Tyler Cowen joins us this week to talk about the slowing pace of innovation and growth in the United States over the past few decades. Has American society become too complacent? What would a more dynamic society look like?
Trevor Burrus: Welcome to Free Thoughts. I’m Trevor Burrus. Aaron Powell: I’m Aaron Powell. Trevor Burrus: Joining us today is Tyler Cowen, the Holbert C. Harris chair of economics at George Mason University, distinguished senior fellow at the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics, and the general director of the Mercatus Center. He also blogs at the popular site, Marginal Revolution. His latest book is the Complacent Class: [00:00:30] the Self‐defeating Quest for the American Dream. Welcome to Free Thoughts, Tyler. Tyler Cowen: Hello. Thank you for having me. Trevor Burrus: I’d like to start at a later chapter of the book. You write about China, and how you were in China. You’ve been to China many times. The chapter is called How a Dynamic Society Looks and Feels. You say that one reason why you came to write this book is because of your experiences in China. Why is that the case? Tyler Cowen: Well, think of the core theme of the book [00:01:00] as the loss of American dynamism. I was thinking, there were so many books out there, including some quite old ones, that compare America to Western Europe, Tocqueville being the most obvious. I thought it was time for someone to write a book, America, in essence, viewed through Chinese eyes, and how might we look to them. Then we could look very comfortable, with a wonderful environment, but also pretty complacent and not so dynamic. That’s the origins of the book, actually. Trevor Burrus: China is a pretty … [00:01:30] You describe it as a pretty … I’ve never been. It’s a pretty arresting place in terms of how much it changes. Tyler Cowen: Every time you go, it’s quite different. Now, of course, many aspects of life in China are quite unpleasant exactly for this reason, so I’m not trying to say we should be China. We’re wealthier. We use that wealth to build safety into our lives. I am pointing out there’s a long‐run consequence of doing this, that we end up with too little dynamism and economic growth. Aaron Powell: If we look complacent [00:02:00] to China, how are you defining complacency? What do you mean by that? Tyler Cowen: We do not see an urgency that the future needs to be something radically different from what the present already is. I think you see that across really all different classes of American society, rich, poor, Republican, Democrat, educated, not educated. That’s what I mean by complacency, not that everyone is happy. Trevor Burrus: Is it worse now than it was before? Tyler Cowen: I think very much so. I see [00:02:30] the turning point as the beginning of the 1980s, where this turmoil from the 60s and 70s, crime is actually remarkably high, and people decide they don’t want this anymore. They take a series of actions, most of which were very good, to say, “Lower crime and make this a safer country.” We also end up regulating too more, being too protective with our children, medicating ourselves too much, lowering our rates of innovation and productivity growth. It’s basically a good idea that [00:03:00] we’ve taken way too far: Safety. Aaron Powell: How broad is this complacency? Because in the examples you just mentioned, you hit on lifestyle, on politics, on economics, on technological growth and innovation. Is this across the board? The 1990s were a period of pretty astonishing technological advancement and dynamism. Tyler Cowen: I think if you look at the 1990s, you have about four years where economic [00:03:30] growth and wage growth are really high. I would not describe those as complacent years. Overall, over the last four decades, in three of them, productivity growth has struggled to reach 1.5%, when in earlier times, it used to be 2% to 3%. Now, the book tries to produce an overarching framework for understanding why it’s harder to put on a protest today, how people raise their children, how the retail sector has evolved, why there are fewer [00:04:00] startups in percentage terms than before. The book is trying to look at a lot of different parts of American life and view them in this common framework. Trevor Burrus: Well, let’s talk about some of those. It is a somewhat depressing book, I would say. The data is pretty damning, but let’s start with a … Tyler Cowen: It’s good if you’re depressed, by the way. Trevor Burrus: Yeah. True. True. It’s like depressing music is good if you’re depressed too, so if you’re already depressed, you could feel that you were completely correct in your depression. [00:04:30] One of the things that is a trend that you don’t seem to appreciate or you don’t seem to like is that Americans are not moving anymore. Tyler Cowen: That’s correct. The rate of moving across state lines is down around 50% from the post‐war era. There are a number of reasons for that, but the biggest one seems to be there are simply not many booming regions that give you reason to move. Different parts of the country are like each other. In the old days, there would be automobiles in Detroit, or the oil sector in Houston. Now, [00:05:00] you have a lot of retail and dentists with low rates of productivity growth in middle class, malled areas. People find the one they’re going to live in and they stay there. It’s, again, not an uncomfortable life, but it’s a reflection of our lower rate of dynamism. Trevor Burrus: Sharing the productivity across the country, relatively speaking, seems like a good thing, that we don’t just have go to California, or go to New York, or [00:05:30] go to Detroit to make a living. If people are satisfied where they are, that seems like a good trend in society. Tyler Cowen: Well, it’s partly a good trend. That’s of course why we have it. Keep in mind, it means, for instance, when we have a recession, our labor markets adjust more slowly. That’s a remarkable fact. You’d think in an age with internet, and all these technological advances, rapid communications, that when people lose their jobs, they would find new jobs more quickly. In fact, every recession we have, the job‐finding rate is [00:06:00] slower. That to me is quite striking and counterintuitive. Again, you have practices which are motivated by individual benefits, but we take them too far, and they give rise to these collective costs. Aaron Powell: Is that something that would … I know that you say we’re also complacent and less dynamic in our technology, but I’ve wondered about the effect of increased and cheaper telecommunications on this question of moving for a job, that [00:06:30] telecommuting becomes more of a viable thing over time, and the limits on it seem now to be less technological and more cultural. There still is an idea that you, in order to get your work done, have to be in the same building as everyone else. Would that be something where we could reach a point where we no longer need to move in order to be dynamic, or where we can adapt our labor markets without having to move? Tyler Cowen: Maybe eventually, but I actually see Silicon [00:07:00] Valley itself as moving away from that. The people who are not onsite, most of their days, they are less productive, and they help their fellow workers less. I think we’re still in the situation where being willing to move has great benefit socially. It gives everyone a very different perspective. It takes you out of the NIMBY mentality. If you’re going to live in the same neighborhood for 15, 20 years in a row, you have the mentality of digging in and keeping out outsiders. [00:07:30] If you’re going to be moving around, you’re absorbing new influences more, you expect change, you view it as an integral part of your life, you see immigration as something quite natural. I think there are a lot of social benefits when people are used to the idea of moving around somewhat. Trevor Burrus: You mention NIMBY‐ism, which is “not in my backyard”-ism. How much has that trend, and the housing policies that have resulted from that and other things, especially in places like San Francisco and New York, [00:08:00] and to some extent, I would say DC, but how much has that contributed to the inability to move to productive places? Tyler Cowen: It’s a huge problem. Researcher Enrico Moretti estimates our GDP could be more than 9% higher if we had easier mobility just into our most productive cities. I think of popular culture in the old days. You might be just some guy without a job, and you could move into Manhattan, live in a flophouse. You might be on Broadway or 5th Avenue and pay very small [00:08:30] rent, and then try to work your way up. That’s so much harder to do now. Typical Bay Area apartment can cost $5,000 a month. It means we end up with a more segregated society. It’s one of the biggest mistakes we’re making, but we show no signs, really, of turning that one around. Aaron Powell: How much of the decrease in moving is cultural? We’ve had the Big Sort, where people who like cities, have the kind of cosmopolitan [00:09:00] perspective, have moved to the coasts, have moved to cities. The people in Small Town America, culturally, are more insular. It’s not just someone who doesn’t have a job in Middle America, how much of it, their not moving, is it’s hard to find a place to live in Manhattan even if you can find a job there, because the costs are so high, and the regulations are so high, but also, we’ve sorted our culture so much that we simply, the guy from Middle America doesn’t want to live with [00:09:30] the kind of people who would be in Manhattan and vice versa? Tyler Cowen: Absolutely. That’s one of the factors. There are legal factors, like occupational licensing, or state‐specific benefits, economic factors, relatively low rates of new job creation, but then especially, wanting to be with people who are like you is another theme of the book. Again, something that in the short run is comfortable and pleasant, but it means we’re more segregated, there are fewer external influences hitting us, less serendipity. [00:10:00] I think it’s making our country as a whole, again, less dynamic. Trevor Burrus: That seems like the kind of choice that would expect to allow a richer society, richer people, to be able to make, that maybe in a cyclical fashion that, as people become richer, they actually have the ability to choose that they’d like to live in a place that has nice coffee shops, and independent record stores, and things like this. It’s not necessarily a bad turn of events, it’s [00:10:30] just the pinnacle of affluence. Tyler Cowen: Well, good or bad depends on the margin. I don’t want to force anyone to move, but keep in mind, Cato is in Washington DC. 4.3% of DC voted for Trump. I’m not myself a Trump supporter, but I actually find that quite unhealthy state of affairs. Alternatively, you can drive from one coast to another and never enter a county that voted for Hilary Clinton. I think when things are so separate and segregated, [00:11:00] you end up with a quite screwy politics, and we’re suffering under that now. You get a kind of gridlock without the two‐party gridlock system, and good things don’t get done. I think at the margin, there is a serious cost. Trevor Burrus: In addition to the housing policies for both the people moving, and then you have the segregation, which is a different chapter, but related to the people moving … In addition to housing policies, how much has public school policy … Reading the chapter, I was thinking that it seems that public [00:11:30] schools would have a lot to do with where people are moving. Tyler Cowen: Sure. Schools, also the non‐portability of health insurance for many people. If you want your kids to go to a school district, depending on your income, either your choices are limited, or it would just cost you a lot of money. That’s another rigidity we’ve built into the system. Another perfectly benign rigidity is more two‐earner families, right? Nothing wrong with that, but it does make people less mobile. I think some of it is just cultural. You see this with immigrants. A [00:12:00] lot of immigrant groups, especially Mexicans in America, they are much more mobile geographically than are native‐born Americans. It can be done. It’s a question of whether people have the vision, foresight, energy to actually want to do it. Trevor Burrus: It’s similar, too, to another one of your concerns, which is something that struck me that I did not know was happening, that our rates of innovation have plummeted, it seems like. We think of ourselves as a very innovative [00:12:30] startup society, but the data doesn’t show that. Tyler Cowen: That’s right. We have these visible tech products, Facebook, which are great, smartphones, those are big innovations. No one should gainsay those, but so many sectors have more or less stood still. Service sector productivity grows at pretty close to 0%. Just try taking the train from DC to New York. Essentially, in 40 years, it hasn’t gotten better. Now, finally, there’s wifi on board. It’s not even that good. The ride itself [00:13:00] probably is worse. Traffic is worse. The physical environment is deteriorating. You have two major infrastructure disasters in Atlanta in the span of a few weeks time. We’re even losing ground in a lot of ways. Trevor Burrus: In one section of the book, you have a really stark illustration of someone’s life between 1900 and 1950, and what they would have seen for changes, versus someone from 1965 looking 50 [00:13:30] years to the future and arriving in 2015. Talk a little bit about those changes. Tyler Cowen: Well, around 1900, you have, what, 6% of Americans graduating from high school. Most live in rural areas, or they’re still in some way connected to farms. We don’t have antibiotics. We don’t have vaccines. Electricity is starting to come, but it’s not that all of life is built around it. Clean water is a big “if.” Cars, not really, yet. Airplanes, no [00:14:00] way. Radio, not until the 20s. Television, not until the 50s. That 50‐year period, really, all of life changes. By the early‐ to mid‐50s, America has a middle class lifestyle, with cars, and homes, and electricity, and clean water, and the proverbial chicken in the pot. Everything changed. The last 50 years, computers, smartphones, that’s a big change. Again, I don’t want to downgrade that. Other than that, if you turn on a TV show [00:14:30] from the 60s or early 70s, it’s remarkable how much of life looks the same, and the people from that era, without instruction, could operate most of our devices easily. Put them in a car, they could drive it, right? Maybe they wouldn’t know how to work the voice‐activated sound system, but otherwise, they turn the key, and you’re off. Aaron Powell: This strikes me as kind of an odd way to think about innovation. The things that you listed as factors of the environment in 1900 that changed dramatically by 1950 all seem like really [00:15:00] huge problems. Nobody was getting education. People weren’t living that long. These are big problems. Health was a huge problem. We solved really big problems. Tyler Cowen: Yes. Aaron Powell: But those problems have now been solved. It doesn’t seem like innovation is necessarily exactly the same thing as just solving big problems. Tyler Cowen: Well, we still have big problems. We have plenty of them. We’re just not as good at solving them. It’s not as if [00:15:30] we’ve invented everything possible, and therefore, we ought to just be coasting, but indeed, we’re coasting. Aaron Powell: Like the car thing, a car built today is in significant ways hugely better than a car built a decade ago or two decades ago. Tyler Cowen: It’s a little better. It’s nothing compared to car versus bicycle. Aaron Powell: Well, yeah, but that’s like a paradigm shift. Is this … I’m thinking of … Every time … Tyler Cowen: It’s [00:16:00] not much worse. People still drive those cars. They’re somewhat less safe. They’re clunkier, but actually, they work fine on today’s roads. Aaron Powell: Well, sure. We’re talking about, they’re basically the same in the sense that they still have a steering wheel, and four wheels, and run on gasoline, although that’s subtly changing. I’m wondering, this sounds to me in some ways, and maybe I’m mischaracterizing it, as … Every year, Apple releases a new iPhone, [00:16:30] and they put out a huge list of, “It’s 80% faster than the one that came before. It’s got a better screen that has truer color representation. It’s got more storage. It’s got a better camera,” all of these things. Tyler Cowen: And no one cares. Aaron Powell: No one cares, and the tech pundits say Apple has lost their ability to innovate, because the outside casing still looks the same. When Apple comes out with a phone that’s got a different outside casing or form factor, that’s when they say, “Oh, there’s innovation.” Is this, we’re [00:17:00] not seeing so much visible innovation, like our cars don’t fly, or have wings, or look radically different in the way that a horse looked different from a car, but just because innovations aren’t immediately visible to the eye in their form factor doesn’t mean they’re not happening. Tyler Cowen: They’re happening, but I think they’re smaller. The data show they’re happening at a slower rate. Another example: I cook in what is basically an unreconstructed 1950s kitchen. My food tastes just as good as anyone [00:17:30] else’s. If there’s a problem, the problem is in my cooking. I don’t yearn actually for anything more recent. It works fine. That’s another example. Yes, there are marginal improvements. There’s better kitchen equipment, but we’ve reached various plateaus. We reached a lot of them at more or less the same time. That’s changed our entire mentality, where we expect a future to be a modestly‐better continuation of the present, and that’s very different from how people were, say, in the first part of the [00:18:00] 20th century. Trevor Burrus: Is this a low‐hanging fruit issue, to some extent? Maybe I’m just exhibiting my complacency, where I’m trying to think of what would go beyond a car. I think a driverless car, which we’re right on the cusp of, would be almost a paradigm shift, even though it looks the same, pretty much, as a car, as a Corvair, let’s say, or even a Model T. A driverless car would be a pretty big shift. Other than teleporting or a hyperloop, [00:18:30] which requires a bunch of infrastructure that’s difficult to do, it seems like that we’ve picked some low‐hanging fruit, and now we’re making it taste better, so to speak. Tyler Cowen: Well, how about giving this country a better system of trains or buses? That hasn’t happened. That’s not even that hard. A lot of other nations have done it. We, if anything, have made ours worse. I’m not saying that we should put high speed rail everywhere. It just seems to me, a lot of our transportation, including the driving experience, on net, I would say it’s gone backwards, [00:19:00] even if the car seat is more comfortable, or enjoy your sound system more. Some of it is low‐hanging fruit. Some of it is regulation. You mentioned driverless cars. I agree. When they’re here in a big way, I’ll say that’s a really big change, definitely. But just think what we need to do. We need to get liability law straight, get juries and judges on the same page, have literally all the cities, counties, states, federal government, possibly other authorities, environmental agencies, agree on how this is all [00:19:30] going to work and be regulated. Now, you work at Cato. Honestly, how long do you think that will take us? It’s fair to say we don’t know. If you think I’m worried, I think working at Cato, you could see there’s good reason for that. We’re on the verge of something big, and we’re actually, most likely, we’re going to screw it up. It’ll get there eventually, but way slower than the nation that once put a man on the moon, starting from scratch, in seven years. Aaron Powell: Well, is this an example of across‐the‐board complacency? The stumbling blocks that [00:20:00] you’ve listed, and especially in transportation, are largely government and then interests influential within government, whereas, it doesn’t seem like that’s a cultural problem with the American people. Outside of the truckers across the country, I think most people don’t have a significant problem with the idea of driverless cars, except maybe in the, “I’m scared of having a robot drive me.” Tyler Cowen: No. I don’t think they have a problem with it, but they don’t see making the change as very urgent. [00:20:30] If they did, the budget of the Cato Institute would be $2 trillion a year, because there’s a lot of change you all would bring about. The general attitude is, “Well, when change comes, it’s fine, but I don’t have to do anything. I don’t have to push for this. I don’t have to vote for this, lobby for this.” We had two presidential candidates who in essence competed for different versions of bringing us back to past. That, to me, is very discouraging. No matter what you think of their concrete views, and I didn’t, frankly, like either one, [00:21:00] but it’s different visions of the past by two quite old candidates, hearkening backing to earlier eras: “Make America great again,” or, Hilary Clinton, “Everything’s fine. I’ll just continue Obama.” That’s a complete lack of urgency. It’s not how societies get things done. It’s also not how people in China think, or how they thought in Japan or South Korea during their more dynamic years. Aaron Powell: What you just said put me in mind of, I think, a couple of week ago, we had Yuval Levin on our show to talk about his Fractured Republic. [00:21:30] Is that, the Clinton and Trump and that kind of complacency, does that have anything to do with just aging Boomers? That Boomers are a significant portion of the population, and as they age, people, as they age, become increasingly nostalgic. The Boomers long for the halcyon days of childhood. Is that sort of complacency concentrated generationally? Are Millennials, or us Gen‐Xers, [00:22:00] the less complacent in this way? Tyler Cowen: Unfortunately not. Aging, I think, is one factor, but if you look at younger people, they still behave in more complacent ways in terms of, say, moving around, how long they live at home, how keen they are to buy a car, than did earlier generations. I think it’s baked into the cake at this point. I don’t want to blame Millennials. They were given a world with less opportunity in many ways, and maybe higher student debt. I don’t think they’re in any way morally [00:22:30] deficient, but so far, they’re looking like a fairly complacent generation. Trevor Burrus: Coming from the Cato Institute, and what we’ve discussed so far, it seems like the blocks of so many of these things, and people kind of throwing their hands up, possibly, and saying, “This is good enough,” but so many of the blocks are government. The question of whether or not, “Did the government make us complacent?” because you do write, toward the end of the book, about government stasis, but [00:23:00] was it we became complacent, and just settled with the government we have, or are we just reacting to this leviathan that is nearly impossible to move, so we just have to accept that Amtrak just kind of sucks, and we just have to accept that a lot of things are not going to get better, because you have to go through the teacher’s unions, or the NIMBYs, or whatever? Tyler Cowen: Well, I think it cuts both ways. There’s causality back and forth, but I don’t want to only blame the government. A lot of this book is asking the meta question [00:23:30] of, “Why do we put up with this government?” That is indeed cultural. If it were the case that a third of America were virulently clamoring for some kind of Libertarian change, but somehow that fight died on the barricades because the teacher’s union got in the last word, I would feel differently about it than I do now. What I see is a politics that mostly argues about a lot of stupid questions, to put it bluntly, and doesn’t get at the real issues, again, whether or not you’re agreeing with the Libertarian point of view, and polarization [00:24:00] for its own sake, and putting down other people, and a lot of meanness. That’s become a kind of excuse for actually making things happen. I still think people, to a large extent, are at fault, even though government is like a transmission mechanism for a lot of the actual problem. Trevor Burrus: You do write about some of the areas of innovation, which I was very happy you got to it, because it was exactly mirroring my thinking. You describe it as matching, which you seem [00:24:30] … You’re positive about the ability that some of the innovation we’ve had has been in matching things up, and specifically in just the ability to find what you need. You use Spotify as an example, I know you’re a big music fan like I am, that it’s much easier to be a big music fan now than it was before, and to get happier from that, even though, if you look at the total productivity of the record industry, it’s down. Tyler Cowen: That’s right. I think matching is one of the big contemporary trends. [00:25:00] You can meet mates or partners online, would be another example, buy things on eBay, all kinds of freedom to collect things you never would have had access to before. That’s the great unmeasured productivity gain in our time, I think. I worry a bit. Matching also means segregation. Matching is a very positive word, segregation, a very negative word, but they’re somewhat two sides of the same coin. Mostly, I’m positive on matching, but I think we need to be careful [00:25:30] we don’t match ourselves into too low a rate of upward social mobility. Trevor Burrus: It does seem like this might be, if we’re thinking in cycles, and you talk about that at the end of the book, that we came up with a bunch of things like the car, and things that really changed life, but one of the things that something like Uber does, which I would say is a matching thing, these all kind of diminish transaction costs, in terms of finding someone to give you a ride. A friend of mine had asked me this before. He said, “What does Uber actually make? [00:26:00] How could they be worth $18 billion, or whatever? What do they actually make?” I said, “Well, they’re a middle man. There were people who were willing to give me a ride before Uber, I just didn’t know who they were.” Actually connecting those people, reorganizing the stuff in the world so more connections are made can be a really big deal, even if you’re not producing new things. Tyler Cowen: Yeah. I’ve written in defense of Uber. I think it’s a company that’s helped consumers a lot. Then that consumer surplus from [00:26:30] Uber, it’s not enormous. It’s like a more convenient taxi. I’m fine with small improvements, but that’s what it is. When that’s the exciting tech company that everyone’s talking about, I think it’s also a sign we’re not changing the world very much. Keep in mind, the current incarnation of Uber does not seem to make money, so the actual deal we’ll end up with may not be as favorable as what’s in front of our eyes right now. Aaron Powell: Unless they switch to self‐driving cars, and then the [crosstalk 00:27:00] … Trevor Burrus: Then things might get very different at that point. That’s the thing, too, is that in thinking about the innovation, it seems that some of the things we might have put a lot of effort into because the market demanded it would be something like video game graphics, which there are thousands of people who worked to make graphics much, much better, which maybe is not a very big productivity gain, but there’s a pretty high demand for it. It’s a pretty big industry. It’s not a sea change from when we had the graphics before, [00:27:30] they’re drawing individual blades of grass, but that’s a job that people get paid a lot for now. Tyler Cowen: No. I would say we’ve done a really good job improving the productivity of our leisure time. Video games, one example of many. A lot of the others come from the internet. Texting would be another. In terms of workplace productivity, I don’t see equivalent gains. In some ways, making leisure so much more attractive probably has hurt workplace productivity. It’s a mixed bag. I think the real breakthroughs will [00:28:00] come when the internet is making everything more productive, most of all like healthcare and education, government. We’re pretty far from that, still. It’s not just a few years around the corner. Aaron Powell: Why should we care about workplace productivity, in the sense that … Let’s say that we’re trading increased workplace productivity for more leisure time, and the innovation we’re getting is making that leisure time more enjoyable. We don’t [00:28:30] work for the sake of work. We work in order to achieve a lifestyle that we enjoy. If we’re getting a great deal of pleasure out of what look like minimal changes, is that a fair trade‐off against workplace productivity? Tyler Cowen: Keep in mind, ultimately, there are increasing returns to scale for economic activity as a whole, at least in the United States, a country that’s innovating for the whole world. If we do more [00:29:00] on the work side, it’s a lot bigger benefits for everyone. It may not be the same in New Zealand, but I think it is here. Also, we are not a nation with a 20% household savings rate. We have enormous debts of various kinds. Most of our savings is done by businesses, often overseas. Our implicit liabilities, again, as you know from Cato, are just staggering. Our strategy all along has been to grow our way out of that. That can work if [00:29:30] you can grow at 3%, but it cannot work at our current rates of economic and productivity growth, so unless we change something, we’re in for a rude awakening. Trevor Burrus: One astounding fact that you actually have in italics in the book is that the median male wage was higher in 1969 than it is today, which is … Tyler Cowen: Since I wrote that, it actually surpassed the 69 level, just to be precise. Trevor Burrus: Okay, so we just creeped above it? But that’s incredible. Why [00:30:00] is that, and why particularly for males? Tyler Cowen: I think a lot of it is the loss of manufacturing jobs. I would stress, I don’t think the comparisons over so many decades are always so meaningful, but the sheer fact that the number can even come out that way I think is telling us something. No economist in 1969 would have predicted that. If you said, more or less, “Free trade, Communism will fall, and no nuclear war, most of the world will be at peace … What will the male median wage be?” No [00:30:30] one would have come close to what’s actually happened. There are some unmeasured gains in there. I think we’ve seen skill‐based technical change that have shifted a lot of income up to the higher earners, and then global competition. Trevor Burrus: You also write in one, I thought interesting, sentence, that, and this might go back to Aaron’s question, about leisure time and stuff like that, that you are a “happiness optimist, but a revenue pessimist,” because some of these men might be happier, [00:31:00] but in terms of their actual productivity, or just general … What does that actually mean, more specifically, being a happiness optimist, but a revenue pessimist? Tyler Cowen: Well, a lot of the internet is just plain, outright fun. I’m one of these people, I can sit around at night and spend an hour or two reading Wikipedia pages. GDP does not go up from that. I’m happy. I’m not saying everyone does it the same way, but I think it’s a pretty common phenomena. It doesn’t produce a lot of revenue. It doesn’t help us pay our bills. [00:31:30] It does make a lot of people happier or more satisfied. I think the world lately has been specializing in that kind of technological change. Trevor Burrus: Would you be as concerned … I’m trying to figure out, if people are happier, and they’re just sort of chilling out, complacent, so to speak, would you be less concerned without the sword of revenue problems we have without unfunded liabilities, with social security, and Medicare and Medicaid? Is that the true fear [00:32:00] that you have, of how much we’re going to have to pay if we don’t get our act together, or is this something that you would not like, or be a little bit trepidatious about even without unfunded government mandates? Tyler Cowen: Well, that’s a big part of it, is those future liabilities, but that’s not all of it. Say, in the future, there’ll be very serious climate change problems. It’s certainly possible. We’ll need to really be at the top of our game in terms of flexibility and innovation to respond to those. I think it’s [00:32:30] not impossible we could be. I don’t see us getting there right now. If you think about military competition from future rivals, possibly China, we shouldn’t take our military superiority for granted. Again, if we just sit around, sooner or later, we’re going to lose it, and there will be some nasty surprises abroad. I think there are a number of ways in which you need to keep on growing even to stay put where you are. If your mission is just to stay put, especially a country like us that’s sort of [00:33:00] built internally to be dynamic, I think that’s a huge mistake. Aaron Powell: At least technological dynamism, and a lot of other kinds of dynamism, doesn’t require … It requires relatively few actors to make it go. Even in the most dynamic periods of human history, technological improvements were concentrated among a very few people. Most were not participating in technological advancement. This [00:33:30] complacency, if, let’s say that climate change starts to look really bad, or let’s say that we get concerned that China is building up its military, isn’t this the kind of thing, like our dynamism could just turn back on, because it would only take a certain number of Americans to decide this is an issue and flip the switch? Tyler Cowen: Right. I suggest that will happen in the last chapter of the book, but I fear we won’t do it optimally. There’s a long‐standing pattern in American [00:34:00] history to wait until things are too late. You wait until you’re attacked at Pearl Harbor, for instance, and yes, we did absolutely turn it around, but the old Winston Churchill adage, that, “We do the right thing, finally, when we’ve exhausted all other possible alternatives,” I’m afraid it will be that way again this time, too. Trevor Burrus: You have an interesting chapter on rioting and public demonstrations, which also contains another astounding fact, [00:34:30] which is that during an 18‐month period in 1971 and 1972, there were more than 2,500 domestic bombings reported, averaging more than five a day. That’s an astounding fact. Tyler Cowen: [crosstalk 00:34:44], of course. Keep that in mind. They’re not like today’s improvised explosive devices, as might go off, say, in Iraq. They’re much smaller. Trevor Burrus: Pipe bombs, and things like that. Tyler Cowen: [crosstalk 00:34:53] devices being done by the Puerto Rican Independence Movement, or Black Panthers, or Weather Underground, but it’s still to me astonishing [00:35:00] that, with a such high background/foreground level of violence, people put up with it. Trevor Burrus: I mean, they may not have a choice. I couldn’t tell if you were citing that saying that, not championing the bombers, but saying that people were doing something to change things. They were rioting. There’s a weird subtext to that chapter, which is people got out in the streets, and they marched from Selma to Montgomery, and they marched against the Vietnam War, and they also might have bombed people. I guess, [00:35:30] at the very least, that shows that they aren’t complacent. Tyler Cowen: Those marches were not stopped by NIMBY. The Selma March, they closed the interstate highway for, what, five days. That probably couldn’t happen today. That I find worrying. We do still have marches, but they’re much costlier. They’re more bureaucratized, like everything else in our society. They’re much more heavily regulated. They can be shut down because of national security concerns with not much explanation. Even when it comes to protest, we’re much more complacent. Aaron Powell: [00:36:00] Has that changed a bit since this … You wrote this before Trump’s victory. Tyler Cowen: I think it has. We’ll see how it develops. Certainly, the first two weeks, it looked like it was changing a lot. I’m not sure if the opposition to Trump will maintain that enthusiasm if he continues to do nothing, but possibly we are at an inflection point there. Trevor Burrus: You write about this. You’ve already just touched on this a little bit in terms of some of the [00:36:30] nature of what’s resisting any change, but that the government is in stasis. We talk about gridlock and things like that, but you also talk about things like discretionary spending, and how much of the government is on autopilot. Those are pretty distressing numbers. Tyler Cowen: Yes. I think gridlock, in a way, was a kind of big lie. It was a story told by people in 2011 to construct a good‐guys‐versus‐bad‐guys narrative, with different emphases on the Progressive or Republican sides. [00:37:00] Now we have Republicans controlling all branches of the government. They still can’t get anything done. I would say it’s mostly we have our own intellectual incoherence about how the future should look, and that’s more powerful than gridlock. That’s a surprise to many people, but I think it’s something I’m very much predicting in the book, that the enemy is us. It’s not just oh, one party stops another. Trevor Burrus: When you say intellectual incoherence about how the future looks, what do you mean by that? Tyler Cowen: It seems the current Republican majorities [00:37:30] may not even be able to do tax reform. They don’t know what it should be, how it should be, how to sell it, how to study it. Vision for the future seems pathetically weak. It may improve. There’s still time. Right now, we’re on track to not really fix healthcare, not even to really reverse the worst parts of Obamacare, not to do tax reform, and we have all the Republican majorities, including now on the Supreme Court. To me, that actually makes perfect sense, but to a gridlock [00:38:00] theorist, it sounds kind of insane. Paul Krugman was saying a few months ago, “Oh, Trump and Paul Ryan, they’re going to get together and bring us back to 1890, and take away Medicare from us.” Of course, that kind of prediction shows really no understanding of how the world is working right now. Aaron Powell: How much of that fits in the complacency thesis versus a declining power of the elites? Because in the earlier [00:38:30] parts of the 20th century, government policy was largely driven by the opinions of the elites. What we’ve seen recently is the common man having a greater influence on politics, and Trump’s selection being the major example of that. That it’s not that they don’t have a coherent ideology, that the people on the Hill don’t have coherent ideas on how to fix this, but that they’re hearing more, and their constituents [00:39:00] have more of an influence over the policy specifics than they used to, and so the common man has always had incoherent political view. Tyler Cowen: I don’t see that policy is so much more populist today. I think in most decades, it’s responded to what people wanted. Even the Supreme Court has done that, and they’re not elected. Today, you still actually have elites in charge. They may be wackier elites, but I think neither the public nor the elites really have a clear direction forward. You [00:39:30] could say Libertarians do, but I don’t think they have one that’s palatable to the public. Right now, to me, does not feel like a very Libertarian moment. Trevor Burrus: No. I agree. It does feel very Libertarian. They don’t really like a lot of what we say. We have Trump now, and that’s the thing. Presumably, you began writing this book, or at least planning it, before the Trump phenomenon, to some extent? Tyler Cowen: Oh, absolutely. Most of book was written before Trump was nominated. There was some small changes afterwards, when he won, but [00:40:00] … Trevor Burrus: Did that seem … It seems kind of, not convenient, just prescient on your part, how he fits into the narrative. Did you, yourself … Tyler Cowen: It was very lucky for me, but I didn’t think it would happen. I had passages in there basically suggesting something like this might happen in five years time, and that it would happen right now shocked me. I was wrong, but I guess I was wrong through being more right than I thought, if I may be allowed to defend myself [00:40:30] in that way. I’m in print as saying, “I don’t think Trump will win this,” and I was wrong. Trevor Burrus: It came a little bit sooner, but that’s … At the end of the book, you have … I would say, it gets pretty dark, to some extent. Part of it is you discussing how people have crawled back from this linear, up and up and up perspective on the growth of post‐Enlightenment world, that we’re just going to get richer, and better, and smarter, [00:41:00] and more peaceful. Part of that was the financial crisis in 2007, 2008, that you said people are starting to look at things more cyclical. Do you include yourself in that? Does this represent rethinking of things that you had previously thought before maybe are not true? Tyler Cowen: Absolutely. I was much more optimistic in most of the 1990s. You will recall, back then, two of the big questions were A, will Russia join the EU? B, [00:41:30] when, not if, but when will China become a democracy? Those both seem kind of laughable today, actually, in a very sad way. The very fact that we were debating them, and now they’re completely off the table, or look at Turkey, Syria, there’s a lot of improvement in the world, but in terms of liberty, I see, on net, backward movement. Trevor Burrus: You also ask whether or not domestic order is unraveling, which is a pretty stark question. You [00:42:00] think that it might be. What makes you think that that might be the case? Tyler Cowen: Well, there are tiny smidgens in the data of some crime rates going up again. I don’t want to over‐read or over‐interpret those. It could just be noise. It could also be a beginning of the reversal of a trend that’s run for decades. I would desire extreme caution on that. I just think someone pointing out, like, “Our word doesn’t actually have to get safer and have lower crime rates each year.” Yes, it’s been [00:42:30] that way maybe all of your life, but there’s nothing inevitable about that. I just wanted to shock people and wake them up to that. Trevor Burrus: Also, things like Ferguson you thought might be … Tyler Cowen: Correct, and Baltimore. In some manner, sooner or later, we will have a period more like the 1960s again in terms of public turmoil. Aaron Powell: But isn’t that dynamism? Isn’t that the dynamism that’s assigned to the dynamism that you have been lamenting the loss of actually coming back? Tyler Cowen: It will come back. It will come back, also, in some pretty nasty ways. Trevor Burrus: [00:43:00] I imagine, but is that … Now we have to look at this as somewhat sinusoidal, that you maybe move up the complacency mountain, part of the chart, however you want to describe it, hit a period of complacency, and then things fall apart, because it’s unsustainable. Tyler Cowen: Exactly. Sooner or later, you lose the ability to pay all the bills, or pay off all your interest groups, and things fall apart. [crosstalk 00:43:26] cyclical aspect. Aaron Powell: How are all these [00:43:30] versions of complacency related? Do they all have a common cause? Because you talked about, so there’s government seems more dug in, more bureaucratic, less willing to change; our desire for leisure time and the way we spend it is kind of settling into a greater portion of our lives, instead of putting effort in in the workplace and being more productive. These things seem [00:44:00] somewhat unrelated. Is there a broader cause that’s driving all of this? Tyler Cowen: Well, I think it’s a few causes, some of which we’ve discussed. We’re growing older. We’re wealthier. A counter‐reaction to the nasty side of the 60s and 70s, which was indeed pretty nasty at times. That information technology, at least so far, has done more to encourage the fun of leisure than productivity at work. Those would be four of the main factors. I would say [00:44:30] growing secularism is another. The growing feminization of our society I would say is yet another. It’s mentioned briefly in the book. I may write about that more in the future. Trevor Burrus: What do you mean particularly by “feminization” in terms of how it relates to complacency? We hear about boys not being encouraged to play, and then of course manufacturing jobs and things like this for men to work, do you mean that, or do you mean even more than that? Tyler Cowen: Well, there’s plenty of evidence that women, in [00:45:00] many contexts, behave in a more risk‐averse manner than men do, for instance, portfolio evidence. If women are more influential in society, that will tend to make society more risk‐averse. A lot of that’s a good thing. Again, I think collectively, it’s been pushed to a margin that’s too far. In essence, we’ve had a number of different forces come together in a kind of confluence at roughly the same time, for reasons which are probably coincidental. I don’t think there’s a single [00:45:30] underlying variable driving this whole thing. Aaron Powell: To some extent, this seems like a large, almost tragedy of the Commons problem, that … Tyler Cowen: Exactly. Aaron Powell: How, then … The way you solve the classic Tragedy of the Commons is with property rights, but how do you go about solving this particular Tragedy of the Commons? Because you’re telling people, “Look. Yes. You’ve got great leisure time. You’re doing all these things that you really enjoy. You’re super happy. [00:46:00] You feel wealthy enough. But you need to make yourself uncomfortable for the good of society,” which is not an easy sell. Tyler Cowen: Sure. Well, I suggest in the book we’re not going to solve it. One possible solution is religion, which I’m not predicting we’ll go that route, but it’s at least on the table. If you look at Mormons, I would say Mormons solve a lot of their collective action problems through a religion which demands a lot of sacrifice. Mormons are pretty good at making those. Mormons are not [00:46:30] a complacent group by any of the metrics we’ve talked about, Mormons are really quite ambitious and innovative. I don’t think most of the nation will become Mormon. More immigrants can be a big help. It already is. I see us moving away from more immigration, but of course, I would favor having much more of it. There is definitely things we can do. It just seems, in almost every case, we’re moving in the opposite direction. Trevor Burrus: You close … As I mentioned before, it closes on [00:47:00] a fairly pessimistic note. You talk about possibility of a reset. Would you even venture to make a broad prediction of, say, the next 10 years, and what, even in broad strokes, you think is going to happen? Tyler Cowen: I don’t have an exact prediction. What I want to get across to people is the point that simply because things feel good now, don’t assume it can keep on going the way you’re used to it. The 80s and 90s [00:47:30] were very special decades. They’re skewing our perspective. Our most likely future will draw more liberally from other, somewhat darker periods of American history with more turmoil. I don’t have a prediction for a particular year. I talk about a few things that could go wrong, like debt problems, or a foreign policy crisis, or just governance getting much, much worse. All of those are possible. I don’t think it’s possible to give a point prediction, like, “Well, it’s going to be, in 2023, [00:48:00] and then in March, it will come.” Not possible. Trevor Burrus: Overall, it’s not … There’s going to be, in your opinion, a growing change, and then a readjustment, would be the broadest stroke, I think. Tyler Cowen: Yes, but keep in mind, I consider myself an optimist. I sound like a pessimist to the people who think there’s nothing wrong. I get that, but actually, I’m saying there’s light at the end of the tunnel. Dynamism reemerges. [00:48:30] The fundamental strength of this or any country, which is its human capital, I see no sign of that being destroyed. It’s just, right now, thwarted. There’s more human capital in the world, in this country today, than ever before, so I think we should be optimistic. I’m just saying, when these bumps come, which could be fairly soon, here’s a framework for organizing what’s happening. Trevor Burrus: Thanks for listening. This episode of Free Thoughts was produced by Tess Terrible and Evan Banks. To learn more, visit us on the web at www.libertarianism.org.