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EPISODE LINKS:
Tyler's Twitter: https://twitter.com/tylercowen
Tyler's Blog: https://marginalrevolution.com/
Conversations with Tyler (Podcast): https://conversationswithtyler.com/
Big Business (Book): https://amzn.to/2OBPbaK
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OUTLINE:
0:00 - Introduction
1:50 - Economics
3:42 - Nuclear war
10:29 - The American dream
17:42 - Capitalism: pros and cons
24:16 - Is competition good for the world?
26:19 - Free market
27:24 - Anarchy
29:50 - Ayn Rand
34:31 - The case for big business
38:57 - Clubhouse
44:01 - Loneliness
46:14 - Eric Weinstein and economic growth
50:34 - Communism
53:25 - Putin
58:55 - China
1:03:48 - UBI
1:07:43 - Disagreement with Eric Weinstein
1:11:35 - Money, Bitcoin, and Ethereum
1:19:46 - WallStreetBets
1:23:42 - MIT
1:31:10 - UFO sightings
1:38:29 - Contemporary art is misunderstood
1:45:32 - Mexican food is the best in the world
1:50:22 - Jiro Dreams of Sushi
1:54:25 - Book recommendations
1:56:41 - Advice for young people
2:00:19 - Love
2:06:01 - Mortality
2:07:52 - Meaning of life

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The following is a conversation with Tyler Cohen, an economist at George Mason University and co-creator of an amazing economics blog called Marginal Revolution.

Author of many books, including The Great Stagnation, Average is Over, and his most recent, Big Business, a love letter to an American anti-hero.

He's truly a polymath in his work, including his love for food, which makes this amazing podcast called Conversations with Tyler really fun to listen to.

Quick mention of our sponsors, Linode, ExpressVPN, Simply Safe, and Public Goods.

Check them out in the description to support this podcast.

As a side note, given Tyler's culinary explorations,

the things that makes me sad about my love-hate relationship with food is that while I've found a simple diet, plain meat and veggies, that makes me happy in day-to-day life, I sometimes wish I had the mental ability to moderate consumption of food so that I could truly enjoy meals that go way outside of that diet.

I've seen my mom, for example, enjoy a single piece of chocolate.

And yet, if I were to eat 1 piece of chocolate, the odds are high that I would end up eating the whole box.

This is definitely something I would like to fix because some of the amazing artistry in this world happens in the kitchen.

And some of the richest human experiences happen over a unique meal.

I recently was eating cheeseburgers with Joe Rogan and John Donaher late at night in Austin talking about jiu-jitsu and life.

And I was distinctly aware of the magic of that experience.

Magic made possible by the incredibly delicious cheeseburgers.

This is the Lex Friedman podcast And here is my conversation with Tyler Cohen.

Would you say economics is more art or science or philosophy or even magic?

Economics is interesting because it's all of the above.

To start with magic, the notion that you can make some change and simply everyone's better off, that is a kind of modern magic that has replaced old style magic.

It's an art in the sense that the models are not very exact.

It's a science in the sense that occasionally propositions are falsified, are a few basic things we know, and however trivial they may sound, if you don't know them, you're out of luck.

But from my outsider's perspective, economics is sometimes able to formulate very simple, almost like E equals MC squared, general models of how our human society will function when you do a certain thing.

But it seems impossible or almost way too optimistic to think that a single formula or just a set of simple principles can describe behavior of billions of human beings with all the complexity that we have involved.

So do you have a sense there's a hope for economics to have those kinds of physics level descriptions and models of the world?

Or is it just our desperate attempts as humans to make sense of it even though it's more desperate than rigorous and serious and actually predictable like a physics type science.

I don't think economics will ever be very predictive.

It's most useful for helping you ask better questions.

Well, game theory never predicted USA and USSR would have a war, would not have a war, but trying to think through the logic of strategic conflict.

If you know game theory, it's just a much more interesting discussion.

Are you surprised that we, speaking of the Soviet Union and United States And speaking of game theory, are you surprised that we haven't destroyed ourselves with nuclear weapons yet?

Like that simple formulation of mutually assured destruction, that's a good example of an explanation that perhaps allows us to ask better questions, but it seems to have actually described the reality of why we haven't destroyed ourselves with these ultra powerful weapons.

Do you think the game theoretic explanation is at all accurate there?

I think we will destroy each other with those weapons.

Look, it's a very low probability event, so I'm not surprised it hasn't happened yet.

I'm a little surprised it came as close as it did.

Your general thinking, realizing it might have just been a flock of birds or it wasn't a first strike attack from the USA, we got very lucky on that 1.

But if you just keep on running the clock on a low probability event, it will happen.

And it may not be USA and China, USA and Russia, whatever.

Bio weapons, but it simply will happen is my view.

And I've argued at best we have 7 or 800 years and that's being generous.

So tiny probability could come any time, probably not in your lifetime, but the chance presumably increases the cheaper weapons of mass destruction are.

So the Poisson process description doesn't take in consideration the game theoretic aspect.

So another way to consider is repeated games, iterative games.

So is there something about us, our human nature, that allows us to fight against probability, reduce?

Like the closer we get to trouble, the more we're able to figure out how to avoid trouble.

The same thing is for when you take exams or you go and take classes, the closer or paper deadlines, the closer you get to a deadline, the better you start to perform and get your shit together and actually get stuff done.

I'm really not so negative on human nature.

And as an economist, I very much see the gains from cooperation.

But if you just ask, are there outliers in history, like was there a Hitler, for instance, obviously.

And again, you let the clock tick, another Hitler with nuclear weapons doesn't per se care about his own destruction, it will happen.

CBT So your sense is fundamentally people are good, but

A trembling hand equilibrium is what we would call it.

That the basic logic is for cooperation, which is mostly what we've seen even between enemies.

But every now and then someone does something crazy and you don't know how to react to it.

To push back, is it possible that The crazier the person, the less likely they are and in a way where we're safe.

Meaning like, this is the kind of proposition, I've had the discussion with my dad as a physicist about this, where he thinks that, like if you have a graph, like evil people can't also be geniuses.

So this is his defense why evil people will not get control of nuclear weapons, because to be truly evil.

But evil meaning, you can argue that not even the evil of Hitler we're talking about because Hitler had a kind of view of Germany and all those kinds of, there's like, he probably deluded himself and the people around him to think that he's actually doing good for the world, similar with Stalin and so on.

By evil, I mean more like, almost like terrorists to where they want to destroy themselves and the world.

Like those people will never be able to be actually skilled enough to do, to deliver that kind of mass scale destruction.

So the hope is that it's very unlikely that the kind of evil that would lead to extinctions of humans or mass destruction is so unlikely that we're able to last way longer than 700, 800 years.

In that sense, I accept the argument, but that's why you need to let the clock tick.

It's also the best argument for bureaucracy.

To negotiate a bureaucracy, it actually selects against pure evil because you need to build alliances.

But look, put it this way, could you imagine 35 years from now the Osama bin Laden of the future has nukes or very bad bio-weapons?

And there might be destructive technologies that don't have such a high cost of production or such a high learning curve, like cyber attacks or artificial intelligence, all those kinds of things.

Let's say you could, as an act of will, by spending a million dollars, obliterate any city on earth and everyone in it dies and you'll get caught and you'll be sentenced to death but you can make it happen just by willing it.

How many months does it take before that happens?

That's probably a good answer for that because you can consider how many millionaires there are, how many, you can look at that, right?

I have a sense that there's just people that have a million dollars.

I mean, there's a certain amount, but have a million dollars, have other interests that will outweigh the interest of destroying the entire city.

There's a particular maybe that's a hope.

It's why we should be nice to the wealthy too, right?

We should stop that because that doesn't inspire the other future Bill Gates is to be nice to the world.

But your sense is the cheaper it gets to destroy the world, the more likely it becomes.

Now when I say destroy the world, there's a trick in there.

I don't think literally every human will die, but it would set back civilization by an extraordinary degree.

It's then just hard to predict what comes next.

But a catastrophe where everyone dies, that probably has to be something more like an asteroid or a supernova.

And those are purely exogenous, for the time being

I was born in the Soviet Union in Russia.

You were born in the Soviet Union, right?

Yes, I was born in the Soviet Union in Russia.

Yes, I was born in the Soviet Union, the rest is details, but I grew up in Moscow, Russia.

But I came to this country, and this country even back there, but it's always symbolized to me a place of opportunity where everybody could build the most incredible things, especially in the engineering side of things, just invent and build and scale and have a huge impact on the world.

And that's been to me, the, that's my version of the American ideal, the American dream.

Do you think the American dream is still there?

Do you think, what do you think of that notion in itself?

From an economics perspective, from a human perspective, is it still alive and how do you think about it?

The American dream is mostly still there.

If you look at which groups are the highest earners, it is individuals from India and individuals from Iran, which is a fairly new development.

Both you could call persons of color may have faced discrimination also on the grounds of religion yet they've done it.

It says great things about america Now if you look at native-born americans, the story is trickier People think intergenerational mobility has declined a lot recently, but it has not for native-born Americans.

For about, I think, 40 years, it's been fairly constant, which is sort of good, but compared to much earlier times, it was much higher in the past.

I'm not sure we can replicate that, because look, go to the beginning of the 20th century.

Very few Americans finish high school, or even have much wealth.

So there's more upward mobility across the generations than today.

I'm not sure we should blame the modern world for not being able to reproduce that.

But look, the general issue of who gets into Harvard or Cornell, Is there an injustice?

Is there too little opportunity for the bottom, say, half of Americans?

Absolutely, it's a disgrace how this country has evolved in that way.

And in that sense, the American dream is clearly ailing.

But it has had problems from the beginning, for blacks, for women, for many other groups.

I mean, isn't that the whole challenge of opportunity and freedom, is that it's hard and the difficulty of how hard it is to move up in society is unequal often, and that's the injustice of society.

But the whole point of that freedom is that over time it becomes better and better.

and it keeps progressing in that kind of way.

But ultimately there's always the opportunity, even if it's harder, there's the opportunity to create something truly special, to move up, to be president, to be a leader in whatever the industry that you're passionate about.

We each have podcasts, right, in English.

The value of joining that American English language network is much higher today than it was 30 years ago, mostly because of the internet.

So that makes immigration returns themselves skewed.

So going to the US, Canada, or the UK, I think has become much more valuable in relative terms than say going to France, which is still a pretty well-off, very nice country.

If you had gone to France, your chance of having a globally known podcast would be much smaller.

Yeah, this is the interesting thing about how much intellectual influence the United States has.

I don't know if it's connected to what we're discussing here the freedom and opportunity of the American dream.

Or does it make any sense to you that we have so much impact on the rest of the world in terms of ideas?

Is it just simply because English is the primary language of the world, or is there something fundamental to the United States that drives the development of ideas?

So it's almost like what's cool, what's entertaining, what's, you know, like meme culture, the internet culture, the philosophers, the intellectuals, the podcasts, the movies, music, all that stuff, driving culture.

There's something above and beyond language in the United States.

It's a sense of entertainment really mattering, how to connect with your audience, being direct and getting to the point, how humor is integrated even with science that is pretty strongly represented here, much more so than on the European continent.

Britain has its own version of this, which it does very well.

And not surprisingly, they're hugely influential in music, comedy, most of the other areas you mentioned.

Canada, yes, but their best talent tends to come here.

But you could say it's like a broader North American thing and give them their fair share of credit.

There's a sense higher education is really strong, research is really strong in the United States, but it just feels like Culturally speaking, when we zoom out, scientists aren't very cool here.

Most people wouldn't be able to name basically a single scientist.

Maybe they would say like, they would say what, like Einstein and Neil deGrasse Tyson maybe.

And Neil deGrasse Tyson isn't exactly a scientist, he's a science communicator.

So there's not the same kind of admiration of science and innovators as there is of athletes or actors, actresses, musicians.

Well, you can become a celebrity scientist if you want to.

And we have Spock from Star Trek, who is still a big deal.

But look at it this way, which country is most comfortable with inegalitarian rewards for scientists, whether it's fame or money?

Some of it is a lot of America is set up for rich people to live really well.

And again, that's going to attract a lot of top talent.

I know the Pfizer vaccine is sort of from Germany, sort of from Turkey, but it's nonetheless being distributed through the United States.

Moderna, an ethnic Armenian immigrant through Lebanon, first to Canada, then down here to Boston, Cambridge area.

Those are incredible vaccines and US nailed it.

Well, that's more almost like the, I don't know what you would call it, engineering, the scaling.

That's what US is really good at, not just inventing of ideas, but taking an idea and actually building the thing and scaling it and being able to distribute it at scale.

I think some people would attribute that to the general word of capitalism.

What in your views are the pros and cons of capitalism as it's implemented in America?

I don't know if you would say capitalism is really exist in America, but to the extent that it does.

People use the word capitalism in so many different ways.

The literal meaning is private ownership of capital goods, which I favor in most Areas, but no, I don't think the private sector should own our f-16s or military assets Government-owned water utilities seem to work as well as privately owned water utilities But with all those qualifications put to the side Business For the most part innovates better than government.

The biggest businesses tend to pay the highest wages.

Business is great at getting things done.

USA is fundamentally a nation of business, and that makes us a nation of opportunity.

So I am indeed mostly a fan, subject to numerous caveats.

What are some negative downsides of capitalism in your view?

Or some things that we should be concerned about maybe for long-term impacts of capitalism.

Again, capitalism takes a different form in each country.

I would say in the United States, our weird blend of whatever you want to call it, has had an enduring racial problem from the beginning, has been a force of taking away land from Native Americans and oppressing them pretty much from the beginning.

It has done very well by immigrants for the most part.

We revel in tributary and creative destruction more.

So we don't just prop up national champions forever.

And there is a precariousness to life for some people here that is less so, say, in Germany or the Netherlands.

We have weaker communities in some regards than, say, Northwestern Europe often would.

It's a better country in which to be a weirdo than, say, Germany or Denmark.

But there is truly, whether from the government or from your private community, there is less social security in some fundamental sense.

On the point of weirdo, that's kind of a beautiful little statement.

I mean, that seems to be, you could think of a guy like Elon Musk and say that he's a weirdo.

Is that the sense in which you're using the weirdo like outside of the norm, like breaking conventions?

And here that is either acceptable or even admired or to be a loner.

And since so many people are outsiders and that we're all immigrants is selecting for people who left something behind, were willing to leave behind their families, were willing to undergo a certain brutality of switch in their lives.

Makes us a nation of weirdos and weirdos are creative.

Ideally you want part of the world to be fully weirdos and innovating and the other part of the world to be a little kind of chicken shit, risk averse and enjoy the benefits of the innovation and to give people these smooth lives and 6 weeks off and free ride.

And everyone's like, oh, American way versus European way, but basically they're compliments.

I used to have this conversation with my parents when I was growing up and just others from the immigrant kind of flow.

And they used this term, especially in Russian, is to criticize something I was doing, that was suggest, normal people don't do this.

And I used to be really offended by that.

But as I got older, I realized that that's a kind of compliment because in the same kind of, I would say, way that you're saying that is the American ideal.

Because if you want to do anything special or interesting, you don't want to be doing in 1 particular avenue what normal people do, because then it won't be interesting.

Russians I think fit in very well here, because The ones who come are weirdos.

And there's a very different Russian weirdo tradition, like Alyosha, Bridenbrother's Karamasov, or Perelman, the mathematician.

And they have their own different kind of status in Soviet Union, Russia, wherever.

And when Russians come to America, they stay pretty Russian, but it seems to me a week later they've somehow adjusted.

And the ways in which they might want to be grumpier than Americans, not smile, think the people who smile are idiots.

What do you, on a tiny tangent, I'd love to hear if you have thoughts about Grisha Paraman turning down the Fields Medal.

Does that make sense to you that somebody, we have the structure of Nobel Prizes, of these huge awards, of the reputations, the hierarchy of everyone saying, applauding how special you are, and here's a person who was doing 1 of the greatest accomplishments in the history of mathematics.

It doesn't want the stupid prize and doesn't want recognition, doesn't want to do interviews, it doesn't want to be famous.

After scientists win Nobel prizes, they tend to become less productive.

Now statistically, it's hard to sort out the different effects.

not enough Nobel Prizes either to gather enough data.

But I've known a lot of Nobel Prize winners, And it is my sense they become less productive.

They repeat more of their older messages, which may be highly socially valuable.

But if someone wants to turn their back on that and keep on working, which I assume is what he's doing, that's awesome.

Grisha, if you're listening, I need to talk to you soon.

I got to ask you, just competition in general in this world of weirdos, is competition good for the world?

This kind of seems to be 1 of the fundamental engines of capitalism, right?

Do you see it as ultimately constructive or destructive for the world?

What really matters is how good your legal framework is.

So competition within nature for food leads to bloody conflict all the time.

The animal world is quite unpleasant, to say the least.

If you have something like the rule of law and clearly defined property rights which are within reason justly allocated, competition probably is going to work very well.

But it's not an unalloyed good thing at all.

Which actually is itself sometimes good, but it's not good per se.

What aspects of life do you think we should protect from competition?

So is there some, you said like the rule of law, Is there some things we should keep away from competition?

Well, the fight for territory most of all, right?

So violence, anything that involves actual physical violence.

And it's not that I think the current borders are just.

I mean, go talk to Hungarians, Romanians, Serbians, Bosnians, they'll talk your ear off.

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Tyler Cowen: Economic Growth & the Fight Against Conformity & Mediocrity | Lex Fridman Podcast #174