probably cause some disruption.

Well, I think it's bad when people each have their own truths on certain matters of public importance. So if a lot of people think vaccines do not work, that's an example of a pretty simple and basic problem. I'm not sure what to do. What to do about that. But I think a lot of recent developments actually are, are positive in that direction. Like AIs will tell you the vaccines typically work pretty well. I'm not sure how many people are listening, but I don't view modern technology per se as the problem. I just think there's a lot of paranoid tendencies in human thought. They come out in many different eras. This is our version of them. I hope we can beat them back once again.

On AI, now that we have these strong artificial intelligence models and they can process a lot of data, like these are pretty powerful models, can sort of create a way of system where you get like these different data points, credit card swipes, GPS movements, weather patterns, like does all of this ultimately, can this lead to central planning effectively working, you know? Does it solve Hayek's knowledge problem now that we have all this information that comes in by AI?

I would be very surprised if it made central planning possible. It may even make central planning harder because with powerful AI, even a single person can be extremely effective or very influential because they're mobilizing a lot of intelligence. That may make the task of the central planner harder, not easier. But so much intelligence, it's tacit knowledge, or it's very particular knowledge of time and place that is not incorporated into AI models. I sometimes say AIs make secrets more valuable. So the more valuable secrets become, again, I think central planning becomes harder, not easier. So I would be very surprised if we ended up in a workable regime of central planning.

Good. What is it, so you've also, being an economist, there are many debates that go on between minimum wage and rent control. And it's very hard, I think, for people to demonstrate and convince the effects of minimum wage and rent control. People still like to increase the minimum wage and to impose rent control. So is there like, what's the strongest evidence the other side relies on that, you you know, that is hard for people to get convinced.

Well, on rent control, there's plenty of evidence. I think sometimes critics of rent control overstate their case, but still, I don't think there are many good arguments for it. I wouldn't say it destroys whole cities the way some critics say, but it makes the housing stock worse and it makes it harder to get an apartment. In a large country such as the United States or India, I don't even mind if a few big cities have rent control because it pushes people to move to other places. I actually think that's fine. You avoid a bit of over-clustering or congestion, but still, like, it's a bad idea. No one should be going around saying we should do this. Minimum wage is a little trickier. There, the professional opinions of economists are somewhat split, but there's more and more evidence coming out that actually minimum wage does lead to job destruction. Probably less than the critics thought at first. In the long run, the effects clearly are going to be negative. Like, the real wage does determine how many jobs are created. In the short run, the effects are probably pretty small or weak. But if you don't believe me about, like, the real wage mattering, the same people who want to raise the minimum wage, you know, they're typically Keynesians, and when there's some business cycle downturn, they'll say, oh, unemployment. Because of, you know, real wage stickiness. People are being put out of work. So actually, underneath, when you pull away the political context and what they feel they're supposed to believe and say, like everyone else, they think the real wage matters, that if the real wage is too high, there are fewer jobs. So they're not really denying that. I just think they're fooling themselves.

Okay. And like on rent control, what about major cities like New York or London or Delhi? Do you think places like these will Does it make sense to have rent control or it's better not to?

No, I, again, I would never do it. I would just say if a small number of cities do it in a large country, I'm not that upset because living standards equalize in other ways. It's just like if you take the weather in California, which is wonderful, Californians don't get the full benefit of that weather. There's competition across states. And you could say they pay for the weather by having higher taxes and bad state policies. That's unfortunate, but it's a property of equilibrium. So when there's this competition across localities, things that look very good on the surface or very bad on the surface, they tend to even out somewhat. I'm just saying I don't fall apart over those developments. But again, I don't think there's really ever any reason to actually do them.

What's an underrated driver of economic growth and progress historically?

Well, underrated. I mean, that gets to the question of, you know, what is really rated highly? And that's fairly complex. I think what's overrated now is the whole Acemoglu tendency to play up, you know, rent-seeking and interest groups. I think every country has that. Acemoglu in the previous book famously predicted China was going to do very poorly. I think that's turned out to be quite wrong. I just think human capital and smarts and IQ and work ethic and culture are very, very important. I'm not sure they're underrated. I think they're probably underrated by academics. I don't know that they're underrated by actual human beings in the real world. I think it's the default theory that say, you know, the grandmas out there have all— Country X is doing well because The people are smart and they work hard. It's the most common view and there's a lot to it.

And what about from a future perspective? Like, what is the biggest risk to global growth and progress? Let's say like 1 year from now, 10 years from now, and 100 years from now.

Well, across all those time horizons, I think it's war. If things remain largely peaceful, I think the prospects are truly fantastic. But if you look at world history, almost any era, you just see wars recurring again, again, and again. And there's been somewhat of a pause in that. And I'm never sure how much do we have that pause because people actually have gotten better, or how much do we have that pause for some very special contingent circumstances, like the United States is a bit of a bully and keeps some parts of the world in order. I suspect it's the latter, that it's quite contingent. And you look somewhere like East Africa, there are so many conflicts brewing. Well, is it Ethiopia and Eritrea? Is it Rwanda and Congo? Uh, you know, across the Gulf, what's going on with Yemen, possibly the two Yamens. Somalia might invade Somaliland. There's disputes over Puntland. Virtually there might be a war between Ethiopia and Egypt over the dam and water flows. Virtually everything there seems to be up for grabs with ill-defined property rights. And I think we're going to have some violent conflicts there in the next year or two. So that's unfortunate. Uh, that's by far the biggest danger. Russia, Ukraine, possibly China, Taiwan. I'm sure you think plenty about India, Pakistan. I don't know if that will ever explode, but if you're just looking for things to be nervous about, That has to be pretty high on your list. There's even India-China on the other side of the border, right? Again, you don't have to think it will become a major war. It just is this ongoing tension and irritant, and it makes the world much worse.

Does this risk ever go away, or this will always be there and it is just going to reduce maybe?

I think it will always be there, and I think at some unfortunate point it will destroy us. That the world will collapse into another world war, probably not anytime soon, but I can't imagine like having a million years of progress without another world war. That seems to me so unlikely. And the next world war will, will so much set us back. You don't have to think that every nuclear weapon will be fired, but it will be, you know, the biggest event of its century and it will be remarkably destructive.

Is there any policy solution, or maybe not policy, is there anything, any solution, maybe at least in the short term, that can reduce the risk, let's say, between India, Pakistan, India, China, or any of these countries? Maybe not a general solution, but maybe specific to India, Pakistan, or India-China.

Well, probably there are things we can do to reduce risk. So one thing I think about, you know, Pakistan in particular, I don't know how good are their sensors for detecting early launches from India., but I suspect they're far from perfect. India's might be better, but those are also possibly far from perfect. So just improving those and having hotlines set up for rapid communication, avoiding mistakes, making sure that some number of countries have second-strike capability, so no one tries to take them out with the first strike. There's a lot we can do. And maybe we don't always know where things stand now because that's typically classified information. But again, it's just very hard to believe these governments are all doing a perfect job along those dimensions. Pakistan in particular, which is just not a very well-run place.

And is there anything maybe at an individual level or a local level, like, or is it just out of control for like an individual to prepare for these risks, hedge these risks?

Well, there are particular issues which are disputed. With Pakistan, some of it is Kashmir, some of it is simply the Pakistani economy is not doing well and the government wants distractions so people get upset at Modi and India rather than their own government. I wouldn't say there are single fixes for those, but again, it's hard to believe there cannot be significant improvements. So that would be the case for optimism, just that the true underlying causes are are in fact things that can be improved. US and Canada get along pretty well, even with Trump. And India-Pakistan someday could be and maybe will be the same. It's just that at the current moment, it feels rather distant.

You've been to India many times. I've read on your blog how you speak about it. So like, is there anything about India that you previously had like a view or a belief that you have since changed?

Well, absolutely. I mean, every time I go, I become more optimistic. So I know the measured rate of growth now at 8% may not be exactly accurate, but it's obvious in many parts of India there's massive progress and extreme poverty is really much, much lower. Again, even if you don't believe all the official numbers and there's been no financial crisis, there's been no major setback. There's been no major war. It's all on track. Modi is a bit toning down, you know, the religious and ethnic conflict issues, which is good. He's focusing more on economic reforms, which is good. So there's just so many things to be encouraged about. And when I first went to India in 2004, it just wasn't at all clear how any of it would develop. And I've seen, with a few exceptions, but just a very steady stream of positives. And it's been great. The South in particular, but also Gujarat, parts of Punjab, just these phenomenal success stories. And then you see Indian talent in the United States doing so well. That's a positive marker, you know, for the nation of India also.

Is there a bottleneck, like if you had to pick one bottleneck that would sort of, decide India's trajectory over the next 15 years, what would it be?

Well, I think there's a lot of bottlenecks. There's so many, I find it intimidating. One would just be the legal system. How long does it take to get a case heard? You know more about that than I do, I'm sure, but it seems terrible. The way women are treated seems quite deeply embedded in Indian culture, and it's improved a good deal, but there's still a long way to go, and it also relates to female labor force participation issues, which in India are quite low, and it's actually staying lower, even falling a bit as India gets wealthy. The fact that there's not true accountability in a lot of federal elections, that what the voting is about is often identity or caste or religion or different emotional feelings rather than how well did this government do. I think arguably that has been improving. But, uh, at the national level, it's not in every way a well-functioning democracy. Uh, you just have a lot of, not a lot, but a few particular backward states and, you know, that are exporting people. I guess you'd say those places are going better. Bihar education system, a lot of improvements, but still very, very far from where you need to be. Uh, but again, you know, most markers, you just see vast improvements, but yeah, the bottlenecks are pretty extreme as well. Congestion, difficulties of building real mass transit systems in major Indian cities, given they're not really set up to sustain that much underground construction. Air pollution, I think eventually you'll solve, but that will, as China's been doing, that will take quite a while. Heat, you know, especially in northern India, how hot does it get in the summer? It kills people. It seems that's getting worse. It's not something India controls. You can put in more air conditioning. Burning of coal. I mean, it's a long list. I'm sure you could add more to it than I could.

But in the net overall, are you bullish, bearish, long, short?

It is very bullish. And again, if you look at markets, you know, take the major Indian cities, like what's happened to the price of land, at least for land assets where you can actually trade them with enforceable contracts. It's just worth much, much more, and it should be. And that's because the positives so far outweigh the negatives.

Yeah. I also wanted to ask you about capitalism, markets, and democracy. People criticize it a lot. And in general, how would you defend markets and democracy for the average person?

That's a very big question. But if you just ask most people on Earth, if you were to be randomly born into a a number of countries, which countries would you prefer? Almost everyone would choose the capitalist democracies. It doesn't quite prove it, but in a way I think it's obvious. And the people who are denying it, I don't really know what would persuade them if that fact doesn't. So capitalism and democracy are both alive and well, and most people in the world want them in different ways. You may have to fuss over the timing, like could Iran become a democracy tomorrow? I actually think they could, but I've never been there. I'll admit I have a lot of uncertainty about that question. I can't really say with much conviction, you know, could Saudi Arabia become a well-functioning democracy tomorrow? That seems to me less likely, but again, I'd certainly admit I don't really know. But eventually we want as many countries as possible to end up in that place.

In the next 25 years, do you think more countries will move towards markets and democracy or net?

I see on net a modest moves away from democracy. I'm not sure those are permanent. I don't think they are actually, but again, it's not in every way a positive trend, especially in Africa. A lot of the central belt of Africa inland has done very badly in those regards. They seem further from being democratic. I think capitalism, again, very mixed, but it's doing better in a lot of places. Latin America in particular, a lot of South American countries have been recently rejecting their leftist governments. And again, we'll see what happens, but you certainly see plenty of positive developments. Argentina is the most obvious case, but somewhere like Bolivia, Honduras, you can add to the list. Putting aside Brazil, most of South America is now at least experimenting with semi, like, right-wing governments. Again, right-wing and capitalism are not the same. A lot of right-wing governments there, they're quite corrupt. There's crony capitalism. But still, I think the people are rejecting socialism and massive redistribution.

Uh, I also wanted to ask you about your own political views, like how did it evolve and, you know, what was the biggest change that happened in your Well, when I was young, and I mean teenager, this is like age 13, 14, you know, up through my teen years, I was very strongly libertarian.

I would say it's still my major influence. Like if I'm at a conference with 100 people, different public intellectuals or scholars or researchers, like of that 100 people, almost always I'm one of the 3 or 4 most libertarian there. But relative to like capital L libertarians, I'm not that libertarian. I'm very willing to entertain non-libertarian conclusions. So that's where I've ended up.

So there's been no changes. So you've had most of the views you had since you were a young man.

Well, when I was young, I was just very libertarian. I was like a libertarian. And people wouldn't say that about me now. Certainly the libertarians wouldn't. But it's the biggest influence on my thought. And again, like I said, if you throw me in a room with 100 peers, almost all of them are less libertarian than I am, just like as a fact, kind of gut-level fact check. And you listen to these people, you read what they write, and you think, that's terrible. Like, they're not sufficiently cynical about government. And that instinct of mine, I think it's still really very correct.

Um, you had also recently posted about your visit to Dubai and you had posted the Emirates Mall and there were a lot of Christmas decorations and the flight. You also had posted one link, the Emirates flight, there was like Christmas decorations on it. So there are many places, even here in India, you'd see like in cities there are more Christmas decorations. I mean, not only Christmas, but there are sort of these leanings towards the West. There are like these instances where these places are becoming more tolerant and liberal in some way. Maybe it's just a show. But there are certain parts of the West that I feel are getting more populist and are going a little bit away from the liberal side. So what is going on here? Do you have any theory of what's happening?

Well, I find the global distribution of Christmas fascinating. For one thing, most countries need a major gift-giving holiday, right? It serves useful social functions and families get together. So not every religion supplies that automatically. And most of the world now is coordinating on Christmas. You go to Japan, South Korea. I mean, South Korea has a lot of Christians. Japan does not have so many, but Christmas is a big deal. India, the UAE, which is based like on shopping malls and mega commercialism. It's like the perfect country to have Christmas be a big deal. And there's so much money there. And so much retail and people from many other Arabic or Middle Eastern countries, Muslim countries go there to shop, to vacation, to go swimming. So Christmas, it's like no longer a Christian holiday. In the US, I would say our Christians are less Christian and we have more Hindus, more Muslims, more whatever from other countries. Christmas is widely celebrated here, but it's just not that Christian a thing. And that makes it easier for the rest of the world to celebrate Christmas. It's like the MAS, the MAS part, you know, more in Spanish, is what matters. And the Christ part is being taken away. Not everyone likes that. But just how quick and how strong that trend has been is something I followed.

You also travel a lot. And in today's world, travel is very easy. Like, it's convenient to get to places. And the travel along with the internet should have made the world, I think, a little bit more interconnected and liberal in some sense, but it's sort of, we are going in the other direction where we are seeing more populist politics. So why didn't like travel and the internet not lead to populist politics?

Well, I'm not sure the world is becoming less liberal. This is complicated. So I think if you look at, say, the Muslim countries in and near the Middle East, they are significantly more secular than they were 20 years ago. And overall, women have more rights, again, with significant outliers there. But it seems to me obviously true. And those are liberal developments for a very large number of people. If you go to Indonesia, it seems there's more fundamentalism, but also the country is more modern at the same time. So what's the net trend there? Not easy for me to say. You go to China, it's more authoritarian because of Xi. But at the same time, in some ways it's also more liberal. There's more commercialism. It's just more of a normal place than it had been. So I think it's a very confusing situation. A lot of the early promise of the internet, it's fashionable to say it didn't happen, but a lot of it happened. It's just we got a lot of other bad things with it too. So the case for internet optimism, I don't feel it's vanished. I just think it's hovering and highly uncertain.

Yeah, but, but like the West, like in Europe, in some places there are many populist parties that are coming into power. Populism is sort of on the rise. So why in the West did travel and not the internet reduce, did not lead to more tolerant and liberal policies? Why did it lead to populist policies, if that is a view you hold?

Well, I'm not sure what drove populist policies in the United States. Early on, the biggest driver was cable television, not the internet. So maybe the internet ended up as the carrier of it, but possibly was not the cause. I would just say that's uncertain. It's become very fashionable to blame the internet. I'd give that one a maybe, not a definitely. And if you look at a lot of countries in the world, the main driver of populist parties is that voters perceive levels of immigration to be far too high. And that is not mainly an internet thing. That's just the actual reality on the ground, especially in Western Europe. So that's the main cause. I'm not sure that's the main cause in the United States. It's certainly a cause, but elsewhere, I mean, that drives the right populist parties in France, Germany, United Kingdom, many other places. It's clearly about immigration.

And travel did not help.

Well, travel made it easier for the immigrants to get to these places, right? In that sense, travel mattered, but in a negative way. Travel did not make people necessarily more tolerant. But I think if levels of immigration had stayed at earlier numbers, you know, we wouldn't have the populist right in most places.

Is there a travel— like, what's one travel hack that is underrated and one that is overrated?

Just going is underrated. But another thing, like places, you said it's easy to get to places. A lot of places are still hard to get to. Not impossible. It's just a pain in the neck, right? And just to go to some places that are hard to get to, you will forget the pains you suffered on the way there and back and remember the experience. So I would encourage people to go to places where they think they don't want to go. I sometimes say to people, like, pick a destination you're really sure you don't want to go to. And I don't mean danger, you know, put that aside. But just somewhere you think, I have no interest in that place and it's hard to get there. And then wake up the next morning and make a plan to go exactly there. You'll love it, is my view.

And does— I also wanted to ask you about food and culture. So does culture impact food? Does food impact culture? Are they independent? Like, what does having fish at Turkish House in Muscat reveal about Muscat? Or is there like something— is food just another data point or does it give you insight into something else about it?

I think of food as another data point, but it's one of the best data points. For one thing, you interact with it, you know, on average 3 times a day. Also, when you eat food, it depends what you do, but it's quite easy to get very good food and not interact with the elite of a country. You interact with a lot of fairly ordinary people. They sell street food or they cook in restaurants or they're your waiters and waitresses. And, uh, it gets you away from the elite. And that too is interesting. You learn about supply chains. You learn about material culture. You learn about history. You learn about how their markets work, how their retail works, how their service sector works. So food is super useful and you're going to be doing it anyway. So you don't have to like make time out of your day for food. You're going to eat, like put it to epistemic work. There's so much you can do learning about food.

You've praised both Indian food as well as Mexican food. So I want to ask you, do you have a favorite? Between the two?

Well, Indian food is more diverse, so I think it would be my favorite for that reason. But per meal, I don't prefer it to Mexican food. Partly I just know Mexico better than India because I've been there many, many times. I think I've been to India 10 times and Mexico maybe 32 times. So in a given Mexican place, I'm pretty sure I'll get the best meal, more than I would be equally sure in India. And it's, I eat street food in Mexico, which is amazing. I'm afraid to eat street food in India. I've done it and I was fine, but I'm just not going to do it a bunch of days in a row. I think it's too high a chance of getting sick. So that for me makes eating in Mexico better than eating in India. But I'd say overall India has better and more diverse food.

Why is there less public appeal or popular appeal to art? Like You will not hear the average person talk about a favorite art or artist, for example, but they will definitely might have a favorite music, book, movie. So why does art attract select few and not the masses?

Well, when you say art, it depends what you mean by that term. If you mean paintings, as you might see in a museum, most people don't live near great museums. And a lot of those paintings are difficult to understand. You need a lot of background cultural capital. So that keeps away a lot of people. But if by art you just mean attractive and appealing visual images, I think almost all humans are obsessed with them. Fashion, interior design, how a city looks, whether a car is attractive, whether food on a plate is attractively presented. And to me, that's a kind of art too. Maybe it's, it's like less high culture, but it counts. So people are very, very interested in visual aesthetics and they tend to focus on what they can access and talk about with others. I think that's fine. So I think they're very interested, but like, will everyone, you know, fly to the Netherlands to go see the big exhibit of all the Vermeer paintings? No, they're not going to.

You also have a new grant program that you've recently launched. With Patrick Colson. So what would like a successful application on that new aesthetics grant look like?

Well, I'm afraid to say because people will try to game the thing, but it should be something that is both beautiful and interesting, can practically be realized, and the person doing it can signal competence in bringing about its execution. It's actually hard for an application to meet all of those standards. A lot of the applications meet one or two of those, but not all of them. And you need the whole package to get anywhere. So, uh, it's difficult to judge those, I would say, because you're not just judging the person. The person can be very impressive and maybe they can't, you know, paint worth a damn. You need to really judge the work in some way. And that's quite different from judging Emergent Ventures applications. With emergent ventures, we expect usually like the work isn't there yet. It's not there to be judged. You're judging the person. And if the person doesn't become a great painter, well, they might do a startup or run a podcast or do something else noteworthy. You can mainly focus on judging the person. And I find that a very different kind of thing to be doing. I try to be good at both. We'll see. I'm not the only referee, you know, part of New Aesthetics.

Oh, it is ambitious and I think it's a very nice direction.

But I think we'll succeed. You know, Patrick's original tweet on new aesthetics, we're now talking only a few days after it was put out, but it already has more than 3 million views and people are talking about it a lot on social media. So even the announcing of the program, forget about the grants, I think it will have a significant impact and get people thinking, wondering, talking, doing. So I'm very bullish on the whole thing.

And related to this, you also posted recently on the great artworks or great artwork century for the past. Sorry, you posted about the greatest artwork in the previous century and you've listed your—

No, this century, you know, the first 25 years of this century. I feel very guilty for neglecting India there. I'm just not well enough informed. So if you ask me, say what was the best movie from India in the last 25 years, I genuinely do not know. I'm pretty sure it should be on my list, but I can't tell you what it is.

And about the ones that you did list, like, what is the thought process or decision-making? Or how do you come up with that list? Is that just something that you feel internally, or do you have like a criteria or standard that— how did you come up with that set of names?

You know, as I said in the post, It was a very seat-of-the-pants enterprise and not comprehensive. But there's something to be said that if you just sit down and feel what comes to my mind, maybe those were the enduring works. Maybe that's in some ways a little more useful than if you try to survey everything that came out and draw up lists and spend days working on it. Just what sticks with you ought to matter in some way. Obviously, it's a subjective list. It's for other people to draw from and add to or subtract from, and they do their own. I'll learn from that. I'm not at all ashamed that it's such a subjective list. But if I had to think about something for a week to remember this album, this movie, like it almost by definition, it shouldn't be on the list, I feel.

And, uh, if I know you don't know a lot about Indian art form, but like if you had to pick amongst all the Indian art forms, like movies, paintings, music, There are different art forms, right? So in India, which art form do you think is the best or the one that you like?

Well, I think there's been a lot of strong positive movement in painting. Most of this I'm seeing online in JPEGs, and that's not nearly as good as being there in person. I've never been able to put much time into the Indian gallery scene, but I've seen really a lot of wondrous things and heard good things. I'm very optimistic about Indian painting.

Before we move on, so for in Indian painting, Going back to my earlier question, not everyone gets an Indian painting. Like if I go down, no one really talks about Indian painting, but it's the select few that understand that, that appreciate it, that buy it. So what again sort of delinks the appeal to the masses?

Well, I doubt if it appeals to the masses, and even the cheaper works are too expensive for the masses, but it doesn't have to. You know what I see periodically, I get emails from many auction houses that sell art. And I scroll through them. It's one of my hobbies, you could call it. And reasonably often there are auctions of contemporary works from India. And most of the time I look through what is being auctioned off and I just see a lot of creativity there. So yeah, of course it will be an elite thing, but that's fine. If you look at popular Indian, like folk art, festivals, cuisine, How women dress at the so-called popular level. Again, you see so much that's wonderful. You go to the Taj Mahal. I think how the women dress up to go there is more attractive than the Taj Mahal itself. Like the saris, the jewels, it's fantastic. And those are not in general wealthy people. Some of them will be, but not so much. Or like an Indian wedding, or how colors are used in Indian cinema. Bollywood or, you know, Telugu, you know, so many things that are not elite that are visually or otherwise highly attractive. Music, fashion, just a lot of areas where India is now extremely vital.

I want to ask you about AI. What gives you confidence that AI will create more jobs as much it will take? Like on the net, will it create more jobs? I think you do say that. So what gives you that? Confidence?

Well, there's a lot of economic history where you see radical technological changes, and those changes tend to boost wages and create more jobs. I don't see why AI should be different. And just to cite some simple examples, we'll need a lot more jobs in the energy sector. We'll probably have a lot more human entertainers. We'll need a lot more jobs in bioscience and doing biomedical trials. We'll need a lot more jobs taking care of the elderly. Those are areas where there'll be a lot more jobs, you know, in very, very high numbers, not just a few. And AI will help drive those processes. Are there plenty of areas doing like routine work with paper and data and numbers where jobs will disappear? Absolutely.

How about writing for the AIs? You mentioned it and now it's sort of, there is commentary on writing for the AI. So if I want to write. That I want to make the writing valuable to the AI as well as the human? Like what changes? What changes so that it becomes valuable to the AI itself?

Well, first, your writing and podcast also, it's going to listen to what we say, right? You want it to be open source that it can be accessed. That's, you know, the prerequisite. So start there. But the AIs are very smart. They're mostly smarter than we are. So it's a tough barrier, but you want to say things, write things that the AI finds convincing or useful or informative and try to do that. And then the AI will incorporate that. It will cite you. It will refer to you and it will use your ideas and you're making it smarter. It's like writing for the Encyclopedia Britannica in the old times, writing to be high in Google search optimization in more recent times. Why would you not want to do that? It's one reason, you know, I do a lot of podcasts with other people, not just my own. It's a big reason why I'm doing this podcast. Yes, I'm doing it for you, but I'm doing it for GPT, Claude, Gemini, whatever, Manus, Llama, doing it for everyone.

Yeah. So also, I mean, related to this is you've recently written a column on how reading is past its prime and we're moving to an reading culture, at least in the US. So if you're writing for the AIs, if people are chatting to the AIs, won't that lead to an increase in reading? Perhaps you're reading what the AI chatbot says, but do you really think it's going to decline, or is it a particular type of reading that will decline?

You know, the AIs are going to change, so I don't think you can target any one tactic or strategy too obsessively. Just do a lot for the AIs over time, see what works. Another reason I write and podcast for the AIs is so it knows me. So if I'm traveling somewhere, including India, and I just ask it, like, where would Tyler Cowen want to eat in Delhi? It knows what I want. It's great. And it knows where I want to eat. And, you know, because we did this episode when I said before, like, I don't really eat street food in India. Well, now it knows that. So it's going to send me to where I want to go. And that's a very valuable service that the AI knows me as an individual. I can ask it, what books should I read? And it has an excellent sense of my taste.

So, uh, what about reading? Like reading, you mentioned in a column will decline. So will AI cause that decline not to happen because you're going to write to the chatbot, you're going to read what the chatbot says. So do you think reading will decline?

Well, I think reading of books will decline, but I don't think reading will decline. And just as you said, you'll read more from the AIs. Now, sometimes the AI may even package it in a book form for you, you know, through some kind of machine, 3D printer, whatever, because that's a convenient way to carry things around. You don't always want to read on the screen. But still, books as we used to understand them, I think, are somewhat in decline, but reading is not.

If you had to start the Marginal Revolution blog today, what would you do differently?

Well, I can change anything I want anytime I want. So just look at what we do. I think there are more links over time because there's a lot of good writing. And as you become acquainted with more topics, you find more things to link to, but you don't necessarily know enough about any one of them to say something intelligent about it. So I have a link coming up today on the conflict in Sudan. I would not have made that link 10 years ago, but I'm quite sure I don't know enough to write a post on the war in Sudan or the wars in Sudan. So it's just a link. Uh, I think I'm doing more personal narratives about my own life because the AIs can't do those and I want the AIs to know me better. That's a change, you know, we've already been doing. So those are some simple examples.

And if you had to start Conversations with Tyler from scratch today, would you do anything differently?

Again, I change that all the time. I can interview anyone I want. This year I want to interview more obscure people. Fewer famous people, even though the famous people get more downloads. I want to interview more people on British history, more people related to the NBA, possibly to chess. So they're all things I can do. I'm going to try to do them. Now, I often need cooperation from guests or potential guests. So I'm not just like fully in charge, but I have plenty of plans. And last year we did way more episodes. I want to keep that up. So again, these are all things that are going to happen.

Is there a guest that you want to interview or people want you to interview that has, that you have not yet interviewed?

Well, it's too late for Zakir Hussain. We did invite him. Paul McCartney, you know, you can invite him, but he never sees the invite. I think he's just overwhelmed with attention. So there's a lot of people like that. I'd gladly interview pretty much all of them. But I don't really expect it. I'm not going to put much energy into it. Most of it is futile.

Will Marginal Revolution or Conversations with Tyler ever come to an end besides, let's say, health or old age? Or will you just keep on?

I certainly hope not. I have no plans to end them. I would be surprised if I ended them. Again, health or death aside. For me, they're fun. Since I'm not paid to do either one, I don't have to worry like, well, what if my wage goes down? Would I still do it? I'm very happy to do them for free. Conversations with Tyler requires a team behind me. Is it possible the team goes away? Yeah, but I'd find some other way of podcasting. So I just think they're going to continue in some form or another. I would do them for many fewer people. Like, say my audience fell by 10x. I would still do them.

You naturally enjoy the conversations and the preparation for it.

I enjoy it. The people I would have left would be, I think, very high quality. So I'm not dependent on this, like, super high audience demand, even though right now we have that.

How will you identify obscure people, like guests that you want to? Like, how do you, if someone is obscure, how will you figure out? That you're interviewing these people that need to come on?

Well, often someone writes to me and recommends them, but also very typically I'll read a book and really like the book. And maybe it's the person's first book, it just came out, and then I'll think, oh, we should interview that person. Like, you know, obscurity is relative. Like most of these people, they're not truly obscure. You can Google their names and you'll learn things about them, but they're obscure in the sense that Even amongst intellectuals, most people probably have never heard of them.

What did you as a young 30-year-old get right and wrong about the future?

Young, like how young?

As a 30-year-old.

30-year-old. When I was 30, I was, this is 1992, I was mostly optimistic about the world. I thought globalization would continue and lead to a lot of competition across governments and a lot of wealth creation. And the 30 years since then, uh, brought that to a large degree. I'd say I was too optimistic about classical liberal ideas in 1992. My big worry in 1992 actually was that Russia would invade Ukraine and there'd be a war in Eastern Europe. For a long time, I was kicking myself. Well, that never happened, but I always thought it would happen, and I still continued thinking it would happen, but it felt like one of these predictions where you were just wrong because it didn't happen. But of course it's happened, and I think I saw the reasons why very clearly and was really quite correct about that, you know, in 1992. I also thought China would try to take Taiwan in 1992. And we'll see, but I expect I'll be correct about that also. And in 1992, that was not such a popular or common opinion.

How did you form these opinions, like, so early on that you got right? Like, where does this— is this reading a lot of information and processing this? Like, how do you form these opinions that led to these correct predictions?

From reading a lot of world history and seeing that certain types of conflict over territory keep on recurring. Again and again and again. Middle East would be another example. Uh, and Russia has wanted Ukraine since at least the 18th century. Most of the time since Catherine the Great, they've controlled Ukraine. If you speak to Russians, a lot of them think of it as theirs. I feel that's quite wrong, but it's a strong view they hold. And the Russian state itself depends upon militarism for some of its legitimacy and impetus, and you could even say dynamism. So I, I've long been convinced on that topic. Same with China and Taiwan. The Chinese people view their nation ethnically, and that means whether you agree or not, they think Taiwan is theirs. Now, I've also always thought India and Pakistan will not ever destroy each other. It will be tense for a long time, but manageable. And so far that's been correct. I don't think you're going to see a war, India versus Pakistan, the way you've seen with Russia-Ukraine or might see with China-Taiwan. I just think it'll go on as ugly and messy and small-scale for a long time to come.

And it won't blow up?

Well, not truly blow up, but could it be bigger than it's been in the last 20 years? Yes, it could be.

And what probability of success Do you think Russia and China would have?

Depends what you count as success. So I think China's chances of incorporating Taiwan are fairly high. Will that help China much? That's far less clear. Russia, you know, they have over a million casualties and they've almost bankrupted their nation. I would say by definition, that's not a success. But in the long run, demographics are working against Ukraine. And even though I don't think Russia will in military terms conquer Ukraine in the next few years, it's quite possible that 30 years from now, Ukraine as an independent nation just does not have enough people and it does end up incorporated in the Russian orbit. I don't know if I'd call that success given the costs and lack of actual return. But some Russians would view that as success.

Um, I also wanted to ask you related to that earlier question is what are you more likely to get wrong, um, 30 years from now? Like if you're looking back to this day, 30 years in the future, what do you think you'll probably get wrong about the future?

Well, there's so many things, but there's a bit of a contradiction in answering the question. If I think I'm likely to be wrong, I'll change my view. And maybe I'll be wrong in some other way, but I'll be less likely to think I'm wrong about that. I would just say the net effects of AI are intrinsically very difficult to forecast, and there will be many more incorrect predictions than correct ones, and that holds for my own as well. One thing I got wrong 30 years ago, I was more bullish about Latin America than turned out to be justified. That would be something I was wrong about then. I thought, you know, half the countries in the region would really do quite well and maybe grow at 4%. Uh, Panama has done that. Dominican Republic has done that. But mostly it hasn't happened.

What do you think? Is it the politics over there that caused this to not happen? Or why did it not?

Well, the politics are not great. But I would say that's downstream of other problems with culture and human capital. So I think it's misleading to put the main blame on politics. Somehow the people themselves are not really obsessed with succeeding is maybe the root cause of their problems.

Um, I want to ask you about crypto, like if crypto succeeds and it's relevant 10 years from now or 15 years from now, what problem did it actually solve? Like what's The, how does it become more valuable and stay relevant?

Well, I would say crypto already has succeeded, maybe not in a huge way, but people have wanted the Bitcoin asset. Some of it is illegitimate. They want to use it for illegal transactions. Some of it is legitimate. They want to use it for illegal transactions that are beneficial, like getting money out of evil countries. Such as Russia. Some of it is they just want another portfolio asset that seems enduring. I would say the gains there from that are quite small, but they're real. And by now you'd have to say they're demonstrated. Now, stablecoins are newer. Maybe they're not quite proven, but I would say there's highly significant evidence. A lot of the world wants to use them to access dollar-based or dollar-linked transactions without going through the entire US regulatory apparatus. And there's just very strong evidence there's real demand for that. And I think that will endure too. It's like a way to partially or fully dollarize without having to deal with all the hassles.

So you see USDC volume to continue to rise and it will become more prominent.

Yeah, so, you know, as you know, El Salvador, Ecuador, Panama, have dollarized. Puerto Rico, you could say dollarized, though they're a territory of the US. It's gone fine. It's been good for them overall. Not perfect, but good. More countries will want to do that over time. They'll probably do it first with stablecoin experiments before they fully dollarize, or they'll partially dollarize. And again, the word proven would be too strong. But there's a very strong balance of evidence suggesting that is, you know, a demonstrated and enduring benefit.

So one question that my girlfriend wanted me to ask you is like, if you were ever stuck on an island, who would you take with you?

Only one person? Well, my wife, but I don't want to make her be stuck too. So maybe it would be someone I didn't like. Okay. I'll take Putin with me so he cannot do the world any more harm. That's my pick, Putin.

That's a good answer. Thank you so much, Tyler.

It's good to see you again. Good to chat. I'm glad the AI now understands you better.

Yes.

And me, I hope. And we'll see each other again, right?

Hopefully, yes.

And happy new year to you all, just in case this comes out. And very much look forward to seeing you next time again.

Yes, thank you so much, Tyler. Happy New Year to you, and thank you for taking out time from your busy schedule. I know you have so much to do, but it really means a lot for you to come on the show.

Great. Bye, everyone.