Why do we refuse to learn from history? | Tyler Cowen

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Why are we forgetting history's lessons? Just asking questions. I'm Zack Weissmuller, Reason senior producer, joined by my intrepid co-host Liz Wolfe, Reason associate editor and author of the Reason Roundup newsletter that goes out every weekday morning. Hey Liz.

Hey Zack.

We're told in school that we study history, so as not to repeat its mistakes. But what if some of those lessons just aren't sticking? Today's guest regularly invokes what he calls the Great Forgetting, and the striking thing about this collective amnesia is that it doesn't apply only to distant ancient history, but also hard lessons learned only a few decades ago— lessons about inflation, price controls, and Crime. Tyler Cowen is the Holbert L.S. Harris Professor of Economics at George Mason University and director of the Mercatus Center and host of the great podcast Conversations with Tyler. He and his colleague Alex Tabarrok founded the popular and influential economics blog Marginal Revolution and recently launched their own joint show, The Marginal Revolution Podcast. Which recently released a limited series on the unlearned economic and cultural lessons of the 1970s, which we're eager to talk a little bit more about today. Tyler, thank you for joining us.

Happy to be here.

Tyler, you and Alex Tabarrok frequently talk about the great forgetting. What exactly is that?

One example of the great forgetting would be you have a lot of individuals today, some of them even economists, who think rent control is maybe a decent idea. Now, several decades ago, virtually everyone would have realized that rent control creates shortages, quality problems, corruption with deciding who gets the apartment, uh, but bad ideas have been making a comeback. So the use of excess inflation to try to stimulate the economy, that's something we did only a few years ago. Again, in the 1980s or '90s, we had learned that lesson but we've forgotten it. There's some kind of generational turnover, so just one idea after another. Or the notion that high crime, you know, is not so bad for your city's economy. Uh, we learned that lesson, but no, we seem to be forgetting that again too.

But okay, so one bit of pushback that I have here is, don't we have a situation somewhat unprecedented in the workforce where the modern workforce consists increasingly of young people, 28-year-olds like me, coexisting at lots of, you know, white-collar workplaces, intellectual workplaces, with, you know, older people who are choosing not to retire at the same rate. And so you have lots and lots of 28-year-olds coexisting in the modern workplace alongside 70-year-olds. How could there be a great forgetting happening if we also have this sort of greying of the workforce in intellectual spaces?

Well, whether the problem is they don't talk to you all enough or you don't listen to them enough, I'll leave that for listeners to decide. But I think people don't respond to reason in any case. They choose political views to express certain sympathies, to signal they're a certain kind of person, to belong to particular groups. So even if the 70-year-old, you know, at the workplace is telling you the right thing, I'm not sure it matters that much. I mean, we are impervious to reason very often as humans.

Not me, but yes, not you, not me, and not Zach.

All the others. Yeah, Liz and I are here to listen and learn to our elders today. Uh, and, uh, I, I mean, I mean that, you know, somewhat in jest, but also seriously, like, because I was fascinated by this series that you and, uh, Alex Tabarrok did on the 1970s. Um, and you said, uh, on one of those podcasts that that's actually when you first grew interested in economics, in, in that era. Um, what is something that you wish our policymakers had learned from the '70s that seems to be forgotten at this moment?

Well, it really depends which policymaker you're talking about. If it's someone like Elizabeth Warren or Harris, who ran for president, I think they're wrong pretty much about everything for the most part. If it's our president-elect, Donald Trump, he's a weird mix of wanting to build out the economy aggressively, which I mostly favor, but having a great belief in tariffs, which economists realized were mostly a bad idea a long time ago, and thinking mass deportations is feasible and/or desirable. So he needs a very different set of lessons. But if you're, you know, if you're talking about impervious to reason, uh, that would qualify for him as well.

Can we talk— you brought up inflation in your earlier answer. I like— that's sort of the issue that defines the '70s in a lot of people's minds. I'm going to bring up a slide here. Showing inflation in form of consumer prices in the United States. From this graph goes from about 1960 to present, and you see that big spike. I think I've got a closer version in here. I know this is crude oil prices. It coincided with oil prices going up.

What was—

as someone who has been through the inflation that occurred then and the inflation that we just experienced. Can you compare and contrast the inflation of the '70s with the inflation of the early 2020s?

Well, the inflation of the 1970s was much worse. It reached significantly higher levels. It went on for long. It was accompanied by oil price shocks, as your second graph showed, and it was harder to get rid of. And when Paul Volcker finally started tightening the screws in 1979, we had a big recession which ran into the Reagan years. So that was a terrible event. This time around, inflation peaked at, I believe, 8.9% rather than double digits, and I would say miraculously we got it back down to 3 to 3.5% without any recession at all. This is something economists still don't understand, uh, but it led to real wage declines for a lot of Americans. It disrupted production. It hurt morale. Bid into living standards, and there were several factors behind that inflation. One, of course, is supply shocks, which were not as bad as during the late '70s but still present, but just passing around too much money, the Fed being too loose with monetary policy. The Fed knew what it was doing, but it believed it would not lead to price inflation because for so many years inflation had been coming in under their targets, and people like Paul Krugman were telling them it's really hard to inflate too much. And they started believing it. That's another instance of the great forgetting.

Hmm. Well, so yeah, the— with the money supply increase, uh, which in this case went out in the form of COVID stimulus, um, largely, um, was that behind— like, to what extent was that behind the inflation in the 1970s? I'm pulling up a chart of the United States money supply, um, uh, The arrow that I put in there is Nixon closing the gold window, which a lot of libertarians say it was the beginning of our problems because then the money printer could kind of fire up unabated. I think I've got a closer look at that there. There's the 1970 through, uh, forward. Um, yeah, what role does the supply of money in circulating play in inflation? Was it a big factor in both of these cases?

It varies across the era. In the 1970s, it was particularly strong. When you have an economy with much more financial innovation, sometimes, like, what's even the supply of money is hard to define. So I think we need to be a little careful. Uh, but starting in 1972, President Nixon pressured Arthur Burns, then head of the Fed, to basically prime the pump to help him get reelected., and then we had a series of escalating cycles of excessively loose monetary policy, and it led to disaster. Now, again, it's not the only problem. The oil price shocks were significant, but the monetary side typically would be seen as more important.

I want to stay on the theme of the '70s for a little bit, but turn our attention to crime, specifically because I am a New York resident. I live in the borough of Queens, and New York crime has sort of been on many people's minds in the zeitgeist an awful lot lately, which I think is kind of interesting, right? Because we've historically had terrible crime rates. We had a terrible homicide rate. We had an awful lot of terrible antisocial behavior and public disorder in the 1970s, um, and frankly the '80s and '90s as well. And now it feels like post-pandemic— during the pandemic and post-pandemic, there's been a little bit of a resurgence. And it's like people's fears that New York will descend back into this horrible era, um, it— people are worried that these fears will come true. And I think some of that is possibly warranted. We saw in 2024, for example, specifically within the subway system, um, an increase in subway system-specific crimes compared to the past few years prior, with the exception of the pandemic years. Um, I mean, this is looking at subway murders specifically, but even, you know, we've had a few different stabbings in the last few weeks. We had a woman set on fire on the F train. There are a lot of very high-profile crimes that are leading people to, I think, feel, um, a sense of fear that may or may not be grounded in the data. But Tyler, you frequently throw cold water on some of these narratives, uh, and are happy to you know, bring people back to earth. So bring me back to earth. What type of great forgetting might be happening here when it comes to the New York crime rate?

The New York crime rate to me is a very complicated matter. First of all, we have a COVID period where there's just a lot less of everything for more or less exogenous reasons. Then there's a Black Lives Matter period, which is still going on to some extent, where the police are afraid to do their jobs, and that leads to murder rates, crime rates going up in many cities. Not necessarily, say, in the American South, but at least for a short period of time, there were spikes in murder rates. We don't know if that's permanent or temporary. What I see in New York— and again, I think we need more data to draw a conclusion— but what's really rising is what I call public disorder, which is things not looking, feeling, or acting like they're supposed to. That is sometimes accompanied by crime,, but even if your crime rate is flat or falling slightly, if public disorder is up, people will perceive the crime rate as very high. They'll latch on to particular anecdotes. It will seem much worse. People don't like public disorder. I know this is Reason Magazine, but I would add to this much more, you know, drug use, marijuana smoking in public is part of public disorder, and people have decided they don't like it. The form we chose for marijuana decriminalization, legalization, I don't think it's worked that well.

I'm interestingly working on a documentary for Reason about this right now, and it's definitely an issue because I'm a New Yorker and I'm a pot smoker, but I'm also a mom of a toddler, and I'm very concerned about a lot of especially the subway system crime and the public disorder issues. And the idea of having public masturbation, public urination, people smoking inside of subway cars, to me this is untenable, in part because I think I'm far more sensitive to these types of, types of threats when I'm walking around the city feeling very defenseless with a 2-year-old right next to me. And so this is something that I actually, I totally agree with you. I think I hope to grapple with this on a deeper level in the documentary that will be released in the next few months. But I also think that this is an area where, you know, reason— I think, I think we have a real opportunity to kind of grapple with some of these issues very seriously, because frankly, it's important, um, that norms be established. And when we bring markets from black, um, from their black market state above ground, it's important for there to be some sort of etiquette that governs our cities, especially places like New York where people are jam-packed together. So I'm actually totally with you that I think libertarians would be well served to to take these issues seriously.

And note, a lot of pot is still sold in black markets, right? So we've had a very bad mix of it being legal and illegal at the same time because it's taxed and regulated typically when it's legal. I suspect we need more policing in many parts of America, not all, but you want policing that is not too brutal but is still effective. And governments, you know, typically don't work well. Police departments have funny internal cultures. It's very hard to get the right balance. I don't feel we're doing well at it, but I, you know, I think it's, it's morally wrong to throw people in jail for, say, smoking pot or just doing things to themselves. But that said, we need a form of marijuana legalization or decriminalization that people are going to support over time, and I don't think we have that now.

Well, so I'm curious— oh, Zach, could I just ask a follow-up and then let you jump in? Well, one thing I'm really curious about is, in your view, Tyler, how should libertarians be grappling with issues of fare evasion, for example? I mean, we have— I think it's something like 15 to 20% of subway riders are not actually paying their fare. They're hopping the turnstile, and it's about 50% of bus riders. Um, like, like, how do you draw these lines of what type of public disorder should be tolerated? What should be cracked down on? Do you have a sense or a mental model of the right way to crack down on some of these things?

I'm in New York a lot, but I'm one of these people who refuses to take the subway, which already should tell you something. My hope is there's a technological solution that it can be solved without actually more policing. I suspect there is, but since I'm not down there in the subway, I'm not an expert on how to do it. But it seems to me extremely likely there is a way to do it.

Fair enough.

Is that just in New York City? Like, yeah, I know you're a bit of a world traveler. Is New York the only place that you're not riding the public transit, um, or is that just kind of a constitutional personal Tyler Cowen thing?

Well, it's for different reasons. If I'm in a foreign city, I also won't ride the public transit, but that's because I want to see the city, not that I dislike the transit. So if I'm in Singapore, which has an awesome subway system, and I have been on it, but still I want to go around in a taxi and just look. But it does seem to me New York has some special problems with public disorder in its subways that a lot of other countries, including, you know, maybe higher crime countries, do not.

Mm-hmm. What have you noticed about what other cities that seem to function better are doing differently? I mean, you mentioned Singapore. That's always kind of brought up as the prime example of like the most orderly city, one of the most orderly cities in the world.

They do a lot of things differently than New York does.

Extremely draconian enforcement of social norms. I— that you hear about caning and so forth. I am assuming, but maybe I'm wrong, but I'm assuming you don't want to go full Singapore, but like what are some lessons that you would draw from other, you know, major metropolitan areas around the world?

Well, Singapore is much more liberal than people think. I mean, the caning thing is not relevant. You would have to do some very strange things to end up in that position, no pun intended. Singaporeans are conscientious and public-spirited. That's the main reason why a lot of their public goods work so well. But if you go— there's something odd about New York City, that it's high status to be a rebel in a way that it's not in a lot of poorer countries. And maybe that's the cultural root of the problem. I don't know how to fix that with policy, but again, I just would be shocked if there were not a technological solution that could not manage to keep out the non-payers from the subway system and the buses.

Well, one thing that I think is really interesting there is like in some cases the city has implemented technology that you would think would be helpful, but it's in, um, you know, as is to be expected with city government, the most half-assed way possible. Excuse my French. For example, New York City maintains camera feeds of what happens in a lot of their elevators within the subway system. Okay, but the only way to actually get those is via FOIA requests to get access to the feeds. If only somebody were building some sort of system that perhaps made it so that the feeds, perhaps through AI, could be monitored all at once, and then people could have an app on their phone where they can check and see, is the elevator in the subway station that I'm attempting to use in the next 10 minutes accessible to me right now, or is it occupied by a crazy person? And if it is in fact occupied by a crazy person, can we get law enforcement on the case, right? Like, the city has the means of surveilling some of these things, and then they, I think, are, uh, are you calling, are you calling for total AI surveillance of New York City? Is that the, of the subway system elevators so that I can use them with a stroller? Yes, I am. Yeah, I, I might get fired after this.

I mean, I think there's a point, I think there's a point to what you're saying that like the, it's like you can have the technology and then And then there's the policies surrounding the technology. I experienced this being in Los Angeles when red light cameras were first rolled out, like red light cameras. In theory, that's a great idea. It reduces the friction of having to interface with a police officer. It creates— it's shown to actually increase public safety when implemented properly. But then, like, some crazy percentage of the red light tickets were just people rolling right on a red. It was just like a revenue generation scheme. So yeah, I mean, Tyler, I guess, like, what do you— how do you view, like, the proper way to, you know, marry policy to technology in terms of creating more orderly environment in, in the city?

Again, New York City is a special case. In some ways, I've given up a bit on it. I don't mind if it's more chaotic and if it's not perfect to live there. Well, that's a slight counterbalance to the NIMBYism. It keeps down the rents, keeps who lives there a bit more diverse, makes the city younger, scares some people away. It's not an optimal mix, any economist would tell you that, but for me it's not the end of the world either. I grew up in a New York City that was far more brutal and dangerous. This is now the 1970s. Even the Upper East Side you might not feel safe, and I mean the safest parts of the Upper East Side now. Uh, in some ways it was a more interesting city back then, so I'm not nostalgically yearning for that return, but it's so easy to leave New York City, as you, Liz, someday I suspect will discover. And for us to have one place that's perpetually screwed up, I've just come to terms with that. And I think making it easy for people to leave is the best thing we could do. We're not going to fix all those problems.

Are you saying I'm not a lifer? I'm a Queens resident, mind you, not a Brooklyn hipster.

Maybe you're a lifer in Queens, but issues of public schooling, the cost of private school—

oh, you underestimate my commitment to homeschooling and forcing the children to listen to your podcast aggressively.

Well, then I'm in favor of you staying in Queens. You have the best food in America in Queens, so that's another reason to stay.

And home of Lenore Skenazy, queen of the free-range parenting movement.

I wanted to bring out— oh yeah, that she's known for sending her child on the New York subway from Queens into the city, right? Is that what the right way—

I think it was home from Manhattan into Queens. Yeah, exactly.

Okay, gotcha.

Yeah, well, I want to talk about—

a lot of Queens, you don't need the subway. You walk to your errands and it's fine, and you'll actually have to take a vehicle to get to some places, and maybe there's a chance you can park. So it might be somewhat sane after all.

You mentioned Donald Trump earlier and this sort of bipolar nature where he believes in growth, but he's also a tariff guy. If the 1970s were kind of like the taught us a lot about lessons, the unlearned lessons about what we should not be doing, I view Trump as a product of the '80s. I just made a little Trump '80s, uh, photo montage here to remind people that Trump was— this was like when he was kind of at the, the beginning of his celebrity, um, in, in the 1980s. And he's still, you know, as we saw by him bringing Hulk Hogan on stage, he still like holds on to, um, I think the, the sort of like turbo America view of the '80s. But at the same time there's a sort of incoherence in the MAGA movement. You know, the '80s— the stereotype of the '80s is that it's parodied for its shallow consumerism. Greed is good. But another way to look at that is growth is good. And that's a— that's a, if not the central argument in your book Stubborn Attachments. And Trump does seem to believe that on some level, but not everyone around him does. There's a sort of MAGA civil war over issues like high-skilled immigration and antitrust. Any intuitions about how that civil war plays out?

I think the MAGA movement is held together by Trump, and as he over time becomes a lame duck, it will more and more splinter. Decisions and outcomes will be more and more random. I think in the first year there's a good chance for many good things to happen. In fact, I'm hoping they do. I'm not convinced they will. The way you really initiate social change is to have a fair number of cadres of people working on something for long periods of time. They, they're in government, they infiltrate institutions, and something sticks over time. Democratic Party has done that wonderfully, the Republican Party far less well, Libertarians almost not at all. You could say they're too free-spirited to want to take a lot of those jobs. Maybe it's a virtue of sorts, but collectively is bad for their point of view. I think you're right about Trump being a child of the '80s. Keep in mind, US manufacturing jobs, not output but jobs, peak around 1977. So the '80s, early '80s, is the time where you really start to feel that decline, and people then are very upset about trade. And Trump was too at that time. I've seen tapes of earlier Trump talking to Oprah Winfrey about this in the '80s.

Yeah, he's talking about Japan and that— now it's that of China.

Yeah, but now we've had decades since then. Yeah, where manufacturing jobs fall to 7 or 8%. Of the workforce, and we're at full employment now, and it's fine, in fact. And those jobs pay below-average wages when you look at them. They're not a thing to be envied, and a lot of them can be dangerous or unpleasant. But Trump somehow still has this bug in his mind, and at his age, I don't think he's going to drop it. You're hoping some measure of corruption saves the day, that basically to kind of sell exemptions from tariffs and trade restrictions will win out And I guess that's what the stock market thinks. I suppose it's my prediction as well, but it's an ugly process, right? It's anti-rule of law. The next time around, it may not go so well and so on. So it's not a great place to be.

Hmm. You wrote back in July that immigration at the border has in fact spun out of control, and that has been a key Trump issue from the beginning of his campaign. And I write this as a person who is very pro-immigration. You can imagine how the immigration skeptics feel. So I read this and it was very striking to me because I feel this exact same way too. I value things being orderly and democratic, and I think there's a lot of value— and intellectually I very much feel this way— in voters getting what they consented to and what they voted for. And what's been happening at the southern border, um, does not strike me as that at all, uh, which leads me to feel as though they'll feel as though sort of rule of law is being eroded the more this continues. Yet at the same time, the idea of deportation squads running around and attempting to round up illegal immigrants makes my libertarian heart very queasy, and I think will have all kinds of ramifications all across the economy. We're about a week and a half out from Trump taking office. What are your predictions for what immigration policy might look like in the coming months, and what should it look like? How do we reconcile these two things?

Trump has to do something on the issue to claim victory. The federal workforce in charge of both stopping and getting rid of immigrants is extremely low productivity. I've heard this from a number of people on the inside, so whatever policy is to get something done is going to be very, very hard. It's not that well known that, you know, per year Obama deported more people than Trump did, and the Obama administration focused on people already in the criminal justice system. You've already got them. It's a very popular thing to do. You're not taking away someone's employee or maid or whatever.

Which is also what JD Vance has touted as the approach, right? Like Trump talks, you know, has all of the big bluster and then JD Vance has been sort of operating on the podcast circuit, running around doing cleanup and basically saying, well, actually no, here's the order in which we will do the deportations.

So we'll return to the Obama years.

Mm-hmm.

Yeah.

And that's, it's not a perfect outcome. It's an okay enough outcome. I do think we should orient immigration as much as possible toward legal and increase legal immigration, but people are so upset about illegal. You're not going to win that debate at this point, and there is the pushback, and it's going to manifest itself in some way. That's probably the best way for it to happen.

Were you surprised to see the discourse shift to debating high-skilled immigration, because so much of the debate in the past has been about, you know, the low-skilled immigration coming over the southern border. And now there— I mean, this is why there's now a fracture between growing in MAGA, because the, the difference this time around was so much of Silicon Valley was openly backing Trump in a way they weren't last time. But, uh, there's now a pushback against the H-1B visas that are pretty important for their labor market. Um, what did you make of that exploding, uh, into the debate over Christmas?

I'm not surprised at all. In fact, I've been predicting this for some while, that once you get people riled up with nationalistic feelings, it's hard to control those feelings. And they spread to being anti-foreigner sentiment of many kinds. This has happened to some extent in Australia as well. So the notion of, well, we're pro-high-skilled immigration against low-skilled, I don't think that's such a stable ideological equilibrium. I prefer a world where people want more legal immigration of both kinds. I know that's not what we're about to get, but there are these fights going on and you know, the first round, the, the pro-immigration people actually won it. I wouldn't say I'm hopeful, but it would have been worse if they had lost it, right?

Yeah, that's true. Um, in that same piece that, uh, Liz was referencing about the vibe shift towards kind of normalizing MAGA, uh, you noted that, uh, MAGA is just better at tapping into what you call negative contagion. Than its progressive opposition has been. Um, Trump's famous American Carnage speech comes to mind as an example for me. But this time it does feel a little different, mostly because of that Silicon Valley techno-optimism that's been infused. Um, is that a possible vibe shift for the better? Like, are we going— like, is this the, the sort of shift from malaise into hopefulness that Americans have been waiting for?

I hope so, but I wouldn't predict it. My fear is that after year one, the best Silicon Valley people will be some mix of fed up, burnt out, kicked out, have better things to do, and will move on. And then it will be in the hands of the others. But on the energy front, AI front, like, let's try to get done what we can while we can, because there is some momentum in those directions. But it's hard for me to see that as the ruling principle for another 4 years of Trump.

Hmm.

Are you, uh, bullish or bearish on Doge, the Elon Musk-Bhavik Ramaswamy team-up to cut down the size of government?

I don't know. The original plans and talk were badly misguided, like great ideas that I agreed with, but the people involved didn't at all seem to know what they were doing. Those are very, very smart people, and I know they've been learning in the meantime. Do they currently have a workable plan? I'm not sure. If they get done a tenth of what they say, it's much better than nothing. I suppose that's my prediction, like we get a tenth of it, and again, better than nothing.

The, you know, the fact that Trump rose to power on this very pessimistic, negative message, American carnage type message.

But it's not also negative, I would interject there, but go on with your question. Like, Trump is funny, right? Yeah, I know people often hate the jokes, but he's genuinely funny, and that makes the entirety of it less negative than just the words on the page might seem.

Yeah, it's a bit of a dark comedy, and it's also— there is the message of hope at the end of it that we're gonna, you know, turn this all around. But the sort of messaging about the current state of America, like America really is, you know, not so great anymore, you know, there— that was very effective obviously. And when you have written about negative contagion, you, you, you put in these terms that negativity, you know, has a way of spreading like a, like a disease. So what is the best antidote to that? I mean, you've expressed some negativity about the trajectory that we've— you know, you're the creator of the idea of the Great Stagnation. And have pointed out the kind of stagnant wage growth that might be at the base of a lot of the negativity, but like, what is the best counter to negative contagion in these big political narratives?

I don't think we know of a good counter recipe. What I observe historically is that if a country wins a war or has to come together in some great crisis and triumphs, that it goes away. I'm not suggesting it's worth the cost, But, you know, the aftermath of World War II was in some ways giddy, right? Got rid of the blues of the Great Depression. We don't want that, though. There's a lot of evidence, you know, suicide can be contagious, psychological depression. There seem to be these turning points. Some of them are probably just arbitrary or luck or nonlinear dynamics. So I think it can flip back in the positive direction. So we go from the Carter years to Reagan. It's not about a war. There's some background conflicts, but it's not that America fought World War III. It can go the other way, uh, but I think it's one of those social processes that's super important and we just don't understand well.

At the beginning of 2020, you wrote an essay, uh, on what you called the hollowed-out state of the libertarian movement. Naturally, this wrinkled a lot of libertarians, but you basically advocated for a invention, a rebirth, this idea of state capacity libertarianism being very selective about what types of functions we want the government doing. So, okay, that's not something that really bothers many libertarians, but then being laser focused on government doing those functions super, super well. Um, do you still land in this place? Uh, what do you think now, you know, almost 5 years later?

All the more so. I mean, policing, we've already talked about But without good policing, your cities fall apart, your voters will opt for worse alternatives. They'll actually want less liberty. They need to feel a basic safety. Outside of local politics, I think space is an example where whatever you might think as a libertarian, you read Robert Heinlein, whatever, but like, government is going to be involved, and let's have as much of it be private as possible, but let's have government do some parts of it well. To make the private possible. And to the extent we do that, I'm all for it. You know, SpaceX is partly a creation of government funding, and I'm basically pro-SpaceX as a company and what they do. But it's hard to imagine that having happened without any government. Nuclear power is another example. It's green, you know, if done properly, it's quite safe, but it's insured indirectly by the federal government through the Price-Anderson Act., and it's hard to imagine getting more of it without governments at different levels having a hand in that. You want it done well. Those would be some simple examples where I just think there's no choice. Yeah.

Yeah. I mean, I think there's been a little bit of an identity crisis in libertarianism. Maybe there always has been. Um, but I, I think you have a pretty clearly articulated view of what you think the role of government is. And I'd like to tease that out a little bit as we explore, like, what kind of the— this concept of government doing things well, because it begs the question, or raises the question, you know, what is it government should be doing? Um, I was wondering, just to try to flesh that out, if in, in your book Stubborn Attachments, you write about this concept called the Crusonia plant. Which is a sort of hypothetical plant that exemplifies what it is you think we should be protecting and fostering. Could you lay that out a little bit before we proceed down this path?

My notion of a Crusonia plant is simply the point that you can have economic growth that is self-sustaining and feeds upon itself and gives you more economic growth. There's more wealth, more opportunity, more innovation, and it just keeps on going. That's where you want to be. America still probably has the best version of that in the whole world, which is great. We've kept it to a remarkable degree. The economy, even just the last year or two, has outperformed most expectations. But we way overregulate it. You know, I would probably get rid of at least two-thirds of all government regulations. That would be a big thing I would change. That would be quite libertarian. Our trajectories of spending and debt are unsustainable. You need to bend those. I would focus on Medicare, but again, opinions on exactly how to do that are going to differ. Uh, though, you know, the YIMBY versus NIMBY movement— we can get more economic growth if we make building easier. That's more state and local than federal, but I would do massive deregulation in those areas. So those are some things we could do. That do not require brilliance. We may lack the political will, but we, we more or less know what ought to be done, and we just do them. Hmm.

I mean, the, uh, an increasingly loud criticism of libertarians that I hear a lot is that we're too focused on GDP, uh, and we're too focused on, uh, economic growth, and that there's other things that the government needs to be protecting. I think that's kind of a parody of the libertarian position, but could you, you know, speak to that concern a little bit when you are orienting sort of the purpose of government around protecting these Crusonia plants?

Well, I think it all has to be made more specific. So if you're asking me, do I support government regulation to maintain, say, the churches and old buildings of central Paris? I would say I do. Whether or not they could grow somewhat faster by knocking them down, even that I doubt, you know, tourists would stop coming. But even if they could, I think there's intrinsic aesthetic value to keeping central Paris some version of what it is now, with growth around the edges, not in the center. But in the United States, are there many places like that? Are there any? Maybe there's a few, like should we protect Art Deco buildings on Miami Beach? I'd want to know more about it, but like I'd say maybe. But there's very little in this country in percentage terms where we should have any attitude other than let's just, you know, let's maximize the growth.

I'm curious what led you to be sort of fed up with— if that's the— I don't want to put words in your mouth, but if that is the right term, what led you to sort of be fed up with modern libertarian messaging or the state of the sort of standard libertarian movement that inspired the essay writing and the coining of state capacity libertarianism?

I don't think I'm fed up with it. I think a lot of people agree with me. They may not always still call themselves libertarians. The part of libertarianism I'm fed up with, which has nothing to do with reason, to be clear, is the vaguely like pro-Putin flirt with fascism, racism. It's not actually libertarian, but they'll often use the name libertarian or the name Mises, and that to me is terrible. Uh, what I'm upset about is we don't have more libertarianism and that it's not more vital. If I think back to the 1970s, uh, the number of libertarians was far smaller, but intellectually they were in a much better position. You had like the world's greatest economist, Milton Friedman, the world's greatest philosopher, Ayn Rand. She's the world's greatest something, not sure what to call it. Uh, we don't have that anymore. I think in terms of talent, uh, to some extent we've been sucked dry, and there's a crisis of talent that we're in denial about. And my frustration is that we don't have a lot more talent.

Well, but surely there were plenty of libertarians who had their feathers ruffled by your— I mean, I think the, the sort of bad faith way of putting the argument is Tyler Cowen wants us to be way more like Singapore than we're comfortable with. How the hell is that libertarianism? Right? Like, that's the bad faith version of it. But I think you understand the thing that I'm getting at, this idea that many libertarians are a lot more interested in slashing the state to a far greater degree than what you're talking about, a little bit less technocratic, a little bit less interested in trying to make government more efficient and much more interested in, um, you know, getting the, the boots of government off of our necks. How did these libertarians take to what you were saying, and do you feel like some of these differences have been reconciled? Have you pulled them over to your side?

Well, maybe the people who hate it write me less than the people who like it. That's quite possible. But my view is you have to focus on the battles you actually can win. So no matter what you think of the social welfare state, I don't think it's going to diminish greatly. We need to put it on a trajectory of lower spending, but it's not going away, and that's a big part of government. So what are things where you actually can get something done? Well, on what you'd call social issues, actually libertarians have made a lot of progress. Uh, YIMBY versus NIMBY, we've made a lot more progress than I ever would have expected. Getting rid of regulations, we're going to make a run at that with Doge. I'm skeptical but hopeful and certainly think it's worth trying. Uh, and then there's a lot of things like making policing better that I just think are very important for people's lives, and it sounds like your life, and we should do it. And if people want to say that's not libertarian, I don't insist on claiming the word. Uh, to me that's not important. The important thing is to focus on trying to be effective and make the world better. I would say if I go to like a public event, this may be like 100 people there who are like speakers or somewhat known, like if I'm in the room with that, those 100 people, like always I'm one of the 3 most libertarian in the room if it's just like a general event. So that to me makes me libertarian, but I know I'm not as libertarian, I say, that people who might work for Reason, or the people who just call themselves libertarian. And in that sense, I'm not. So if they want to own the term, uh, that's fine. But if someone asks me to deny being a libertarian, I won't do that either.

What, what is, uh, how do you think about investments? Like, when the, the government investing in things— you said you support SpaceX, for instance, um, How do you, like, what is a good, from a state capacity libertarian perspective, or just a, let's just say a libertarian, or from Tyler Cowen's perspective, what is a good, how do you determine what is a good government investment and not just go down, you know, boondoggle alley and start becoming California high-speed rail funders?

Well, you have to study it. So Operation Warp Speed went very well, very high returns. There's plenty of things I haven't studied, but you know, you hear of many, many bad outcomes like high-speed rail in California, and there's far too many of those. But I don't think we should be afraid to praise and try to, you know, replicate the things that have worked. So say avian flu would become a bigger problem— possibly will happen— we should again have something like an Operation Warp Speed, maybe more for distributing vaccines we already have than needing a new one. We'll see., but absolutely it's a public good. And again, the government is going to be involved no matter what we say. I think we need to realize that. And so you want a better version of it that's using good economics and market incentives because it will save people's lives.

One thing that was interestingly emphasized during the H-1B discourse, uh, sort of spearheaded by Vivek Ramaswamy, was this idea that we have a cultural problem in the United States, that part of the reason that so many Asian second-generation immigrants end up being highly valuable tech workers in America and responsible for staffing some of the most dynamic, innovative companies here is because there is a culture that is leading them to be far more productive, intelligent, and hardworking people than many native-born Americans. You also see, I think, a strain of this embodied in some of the American dynamism movement, which the writer and venture capitalist Catherine Boyle talks a lot about. But we see this— and Ilya Asparouhov, who focuses— his company basically is building manufacturing capabilities in space. He focuses on this too. But you see this strain emerging consistently from this tech crowd, this idea of we're not as great as we used to be, we've lost something special, uh, and this, this, this feeling of really deeply wanting to revive it. This has also been on my mind an awful lot because we interviewed Byrne Hobart, the author of the book Boom, um, recently. We, we interviewed him a few weeks ago. We talked about, um, you know, the era of the Manhattan Project and the Apollo program, um, Do you believe that there's a cultural problem right now, or are people sort of succumbing to a little bit of like chronological snobbery, thinking that our time is uniquely, uh, stupid or lazy compared to other times?

I think there's a cultural problem right now. I'm not sure it's the problem those people are pointing to. What I see is the biggest problem is a kind of polarization or split between a lot of men and a lot of women. And from what I understand, one sees it on dating apps, which have become almost unusable for many younger people. And just people who live with their families for too long, men who never marry, men who are not worth marrying. A lot of it, I would put it, you know, the fault of the men. This problem is maybe at its worst in South Korea, where it's led to plummeting birth rates. But just men and women seem not to be in sync, and that also lowers the return to having a family, to being married, to trying to get a better job.

Why would you put that, uh, at the feet of men, um, instead of some sort of, you know, systematic problem?

Men are higher variance than women overall. I think that's probably biologically true. It's certainly true in the data. You, you hear there's a serial killer, how many— it's a few cases, but how many times do you think, oh, what's the woman's name who did that? No one sane would respond that way. I know there's this nurse in Germany, she killed all the patients, but it's, it's pretty rare. So men have greater potential for going wrong, being violent, being irresponsible. Uh, so yeah, I think somewhat more of the blame has to fall into the hands of the men. And I don't think there's a solution with a capital S. I certainly don't want to get the state involved, but to me it's a big, big problem. It shows up in our birth rates, which is also our future fiscal position, and just makes a lot of people's lives really unhappy.

How can—

I'm a lot less worried about the, oh, like the Indian software engineer is better than the guy from like Ames, Iowa or something. I don't know, like every era has its cultural problems. Every decade I've lived in had big cultural problems. This is the one we have now. I don't like it.

How—

so I have a question. How How convinced are you that the current birth rate in the United States is a problem? And I think a relevant follow-up to that is your colleague Robin Hanson, I think, has some very interesting theories about basically it's not necessarily, and I don't want to misrepresent him, so correct me if I'm in any way wrong. It's not necessarily that, um, incentives for baby-making in other countries, uh, where they've been tried, it's not necessarily that they don't work, but rather that we're simply not doing them at the amount that is needed, at the scale that is needed in order for people's decision-making to actually be affected. How do you look at this issue? Is this something you're worried about, or is this one of these stupid trendy things that people are going to talk about on Twitter, but it doesn't actually, you know, it's not actually going to have a huge impact on American society 30 years from now?

Well, it's a deep worry. I would say America is the country maybe that should worry the least because we can always attract high-quality immigrants, but for the world as a whole, that's not a solution. And you have many countries— Iran, Mexico, you know, Brazil, much of Latin America— that are starting to shrink and are far poorer than we are and not well positioned to attract a lot of high-earning immigrants. It's one of the biggest worries in the world. Now, you asked about subsidies. Hungary has spent about 5% of its GDP, mostly through tax exemptions, subsidizing births. At first, this boosted birth rates. I forget the exact numbers, but like something like 1.3 to 1.6. That's positive. But I saw some new data recently. The last few years, it's fallen back down again. It's not clear even that is working. So spending 5% of your GDP does not do it. You can say we should spend more, but again, you've got to ask, like, what's actually realistic? And I don't know, uh, my hope is, you know, the AI dividend in, in some way makes it possible to fix this problem, but we don't have good answers right now.

From what I recall of Hungary, and I could be wrong here, but I'll follow up with you after this perhaps, um, some of the issue is in the way that these things are measured. And so there's not actually a ton of evidence to indicate that Hungary's program of subsidizing births, um, has failed per se. It's more that, um, the pool of women, of birthing age is sort of shrinking. And so we're seeing, um, it look like there's less sort of total fertility because the pool is shrinking. And the other thing that they're sort of interested in and focused on, like the important caveat here is I, if I recall correctly, a lot of Hungary's incentives specifically were started 10-ish years ago. I believe it was, am I correct? 2011, 2012 that some of these things were started. And so they're basically saying we need a little bit of a larger, um, time horizon in order to actually assess how, um, you know, helpful this actually is. But it is kind of interesting. I mean, we see small-scale experiments of this, like the Italian province of Bolzano, um, and, you know, it's hard because it's like, at, you know, I guess this is more, um, evidence in libertarians' favor that solutions implemented at the smaller, more local scale tend to be a lot better than, you know, more top-down, central government-led approaches. But, you know, we do see some really promising results from these smaller Italian provinces that have attempted to have like basically wraparound social services to attempt to boost the birth rate. So, I mean, maybe there's possibly a thesis in here depending on how the Hungary situation shakes out of top-down approach in Hungary is not working so well, but the more local bottom-up approach in Italy is working better. And this type of thing can actually only be done at a local level, right? That would be something that you would think.

The local approach still has to scale, right? Yeah. So if you look at the Nordic countries, they do a lot for childcare, family leave, whatever, as much as you can imagine. It hasn't helped them. Now, if you do it locally, you might just attract families who want to have a lot of kids anyway, and your numbers will look great. I have no objection to localities doing that if they want, but you're not solving the problem in a scalable way. And Hungary, it's fair to say we need more data, but if after 10 years you don't see that it's working, you still should say we don't know how to fix the problem, and they're spending a lot on it. So I would just repeat, we don't know how to fix the problem.

Yeah, that makes sense. Do you think that there's any sort of like, you know, we're identifying the birth rate as an issue, we're identifying this sort of very Richard Reeves thesis of like, the boys and the men are not okay. Um, you know, Derek Thompson's, uh, latest piece in The Atlantic has been making the rounds about the issues with solitude and loneliness and how so many people, um, you know, maybe have close ties that are digitally enabled with family that lives far away, and maybe close ties with a tribe of, you know, people in a specific polit— like affinity group, people to talk about politics with online, but that there's this middle tier, the community bonds that have really disappeared. I mean, it seems like we're in an era where there's an awful lot of hand-wringing about, you know, how are we going to do family formation and communities? What happens if these, these bonds, um, that unite us sort of all disintegrate? Do you have any idea how to go about attempting to fix what looks like a broader cultural sickness?

I think we'll have to adjust to it. You know, Derek may well be correct about the middle bonds disappearing. You know, personally, I've always hated those middle bonds. I'm delighted they're gone. I don't want community involvement. I'm more than fine with not knowing my neighbors.

You don't want to be on the PTA?

No, don't want to be on the PTA, but I get there's a collective goods issue here, right? I just think we'll have to rebuild the world around the fact that we don't have such a middle bond and make a go at it. I don't really see how we're going to get back to a state of affairs where being on the Utica City Council is some kind of meaningful life experience that makes everything work better. I think that's just gone.

This kind of gets to a larger issue that I want to ask you about, which is the sort of big picture vision, uh, for people like us who care about, you know, individual liberty, individual rights, um, and we tend to favor decentralized solutions, um, but that's not something that, um, sells on a political level. And it might not even be like the right way. It might be like a failure of imagination if you're not able to lay out like a bigger picture, like where should things be headed type of vision. Uh, do you think that is a weakness in libertarianism? And, um, how would you suggest, uh, we think a little bit bigger and a little bit further into the future?

I think a lot of times you have more freedom under the centralized solutions. I get the gains from exit when things are decentralized. You can move somewhere else. But on the other hand, decentralized processes, they can be pretty nosy, pretty intrusive. Federal government, a virtue of its inefficiencies is often they're just not in a position to go after you or monitor you or surveil you. I just think a lot of these issues, they're going to change radically as AI becomes more advanced, and that is happening quite soon. So I'd be maybe more focused on thinking about the future than reconstructing what we got wrong in the past. Like, will AI be a centralizing or decentralizing force? Everyone has a pet hypothesis. I think we don't know, but it's going to reshake all the tumblers, you know, within the next 10 years.

How do you make policy decisions though under that sort of radical uncertainty?

Well, my personal focus is to put a lot of stress on AI policy itself and not have government choke off what I consider to be progress and hope, expect really, that those tools help us solve a lot of these other problems and frankly ignore some of the other issues. They're going to be obsolete anyway. That's the sort of gamble-like view, but it is how I think the world is going.

But so this is another realm where I wonder about like your attitude towards investment and what government should and shouldn't invest in, because there is a case that has been made. We have heard it. We've talked with Guillaume Verdon, known as Beth Jezos, and it's his belief that part of the sort of AI pause regulation effort is to kind of pivot towards getting government funding for AI, that, that what we're going to hear in the coming years is like we sort of need like a Manhattan Project for AI in order to beat China to superintelligence or something like that.

I'm against the government doing that. Our private sector has done great and beat China. We want to keep the conditions going where it can do great, uh, and why should we trust the government with whatever we think is going to result from, from that process, right?

Well, you brought up like, you brought up Operation Warp Speed as a positive example of a, of government investment. It was a public-private partnership of sorts. Uh, what were the good, what were the lessons that you suggest should be learned from that experience?

It was basically created as a new program, which allowed it to operate quickly. It had people running it who were not simply career bureaucrats. Everyone knew at some point it would be disbanded, so there was no incentive for self-perpetuation or to hang, hang on. Their actual incentive was to solve the problem and get back to other things. Now, you can't always create those conditions, But with powerful AI, there's the question of, do you want it to be, you know, somewhat decentralized across a number of companies or all controlled by the government? Like, A, I don't even think the government can do it, and B, I would trust decentralization across, you know, some number of companies. Maybe it's 4 to 6 companies with checks and balances and competition. I think that's a better outcome. Yeah, so That's what I'm rooting for, that we actually don't do too much. Now, there is a way in which I think we need the government involved in AI. There's a lot of weapon systems, many of them defensive, like defenses against drone attacks on the U.S. You need advanced AI to construct those defenses, and I absolutely think our government should fund that. So if it's something like a Manhattan Project to protect us against other entities attacking us with their drones. I want it done right, but I'm pretty sympathetic. Like, you know, we need that now.

So that, that's why that, that— so that logic sort of maps onto the Operation Warp Speed, because it's the government protecting us from, you know, not an attack but a biological, um, threat. Obviously, um, the, the, you know, I think libertarians as a whole have a mixed view of Operation Warp Speed. I mean, there's the undeniable fact that it created vaccines that saved a lot of people. The sort of poison pill with that is that then it was forced on some people who did not want it via OSHA mandates. And you could, you know, make an argument that it was kind of because the government spent so much money developing the vaccines, they were going to do everything they could to you know, get everyone to take it.

Uh, that's not Operation Warp Speed. I mean, you can debate other things we did, but the literal OWS, I just think was flat out a good idea.

Okay.

Um, and I thought governmental mandates were a bad idea, and I wrote as such at the time.

Right. Okay. Um, all right, uh, I think Liz, uh, you wanted to take us to, uh, a final segment here.

Yes, I've prepared for the first time in this show's history a rapid-fire segment, um, and the reason is because I was 16 when An Economist Gets Lunch came out and I read it and I loved it and I was at the time just a baby libertarian and a baby foodie. And since then, in the last 12 years, I have become unfortunately even more of both of those things, and I think that Tyler Cowen is at least partially to blame. Um, so I wanted to give you a line of rapid food-related fire questions Um, the first one is wheat-based Northern Chinese or rice-based Southern Chinese?

I love both. Ultimately, my preference within China is Western Chinese food, uh, the mushrooms of Yunnan and the dishes of Sichuan and Chongqing. That's going to be in the rice direction.

Fair enough.

But it's a bit of a subverting your question.

How did Chilean food become so strange? At least, so I lived in Chile for a little bit. Whenever I have Chilean food, there's frequently creamy sauces. There's frequently cream cheese added to strange things, like for example, you go to a sushi restaurant and it's very unclear as to what the cream cheese is doing there. What exactly is going on with Chilean food?

The Chilean mix of dairy and seafood is simply a mistake. There's wonderful food in Chile, but Chileans are in some regards very provincial, and it shows up in parts of their diet, and someone needs to go there and cure them of their mistake. I hope you did your best during your stay in Chile. They have incredible mashed potatoes, just like plain eggs, fish, all sorts of things, and then they make these inexplicable errors.

How did they become so provincial though, if it's always been a relatively rich country, at least as far as the region is concerned?

I suspect it's always been provincial. It's quite cut off from the rest of South America by the Andes, which before flying was very hard to cross., and then the Pacific is a huge ocean. So, uh, it's just, it's a weird place. It's in a way more a Pacific country, but there's no other Pacific countries for them to be close friends with.

I'm planning to go to El Salvador in a few months. Uh, what or where should I eat?

Well, there's one restaurant in the capital, San Salvador. It was written up by the New York Times. I forget the name. But it's largely indigenous dishes, and it's a pretty fancy restaurant, not super expensive, but if you just try Googling or perplexity for it, like, you'll definitely find it, and it's one of the best meals I've had in the last 5 years. And go there and get the vegetable-based dishes, the corn-based dishes, the squash-based dishes, and it will blow your mind. So either eat there or just eat super cheap at like roadside stands and pupusa places and you'll have a fantastic time eating, and it's extremely affordable, even priced in terms of US dollars. But there aren't many dishes you can eat there, like, if it's not involving corn, cabbage, white cream, and a few other things, beans, just don't do it.

Why haven't Polish milk bars become a fast casual dining concept in the United States?

I've never had a Polish milk bar, so I cannot tell you why that is the case. Could it be that they're just not as good outside of Poland? I don't know.

It's— yeah, it's very possible. Um, I'm curious, which restaurant or food trend do you hope that you've noticed in the last 5 years, do you hope dies out soon?

Dies out? I mean, the stuff I don't like, I tend not to go to, so, uh, I walk away pretty happy. What I hope is that the growth in regional Chinese food which stalled with the pandemic, that that resumes. It's held steady, but you just want more and more of that, and you want more and more regional and interesting and specialty Mexican and regional Indian. And if we get those three things, none of the rest really matters at all. That's my somewhat provincial view at the moment.

What do you think?

Other things can be very good, but you don't need them.

What do you think people misunderstand about Sichuan food?

Well, if they're Americans, they probably spell it wrong, and they've had all these dishes in Americanized Chinese restaurants, uh, and they think— if they know a bit, they'll think it's all spicy, which is also not true. And then within Sichuan, there's so many different types of it, uh, so I don't know. More and more cities now have real Sichuan restaurants. It's one of the biggest advances in U.S. dining in the last 10 years. Like, you can go to Philadelphia, which is not typically been a great, great food city, and there's just no doubt there'll be a real Sichuan place, at least in Chinatown, probably somewhere else too.

What's the best, um, sort of subcategory or hyper-specific locality, um, like rendition of food? Like, I'm thinking of like Isan Thai food specifically. Like, do you have a— not just a country, but within a specific country, an idea of like, this place, this is a real hotspot that people aren't aware of?

If you go to Hermosillo in Mexico, where there's no other reason to go except the food, but at least it's close to the US. You can even drive there from southern Arizona. Incredible beef dishes, uh, dishes we, we call them burritos and fajitas, but don't be misled, they're quite different there. Blew my mind how good they were, and incredibly cheap, and there were no other tourists, and it's some of the best food in all of the whole new world.

Hmm, with that, I want to put Zach out of his misery because I could probably go on asking you questions for another hour, but I recognize that we do have time constraints here.

No, it was not miserable at all. It was a delight, and I'm taking notes, uh, for my travels to Asia later this year. Um, uh, I want to ask you the final question of the show, which we ask everyone, Tyler, which is what is a question that you think more people should be asking.

Why do we have so much negative contagion for psychology, where people's attitudes are more and more— often, not always— cynical or depressed or seeing the bad side of things? Uh, you know, if you live in Ukraine or, you know, Chad, Africa, I understand it. But in the wealthier parts of the world, you— especially the Anglosphere— you often see the same. And I think we need to get to the bottom of that problem.

For sure. Cheer up, folks. Cheer up. Tyler, thank you. Thank you for joining us. It was a pleasure and honor having you on the show.

My pleasure. Thank you both for preparing so well.

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