Tyler Cowen recently sat down with executive editor Damir Marusic and assistant editor Aaron Sibarium to talk about, well, everything. This is a lightly edited transcript of the conversation, which is also available as an episode of our podcast.
Damir Marusic for TAI: Tyler, thanks so much for joining us today. One of the themes we’re trying to grapple with here at the magazine is the perception that liberal democratic capitalism is in some kind of crisis. Is there a crisis?
Tyler Cowen: Crisis, what does that word mean? There’s been a crisis my whole lifetime. People have fallen apart because Brexit happened and Trump was elected. I didn’t favor either of those outcomes, but I think both systems have shown they’re fairly robust. In the United States, the economy is fine. I’m not crazy about the course of the entire world, but I think most of that is simply other nations being a higher percentage of global GDP, rather than any particular mistake we’ve made. Brexit will happen. The United Kingdom will be poorer. It’s just not the end of the world. You see people on Twitter saying, “Oh, I don’t love Great Britain anymore”—it’s crazy. They’ll be fine. So I’ve become more optimistic than most people. I feel I’ve stayed put, they’ve just gone crazy.
DM: Where’s this broad nervousness coming from? Is it driven by technology—Twitter and the broader communications-sphere? Or is it just that there’s more change than usual and people are made nervous by it?
TC: Martin Gurri’s thesis is that with the internet and social media, you become disillusioned by your elites. I certainly think there may be something to that, but I don’t think it’s been demonstrated. The most plausible alternative hypothesis is just that globalization really works, but non-liberal countries becoming richer has an impact on us. And that’s what we’re seeing. So how much it’s the Gurri thesis, I don’t know. But those would be my two leading candidates. But I also think the intellectuals have kind of gone crazy, and they’re made crazy by social media because they bicker with each other. I’m not sure ordinary people think it’s that much off track. So maybe one can just challenge the premise of your question as well.
DM: You wrote a book called Stubborn Attachments in which you laid out a case for our liberal capitalist system. I suppose you didn’t focus as much on democracy—
TC: To be clear, I do believe in democracy, I just don’t discuss it in that book.
DM: Could you summarize that case for us? I think your moral argument is especially interesting in light of some of these worries that are obsessing people.
TC: In Stubborn Attachments, I tried to argue that democratic liberal capitalism is a rational system that can be fully philosophically defended, and my basic argument is that economic growth is a good thing. Over the long haul, it’s a very, very good thing, because we should not discount the future by very much, and richer societies are just much better than poorer societies, across many different dimensions. So this argument works for a [value] pluralist. And then you look around and you ask, “Well, which are the societies that deliver sustained economic growth the best?” And it turns out they are, for the most part, liberal capitalist democracies. So I think one should be pragmatic. But it’s clear to me what the better winning systems are and I’m all for them. And that to me feels philosophically justified in a way where there is no crisis. You don’t need a complicated Rawlsian argument [to justify liberal democratic capitalism]—that was the core thesis of the book.
DM: So it’s a work of moral philosophy.
TC: Yes, I would say so. And I worked on it a long time, about 20 years. It was a very short book, but I just kept on refining the argument, paring it down.
DM: So given that it’s a work of moral philosophy, you wouldn’t necessarily expect it to include much about politics. But one thing that jumped out to me reading it is that the question of the nation doesn’t really come up. You talk about civilization, you talk about humanity and welfare and how one measures these things, but the unit of the nation never explicitly appears in the book. Is that by design?
TC: I wanted to keep the argument simple, but I would fully accept and indeed emphasize that the units that have delivered economic growth are nation-states. Now, not every nation-state has gone well, but a nation-state seems to be a prerequisite, at least under current technologies, which I was more or less taking for granted. I don’t quite get what the alternative is. Now, do we need more international conventions on some global public goods? Probably, but it’s still fundamentally a game of nation-states.
DM: Are you concerned about the resurgence of nationalism, especially on the right? The national conservatism movement, for instance? Or is it just a part of normal political discourse?
TC: Well, I’m not quite sure what they all mean. I strongly suspect some of them would concern me greatly, but not the nationalism word per se—just other things they believe. In a way, the mystery to me is why nationalism ever seemed to go away, and I don’t think it really did. We still organized political matters at the national level. Almost everyone in the wealthier countries has been mostly a nationalist. Then there’s the European Union as a separate project that’s not quite nationalism, but you can still make sense of it within a framework of nationalism. So the people who call themselves nationalists, they do make me nervous, but I don’t mind the word per se.
Aaron Sibarium for TAI: You also wrote a book praising big business, which is in many ways a sequel to Stubborn Attachments. Why is big business good?
TC: Big business pays higher wages, it innovates a phenomenal amount. It gives us reliable products, it makes the world a better, safer place. It spreads prosperity throughout the world. It tends to favor peace. We’ve gotten to the point where, in America today, big business is grossly underrated. You see this in the rhetoric of Elizabeth Warren, Bernie Sanders, but also Donald Trump. He’s very happy to go after business with his pitchfork on Twitter. So it seemed to me one should write a certain number of contrarian books, and this is a contrarian book that should not have been contrarian at all.
AS: In recent years, some conservatives have revised their views on labor unions and sectoral bargaining. A few have begun to flirt with these ideas, and even, in some cases, to embrace them outright. Where do you fall on this issue? To what extent are strong unions, sectoral bargaining, and big business compatible with one another?
TC: Well, clearly they’re compatible. They were extremely compatible in the America of the ’50s and ’60s. But I think people just haven’t been paying attention to the data. I don’t see how unions can come back in a big way even if you want them to, they work better in old-style manufacturing jobs. There’s a significant literature on the wage premium for union jobs. I’ve known for decades it’s about 10 to 15 percent. Unions pay more. But on the other hand, the [unionized] firm hires fewer people, possibly, and to some extent, it means higher prices for consumers. So there’s a big cost-benefit trade-off. I think a lot of the unions we’ve had did do some good, but not that much good once you take the costs into account.
And I feel I’ve always been consistent on this point, but people have swung around wildly—first for unions, then against them, now for them again, and they’re just not looking at the facts. I would just say, “Look at the research, there are some benefits, but don’t go crazy telling yourself this is going to be the next difference-maker.”
AS: In the book, you note that part of what makes American capitalism so innovative is creative destruction—the fact that more efficient firms can easily displace less efficient ones. Yet you also cite several studies that show that involuntary unemployment is a much bigger source of unhappiness than working—or divorce and separation for that matter. Is there a tension here? In the sense that involuntary unemployment is going to be a structural feature of a system in which new firms frequently displace older ones.
TC: Well, there are plenty of economies that don’t have that much creative destruction. Jamaica is one example. At times, unemployment in Jamaica has been around 30 percent. There may be some people working in black markets and the like, but it’s still a big problem. Stagnant economies ultimately do poorly with their labor markets, or the jobs just become so terrible that everyone can get a job, but it’s awful, as was the case under communism. So I think your best bet is to try for a model like America or Japan, where a lot of the time you’re close to full employment.
Keep in mind that creative destruction in America has gone down by most metrics. So I don’t feel that we have too much of it. There was this one big unprecedented thing, the China shock, which we probably didn’t respond to very well, but we’re not going to have another China shock three years from now.
So I would say we blew it on the China shock, although it was a mistake easy to understand. Now, we’re pretty close to full employment. We’ve never gotten it perfectly right, but we’ve done better than most countries.
AS: The China shock is often brought up alongside the fact that rates of suicide and drug abuse are rising in the United States, and life expectancy is falling. What, in your view, are the most important explanations for these trends, what are the implications for American capitalism?
TC: From what I read from secondary sources, suicide and opioids are the two main reasons why life expectancy has fallen. Note, it’s fallen a very small amount. I’m not sure if those results are confirmed, but they seem likely. I don’t think we understand suicide very well. I think we’ll eventually figure it out, and one day the rate of suicide in our civilization will be much lower. Some countries have a pretty high rate of suicide. They’re not obviously worse countries than those with lower suicide rates. So I don’t look at a higher rate of suicide and leap to any conclusions. Opioids, I think, has been a failure of policy. There have been ten, twenty different suggestions of things we could do to somewhat alleviate that problem. I don’t think any of them is a magic bullet. I suspect in any advanced civilization, drug problems will be worse because drugs will, in some way, be “better.” And I think as a matter of personal ethics, people are far too tolerant of all kinds of drugs, and what I recommend is people be more like Mormons and just not let it near their plate.
You have people smoking marijuana and taking cocaine, pretending it’s a semi-acceptable thing. I think people should just voluntarily treat it like the plague. It’s not a great solution, and a lot of the technical fixes—like changing electronic medical records so we know who is over-prescribing, and who has gotten what from other doctors—will only solve the problem a bit. But we should do them all.
I think addiction is an underrated issue. It’s stressed in Homer’s Odyssey and in Plato, it’s one of the classic problems of public order—yet we’ve been treating it like some little tiny annoyance, when in fact it’s a central problem for the liberal order.
AS: You argue that there are these superstar firms like Amazon that pass on tremendous benefits to consumers. What do you make of the counter-argument that the people who staff Amazon packaging plants often work in terrible conditions? There are reports that some Amazon employees have been forced to pee in trash cans. If the consumer welfare generated by Amazon is only achieved at the cost of worker dignity, why think superstar firms are a net moral good?
TC: Anecdotal descriptions will typically make things sound worse than they are. I would say this: There’s a lot of communities where old-style manufacturing jobs have gone away, and the new jobs for Amazon are the best that are there. It’s fine to see that as a structural problem, but not to blame it on Amazon.
In passing, I would note that I’ve either peed in trash cans or wished I had a trash can to pee in. So if we’re going to get very literal about it, that’s not actually an abuse. I know what an abuse is, there are plenty of abuses in the workplace. That’s not one of them.
AS: Relatedly, Oren Cass has argued that American economic policy has tended to put the interests of consumers before the interests of workers. Is this an accurate characterization? What do you think of his normative case for switching to a producerist framework?
TC: I think it all needs to get more specific. So I don’t think, for instance, that tariffs, on the whole, create better jobs. To the extent there are recipes for creating better jobs, I’m all for those. You could view state universities in this country as creating much better jobs in the long run by educating people. That makes perfect sense to me. I don’t see that Oren has come up with a new idea that really works, that we could be doing but aren’t.
Now if you say, “Wow, the state universities are failing us, they’ve ossified, they’re not teaching the right things,” I would agree with that. I think we could improve our current fixes, but I think he’s skating at too general a level. I’m inclined to say: “Put it on the table, show me what you’ve got.”
DM: You wrote a book in 2013 called Average Is Over, which basically argued that a permanent underclass is a likely outcome of technological progress. I’m not sure if you’d put it exactly in those terms, but our colleague Bill Galston reviewed the book very harshly in the Wall Street Journal—
TC: I never called it an underclass. I think in this country, and in many others, there will be large swathes of people who decide voluntarily not to be that ambitious. And they will stay somewhere between middle and lower-middle class, and actually do fine and often be quite happy. They just won’t climb the ladders of success. There are different ways one can evaluate that normatively, but to call it an underclass, I think, is misleading.
Ambition is distributed in a funny way and not everyone is going to have it. And the people who don’t have it… There’s not some future where they’re paid like $300,000 a year, but even so, they’ll do fine. They’ll have a higher per capita income than, say, Belgium today. Is Belgium just a big underclass? I wouldn’t say that.
DM: What about the claim that economic resentment is fueling Trumpism? Do you think that’s an overstated thing?
TC: It’s probably wrong. I don’t think we know. I’m much influenced by Eric Kaufman’s book Whiteshift, which portrays immigration as a major cause. And the median income of people who voted for Trump in the Republican primary was $70,000. If you’re just saying, “Well, economics is one of the 13 factors,” then yes, but it seems to me that discussions about what is behind the rise of Trump are some of the worst areas for truthful, accurate commentary in the whole world right now. I would hardly believe any of it. I want to see serious work with data put up against alternative hypotheses. You should just dismiss most of what you read on that topic. It’s probably junk.
DM: So presumably you think the Democrats are barking up the wrong tree by floating Bernie and Warren? In the sense that Trump is not just a response to economic anxiety—
TC: Probably, but keep in mind how few factors predict electoral success. It seems too late for there to be a recession, but if there were a recession now, Bernie would probably beat Trump no matter what your theory of politics is. So a lot of different outcomes are possible. The betting markets seem to think Biden has the best chance of beating Trump, and Americans are pretty centrist and sensible, which is compatible with a Biden victory. But don’t think Bernie winning couldn’t happen. Trump won, right? That was a shock.
Go back to the 1980s. Biff is this character in Back to the Future 2, and he’s basically Trump, it’s like a joke that he becomes President. So never say never.
AS: You write that the modern antipathy toward big business stems in part from our tendency to view corporations as people, which then causes us to blame them for things that aren’t really their fault. But you also argue that our entire economic system depends on us viewing corporations in this way. Could you elaborate on that tension?
TC: Well, say you call Apple, and you’re on the helpline and they leave you waiting. Now that’s ultimately a profit-based decision on their part: What’s the value from serving you right away as opposed to making you wait seven minutes? People resent that they’re part of that calculus. I get it. I’ve been on the helpline. You feel your friend wouldn’t make you wait for seven minutes, which is probably true, and so people get upset.
But I think that’s the wrong standard. People ought to be a little more detached and understand that the system of rules that determines how good the helpline is depends on profit. It’s not always good for you, but that is simply the way things work. People find it difficult to appreciate an abstract rule when it’s bad for them. But when you get through the line quickly, you forget about the rule.
That said, it’s because you think of companies as cool or friendly or sympathetic that you support them. So there’s this contradiction embedded in support for the liberal order itself. I don’t think it will ever go away. I would just like to nudge us a bit to be a little more analytical about it.
AS: You say it’s a mistake to treat corporations like friends. Would you agree, though, that corporations are agents, despite not being persons in a literal sense? Do you think that group agency and group moral responsibility are coherent concepts as applied to corporations?
TC: I guess it depends on what you mean by that. Do I think you should have the right to sue a corporation? Of course. So in the legal sense, absolutely.
AS: But in a moral sense, is it coherent to say a corporation has wronged me?
TC: I’m not sure there is a moral sense. I would say there’s a pragmatic sense, and in the pragmatic sense it’s fine to say that, but we might get into trouble if we push too hard on any other sense.
AS: Switching gears a little bit: In his forthcoming book The Decadent Society, Ross Douthat argues that the West has entered a period of “economic stagnation, institutional decay, and cultural and intellectual exhaustion,” even as it has maintained “a high level of material prosperity and technological development.” Do you agree with this assessment?
TC: First of all, I love that book. Ross is one of the best writers around, period, from any point of view. He’s maybe the best columnist in the world, which is pretty impressive, right? I think it’s hard to pin down particular hypotheses about big social changes, but when I read the book, I found myself nodding a lot in general sympathy. But the data-driven side of me has some skepticism just as to whether there’s any actual malleable explanation for some of these trends.
DM: In 2011, you wrote that we were in the midst of a “great stagnation”—that we had plucked all the “low-hanging fruit” of the 20th century and arrived at a technological plateau with low productivity growth. But recently, you’ve suggested that some of these trends may be coming to an end.
TC: That’s right. It’s possible the great stagnation is over right now.
DM: Are new trends emerging? Do you think we’re getting a kick in the seat of our pants?
TC: I would say we don’t know, but for many years it seemed obvious that the Great Stagnation was not over, and now at least it’s an open question.
DM: Any thoughts on what we should be looking for?
TC: Well, tech is starting to pay off. People hate tech in a way they didn’t five years ago—that’s a sign tech is quite powerful, not in the corrosive sense, but just reshaping our lives. So it’s possible that there’s a speedier rate of technological progress, and when it comes to biomedicine, the stuff isn’t there in the “my doctor gives it to me” sort of way, but the advances you read about second-hand at the research level seem pretty phenomenal. So biomedicine and green energy have gone much quicker than seemed likely ten years ago, and then you have big tech. . . . Again, I’m not claiming the Great Stagnation is over, I’m just saying I can see a window where it might be over in a few years time.
DM: Has Trump been good for the economy?
TC: Of course.
DM: How much of an impact can any single individual have on overall prosperity? Has Trump been good for the economy for deregulatory reasons?
TC: I don’t think so. Most presidents don’t influence the economy much, and I’m not sure Trump has either, but his main virtue in this regard is simply that he’s not a Democrat and the Democrats have gotten worse. He’s off with his own tomfoolery, which I find quite offensive and bad. I’m quite opposed to it, but it does mean he hasn’t screwed up the economy. And that’s the good thing he’s done. I’m all for the deregulation, but that change in flow relative to the total stock is tiny. I don’t blame Trump for that or anyone, but it’s not really mattering.
I do think there’s a general sense that businessmen have, like Trump. “He’s crazy, he won’t come after me, I can go do my thing.” And that’s one factor that’s helped. That would be most of it.
AS: Many on the socialist left—and some on the post-liberal right—have begun making arguments about “workplace democracy” as a check on corporate power. Do you think any of their proposals have merit?
TC: There’s so much you need to unpack there. On corporate power: If you look at the Federal budget, most of it is determined by voters, not by corporations. Are there all kinds of small things like subsidies for Amazon that are rent-seeking and bad? Of course, and I’m against all of those, but they’re just not the main feature of our political system or our government. So corporate power, as it’s called, is much weaker than one thinks, and on most of the issues where companies have some influence—immigration and freer trade, for example—corporate power is a positive insofar as it shapes outcomes. So I don’t think we need some separate thing to counteract corporate power. And going back to our labor unions discussion, I don’t see what those unions are supposed to look like in a service-sector economy, or why they would be sustainable. I just don’t get what people have in mind there, other than some kind of fuzzy nostalgia.
AS: What about co-determination?
TC: There are too many people with the right to say no in America as it is. We need to get things done speedier, with fewer obstacles that create veto points. So no, I don’t favor that.
AS: Does that imply a critique of the American political system, which is built in large part around veto points? Many of those vetoes arguably constrain growth and the economic policies that produce it.
TC: It’s a partial critique, but mostly veto points have been good. Every now and then a big issue comes along where you don’t want veto points. Right now maybe that’s climate change, where I haven’t really seen any progress on the policy side. But on the tech side, there’s been lots of progress. Electric cars, batteries, solar power, and now the small nuclear reactors. Maybe that’s because we have veto points and these things have not been over-regulated. It’s not as if other countries have actually done better. So I don’t want more veto points, but they’re still underrated in some regards.
DM: Some have argued that China and Singapore’s ability to strip out veto points has contributed to their economic success. Do you agree?
TC: Yes, but I would note China is in a very different position than we are. Some of what they’ve done with fewer veto points has been very good, I just don’t want it for America. Should China have a looser sense of eminent domain than the United States? They needed to urbanize, so probably. I think they went too far, but I would grant that much of what they have done has succeeded.
DM: Let’s talk a little bit about libertarianism. You recently had this post on Marginal Revolution about “state capacity libertarianism.” Could you—
TC: Everyone asks me about that. I didn’t think anyone would even read it. It was in the Washington Post, the Guardian. People are still writing me about it. I thought it was all trivial, actually.
DM: Do you feel you’ve evolved as a libertarian?
TC: Somewhat, but keep in mind, I’m 57 years old and the way I feel now is more or less how I felt by the early ’80s. So it does reflect my own evolution, but that evolution has largely been in place for a long time.
AS: The whole point of state capacity libertarianism as you describe it is that libertarianism is compatible with a strong state, and we should build up state capacity in certain regards. State capacity generally implies state power. Many Americans claim to be distrustful of state power. Do you believe them? And if so, how do we alleviate that distrust?
TC: I think they should be distrustful of state power, but as I said, there are some periods where you want fewer veto points in order to get a few very particular things done. If nuclear power were to happen, I know it would happen in a pretty non-libertarian way. I’d still say “Yeah, let’s push the button. This is important, there’s a lot at stake.” I then would hope we go to a system where the veto points are stronger once again, once we’ve made our energy supply greener. So, the time for state power comes and goes, and it’s path-dependent.
AS: There’s some evidence that immigration reduces social trust, at least in the short run. Would that imply that state capacity libertarianism is more restrictionist than traditional libertarianism, insofar as social trust is a prerequisite for building state capacity?
TC: I think it depends on how you do immigration. There are ways we could do immigration that would boost social trust and bring in more immigrants. Not higher social trust for every single neighborhood, but for the country as a whole. I know Robert Putnam’s work, I accept his micro-results neighborhood by neighborhood, but when you look at the longer-run benefits of immigrants, which he’s not measuring, I do think state capacity libertarianism is compatible with a pretty high rate of immigration.
Immigration also helps America remain a viable military power in a world where China has 1.38 billion people. We need to be competing on the numbers game too, to keep our place in the global order. So that’s another area where state capacity relies on population size. We’re not New Zealand.
DM: Do you see state capacity libertarianism as an American phenomenon? Or is it applicable beyond America, specifically on the immigration question?
TC: Beyond America, absolutely.
DM: So, can you talk a little bit about how you see the challenges of immigration in, say, Europe compared to America? Do you see them as roughly analogous, or are Europeans less able to make the moves you would favor for cultural and historical reasons?
TC: Oh, I think Europe’s very different. They have more restricted labor markets, they’re more hostile or at least suspicious toward their potential migrants who might be Muslims or from Africa, who are of course closer by, and there will be more and more water vehicles trying to land in Southern Europe. And America is bordered by Mexico, which is essentially full of Christians who mostly assimilate in due time. So it’s easier for us. We should take in more immigrants from afar. They assimilate better.
But still, the EU has opened borders within the EU. That’s a phenomenal achievement. So Europe has done something nowhere else has.
But I do think that if particular nations in the EU want to partially secede, they will be allowed to do so somewhat quietly. And that is necessary. I don’t quite want to say I’m for it, but I recognize it’s necessary and I’m not against it.
AS: In recent years, some conservatives have begun to lobby aggressively for industrial policy. With few exceptions, traditional libertarians have condemned these efforts. What’s your take?
TC: We already have industrial policy. First, it’s the military, which has had tremendous spinoffs: nuclear power, the internet, partly the airplane, partly the computer. I’m all for that having happened. I think our procurement cycle is much worse, we should try to fix that. But that is American industrial policy. And then we have the world’s best universities, strongly supported by our federal and state governments. Those two have ossified, but they’ve been effective industrial policy, even though people don’t call them that. And I don’t see why we need this new thing where lower-level bureaucrats sit around and decide how well electric cars are going to do. No, I would direct support at basic science and not have government do much to pick winners. So I think we’ve had a good industrial policy.
AS: Many libertarians also argue for the decriminalization or outright legalization of sex work. What do you make of their arguments, and how comfortable should we be with the introduction of market principles into one of the most intimate spheres of human activity?
TC: I’m sympathetic to legalization. It’s been done in New Zealand, it seems to have gone fine there. But again, we have a system of federalism. I’m not sure the whole nation should do it all at once. Let some states try. The experiment in Nevada, if anything, seems to be reversing. So, I would give it a shot. See if people find it a better outcome.
AS: What was the experiment for Nevada?
TC: Well, there are some counties in Nevada where prostitution is legal, but I think it’s heavily zoned and regulated, and the tendency is toward more regulation and it’s in retreat. So, there’s plenty of evidence that seems quite solid that sex crimes against women go down when they can do prostitution legally. That to me is a major consideration. Not decisive, but if you can stop a lot of violent crime and it’s not obvious anyone’s worse off. . .
There are claims that it leads to more trafficking, I’d have to study that more, but I guess I’m dubious. I think the benefits would likely outweigh the costs.
DM: You are one of the most interesting and diversely-interested public intellectuals around. So this last section is basically “the world according to Tyler Cowen.” Aaron, go ahead.
AS: Alright. Is economics a science, dismal or otherwise?
TC: Science, what’s a science? I think economics is halfway between science and art. I’m made suspicious by the people who claim, “It’s all very scientific.” Most papers you read, you can’t totally trust. I don’t mean any aspersions against the authors, but it’s hard to figure things out. But that said, the people who think it’s all nonsense and you can just do what you want or print all the money you want, I reject that too. So having the wisdom to know where you are on the science-art spectrum is part of the art of economics.
AS: Is there anything currently for sale that shouldn’t be?
TC: In the United States? Maybe alcohol. I don’t know. I don’t think it’s feasible to ban it, but the evidence that it destroys lives is phenomenal, and I think we should shun it socially to an extreme. And it’s one of our great crimes as a society that we don’t do that.
AS: Implicit in your answer is a rejection of the libertarian line that banning things is always counterproductive. It sounds like you think that in principle, bans can be good and effective.
TC: Of course. And during prohibition, rates of death from liver disease and the like went down. Again, I get we can’t do that now. It won’t work. We tried it.
But at the end of the day, although you can probably buy cyanide somewhere, people just don’t keep it around the house. It is abhorrent to them. We should treat alcohol like cyanide.
DM: Who, in your estimation, are the three best novelists around today? And why?
TC: Elena Ferrante, she’s around somewhere, if it’s a she. [“Elena Ferrante” is a pseudonym.] Karl Knausgård, at least his first two volumes of “My Struggle.” And Michel Houellebecq.
And then the Three-Body Problem from China, by Cixin Liu. They’re the four best, I think, by far. I can’t narrow it down to three.
DM: What did you think of the most recent Houellebecq book?
TC: I think it’s awful, I didn’t like it. A lot of critics have panned it, but his fame is secure from his earlier work.
AS: Is there anything that all four of the novelists you listed have in common?
TC: They’re all highly conceptual, and they all would do a great podcast, language permitting. I did do a podcast with Knausgård. He was awesome.
AS: You’re arguably a progressive in the narrow sense that you think life has gotten, and will continue to get, better as time goes on.
AS: Material progress is easy to measure, but what about moral progress? Is this a coherent concept? And if so, do you think we are more moral today than we were 40 years ago?
TC: Who’s the “we” and what does “more moral” mean?
AS: Let’s say American society.
TC: We treat gay individuals much, much better. Race has gotten better, but not nearly as much as it should have. I don’t think we treat animals better. I know there’s a lot more rhetoric and veganism and so on, but in terms of actual on-the-ground treatment, it seems there are more animals in factory farms. So I think it’s issue-by-issue. On most issues, we’re better. Gender issues, we’re definitely better, but still far from perfect. Animals and climate change are the big cases where we’re much worse, and those are significant.
DM: Has the quality of movies and novels gone up or down?
TC: Hollywood movies have clearly gone down in the last 15 years. Too many tentpole franchises, possibly talent’s been drained away to television. I think that’s a big and noticeable change. But for the world as a whole, movies are as great as ever, and there’s plenty to watch. So I’m not a pessimist about the genre, but Hollywood is not what it was in, say, the 1970s.
Books are harder to compare, but I’m not pessimistic. I named four authors who, to me, stand amongst the all-time greats of any era. Maybe novels peaked in the 1920s, but now’s a very good time for fiction writing.
AS: Do you think part of the explanation for the quality of movies going down has to do with globalization and the fact that Hollywood is now trying to appease countries like China?
TC: Absolutely. More CGI, more things explode, no sex in movies. Now, I’m not saying sex in movies is good per se, but there’s something about mature themes where sex enters into the story, and that’s now a no-no. So it’s like, “Well, I’ll do Captain Marvel instead.” And, some of those movies are good, but they’re not that interesting, and it’s harder to be creative with human drama. And comedy is harder in a globalized world. Romantic comedies seem almost dead. Sleepless in Seattle is a distant memory.
AS: In 2017, you wrote a blog post explaining why you didn’t believe in God at that time. What were some of your reasons, and have you changed your mind about any of them?
TC: I don’t remember my reasons. My main reason is just that I don’t believe. I don’t think theism is an absurd belief, I don’t think it’s impossible. I’m not sure the terms are well-defined. I wake up in the morning and there’s a bunch of things I don’t believe in, in a kind of absence-of-belief way, and that’s one of them. So, I just don’t see that the case for believing is that strong.
It struck me at the time that people who believe in a particular God of a particular religion are often reluctant to speak of it in Bayesian terms. Suppose someone said: “Well, I’m a Catholic, I think Catholicism is true with probability 2 percent, but all the other religions are true with probability of 1 percent. So I’m a Catholic, but there’s still a 98 percent chance I’m wrong.” That would actually make perfect sense to me, but I’ve never met a human who feels that way. Belief in religion is usually bundled with high certainty, and that to me doesn’t make sense.
AS: You also wrote a paper that laid out an “economic and rational choice approach” to the autism spectrum. Do you think society has grown more or less tolerant of neuro-divergent individuals?
TC: Overall, more, but that’s a complicated question. If you looked at, say, guardianship for people who are disabled or autistic, there’s no available number on how many people suffer under guardianship status. And you might think, “Well, some of them need to, they can’t take care of themselves,” but it’s pretty clear that not all of them need to—just as our judicial system makes a huge number of mistakes with murder trials, which are taken far more seriously.
So in terms of actual treatment, some dimensions probably are worse. But if you just mean tolerance from a lot of smart people, it’s probably better. But the old days where everyone just thought you were weird, maybe that was better yet. So I’d say we actually shouldn’t be sure.
DM: What’s a book, let’s say in the social sciences, that hasn’t been written but is crying out to be written?
TC: Any kind of synthetic applied knowledge is important. How should the United States reform its funding of science? How should the NSF operate the NIH? There are no current, good books on those topics, and they’re immensely important. There should be many more books on NIMBYism—how much do housing restrictions slow down economic growth, for instance? There’s research being done on it, but there should be much more.
AS: You wrote a paper very recently arguing that the rate of scientific progress is slowing down. Why is this happening, and what do you think the implications are for society, politics, the economy?
TC: I think the rate of progress in many areas of science have slowed down because of greater bureaucratization. It’s harder to be an inventor in your garage. You need big teams to do things. There are more moving parts, but they’re also more likely to be regulated, and the area where there’s been very rapid progress, like tech and social media, has been garage style. Mark Zuckerberg in his dorm room, he did it, right?
I don’t think it’s an easy problem to fix. That’s partly why I’m interested in reforming the funding of science. But undoing bureaucratization has not succeeded in many cases. Sometimes you just need to set up parallel structures that do new things their own way.
DM: What’s the next Tyler Cowen book that needs to be written?
TC: It is being written. It’s on what we do know from the social sciences about how to identify talent. If you think of talent as a binding constraint on projects, every institution has things it wants to do but can’t, because it can’t find the requisite project drivers.
Or suppose you’re a magazine, and you want an article written. Who’s going to write it? You must have this conversation every day. We could deploy our talent much better in this country and around the world, and this is a book on that. And oddly, there’s not a single really good book on what the social sciences know about spotting and evaluating talent.
AS: Do you think part of that is because, as you were saying earlier, economics is halfway between a science and an art?
TC: Yes. And it’s a hard problem. There’s not some simple formula, like “hire all the people with green eyes,” that’s going to work for you.
But the fact that people aren’t even trying strikes me as a kind of crime. There’s all the justified weeping and wailing about poor kids growing up in poor circumstances. One should complain about that, but at the end of the day someone has to wake up and say, “I’m going to figure out a way to hire and mobilize these people.” That’s what my book is trying to help people do.
AS: Ok, final section. Ready for some “underrated or overrated”?
TC: I would say I’m ready.
AS: All right. Underrated or overrated: big tech.
TC: Way underrated in the United States right now amongst people who are politically active. But if you mean by actual American citizens, it’s probably rated about correctly. They love Amazon. They often use Facebook. Google has become a verb. That’s all justified.
AS: Underrated or overrated: dating apps.
TC: I met my wife on match.com about 17 years ago. She and I were both early adopters and the curve of use for dating apps—like what percent of marriages begin online—is just going straight up right now. So they’re still underrated, and I suspect they could get a lot better.
AS: Underrated or overrated: the U.S. manufacturing sector.
TC: It’s underrated. Manufacturing output in this country is basically at an all-time high. So people complain that it doesn’t create enough jobs, but an earlier generation complained about how terrible those jobs were and said we needed to get rid of them. At some point, you’ve got to ask, “What do I really want?” Those are mostly jobs you do want to get rid of. I get the transitional problem. There was an article in Bloomberg recently about people managing a Taco Bell. Some places you can be paid $100,000—it’s way better than working in a factory along a number of fronts.
So I would say U.S. manufacturing is underrated. Am I worried we cannot build a ship on our own? Yes. Should the military and government do something about that? Probably. Rare earths? We shot ourselves in the foot with too much environmental regulation, but we could undo that. So there are things to be fixed.
DM: Underrated or overrated: international law.
TC: Again, you have to look at it case by case. Our current Administration doesn’t respect it enough. We will need international law to address climate change. So there’s been too much trampling on the notion. It’s easy for politicians in most countries to mock it and be nationalistic, but it needs to make a comeback.
DM: What about the Jacksonian tradition in American foreign policy?
TC: I’ve never liked it. I’ve never liked Andrew Jackson, starting with Indian removal. And I think our experience with native Americans—he called it Indian removal, I wouldn’t call it that—has shaped too much of our foreign policy, and it’s something like slavery we just ought to repudiate. Now, I’m not an isolationist or non-interventionist, but I don’t like the Jacksonian tradition on much of anything. I think he was a fool and a jackass.
AS: Underrated or overrated: Higher education.
TC: Again, it depends by whom. If you poll Republicans, they seem to underrate it. But if you look at where they send their kids, they behave like other people. So it could just be they want to poke left-wingers in the eye by saying it’s all terrible. It’s probably become underrated. People think it’s all just some big scandal, all political correctness, and a lot of those complaints are real and I’m against all that stuff. But I don’t think it’s the main story of American higher ed right now.
AS: Underrated or overrated: borders. The geopolitical kind, not the out-of-business bookstore.
TC: You need borders. But you also don’t want to enforce them too tightly because some flow of non-legal immigrants is good for your economy, and it’s a source of cheap labor. Don’t force anyone to stay, but if kept within reason and distributed in the country in the right way, it’s a big plus.
DM: So do you think as an issue, it’s overrated at the current moment?
TC: By Republicans, it’s way overrated: “Build the wall.”
But the Democrats to me are insane. “Let anyone in, never send anyone back, have no standard, de facto open borders.” If they really meant it, it would literally destroy the country. I think you could boost immigration by a factor of two or three, and still have some people who can’t get in illegally and cross the border. You could tolerate that within reason, and things would be fine.
AS: Underrated or overrated: religion’s effects on human flourishing.
TC: People who are religious think it will be wonderful for you and it won’t be. But people who are hostile to religion just don’t want to talk about it. Democrats now just don’t want to talk about religion often—especially white Democrats—but the evidence seems pretty clear that religion is good for you to some extent. It’s a modest causal effect—not overwhelming, but positive. And everyone either over- or underrates that, no one really gets it right.
DM: Underrated or overrated: China’s economic prospects going forward.
TC: I think they will slow down to 2 to 4 percent growth. I’m not sure what the rest of the world expects from them, so I’m not sure how they’re rated. People will invoke either a very weak China or very strong China for their own partisan political reasons. China is really good at finding talent, to get back to the topic of my next book. It’s really bad at politics and transparency. And often, the best thing you can say about China is China will always surprise us. Whether it’s a Taiping rebellion, communist revolution, or the great famine, the country has done these weird about-faces. Hardly anyone predicted the Deng reforms. So the best answer is that China will always surprise us.
DM: How about India?
TC: I would say India hardly ever surprises us. Indian history has been fairly linear for centuries, right? Obviously, it’s colonized and then becomes independent, but all the other colonies became independent at sort of that same time. It grows, but not at a very high rate. It’s full of religions, cultures, languages, it’s not very well-governed. It’s super diverse. India never surprises you—in a way, that’s the surprise.
DM: Let’s talk about democratization, then. Chinese democratization versus, say, India under Modi.
TC: I don’t see any reason to think China will democratize. They never have, the elite there don’t want it. The people with money don’t trust their own median voter, standards of living are still going up. It’s a Western conceit to think democracy is inevitable. Maybe someday, yes, China will always surprise us, but this one, I just don’t see it coming. And Indian democracy, for a long time it’s been democracy without accountability because so many people vote on the basis of party, ethnicity, or cast, something quite particularistic. And if you don’t judge governments on the basis of delivering goods, you get highly uneven results. Now that the Modi government does bad things, everyone’s all aflutter, but I’m not surprised at all. I don’t really think it’s anything new. And I think people are misreading the situation. They’re correct to criticize it, but they’re also falsely idealizing some India of the past, maybe even just five years ago, that never existed. To the extent it was free and pluralist, it was through state incapacity. And that’s not that good a thing.
AS: You recently wrote a review of Charles Murray’s forthcoming book on the biology of race, class, and gender. Underrated or overrated: the evidence that genetics plays a nontrivial role in economic inequality—between groups, as well as between individuals.
TC: Well, groups are a very tricky concept. We know within families there’s a lot of heritability of different skills including IQ. So if identical twins are a group—and they are—then yes, it plays a role in inequality between groups.
But if you are asking whether the heritability of IQ is a major factor in explaining differential levels of development around the world, I don’t think it is. Ireland in the 1970s was very poor and had a much lower measured IQ than did England. It was called a backward country, it was viewed as full of problem people. Now IQs in Ireland are higher than in the UK, and somehow that happened magically. Presumably, it’s environment and different incentives, and I suspect that’s true for most or all countries.
DM: Overrated or underrated: the probability of nuclear catastrophe.
TC: Way underrated by almost everyone. I’m not sure it’s underrated by the North Koreans, but because it hasn’t happened in so long, people have forgotten it. But it’s the world’s number one problem. It’s the one thing that could really end civilization. As you know, accidents have come very close to happening in the past. So if you let the clock tick for long enough, you’re going to have some kind of accidental exchange. That, to me, is the most terrifying prospect before us, much more than climate change.
DM: Any thoughts or insights about how we should even think about tackling it?
TC: Well, it’s hard to get information even on what we’re already doing. But I agree with the general notion that we should work with countries, including enemy countries, to improve their surveillance, or with the allied countries such as Israel to improve their second-strike capability. We can do it. It’s not that hard. We may be doing it already in ways that are not very openly discussed, but I think there’s a lot in principle we can do.
AS: You said nuclear was a bigger threat than climate change. What do you think are the top five issues facing the world today?
TC: Nuclear number one, possibly bio-weapons as number two. I don’t know if climate change is third, but it’s in the top five. Demographics are in the top five—more people is a good thing. And just our own general stupidity. Those are my five.
AS: What do you make of all the attempts to boost fertility in, for example, Hungary? Do you think there’s any way to do this with government policy?
TC: I favor these interventions when they work. In Singapore, it doesn’t seem to have worked. France, it seems it’s somewhat worked. I can’t speak to Hungary’s efforts. In principle, I’m all for it, but I recognize it seems to fail more often than it works. So I don’t want to advocate policies that will fail but I’d love to see us find a way to make them work.
AS: To end, I thought we’d do underrated or overrated for particular people. Underrated or overrated: Friedrich Hayek.
TC: He’s overrated by his partisans, but grossly underrated by almost everyone else.
But the Austrians, the people who support it, they’re like these deities where you study their minor works for little glints of genius. And I don’t know, I don’t think that’s a good way to go about learning economics. It’s one thing you can do, but the approach is overrated by its supporters.
AS: John Rawls.
TC: Very much overrated. He didn’t understand economic growth. He wrote far too many pages. The basic instruction doesn’t make sense. Theory of Justice is a super deep and rich book, I get that, but ultimately it came out in the right place at the right time. People wanted a justification for a certain kind of social democracy and liberalism. But in terms of the framework, there’s very little in there that’s influenced me or that I think is correct.
AS: How about Rawls’s foremost critic on the right, Robert Nozick?
TC: Still underrated. I knew Nozick and he was just brilliant. His early articles are some of the best philosophy ever done. The first section of Anarchy, State, and Utopia on the state is phenomenal, though the famous parts of the book are less interesting. I don’t think Philosophical Explanations or The Examined Life are important books, but he was phenomenal. One of the smartest people I’ve met.
AS: John Maynard Keynes.
TC: I suppose underrated. He was a polymath. Polymaths tend to be underrated, and Keynes was a phenomenal writer. I’m not a Keynesian on macroeconomics, but when you read him, it’s so fresh and startling and just fantastic. So I’d say underrated.
AS: Barack Obama.
TC: Again, that’s one of these “by whom” questions. He’s either underrated or overrated.I don’t think he’ll go down as a consequential President. He was too weak on China and Russia. He was entirely sane and non-corrupt, and it was wonderful that America had a black President. Probably a very admirable person, but I’m not sure he gave our country what it needed at that moment.
AS: Probably going to be the same kind of answer, but Donald Trump?
TC: People are just crazy when you bring up Trump. If you live on the coast, he’s underrated. By his supporters, he’s overrated. He is not what I look for in a President morally or prudentially, and to me, it’s scary to think he might get another term, but there is such a thing as Trump derangement syndrome, and most of the criticisms of Trump are totally unreliable. You go to the New York Times op-ed page, and there’s like seven op-eds about how Trump just did the most terrible thing by killing this fellow in Iran. Probably one should be agnostic. Obama assassinated dozens of people by drone in multiple countries for many years, and that was like, “Ho-hum.” And now Trump kills someone who’s probably more evil than any of them. I don’t know how it will shake out, but I don’t just think “this is Trump, this must be terrible.” The reaction in the media is quite dishonest and self-serving. And in that sense, Trump is underrated.
AS: Slavoj Zizek, the quirky communist philosopher you debated recently.
TC: Way underrated. I had breakfast with Zizek before my dialogue with him, and he’s one of the ten people I’ve met who knows the most and can command it. Now that said, he speaks in code and he’s kind of “crazy,” and his style irritates many people because he never answers any question directly. You get his Hegelian whatever. He has his partisans who are awful, but ordinary intellectuals don’t notice him, and he’s pretty phenomenal actually. So I’d say very underrated.
AS: Last one: underrated or overrated—Tyler Cowen.
TC: Well, by whom? I guess he’s overrated by me, right?
DM: Highly rated by us, in any case.
TC: Thank you very much.
DM: This was really a treat and a pleasure. Thanks for joining us.