On podcasting, the end of the great stagnation, academia, antitrust, and more.
Tyler Cowen is Holbert L. Harris Chair of Economics at George Mason University and serves as chairman and faculty director of the Mercatus Center at George Mason University. Cowen is coauthor of the popular economics blog Marginal Revolution and cofounder of the online educational platform Marginal Revolution University.
A dedicated writer and communicator of economic ideas, Cowen is the author of several bestselling books and is widely published in academic journals and the popular media. Cowen’s latest book is Big Business: A Love Letter to an American Antihero, with an upcoming book called Talent: How to Identify Energizers, Creatives, and Winners Around the World which he wrote with Daniel Gross.
Cowen is host of Conversations with Tyler, a popular podcast series featuring today's most underrated thinkers in wide-ranging explorations of their work, the world, and everything in between.
In 2011, Bloomberg Businessweek profiled Cowen as “America’s Hottest Economist” after his e-book, The Great Stagnation, appeared twice on the New York Times e-book bestseller list.
Cowen's blog was named in the Top Financial Blogs of 2011 by TIME and in the Best Economics Blogs of 2010 by The Wall Street Journal.
Cowen graduated from George Mason University with a BS in economics and received his PhD in economics from Harvard University.
Tyler Cowen
[TRANSCRIPT IS AUTO-GENERATED]
[00:00:00] Alex: Tyler Cowen is the Holbert L. Harris Chair of Economics at George Mason university and serves as chairman and faculty director of the Mercatus center at George Mason University. Cowen is coauthor of the popular economics blog Marginal Revolution and co-founder of the online educational platform, Marginal Revolution University.
He's a dedicated writer and communicator of economic ideas and is the author of several bestselling books, widely published in academic journals in the popular media. Cowen's latest book is Big Business, a Love Letter to an American Antihero with an upcoming book called Talent: How to Identify Energizers, Creatives and Winners around the World, which he wrote with Daniel Gross. You can get your hands on it May 10th of next year.
Cowen is host of Conversations with Tyler, a popular podcast series, featuring today's most underrated thinkers in wide ranging explorations of their work, the world and everything in between.
In 2011 Bloomberg business week profiled Cowen as America's hottest economist after his ebook, The Great Stagnation appeared twice on the New York times e-book bestsellers list. Cowen's blog was named in the top financial blogs of 2011 by time and in the best economics blogs of 2010 by the wall street journal. Cowen graduated from George Mason university with a BS in economics and received his PhD in economics from Harvard.
Today, we talked about podcasting, the end of the great stagnation, academia, antitrust, and more. Hope you enjoy.
[00:01:26] Alex: Your podcast, conversations with Tyler is really a driving force behind me starting this project. So it's, it's really great to be able to sit down and chat with you. You know, for, for starters, I'm curious what you think your biggest takeaways have been from the practice of podcasting and interviewing, you know, I, I always say.
Having a platform like this really just gives me an excuse to talk with people I have absolutely no business asking questions to but there's, there's elements of growth that come with that, you know, you're, you're quite a bit more qualified than I am. You've got quite a bit more experience than I do, but I can imagine there's some of the same lessons that come with it.
Do you think you have any broad standout takeaways from interviewing so many people?
[00:02:04] Tyler: Well, it improves the quality of my own reading that's for me, the biggest takeaway I don't know what we learned from all those, you know, they're they're entertaining or I hope some of them are entertaining.
Oh. Which is fine for me. That's enough. I'm not sure there are great DEMEC lessons. Maybe that it's entertaining. It's the lesson.
[00:02:23] Alex: I think that's less than enough. Isn't it? Now, you know, between the, the books, the podcast and your blog, you're an incredibly prolific creator. I'm curious, quite fundamentally.
What do you think compels you to write,
[00:02:37] Tyler: To learn and figure things out? I'm not actually that focused on the audience.
[00:02:43] Alex: Do you think that's an important. In doing what you do and focusing on, doing it for the sake of doing it rather than doing it for the sake of, you know, the benefit of an audience.
[00:02:55] Tyler: It has meant I don't stop the most people stop. I don't mean they totally cease producing, but they stopped trying to improve or they stop enjoying. I feel I have significant compound returns because I've never stopped by. I also started young, like at age 14. So I'm 59, that's 45 years of going full steam and never stopping.
And that's a big benefit if you're doing it for other reasons like, oh, I want to persuade people. It's kind of like earning money, people that were in money to have more money donor in that much. Cause at some point they have enough and after your. A hundred million, whatever, you know, like why do it people who were in money to change the world, keep on earning money.
[00:03:37] Alex: Now I, I think I was talking with Eli Durado about this, but at some point in our conversation, he brought up the great stagnation, which is a book you're obviously quite well-known for. Correct me if I'm wrong here. But the basic summary in my mind, is that okay. So from, from 1922, around 1970 productivity growth in the U S hovered a bit under, I believe 2% per year.
Nowadays more broadly it's something quite a bit lower. I think that the number mentioned was like 0.4%. And obviously that discrepancy can really, really compound. And so what he was saying in referencing this was that pretty much everything outside of it was stagnant that we get a bit too caught up in Moore's law and fail to see the big picture.
A lot of the time. My question to you would firstly be, is this a reasonable characterization? And secondly, if you were in the oval office, how might you turn that around?
[00:04:22] Tyler: That's absolutely a good characterization. I don't think the oval office really can turn it around. So, I mean, even if you had Congress agreeing with you, I think some of it is broadly cultural.
Some of it is that we exhausted the available benefits from previous fossil fuel breakthroughs. Some of it is regulation. A lot of that is state and local, like building restrictions or just, it's hard. Excuse done because there are multiple levels. So hard to fix. I actually think we're now at least temporarily out of the great stagnation.
I think you have to count MRN vaccines as really a big breakthrough and they definitely work so more hopeful, you know, in the book itself, I say, we're going to get out of it soon. So I think we're at.
[00:05:12] Alex: That's great news. And when you're thinking about measuring progress, I'm curious again, at a base level of here, what do you think is probably the best measure of progress as it is a GDP per capita?
Should we even be looking at GDP? What's the metric that you see as, as best suited?
[00:05:31] Tyler: Well, total factor productivity. If you had to go with one number GDP per capita should be broadly consistent with that. But, you know, I think just anecdotally, what you see in life is more persuasive for most people.
It's not very scientific, but mere fact say that I learned to drive a car, I guess in 1977. And I drive a car today and I haven't had to learn anything new now with Tesla that will change. That's like pretty soon. Right. But that's a long time that you just do the exact same thing to me. That's evidence of stagnate.
Now not every area is like, I computers clearly big, big change, but most of my life, you know, cooking in my kitchen, it's the exact same. I can get better spices. Like there's some improvements, but the technology completely unchanged.
[00:06:30] Alex: I'd like to backpedal a bit to what you were talking about when you were talking about sort of the social forces behind you know, any, any given movement of stagnation. How much of it do you think is truly economic or regulatory and how much do you think of it as just general sentiment when it comes to optimism or complacency?
[00:06:49] Tyler: I'm not sure those are two different. So it's hard to say you know, complacent, so you could all risk aversion, right? Risk aversion is a concept in economics, but I think the cultural element is strong. I would say that I don't know how to give it a more exact number. Sure. The regulation itself is endogenous to the culture.
Right? So in that sense, it's primarily the culture,
[00:07:13] Alex: you know, I. I think this is sort of an interesting segue here. I was, I was speaking with, I think it was a longevity scientist someone's back. And one thing I thought he said that was interesting, that you might have some perspective on is just the state of academia. You know, he, he characterized academia as a bottleneck in a way for breakthrough innovation because.
Just the stigma that's associated with really radical ideas and research. Do you think there's some truth to that?
[00:07:40] Tyler: I think academia is a bottle as he said, but I would put the specific critique a little differently. I don't know if there's a stigma to radical ideas, but there's just so many entry barriers like it used.
Now it's the case to get into a good grad school. You have to have gone to exactly the right places. You need letters. from exactly the right. people Maybe you need to have been an intern with them for one or two years. And just the pressures, every level for conformity are so strong. Now conformity also means higher standards.
So it's not all bad. Just people become much more careerist. And is there a stigma to radical ideas? I mean, maybe there is. I see the bigger problem. People are not built, are trained to produce radical ideas with or without stigma, I think there's always been a stigma for radical ideas in a way you wanting to say F-you to the stigma is part of what motivates the creators, but we're not training people to be that way.
It's a slightly different take. I agree with the core point.
[00:08:50] Alex: What do you see as sort of the long term? Cause I, I think I'd agree with you in that characterization of people becoming more careerists and, and maybe more conformist in a very weird way. What do you think the longer term implications of that look like as this, as this, a new phenomenon?
Obviously you've seen this for quite a bit longer than I have.
[00:09:10] Tyler: Well, you say longer term, but I think you see it in the short term, like it's here a fully blown. And I think academia is hyper specialized and a lot of it just doesn't matter very much. So I, I don't view that as extrapolation. I just think that's pure description makes sense.
Probably it'll get worse, but and then you have people like public health authorities, they know one area, but they're very bad at putting knowledge together. You have like an overall judgment on a public health. But there's still like the authority.
[00:09:44] Alex: I think that's, it's interesting in the context of what a lot of us as students have been going through over the last year and a half, you know, I think today was my second day of classes for the year. My S I'm a senior in college now, and it's very, very strange seeing so many people in a, in a classroom on campus.
But yeah, I mean, there there've been some pretty big implications on the future of education as far as remote learning has gone, I've had my fair share of experience with online classes and, you know, quite frankly, I'm, I'm not a fan of. I think there are a lot of students, but the question of how it will shape the future of academia, I think, I think remains this might be cynical of me to say, and I think you might've alluded to it a little bit before, but I think the biggest driver of power for academic institutions, at least for.
From a student's perspective, right? Is, is exclusion, right? It's not necessarily how much value they can provide to as many people as possible, but rather how few obviously time and resource constraints become much less of a big deal when you virtualize a classroom. I'm curious, what implications you see that having?
[00:10:43] Tyler: Well, I think you already are seeing some state universities like Arizona state, Georgia. That are not obsessed with exclusion building online programs designed to be online, not professors in some half-assed way, pulling a zoom lecture, you know, out of nowhere because there's a pandemic like actual online education for students who otherwise would not get a U Chicago quality class.
And I think the stuff we'll do very well. I don't think it will do well in like your market segment, because what you get is, is better, but for the world as a whole, I think it will be a big part of higher education. And it will be done by people outside of the elite schools and who build it upfront to be online and who make it cheap.
I mean, even where you are, which is like in a way, the best school, if you could trade in like the worst quarter of your class, For something online, would you do it? I think almost everyone would like, certainly at Harvard, everyone would, Harvard is worse teaching than Chicago, but that's still indicative just the worst quarter.
You've learned nothing, at least online, you have the option of not showing up or not having to get up at whenever in the morning or you can do it from, you know, travel or home. So think it's. Do
[00:12:06] Alex: you think the elements of prestige will, will possess? I think that's something I've well, I think generally that's something people, you know, sort of over index for having seen elements of that firsthand, but I think that becomes really interesting when you're talking about the, the scarcity or the abundance of a supply of quality education.
[00:12:28] Tyler: I think schools at the very top will keep and extend for prestige and elsewhere in the distribution. I think there'll be a great deal of flattening because you could like sign up for you Kansas, but take a 30 year classes online from other places all over. So like you can just degree will not be that distinctive compared to like you Florida degree, like in a way there'll be a third or more of this.
Well, I think it'd be flattening, but Harvard and Princeton, if only as dating clubs, I mean, that will continue. I think.
[00:13:03] Alex: What about specialization in general? You know, you been speaking a little bit earlier about just the immense pressure that goes into getting into something like a great graduate school and just sort of the careerist attitude that a lot of people have going into it.
Do you think there's, there's going to be a shift in any sense of you know, a generalist education versus one that's more specialized as we see sort of the trends you're talking about. Higher quality education becoming more accessible for more people.
[00:13:30] Tyler: I dunno. I mean, I'd like to see the data on what classes people are taking.
Cause I don't know, but I think with the internet, I think education is like pretty generalist right now. If you want it to be outcast, there's all sorts of places you can go. So I'm not worried about that. Like maybe I'm worried about the demand side. I think it's there for anyone who wants it, like more, much more than the.
[00:13:55] Alex: When you're talking about the demand side, do you think it's going to become more or less of a necessity for people coming out of high school? Because I know a lot of that's been called into question. I think just the tools that people's disposal nowadays give a lot more leverage than, than, you know, they would have otherwise without a college education.
[00:14:15] Tyler: Yeah. I think a huge bifurcation. The people who in high school are using the internet to become smarter. Like those are the people who rise to the top and you can do very well. Not doing that. You go through the usual quality track. You end up working at McKinsey. They'll pay you a lot. But in some sense, you're not really doing anything.
Oh, the people who end up doing stuff, which of course is a minority, but they're all learning from the internet in high school, like crazy. And it's like, you are where you are. And that's a huge bifurcation and it's the new, it's not even 10 years old. I think 10 years ago, obviously there was plenty of internet, but somehow this was not quite fully in gear.
[00:15:00] Alex: So to, to shift gears for a second your latest book is called big business, and I think a nice way to characterize it again. We'd love to hear your thoughts on this characterization is as a sort of defensive how integral role corporations play in the economy, but, but in my opinion, with a stance that's, so non-partisan that I think it's actually much more difficult to argue than one would expect.
One thing that really struck me, I think, is the discrepancy between words and actions when it comes to people's trust of big business, how might you break that down simply?
[00:15:33] Tyler: Well, the people who will go on and on criticize big business, you know, they own an iPhone, which tracks them and they call Uber without a moment's hesitation and they have door dash deliver, whatever they're going to eat.
It's like fine, but you're trusting these people. Oh, I think it's crazy hypocritical. I'm just pointing out the reality that most of these services compared to the alternatives are pretty good.
[00:15:58] Alex: Do you think that's willful ignorance or a fundamental misunderstanding of how interconnected corporations are in society?
[00:16:07] Tyler: I think it's ignorance, but not willful. I think it's a kind of S of ignorance that there's no incentive in their life to force them to wake up. And I hoped my book would do that.
I think it had good timing in the sense the pandemic big business really came through for us. Right. Not just vaccines, but Amazon zoom. We're talking on zoom now. That's the kind of luck that Oak my way, but I think I got good luck for a
[00:16:31] Alex: reason.
To go back to your point too, of the of the great stagnation when it comes to COVID I'm curious as to what your thoughts are on. What characterize the winners and losers in that situation? Right? Like the way I, the way I saw it was there was sort of a divergence between companies that could leverage the internet effectively and those who couldn't.
Right. Like, it seemed like the brick and mortar were really the biggest losers in that sense.
[00:16:59] Tyler: Sure. In most areas, I'm sure you had a bunch of brick and mortar company. Feedback on the internet. So if it's like food delivery, let's say you own the truck. I mean, that's brick and mortar, but you're going to do great kind of standalone, not internet driven, brick and mortar, I think is what did badly.
[00:17:21] Alex: And when you're looking at, you know, the big winners, if you're talking Amazon, Google, any of these others, I'm curious as to what your thoughts are on. Things like antitrust legislation and the odds of these types of things, taking significant effect, particularly in big tech, because, you know, again, those seem to have been the largest winners or among them.
[00:17:40] Tyler: Well, I think the biggest company already cannot make more acquisitions because of the spread of antitrust. I would be surprised if they broke up Google or Facebook. But it's not impossible. Like at least a 20%. I don't really see what problem they think they're going to solve. Like it's not outfit restriction, right?
It's free. But you get to Google's let's even say they're as good as the old Google. Like what have you fixed? The advisor? Google's price is not going to fall. They all have information on you. Smaller companies are probably more vulnerable, like to foreign hacking. So I don't think breaking them up is any kind of fix.
It's not. Standard oil or something.
[00:18:26] Alex: Do you think there is a fixed, do you think there's a problem to begin with? I
[00:18:31] Tyler: think there's a problem that many people do not use information well, or they become addicted in bad ways. I don't think breaking them up, fix this, that at all. And I'm not sure there's really a fixed, but I do think it's a problem.
[00:18:45] Alex: You would say it's more of a social. Not phenomenon, but issue rather than one of, you know, that's purely economic.
[00:18:53] Tyler: Yeah. Like say the internet makes smart people smarter and dumb people, dumber, oversimplify a bit. It's clearly a problem.
But again, I'm not sure what to do.
[00:19:04] Alex: When it comes to regulations, sort of in the same vein of this, this antitrust talk how would you measure the, the pros and cons when it comes to like an authoritarian system like that, of China, you know what, at a surface level, you see decisions being made much, much more quickly but obviously at the expense of the rights of their population, I mean, do you think that'll catch up with them eventually?
[00:19:25] Tyler: Well, eventually, but I would say they've yet. Rise out of the problems. The Forrest Chinese people in the world are in China, right? So they're not some great Victor Taiwan, Hong Kong, free Chinese Hong Kong, Singapore, all our way for your enriched replaces. So they still need to prove their, their approach works.
I would say. People in Canada, America, way richer than in China. It's not even close, right?
[00:19:54] Alex: What do you think that looks like over time though? Like, in saying, well, this catch up with them, will this, will this not catch up with them? Is the, is the effect that they have on, you know, the rights of their population, something that is you think a serious threat to holding power?
[00:20:11] Tyler: I don't know. I had to predict for China, which I would do only cautiously. I think the growth will slow a lot with the case in Japan. And they'll have growing social problems they'll limp through, but not really take over the world so to speak.
[00:20:27] Alex: To shift gears again, you know, I was, I was talking with Daniel Gross a couple of weeks ago and the topic of identifying talent and predictors of success came up. I think there's a collaborative project in the works there.
[00:20:39] Tyler: Daniel. And I have a book coming out in may.
My advice is to buy our book, but it simply but one has to wait.
[00:20:46] Alex: Right. So it's coming up, which is exciting. Yeah. You know, in, in sort of the same vein there, what kind of person do you think succeeds in the future? We've been talking about a lot of macro trends.
A lot of sort of larger scale changes that you see on the horizon. What sort of characteristics do you think makes a person successful in the future?
[00:21:07] Tyler: Well, I think location will matter much, much less, but the people who are energetic and smart and. And enthusiastic almost anywhere will be found by the internet.
And we'll use a variety of work from a distance and contribute a lot and be paid a lot just as programmers in India already are paid a lot. This will become much more general.
[00:21:31] Alex: Tyler, I really appreciate the time. It was great speaking. Take care.
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