Optimism, AI (and the end of homework!) - with Tyler Cowen
Today’s guest is surprisingly upbeat about the world. A big factor in his optimism is the revolution in artificial intelligence that we’re about to live through.
Tyler Cowen is an economics professor at George Mason University and he’s the faculty director of the Mercatus Center. He is the coauthor – with Alex Tabarock – of the economics blog Marginal Revolution (the #1 economics blog in the world) and the co-founder of Marginal Revolution University. He is the host of the top-rated podcast “Conversations with Tyler”.
Cowen’s latest book is Talent: How to Identify Energizers, Creatives, and Winners Around the World. Before that he penned The Great Stagnation, and also The Complacent Class. About a decade ago he wrote Average is Over, which was somewhat prescient about this period we are heading into with AI. He also published a book called Big Business: A love letter to an American anti-hero.
Tyler writes a column for Bloomberg View; he has contributed to The New York Times and The Wall Street Journal. His academic research has been published in the American Economic Review and the Journal of Political Economy.
Transcript
DISCLAIMER: THIS TRANSCRIPT HAS BEEN CREATED USING AI TECHNOLOGY AND MAY NOT REFLECT 100% ACCURACY.
[00:00:00] You know, your ability to steer technology, you can't micromanage everything. Science gets underway, it takes its directions. It's very hard to go in reverse. So I think the better attitude is to work on the quality of our institutions, for the freer and nicer nations to have the better science, and really to, you know, charge straight ahead and try to do it right.
If we as human beings can't have a new positive development that gives us more intelligence, if we can't get that right, I mean, what are we doing here? What is it we think we can get right? What kind of vision is that of the world?
On this podcast, our guests offer up a healthy helping of doom and gloom on everything from geopolitics to economics and popular culture. But today's guest is surprisingly upbeat about the world. He thinks America, even some [00:01:00] of its major cities, even much of Europe. And a big factor in his optimism is the revolution in artificial intelligence that we're about to live through.
Tyler Cowen is an economics professor at George Mason University, and he's the faculty director of the Mercatus Center, which is a sort of a think tank at George Mason University that focuses on free markets and solutions from free markets to major problems. He's the co author, with Alex Tabarrok, of the economics blog Marginal Revolution.
I highly recommend reading Marginal Revolution. I visit it almost daily. It has received something like hundreds of millions of unique page views since it was founded. It's actually the number one viewed economics blog in the world. And he's also co founder and runs Marginal Revolution University. Which is a series of online resources for anyone who wants to get smart or just learn the basics of economics and you can use resources there [00:02:00] as a student or you can gather resources there as a teacher, as I recently did when I had to teach a class on inflation to high schoolers.
His podcast, Conversations with Tyler, is one of my favorites. It's been downloaded something like 15 to 20 million times. He has the most. Interesting collection of guests, and I would say that Tyler has perhaps the most unique interviewing style of any podcast host I know. So, listen to Conversations with Tyler.
His latest book is called Talent, How to Identify Energizers, Creatives, and Winners Around the World. We talked about that book in this conversation. Before that, he penned The Great Stagnation, and he also authored The Complacent Class. About a decade ago, he wrote a book. that I read called Averages Over, and I was always intrigued by that book, and especially now, because it was somewhat prescient about this period we're heading into with AI.
More recently, Tyler also published a clever book called Big Business. A love [00:03:00] letter to an American anti hero. He writes a column for Bloomberg View. He's contributed extensively to the New York Times and the Wall Street Journal. And his academic research in economics has been published in the American Economic Review and the Journal of Political Economy.
Offline, Tyler and I have also often bandied about sports. Not about speculating, but what's happening in sports. But mostly about what he thinks the role specific athletes play on their teams. And what they tell us about the kind of talent we want to recruit in other realms. We actually get into a little bit of that at the end of this podcast.
Fear not, this is not a housekeeping note, alerting you that we will be talking about the New York Jets. Tyler is very focused on one sport and one sport only. He says he only has time for the NBA. The future of AI? And Tyler Cowen's optimism. This is call me back.[00:04:00]
And I'm pleased to welcome to this podcast for the first time, my friend, Tyler Cowen, who is the host of one of my favorite podcasts, conversations with Tyler and the, uh, editor in chief and chief. blogger of Marginal Revolution, which is an economics blog that I think folks on this podcast have heard me rave about many times and is also uh where the home is for Marginal Revolution University Which if you want to learn about economics on your own or teach economics on your own You should use the resources at Marginal Revolution University, which by the way as Tyler knows he and I were in touch I would just use to, uh, teach a little bit of inflation to some high schoolers at my kid's school.
So, Tyler, thanks for, thanks for coming on. Hi, Dan. Happy to be here. Uh, Tyler, you are here for one reason. You are here to Explain what the possible end of LeBron James [00:05:00] career means to LeBron James, to the future of sport, and to talent, and how you think about talent. You just co wrote a book about talent, and you think LeBron James is the model for talent, not only in professional sports, but in a whole range of professions.
But, I know our listeners are dying to hear your take on that, and we will save it for the end of the podcast, and we'll, we'll get kind of through the more trivial stuff, too, like future of the West. artificial intelligence, uh, and we will, I promise we will get to LeBron. So, Tyler, you've been speaking quite a bit on, uh, artificial intelligence, uh, and you have been trying to explain what, for most of the world, hit us in November of last year, uh, with the launch of ChatGBT, which was like the first wake up call, and I just want to first To frame this conversation, have you kind of provide some historical context with what we're dealing with and the only, I mean, there's so many, you know, [00:06:00] the invention of electricity, Gutenberg's, you know, the printing press, uh, and when I guess the 1500s, uh, the invention of the printing press or the steam engine, that's the one I use to try to explain to people that the steam engine launched the industrial revolution because for the first time in history, humans could, you know, harness this.
Yeah. More and more, uh, power, or at least more power than they could on their own, or on horses muscles. And computers and AI are sort of like the steam engine. You know, humans only had intelligence of their own brains, and they could rely, I guess, on the collective intelligence. Uh, accumulated throughout history, but AI is like a steam engine for the brain, a force that, you know, greatly multiplies human intelligence, and that could be a force for good, or that could be a force for horror.
So, what do you think of my analogy, and give us some historical context with what we're dealing with. I think artificial intelligence will prove to be one of our [00:07:00] most important breakthroughs as human beings. Comparable, say, to the printing press. For the first time, we have created intelligences. Well, they're not sentient, they're not conscious.
But when you talk with them, in general, they're as smart as people. Often they're smarter, they certainly have far more breadth. If you give them most exams, they do better than most human beings do. Uh, they can't juggle three balls or play point guard in the NBA. But it's really astonishing what we've managed.
over the last two years. You can interrogate GPT 4 about economics all you want, and on most questions, it does at least as well as a professional economist. It also can do coding for you. It can read and summarize documents. Uh, it's just one of our most remarkable inventions. I mentioned, uh, November of 22, November 22nd, 2022, to be precise, which is when open AI released the chatbot called chatGBT and it was located on a [00:08:00] simple website.
And that's when most of us woke up to this, you had been in it for. Much, a much longer time before that, but within five days of the release of November 22nd, 22, it garnered our chat. GBT garnered 1, 000, 000 registered users and within weeks of become a global phenomenon, it reached just to give some comparisons here.
It reached 100, 000, 000 users in just two months. So that's faster than Facebook, faster than Instagram, faster than Netflix, faster than Snapchat, faster than TikTok. So. Were you surprised by this? Did you know it was coming? What did you, what did you think was coming? Well, I wrote a book 10 years ago called Average is Over, that argued artificial intelligence was the next big thing.
It would drag us out of technological stagnation. It would change everything. Now, I did not foresee the details of how this breakthrough was made. And I'm surprised [00:09:00] how good it is at words as opposed to numbers. Uh, but nonetheless, I've been expecting this for a long time. And when it happened Uh, I felt this was the scenario playing itself out.
It will change labor markets, national security, scientific research, podcasting, just about anything you'd care to think about. There's always some angle, crypto would be another example, of how AI is going to make everything different. So in January of 2007 is when Jobs first released the iPhone and it's hard to imagine, I think they were first, I guess that's when he launched, he, he publicized the iPhone, I don't think it was released for a few months later to the consumer market, but you know, before the iPhone, it was hard to imagine.
A world in which, I guess, let me put it this way, before the iPhone and then the, the intersection between mobility and social media and FinTech, I guess, it was hard to imagine [00:10:00] how transformational that period would be, those, those developments, social media, FinTech, the iPhone, all kind of coming around that time, you know, some of it a little before 2007, some of it after, but all around that period, and that this idea that like billions of people around the world would be walking around with supercomputers in their pockets.
And, and so that's, that was life changing, impossible to imagine. And since then, and that was like, it was pretty basic. It wasn't that good. It was, it was clunky. It had a lot of hiccups, had a lot of bugs. There was no app store for a year or two. And, and so then a lot of innovation happened after it. And then it feels like there's been a little bit of a plateau since then.
in, in the innovation around, there's, in terms of how much that device can change our lives. Where are we in the chat, GBT story? Are we at the iPhone release? Uh, or are we, are we are, is the transformation going to be so big that we're already [00:11:00] exponentially, you know, faster, bigger than, than the iPhone was relative to where we were before the iPhone, uh, back in 2007?
I think we're at the iPhone release. But I view it this way, uh, chat GPT and smartphones and the internet, they'll all be seen as the same innovation, ultimately. So it's a knitting together of intelligences, say mine to yours, but also ours to GPT models and other devices for artificial intelligence. So GPT models, they're trained on the internet.
They couldn't really have come about without having a large internet, which in turn was more enabled by mobile devices. So it will just be the same thing. And I wouldn't be surprised if eventually we had a device that was more designed around a GPT model than around the internet per se. And what is your, looking at the next We try not to look too far into the horizon on this podcast, but we're sort of more practical thinking the next couple years, [00:12:00] two to five years, give us your, um, what we should be excited about, enthusiastic about, bullish about, in terms of the impact it has, it has, or will have, and give us the, what we should be worried about.
Well, in terms of the positives, it's immediately the case, and I mean right now, not in two years from now, that any person has a very high quality tutor. for virtually anything having to do with words or ideas, or actually now even mathematics with the plugins. So you can learn anything you want, you can have it quiz you, you can have it draw up a reading list or syllabus for you.
It remains to be seen how many human beings will take advantage of this. But probably the biggest impact will be in nations where the prevailing education system isn't that good. It is already the case that right now, GPT 4 diagnoses you better than does a human doctor. I think, especially in countries where doctors are scarce, [00:13:00] this is just an immediate revolution of considerable importance.
I think somewhat longer term, but within five years, we will see more and more institutions and organizations Completely reorganizing all of their information silos. It will be like that world in classic Star Trek where Spock just goes to the computer, asks it questions, and the computer tells him. Uh, it can do that now.
The main obstacle is simply how rapidly will institutions make the leap from their old systems to these newer, far more efficient systems. So those would just be some very basic gains. In terms of what you should worry about, anything that gives us more knowledge, more information, more science, can and will be used by bad actors.
There's now a kind of arms race on. It is easier to imagine a terrorist group, say, talking to a GPT model and learning something you don't want them to know. That was also the case with the Internet. Misinformation will be easier to [00:14:00] produce, but on the plus side, good information will be easier to produce.
There's another new arms race. I'm optimistic about that, but certainly there's no guarantee that on net, the good guys are going to win. But isn't that, the good guys winning, isn't that just dependent on the good guys being more innovative, more creative with, with these LLMs, these large learning, large language models, dedicating more funding, governments being more organized in how they leverage them?
I mean, isn't that. What you're ultimately depending on. The good guys are winning so far. Right. America is clearly in the lead with artificial intelligence. But still, the bad guys can free ride upon the good guys. Just as the Soviet Union stole many technological secrets from the West during its day. And we're going to find, uh, Less salubrious powers, not only stealing our secrets, but just using what's out there on the market to learn things we don't want them to know.
It's going to make them smarter. Now, I think it's going to make us, in relative [00:15:00] terms, all the more smarter. But again, that's a new arms race. We have to worry about it, not just the United States, basically all nations around the world. And they're just these new terms of competition. In everything we do, it includes the labor market, what school you go to, how you train yourself, what skills you invest in.
All of that is being changed pretty rapidly. We'll remix all the competitions we're used to, and people will find that disorienting. So you mentioned medical diagnostics. So does that mean we will just interface directly with the chatbot or some version of it for purposes of medical diagnostics, or does it mean to use my, my steam engine analogy?
It just means that doctors will be using it too, and they will be better at diagnosing us and working with us. So who are we cutting out the doctors or the doctors just getting more leverage in dealing with us? Oh, I think it's a bit of both, but we can cut out the doctors. For some issues, if the [00:16:00] main thing you need is diagnosis, rather than, say, open heart surgery, uh, I'm not recommending this in the sense of giving you medical advice, but there's a recent research paper that rated the GPT model versus human doctors, and human doctors themselves thought the model was a little bit better.
And get this, the area where, in relative terms, the model did strongest was bedside manner. Now, are there still many people, possibly most people, who prefer to see a human? They don't necessarily know how to ask a GPT model the correct way. They're not good at describing their symptoms. They need some help.
Uh, they somehow want to be affiliated with the medical establishment. They feel better. Uh, a lot of that is still going to be there. I don't know how much. And what about biomedical research, science? Well, here's a way to think about it. It is already the case, and I mean today, this is not speculative, that any manager, any scientist, any writer, any, anyone [00:17:00] has a free army of research assistants, and that's CHAT GPT.
So, again, it remains to be seen how well we will use that free army, but that free army is at least as good as having a very smart undergraduate, but with a much greater breadth of knowledge. So, at least in principle, scientific progress ought to accelerate. There are also a whole number of uses of the new forms of artificial intelligence, such as protein folding models, where, in essence, we apply the technique directly to some problem in biology, and we can just solve it.
Or we can figure out what, what kind of device or remedy or vaccine or antiviral might cure a given problem, and we teach the artificial intelligence to, you know, solve that problem directly, rather than having to test everything through human trials or in the lab. So it ought to considerably accelerate the rate of scientific progress.
We, you and I, are in knowledge jobs. [00:18:00] We call modern economies knowledge based economies. Does artificial intelligence change? knowledge from a scarce resource to, to an abundant resource? Like, what does it mean for the knowledge economy when knowledge feels totally, totally, you know, there's like a, a glut of, of knowledge available to everyone?
What does it mean to these knowledge workers? Well, the important point is that there's a glut only of some kinds of knowledge. If you can ask a direct question about facts or analysis or outline, GPT models are just superb. However, when it comes to particular knowledge of time and place, understanding of context, uh, GPT models perform best when they are working with a human being.
So we need to rethink what is it we're really good at. The things human beings are really good at that GPT models cannot do include networking, charisma, setting goals, understanding context, innovating in some very [00:19:00] particular ways. So the people who have those skills are now much more valuable. People who just did routine back office work, I think they will have trouble in the labor market, their wages will decline, and we as a society need to figure out how to manage that transition.
I have one son finishing 8th grade and another son finishing 9th grade. By the time they go to college, will the notion of homework be over? I think the notion of homework is over right now. There are only those people who admit it and those who don't. Explain. Most homework that is given to You know, kids that age or even, you know, at the Ph.
D. level a GPT model can do most of it quite well, better than most humans. Write an essay on something. It probably still needs a human supplement, some editing, you know, a nice, a nicer ending than a GPT model can create right now. But three quarters of the work will be done by the [00:20:00] model and not by the human being.
And this is now. So, why should we give homework? We shouldn't. I don't consider it cheating, actually, but it's seen as cheating, and it's no longer a fair test of anyone. So we need to stop. You can assign homework in class, you can have oral exams, there are other ways you can test people, but take home, homework should be abolished.
But doing it in class is a way to make sure they're not relying on technology to answer these questions and work through problems. Correct. And if we give people something to take home, the express purpose should be, we want to see how well you can work with your GPT model to come up with something together.
And then I'm back to being fine with homework. But it's not just you. But that's the skill you actually need to learn for our new world, is how you can work with the machine. So you just said homework should be abolished? Unless it is deliberately presented as this is homework to see how well you can work with the machine.
Yes, otherwise abolished. 100%. At [00:21:00] pretty much all levels. Okay. And you think that's just, like, gonna sort of happen on its own? I think it's already, the abolition hasn't happened. That so many students are using this. That has happened. People use it all the time for everything. Their correspondence, emails, everything.
And for homework, you know, homework, it's something about it that's repetitive. It's a bit the same every year. It's maybe hard, but in a way not too challenging on the creative side. It's exactly the kind of work that GPT models are well suited for. Okay. What, um, there's been a debate recently in the U. S.
about quote unquote pausing AI, whatever that means. Pausing these, the, the further development of these, of these, uh, large language models. And, and actually a bunch of AI Scientists have signed one of these letters, which is interesting because it seems like their issue is not that they're for pausing development, they're just for pausing open AI.
They want to be able to keep developing [00:22:00] AI, they just don't want, like, you and me, they don't want, you know, tourists and pedestrians to be doing it. Um, what is your reaction, there is this movement in the academic and science world, and the political and policy world, making the case for what they call a pause.
I don't even know what that means, I don't even know how you implement it, but what is your view of that debate? I think that proposal for a pause is entirely ill conceived. First of all, China's not going to pause. Other nations are not going to pause. I don't even think most groups inside the United States would pause.
But also, you know, admitting there are problems with all new technologies, what exactly do you get done during the pause? You know, you sit on your sofa and you write long essays on the internet about all the problems with AI. The way we actually solve problems in the world is to proceed with technologies.
You see the problems come up, you address them, often in a rather hurried fashion, and you try to fix them. I'm not saying that's easy, but pausing is not going to make it easier. You'll end up with a less good bargain [00:23:00] of what you started off with. So, you know, if we build a nuclear submarine, you pause in the sense that you make sure the missile, you know, doesn't end up landing in Denver rather than somewhere else.
But you don't just pause the technology and sit around for six months and try to figure out what are the risks of nuclear submarines. You go ahead and do it, you're in a competitive world order, and you take your, you know, your best care to get it right. And that's what we did. Okay, uh, is, um, can you just lay out, and then we're gonna, we're gonna switch to your, your optimistic case, your optimistic case for at least North America, which, which I know, uh, you're, you're, you're bullish on, on this part of the world.
Uh, before we do, what, what are examples of Um, major innovations that, um, at, you know, we were, there was much excitement around and then we regretted, um, their launch and sort of entered in a version of the debate that we're [00:24:00] going through right now. Well, there are numerous weapon systems. Many have not been used.
I would just say we don't know whether or not we're going to regret them. Uh, if we invented, say, laser beam weapons that were extremely powerful, would we regret those? Would they make the United States safer? Would they in some manner perhaps strengthen our enemies more than us? It's very hard to say.
There are various technologies used more by terror groups than by, you know, major nations of the West and Japan. Uh, we, in the abstract, wish those didn't exist, like explosives that you can strap to your body. Like, wouldn't we prefer to just do away with that? But, you know, your ability to steer technology, you can't micromanage everything.
Uh, science gets underway. It takes its directions. It's very hard to go in reverse. So I think the better attitude is to work on the quality of our institutions, for the freer and nicer nations to have the better science, and really to, you know, charge straight ahead [00:25:00] and try to do it right. If we as human beings can't have a new positive development that gives us more intelligence, if we can't get that right, I mean, what are we doing here?
What is it we think we can get right? What kind of vision is that of the world? Just everything that comes along that's an opportunity. We say, oh, we're going to screw this up, we can't do that. That's not a very promising future. I would be super pessimistic in that world state. Right. I want to talk about, I want to move off of AI, but obviously AI could easily come back to this topic.
You are an optimist about America and about North America. Uh, more generally why? Because all we hear is, as we are living right now through this debt ceiling crisis and, you know, and it's just a reminder of how much debt this country has, the United States has accumulated at the same time that our military industrial base is, is getting thinner and thinner as, as we call in more and more resources to deploy, uh, to Ukraine.
[00:26:00] Uh, I mean, the migrant crisis, you know, deteriorating, uh, sense of law and order in major American cities. We haven't totally figured out the return to work post COVID. You know, inflation. I mean, I can just go through the list of reasons to be pessimistic. You're not pessimistic. I'm not pessimistic. Now, there's a lot of issues you mentioned, uh, in your list.
Just to take one. Well, over the last two years, in most major American cities, crime actually is declining again. Not in all cities. Inflation has been declining. It was at about 9%, now it's at about 5%. 5 percent is still too high. But America has shown a remarkable ability to solve and address its problems.
In terms of general strengths, we have the most talent of any nation in the world. We are still by far the number one military power. We have no natural enemies who can credibly threaten to take us over. Whatever problems we may have projecting power elsewhere, that is still the [00:27:00] case. We have pretty amazing natural resources.
Our constitution has held up. We are a democracy. And the Internet itself, combined with AI, give us a big leg up, you know, for the next generation of technology. We are ahead again in some of the most important technological developments in the history of the world. It doesn't deny that we have major problems, but if you think of yourself as playing poker and you're asking, well, How do you like the hand you've been dealt?
We have by far the best hand. I don't even think it's close. You could say, well, Canada, right? They have a hand in some ways as good as ours, but it's really the same North American unit in some way. And how, I, I know you feel that our politics also, Well, it looks very dysfunctional and, you know, the, the Democratic nominee is likely to be someone who will be closer to 90 than 80 when he would finish his second term as president.
And the favorite, not the prohibitive favorite, but the favorite to win the Republican nomination [00:28:00] is Donald Trump. Uh, this does not. strike me as an expression of very healthy, forward looking, you know, America's promise, America's best days are ahead of itself, uh, or ahead of now. Um, this does not reflect to me or express to me the politics of a country on the move.
I would just say they are not my personal choices at all, but neither was William Henry Harrison, or James Buchanan, or many, many others. In fact, virtually all of them. We got through that. I think we're actually at a time where our government has started doing some number of things well again. The simplest example would be Operation Warp Speed.
A lot of the Biden climate policies, I'm not saying I agree with them all, but we're actually seeing some things happen. It's not just pure gridlock. Many parts of America at the state level are innovating a great deal with policy. So many of our cities, especially in Texas, the southeast, [00:29:00] they're just becoming so much better.
Uh, some of our blue states are experimenting with YIMBY changes, letting people build more to lower the cost of housing and rents. Uh, that movement is proceeding. So I just see, really, a lot of positives on the American scene. But yes, I don't like the two leading candidates. Okay, so let's talk about a couple of these places on the local scene.
So you, you've spoken favorably about what has happened in Florida under DeSantis, and you think it's a, not, you're not endorsing DeSantis, but you see a, you see the Florida model as like a laboratory where a lot of interesting things have happened that should, we should be encouraged by. I would say it's almost the whole Southeast, so I don't attribute what's happened to DeSantis.
You have cities like Nashville, which were formerly marginal, not very impressive. Now they're beautiful, they have great food. Uh, the music scene has remained incredible. Healthcare sector there has grown. All sorts of people want to live there. You go to Nashville, you think, Wow, this is great. I'm a northerner.
If I had done that 30 years ago, I'd think, eh, Nashville, well, [00:30:00] at least I can hear some bluegrass and I would wince. Now these are just amazing places. And you feel the same way about Texas and even places deep south, Alabama. Alabama's become very nice. I worry greatly about the depopulating parts of the south, most of all Mississippi, parts of Louisiana.
From what I can see, they're in big trouble. Uh, definitely something has to be done there. But most of the South, even a place like Chattanooga, really had a resurgence. Charlotte has become actually a major financial center some while ago. Richmond is now a gorgeous city. All these people want to live there.
Commute to Washington, D. C. So, so much good has happened at the state level in America. I think sometimes that's overlooked. And you are also not nearly as doom and gloom about places like New York City and San Francisco. Which is always surprising to me when I, when you, you've said this to me. I've heard you say it elsewhere.
Tell us why we shouldn't be worried about the future of these major cities. Well, New York City has more [00:31:00] different and more diverse kinds of talent than any other city in America, arguably in the world. I don't see that strength going away. It's a major tourist attraction. It's the financial capital of the world, along with London.
It's actually a very safe city. It has its problems. When do they upgrade the subway? What does that cost? I get all that. But there's a reason why it costs so much to live there. Now, San Francisco is a trickier case. I'm emotionally torn when it comes to San Francisco. I can imagine a scenario where that tips the wrong way and really just does become an outright bad place.
It's a city with a long standing history of what I would call too much tolerance. On net, that has been good for the city, but too much tolerance, you take it in the wrong direction. You tolerate shoplifting, you tolerate too much drug use in the streets. But that's the bargain of San Francisco. Uh, it is still the best place in America to have the most interesting conversations.
It's now the home of AI developments. I [00:32:00] am cautiously optimistic about San Francisco. By the way, just before we move off of these places, are you not worried that the high income earners and generators of wealth and largest contributors to the treasuries of those cities are leaving these places in more numbers than we've seen in, you know, the last, I don't know, 30, 40 years?
That does worry me, but I think it's also what will force them to adjust. So keep in mind, I grew up in the 1970s, near New York City. The city went bankrupt, so I lived through that. Obviously, it made a huge comeback. I don't think it will go bankrupt this time. That comeback won't be needed. But this ability of America and New York to regenerate itself, uh, but the city is too dependent on like 200 or so taxpayers, and it needs to do something for those people, so not more of them go to Florida, absolutely.
So you're just saying it's a bad moment when all these people, when there's this exodus, and the numbers are quite extraordinary. They keep coming, [00:33:00] new numbers keep getting released about the exodus each year, uh, from these places, and, but to quote Tom Wolfe, we're going through a, like, the great relearning, and, you know, these cities will go through the great relearning again and learn that the policies You know, don't work, and people can have more options now to go to all these other places that you're talking about, and they can leave these centers, and the policy makers and the elected officials will correct, relearn, and these cities will be back.
That is my view, and in terms of New York City in particular, nowhere else close in this country has the same level of amenities, culture, interesting people to talk to, right? Nothing remotely close to that. Not Chicago, not Los Angeles. So, New York's position in my view is pretty secure. Okay, so now let's talk, let's, let's, let's raise the, the lens even higher and look at some countries.
You mentioned London. You're, you're also bullish on the UK, which always amazes me because talk about, uh, dysfunctional politics. Uh, [00:34:00] we have had, uh, you know, five prime ministers in seven years, pretty close to Italy. It was the Liz Truss experiment, which you actually were, were kind of bullish on the Liz Truss experiment.
Uh, the 40 plus day Liz Truss experiment. Tell us about the UK, why you're upbeat, and why we shouldn't be worried about how crazy the politics have been. I would say I'm bullish on Southern England. London, Oxford, Cambridge. I'm not bullish on the entire UK, necessarily. But Southern England is one of the world's most remarkable engines of progress, growth, and ideas.
If you ask, you know, who is in the lead with mRNA vaccines? Well, Southern England. Who is one of the leaders with artificial intelligence? Well, DeepMind in Southern England. There's only a few places in the world that are really capable of generating, producing, putting out there truly important innovative ideas, and Southern England is one of them.
And London, you know, if you were a billionaire wanting to spend a billion dollars, [00:35:00] you might rather actually be in London than New York. And that advantage of London, again, it's not going away. Northern England, I've been there quite a bit. I would say I have mixed feelings. I'm not sure we should be optimistic.
There's just too much brain drain toward the South. Now, of course, the politics is a mess, right? Uh, they need to get over the fact that Brexit was a mistake, but also they probably cannot undo Brexit. And you believe it was a mistake. And did you always believe it was a mistake? I always believed it was a mistake, but I've increasingly come to see it as an inevitable mistake.
Like if the U. S. were in the EU, we would leave, right? We just couldn't put up with it, whether or not we should. Now, they're a smaller country, they're closer, they would be better off if they could stay in. But we all know the history of the Reformation, the differences between Britain and the continent.
So, I think the Remain forces also need to get over it. And to look for ways that they can build a new Britain. [00:36:00] around the idea that by not being in the EU, for instance, maybe they can be a center of artificial intelligence in a way that EU regulations will prohibit. Yeah. So Larry Summers has said that You know, why is he optimistic about America?
He, his attitude is, he says, sort of a version of compared to who, right? He says Japan is a, Japan is a retirement home, Europe is a, is a museum, and China is a, is an open air prison. His words, not mine, I'm paraphrasing. Uh, so He's a little too negative on those other places. Tell me why. But I agree with the general sentiment.
Tell me why. Western Europe, actually, most of Europe, is still a creative place. It has arguably the highest social capital in the world. An incredible culture, which is not dead. Just remarkable living standards in terms of quality of public goods. You wake up in the morning, how good is that day of your life?
It's very strong. They have challenges. And is that what you mean by social capital? Absolutely. Their ability to cooperate, [00:37:00] to have polities, that will have policies maybe I don't agree with, like levels of spending and taxes, higher than what I think are best. But they somehow get through it and make it work.
Look at the Nordic countries, right? Like, those places work pretty well. If someone sent you there, your life would still be great. You have told me that, if I said to you one country that you would bet on in Europe, you, not just in Europe, in the world, what I would regard as a sort of contrarian take, you have pointed to Poland.
You're very high on Poland. Why? I've been to Poland three times. For about 20 years, I think even a little more, Poland has been growing at 4 percent a year. That's a remarkable record, unprecedented for contemporary Europe. There's a very dynamic attitude. Poles are generally pro American, pro capitalist. I don't like everything they have done with their government.
I don't like the undercurrent of, you know, anti gay sentiment or [00:38:00] sometimes anti Semitism. All those are things to be criticized. But at the end of the day, it could be in 10 years, Poland has caught up to the UK in terms of per capita income. They're just doing very well. And have you surprised, are you surprised how they've held up being on Ukraine's border during this crisis over the past year?
No, I expected that because I think the Poles always, for good reason, have been suspicious of Russia. They now feel vindicated. And Poland doing well is now an existential matter in a way that, say, You know, the Netherlands doing well is not. Poland has to do well. And I think that will end up helping them.
But, of course, it's nerve wracking, right? And I think all those Ukrainian refugees are helping them already. It's more labor for us. It slows down depopulation, uh, boosts the birth rate, gives them a lot of talent, not really big problems with cultural assimilation. So, uh, again, I'm bullish on Poland. You've also told me you feel that you believe we're living today through a renaissance, an Indian [00:39:00] renaissance.
I don't know if renaissance is the word. I think for just sheer innovativeness, determination, talent, India is the place to be right now. Uh, the very fact that so many Silicon Valley CEOs were born in India, isn't that astonishing to you? Like it's not that America can't produce its own CEOs. And then you look at Britain, the UK, you look at Ireland, you look at, you know, SNP, those units, they're all run by South Asians, which is remarkable, you know, in the Anglosphere.
So just the, the talent coming from India and virtually all areas, I think will shock and overwhelm the world in a very positive way over the next 10 to 20 years. It's already happening. I would just say we should be ready for it. But what's happening in India that it is this. [00:40:00] I can name a few factors, it's not a complete answer, but look, English language, internet access, infrastructure is now good enough, no one there takes prosperity for granted.
Uh, people really struggle and aspire and have ambition, not everyone, but in what is now the world's most populous country, it's a significant portion of the population. And I think also the diversity of India, so many different languages, large number of different religions, different castes, uh, it may be too much diversity for the good of India, but it teaches people growing up in India how to speak to people from different backgrounds, different cultures.
So, they come into an American company as CEO, the idea that not everyone is from their group. It's something they're very used to. And I think that will prove an enduring advantage for some while. Where, in terms of countries that you're optimistic or pessimistic about, do you put place Israel? [00:41:00] I'm very optimistic about Israel.
Uh, I don't feel I can offer any assessment of the military situation, but I see Israel has survived. It's quite strong. Uh, enough of the talent has remained. They have a high birth rate. Not just among religious Jews, too, which is interesting. That's correct. Yeah, something's in the water there that's, whether you're secular or religious, people are having a lot of children.
Only wealthy nation in the world, as far as I know. And they're building alliances with a lot of their neighbors, UAE, Saudi, in a way that would have seemed impossible some while ago. So, I don't see any reason to be anything other than optimistic about Israel. I'm not so optimistic about a bunch of their neighbors, but Israel, yes.
Okay, but what's interesting is, like, we go through each of these. There's a thread here, because the politics in Israel has been, shall we say, Yes. Uh, especially over the last two to three years, but even before that, the UK, we talked about its complicated politics. We talked about U. S., at least, complicated national politics.
You seem to [00:42:00] separate trends, near term trends, as it relates to dysfunctional politics, from how you evaluate a country's promise. I mean, it's interesting, because most people look at Evaluate nations, whether it's geopolitical risk or economic risk, and, and the, the health of the politics is an important factor.
And you, it seems to me like a, you divorce it from your analysis. I think it's overrated. So, all the countries we've been talking about have real problems in their politics. But you have to compare it with the earlier histories of those countries. So for Israel, go back to the times of the Intifadas.
Worse yet, go back to 1973, where Israel almost is obliterated. The earlier wars, 1948, 1956, 1967 for that matter, even though Israel wins decisively, they had to attack preemptively. Those are very, very dicey situations. And if someone asks you, well, would you take Israel's problems today, or of those earlier times, think without a doubt you'd prefer to handle the [00:43:00] problems of today, politics included.
Yeah, so, I, I, I don't want to get into a discussion about these debates over the judicial reforms in Israel, but I think the rhetoric got a little hot, and certainly out of context, when you had people like, for instance, one of Israel's former prime ministers saying that this is the most vulnerable Israel has been, its judicial reform debate, about about the health of its, you know, civil society.
It's, it's the most vulnerable Israel has been since the Yom Kippur War in 1973. And I'm like, really? Since, like, they, they, literally, that was a war that they thought could be existential. It was, it was over a year long. They lost a huge percentage of their population. Uh, the, the, these problems Israel has with the debates of the judicial reform are real problems, but they're similar to the political problems that exist in many countries.
It's, this is, this is at the same time, to your point, a geopolitical risk for the country has gone way down. No, my wife was just there. She had to deal with rocket attacks, which were no joke, as you know. I would think the biggest risk to Israel is simply [00:44:00] that Iran becomes stronger, possibly has nuclear weapons, uses those as a shield to protect terror groups that do enough mischief.
That the Tel Aviv airport cannot really be guaranteed to stay open. And that over time, just more of the talented people leave. That erodes the tax base, makes the politics worse. I think that's a real risk. It would be, you know, crazy to deny it. So Israel will have to manage that in some way. You are not a geopolitical strategist, but you monitor geopolitical events quite closely.
Some are very personal to you. You've told me that the Russia invasion of Ukraine was not a surprise to you at all. Your, your wife is Russian. You have deep family ties. She's Soviet, not Russian, right? Sorry, sorry, sorry, sorry, sorry, sorry. Your, your wife is Soviet, not Russian. Very important distinction. Um, why did you foresee?
Putin's invasion of Ukraine, and based on what you know, less academically, but just from being [00:45:00] so in touch with the country from your family history, uh, and your extended family history, uh, where do you see things going? First of all, isn't it a funny world where Soviet has become the positive adjective compared to Russian?
Terrible, right? I look at Russian history this way. Since the time of Catherine the Great, Ukraine has been an independent nation for a total I think of less than 30 years. So if you just have a crude model that it's hard to get rid of the past, you will be hyper aware of the fact that Russia thinks it's theirs.
Historically, it has been for a long time. Uh, Putin is an evil guy. Putin has made his intentions quite clear for years in his speeches, the writings he endorses. Uh, when I. End up meeting with Russians, Ukrainians, socially, which happens all the time for, you know, for decades. I hear them talk. These are the ones in America.
And it just seems, it always seemed [00:46:00] to me Russia still has active designs on Ukraine and a whole bunch of other territories and nations. And they're willing to act on it. That's most of world history. It's recency bias, like, ooh, Ukraine's been independent for a while, like, Russia won't do anything about that.
That, to me, is just a naive view. And what is your take on China today? You, you've told me that you think it's inevitable that China tries to invade Taiwan. Um, do you still believe that? And where, uh, how does America respond to that inevitability if it is indeed an inevitability? I would reword that. I don't think it's inevitable they will invade.
I think it's inevitable they will try. But how they will try is an open question. So maybe a blockade is more likely than an invasion. Maybe some kind of political subversion. is more likely yet. They think it's theirs. So imagine, you know, that the United States had somehow lost Colorado [00:47:00] back to Mexico, and that was a thorn in our side.
Would we try to quote unquote liberate it and get it back? We would. So that's Taiwan for China. But so much of the free world and freedom and democracy in Asia is at stake. And limiting nuclear proliferation is at stake. So we are I'm quite intent on defending or maintaining Taiwan in some matter. Uh, that's a major recipe for conflict.
For that particular thing, I, I'm not sure I am optimistic. I'm probably not. And given that the powers we're talking about, China, Russia, U. S., all have nuclear capabilities, how does that factor into nuclear weapons capabilities? How does that factor into your risk analysis, optimism, pessimism spectrum? Well, it makes it all much riskier, but my supposition is that if China were successful, or even if China ultimately loses, the countries such as Turkey, Saudi, UAE, South Korea, Japan, are [00:48:00] going to want to get nuclear weapons.
That to me is a much worse, much less safe world, even apart from whatever happens in Taiwan. So, that's a big part of the risk, is how the rest of the world responds to it. I don't really see a good way around that. But if I were those countries, I would, they are right now thinking. Gee, this could happen to me.
I need my own nuclear weapons. They see Ukraine gave up nukes. You see what happened to Ukraine. And these countries are not stupid. They're very shrewd bargainers, even if we don't always like their values. So that, to me, is just by far the number one risk right now. We just had H. R. McMaster on, on this, in this conversation, uh, in the last episode, and, and we discussed with him that through most of history, the world has lived with great power conflict.
And we've had a break from great power conflict from, say, the end of the Cold War to Russia's invasion of Ukraine. So we've got this, like, 30, approximate 30 year break. And now we're, between China and Russia, either in or getting close to a new [00:49:00] era of great power conflict. Our policymakers, our elected leaders, have no real experience with it.
That is the norm throughout history. This period we've been living through up until now has been the exception. Does that worry you? That our leaders are like, do they understand what, what kind of world we're heading into? Well, our current president has a lot of experience with the earlier world order, whether or not you like his foreign policy.
I would say what worries me is that so few of our younger politicians have military service in their backgrounds. We're not going to really change that anytime soon. And why does that worry you? There's something about being in service, which I myself have not done to be clear. Where you understand the gravity of conflict, and death, and sacrifice, and what military life really means, and what war really is, you're close to it in a way that someone who isn't serving is not.
Obviously Israel is a place where people generally serve, right? So, I [00:50:00] think that's a cultural weakness we have. Our military, culturally, is so far apart from so many of the other groups in America. That's a concern. Yeah, okay, so before we move to your last book and then we'll wrap, I do, I just have to pin you down on this, Tyler.
You're generally an optimist. I've identified two worries of yours. One is the China invasion of Taiwan and, and where, you know, well, let's just leave it that China invasion of Taiwan. Another worry is the civilian military divide in America. Am I right? Those are your two worries? Uh, they wouldn't be my top two.
China Taiwan is my number one. Just Russia Ukraine would be my number two. But since you brought up, you know, issues of the military, that's just one of many ways in which America right now is culturally weak. Okay, any other worries that you can rattle off? Right, how about teenage mental health? How about mental health in general in the United States?
It seems to be down by any metric we can find. We don't know why it's happened. We don't know why to fix it. I take that to be [00:51:00] quite a major problem. I understand not everyone was so happy and gleeful in times past, not at all. But there may have been some benefits to the kinds of repression we had earlier on.
Whereas today, people seem to wallow. They boast about how many therapists they go to. They just reinforce the neuroses of their friends and associates. And I worry about that too. Like, I don't think I'm optimistic per se. It's not about holding a mood. That's irrational. You see, you look at the evidence and you try to figure out what your mood should be.
I think there's a lot more evidence on the positive side, but the negatives are very large. Do you worry about the demographic projections of global population decline? Absolutely. I don't think it will be a factor soon for many nations, but for South Korea and Japan, it is a soon issue. Singapore, it might be a soon issue.
Uh, we have no idea how to fix that. In the short run, bring in more migrants that will work for the U. S., Canada. Uh, I'm not sure it works, say, for [00:52:00] Japan, where it takes so many years to learn how to read their scripts. And there are so many theories trying to make sense of why we, why periods of population decline kick in.
We're, we're entering in one now. Do you, do you buy any one of the theories, or you think it's just too hard to make sense of because it's, it's all evolves from deeply personal decisions? I think just the super simple theory that a lagged effect from birth control being everywhere and super cheap and it took a while to really kick in.
There were peer effects, so you get a somewhat slower downward cascading movement. And, uh, a lot of people think kids aren't that fun. Whether you agree with them or not, like one is fun enough. And if a bunch of families have one and then a bunch of people don't marry and or don't reproduce, you're in a lot of trouble.
And South Korea's at 0. 8 right now. Okay, we're gonna, before we wrap Tyler, I do want to just spend a couple minutes on your book, uh, your most recent book that you wrote with Daniel Gross called, it's called Talent, we'll put it in the show notes, Talent, How to [00:53:00] Identify Energizers, Creatives, and Winners Around the World.
So, why did you, we'll talk about LeBron in a moment, but why did you write this book? I've been involved in many projects in my lifetime, as I'm sure you have been, and in really every case I've noticed the binding constraint tends to be talent, not money. If you have talent, you can get some money. Uh, if you don't have talent, you're just not going to succeed.
At the same time, it seemed there was not like a seminal how to book on finding and evaluating talent. Uh, Daniel being a venture capitalist, I being a writer, also someone who's done a lot of hiring, we thought we should write this book together. Alright, so now, uh, By the way, I recommend people read the book.
There's a lot of interesting insights in there, including some very practical steps on how to do job interviews, on how to identify talent. But the model talent you point to, or in conversations have pointed to, is LeBron James. As a exemplar of what we should all be looking for in talent, not that we're all going to find, [00:54:00] you know, the people who've achieved what he's achieved in his sport.
But what do you think he brings together? Uh, in terms of a set of interdisciplinary skills that you think is what we should be aspiring towards. Not just, not the individual skills he has, but just the way he collects skills and, and is constantly learning. LeBron, to me, is G O A T, greatest of all time.
He's played for 20 years, given it his hardest every single year, always sought to win a title, always has added skills to his repertoire. He's a basketball intellect. He is superb. You can ask him about a game played a long time ago, he'll remember every play, who touched the ball, what happened, what the referee did, everything.
Just his mind for the game is unbelievable. Hold on, Tyler, I just want to play because I'm fascinated by it. Sure. In 2018 at the Uh, during the, uh, during, uh, it was game five, I think, of the, of the Eastern Conference [00:55:00] Finals with, uh, with, uh, he was playing the Celtics in game five against the Celtics. He was just asked randomly about the number of turnovers he had during the game in a random press conference after the game.
And here is what he said. We'll play it. I had two turnovers where I felt like they were just, um, really bad. My first turnover, I tried to, I saw something happening and Marcus did a good job. Marcus Morris did a great job of reading it, threw it up ahead to Kev, he picked it off. My second turnover, I went baseline, lost, lost my footing on Marcus Morris, another turnover.
A couple of them, one in transition to Jeff Green, I thought I, you know, put it on his hands and he kind of fumbled it. Wish I could have that one back and maybe bounce past that one. Um, had a backdoor one to switch, hit his hands. Maybe should have not thrown that when there's a little bit in traffic. Al Horford was right there, but his switch hands, but maybe should have took that one back.
I had a post up on Terry Rozier. They came in Peyton from the bottom side of that means Peyton means they double from the baseline. Sorry guys. [00:56:00] Um, and Jason Tatum got his hands on him. I had a guy wide open. I should have faked high and threw a low and my last turnover was just very, very careless on Terry Rozier.
We had a pick and roll. I got to switch and I just lost it out of bounds on the other side of there away from their basket. So that's my six turnovers. I think out of those six, maybe three of them was just Careless, I think the other three were attack turnovers, and I'm okay with that. Alright, so, so, by the way, I've seen him do this on more than one occasion.
Where he can literally So have I. It's, it's extraordinary. So, what is that? LeBron is the perfect marriage of intellect, physicality, and sheer determination. And unlike Michael Jordan, he never quit or walked away from the sport. So, an unbelievable record. Like LeBron, maybe Steph Curry, Magnus Carlsen.
There's just a few people whose achievements are so extraordinarily above the others. They should all be studied. Alright, so LeBron has won four NBA championships, two with the Heat, one with the Lakers, and, and one with the Cavs, uh, but he competed in ten NBA finals, he was the, [00:57:00] uh, he's four MVP awards, four finals MVP awards, Jordan has six championships with the Bulls, and was named finals MVP six times, and he was NB, NBA MVP five times, so we can go on and on comparing these stats.
How do you respond to this idea that Jordan just has better stats? First, Jordan had a better team. But I think the key point here is LeBron has played for 20 years and counting, we hope. And Jordan, you know, quit to play baseball for the Chicago White Sox for their minor league team. Like, who wants that in an employee?
So, Jordan is one of the three greatest players ever. With Kareem being, you know, the third of the triumvirate, I'm not even sure he's second. Okay, so, and then, and just, I just don't want to leave this topic because you've mentioned this to me before. Talk about all the things he learned. He wasn't a natural three pointer, and yet he learned how to be a three point shooter.
He wasn't, you know, he makes his teammates [00:58:00] better. Like, just explain your, your, your points on this. Leadership, when a player needs to be encouraged, when he needs to have his butt kicked, how to deal with the coach, how to actually be partially a coach himself, how to build talent around himself, how to attract talent to the team, how to put forward a pretty positive public image.
Uh, so many things he has just gotten better and better at. Passing, whatever is needed on a given team, he will try to do his best to improve on that skill. And he was doing this way back in 2003. He was doing this in 2011, you know, 12, 13, 13, I guess, with the Heat. Every year. Right. He's never stopped. And on different teams.
This Lakers team this year started off, what, 2 10 at the beginning of the season. He helped them trade some players, reshape the team, attract some talent. And they made it to the Western Finals based on, you know, a pretty thin set of players past their top two. And even Anthony Davis. Has not been at [00:59:00] his peak strength, and LeBron himself has played more minutes, uh, maybe than anyone, or maybe second to Kareem, but there's a lot of wear and tear on that body.
And he still gets out there, and he said, you know, just yesterday, I'm still better than 95 percent of the NBA, and no one said he was wrong. Okay, so before we go, the Cowen is what does LeBron do next? A. Stay with the Lakers, B. Retire, or C. What? This is what I think he should do. He's talked about retiring.
I would like to see him demand a trade to the Golden State Warriors in return for Andrew Wiggins, Jordan Poole, Kuminga, maybe some, some draft picks, whatever, you know, to make it work. I don't think the current Lakers, even with some add ons, can contend for a title, nor can the current Warriors. But LeBron on the Warriors is a maybe.
That would be exciting. One of the greatest basketball experiments of all time. So this is like Rocky Balboa being coached by Apollo Creed. This is LeBron with [01:00:00] Steph Curry. And with Draymond Green also. They're best friends, Draymond and LeBron. And you still have a pretty good Warriors team. Maybe they're too old.
But man, I would love to see that happen. Because those two teams on their own are just Gonna go down again in the playoffs. But wasn't the story of LeBron going to the Heat, or LeBron coming back to the Cavs, or LeBron going to the Lakers, was all about LeBron choosing his team and making the team, and making the team success.
About his arrival, and that's a harder case to make with him arriving at Golden State Warriors, given that Steph Curry, while the Warriors had a, had a, uh, underwhelming, uh, postseason, it's still Steph Curry's team. When you've played for 20 years, you need to adjust your expectations to what you can realistically achieve, and that's where I think LeBron is at.
He cannot dominate a game at will anymore, and he needs to look for the environment that fits that. I hope he does it. All right, Tyler, we started it at [01:01:00] ChatGBT and biomedical research and the impact AI will have on it. We, you know, kind of detoured around to optimism and pessimism about different countries.
We dealt with great power conflict. And we ended with the Tyler Cowen plan for LeBron James next season. Perfect. Perfect. Thank you for this. Don't forget Israel and the Soviets and everything else. Israel and the Soviets and Poland and, and, and India. And, no, no, I know, I said we toured, we detoured, we, we went through a lot of geopolitics.
It was, uh, it was a great conversation as always. I, uh, I look forward to continuing it one way or the other, offline, online. And, uh, thanks for joining us. A real pleasure. Thank you.
That's our show for today. To keep up with Tyler Cowen, you can follow him on Twitter, at Tyler Cowen. That's C O W E N. [01:02:00] And you can also go to the Marginal Revolution resources, MarginalRevolution. com, as I said at the intro, the number one economics blog in the world. And also Marginal Revolution University, which is M R R ru.org.
And of course, he has published numerous books, all of which you can find at your favorite independent bookstore, or@barnesandnoble.com, or that e-commerce retailer that I, well, you know, call Me Back, is produced by Ilan Benetar. Until next time, I'm your host, Dan Senor.