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- [00:01]
Yasha Monk
Thank you so much for being a loyal listener to the Good Fight. The podcast has expanded significantly over the course of the last few years. We have millions of downloads a year at this point and it is all thanks to you. But our hard working team that edits these conversations and prepares the transcripts for them needs a little bit of a holiday. So for these two weeks we are rerunning some of the conversations from the last months and years of which we are most proud that we think you might enjoy listening to again. We will be back at the beginning of September with two weekly conversations about big ideas and a regular, perhaps weekly new format of A Good Fight Club in which I invite some of my favorite thinkers and podcast guests to discuss the political events of the past week. I hope you two are enjoying the rest of the summer and I very much look forward to welcoming you back at the beginning of September with our new content. In the meanwhile, if you want to support the podcast, please consider going to jasamunk.substack.com and becoming a paying subscriber.
- [01:39]
Tyler Cowen
The stock market does not believe the tariffs will be severe. I can look at Trump's earlier words dating back to the 1980s, and I can see Trump truly believes his own talk about trade and tariffs, which would suggest something will happen. You know, when you're in serious doubt, maybe sometimes you fall back on your core models. A core model I have of American government is that enduring change tends to come on a bipartisan basis, whether we like that or not. I do see a bipartisan consensus against China, so my inclination is to expect much heavier tariffs on China. Trump declares victory. Get some symbolic concessions from Canada, Mexico and other places, and that's what happens.
- [02:21]
Yasha Monk
And now the good fight with Yasha Monk. My guest today is Tyler Cowen. Tyler is a prominent economist who is the Hulbert L. Harris Chair at George Mason University. He is also a columnist for Bloomberg and writes the excellent blog Marginal Revolution. I changed up the style of his podcast a little bit for this week to match Tyler's intellectual temperament and the way he runs his own excellent podcast. So rather than going in depth in one or two or perhaps three topics, I tried to cover a lot of different ideas and you'll see that Tyler just has something interesting to say about just about anything you throw at him. So we talked in some amount of details about the role of artificial intelligence and how big an impact it is going to have on the world, how quickly it is going to continue to develop. We talked in some amount of detail about the global decline in population that may be around the historical corner that is already affecting many countries, including the United States, but also large parts of Western Europe, East Asia, India in the coming years, and so on. And then we touched on a bunch of other things on where science is making big progress and where it's making less progress and why universities might be to blame for that. About the biggest threats facing humanity, which include climate change, according to Tyler, but are outranked by nuclear war and drones, and other interesting developments. We talked about a bunch of different countries around the world what the efforts of doge, the Department of Government Efficiency is going to do to to the American government and what to expect from the economic policies of a Trump administration how to make sense of China's rapid economic rise but also its recent economic travails what the future will likely hold, whether the country is actually going to catch up to America's GDP per capita or Europe's GDP per capita, or remain stuck at a significantly lower level how to think about the economic future of Japan and South Korea, how to contrast the Germany and France and think about the economic prospects of Central Europe and Britain what is going to happen to Javier Milei's attempts at fixing the deep economic crisis and lack of performance in Argentina. And finally, how to think about your personal finances and your financial goals in life, to what extent financial goals should drive your life, and whether college students are making the right of the wrong decisions in flocking in great numbers to seemingly lucrative professions like finance and consulting and tech. Today, the first part of this conversation is accessible to all of my listeners, but the latter part, including the really interesting conversation about the role that money plays in Tyler's life and should play in all of our lives, are reserved for paying members. If you want to become one of them, please head to to yashamon subsec.com this will give you access to a private podcast feed which allows you to skip these annoying announcements that I have to make in each episode. Listen to the whole damn thing without ads and it gives you access to all of my written content, all of my weekly columns, and more on my substack as well. If you value this podcast, if you enjoy listening to it, please, for less than the cost of a cup of coffee a week, invest into making this possible. Jaschamung.substack.com thank you. Tyler Cohen welcome to the podcast.
- [06:20]
Tyler Cowen
Happy to be here.
- [06:21]
Yasha Monk
So I have a whole bunch of questions for you. I think one of the things that I really been trying to wrap my mind around is the impact of AI. The launch Of e easily publicly accessible AI is now a little over two years ago. It is clear that AI has tremendous capacities at the same time. So far its impact on the world has been a little bit more limited than might have been imagined two years ago. How do you see this panning out over the course of the next years?
- [06:45]
Tyler Cowen
I think it will take a long time to have a major impact. There are some areas, such as programming, where it's already doing well over half the work, or some parts of graphic design. Well, you use midjourney and and you get something quite nice for free and you own the intellectual property rights to it. But when it comes to institutions, they're not in general arranged so that there's some easy way to slot extra intelligence in or extra intelligence that's not attached to a body. So I think slowly a lot of institutions will be rebuilt. So we have what Matt Clifford called AI sized holes. And this I think, you know, could be 10 years or more. But in some sectors it's an immediate revolution. Students cheating on tests, that's happened very quickly. People writing with it, applications challenging regulatory comments. Again, when it can happen quickly, it will, but I think it will be a protracted process.
- [07:43]
Yasha Monk
I was just grading a paper and sometimes what I do in exams, especially take home exams, is to make up a quote and make up a name for who that quote is from and then get students to react to it as a good way of getting at some of the concepts in the course. And unfortunately one of my students ended up citing the made up book by this made up author which was a pretty sure sign that they had used AI. And I can only guess at how many other students have done that as well. For listeners who are not as familiar with AI as you are, what are the capacities of AI today and at what rate is it continuing to improve? Have we hit a kind of upper limit of what AI is going to be able to do or are we just at the very beginning of a development?
- [08:22]
Tyler Cowen
We don't have exact answers to those questions. I do know that A year ago AIs were given an IQ test, one of the GPTs and it got 118. They were given an IQ test I think a week or two ago and it got 157. There are now numerous studies showing it beats human doctors when it comes to medical diagnosis and it has a phenomenal understanding of the law in economics. I can assure you it's quite good. Now it depends what model you're using. Right now the best model is OpenAI's O3 Pro, which costs $2,500 a year, an amazing bargain from my point of view, but that does the best. And there's all kinds of projections about the future. But OpenAI itself tells us that probably in about three months a new model will be coming that will have more, what is called time scaling. That is, it will use time better as a way of thinking better, and that's probably going to be much superior. And that's only a few months from now. So we'll see. But there's no reason to think it stopped.
- [09:28]
Yasha Monk
So explain to us how AI works now and what the trick is to further improvements. You know, one of the arguments that skeptics make, we ran an article on persuasion that I personally was quite skeptical of. I was making the skeptical case about AI saying, you know, it's reached. You know, it basically is just a predictive algorithm. We've fed over data in. It's sort of as good as it's going to get. I thought it was a well argued piece, but I didn't buy the conclusion. And I was a little bit skeptical about running it, to be honest, for that reason. But, you know, part of the point of having a magazine is to, is to run debates within it. What's the case against that? How would you respond to somebody making that skeptical case about both AI's capacities and its likelihood to improve further in the coming months and years when proprietary
- [10:11]
Tyler Cowen
systems are at stake? It's hard to make a lot of traditional arguments. I would just say the people I know who are in touch with others who work in the labs, those people do not believe those arguments. I think that's the most decisive evidence. It's not entirely what you would call verifiable, but when you look at the progress we've seen, you know, the very last thing that happened with the release of O3 Pro is a move into this new dimension of what I called time scaling. So what people had been doing this is again, oversimplifying, but just doing more compute and then, oh, are we running out of data? Have we used up everything on the Internet? Can we digitize the National Archives? That's still a debate going on. But if you can teach it how to use time more time to think more effectively, that's a whole other dimension of improvement. So only in the last, what, less than two months have we had those systems available. And I would just be shocked if somehow the first iteration of those systems were the very best we were going to see. I can't prove the next generation will be better, but OpenAI says it will be better. All their predictions so far essentially have been correct. There's a lot of technical reasons to think the very first system won't be the best one. So it just seems like there's a lot more room for improvement. And then there are other possible dimensions we might improve the systems on. People disagree about those, but there's plenty of startups working on yet other ways of improving AI.
- [11:43]
Yasha Monk
So explain to me what some of those ways are and explain a little bit more what this idea of time scaling is. So it is true in general, right, that basically what the current forms of AI do is to have a lot of data, and that allows them to detect patterns. And when you ask it to generate attacks or generate some form of medium, it's sort of predicting what the logical next step is, you know, based on all of the data that it's seen. So how do you sort of introduce time in that? When you talk about teaching the AI to use time better in order to come up with better answers, what does that actually mean on the technical end? And what kind of other interventions might we do in order to improve its reasoning abilities in other kinds of ways?
- [12:24]
Tyler Cowen
There's a number of different points one could say in response to that. First, the initial systems, I think they're much more and more complicated than what you describe. In fact, the people who built them do not entirely understand how they work. So it's more than just auto regression. There's reinforcement learning. There's other things in the system that have been shoved together, you could say, and they just have worked a lot better than what people expected. So that's a surprise. When I ask people somewhat, the people are not at liberty to say, but I think also when they tell me I genuinely don't know, I believe they're telling me the truth. Time scaling is simply the point that, you know, if you use standard GPT Claude, it gives you an answer right away. If you let it think for more time, as with a human, or indeed many other systems, it ought to give you a better answer. Time scaling is a proprietary technique whose exact nature has not been disclosed. But in essence, it's giving the beast more time to think. So of course it will do better. Other things in the works. I would just say what I've been told. I've been told in confidence, but I think we're not sure if any of them will work. But you see so many talented people taking so many new directions, built on a base that's worked extraordinarily well. I would just be very surprised if all of the other possible directions didn't pan out.
- [13:50]
Yasha Monk
One of the things that puzzles me, and again, I don't have technical training, I'm really coming to this from the outside, but it strikes me that some of the arguments about why AI is not going to reach human intelligence rely on somewhat metaphysical assumptions about what human intelligence is. If we have AI systems that learn in good part on the data they have, but also that improve over time, that adapt to external stimuli, it's not clear to me that they're categorically different from human brain works. Do you think that if AI continues to develop, and perhaps we actually continue to understand AI a little bit better, that'll give us insights about how the human brain works in the first place? Or are they really categorically different kinds of mechanisms?
- [14:35]
Tyler Cowen
I'm not sure anyone has the knowledge to answer that question, but I know I don't. I understand very little about how the human brain works. I would be surprised if they were similar mechanisms. Geoff Hinton, father of neural nets, he just said recently on YouTube he, he thinks they're the same mechanism. That struck me as crazy. But look, what do I know? He's Jeff Hinton. I still think he's crazy and he's wrong about most things. But, you know, you ask, oh, AI becoming more intelligent than humans. It's more intelligent than humans right now at most things. So it's not a hypothetical. It got there somehow. It's not sentient. Can it dribble a basketball? No. Can it fall in love? No. Can it pass a Turing test and beat most humans on most tests? Yes. I think in less than a year it will beat me on an economics test. Possibly it would beat me right now. So none of this is hypothetical.
- [15:28]
Yasha Monk
What do you think that should mean for young people who are trying to reflect on how to have a worthwhile professional and perhaps intellectual life for the rest of their existence on Earth?
- [15:41]
Tyler Cowen
How about old people?
- [15:42]
Yasha Monk
Yeah, I was going to say, what do you think about people like you and me who are kind of, you know, somewhat stuck with the skill sets we have and the approach we have? I mean, certainly when it comes to the skill that I'm a most proud of, and that's more core to my professional identity and perhaps in some ways my personal identity, which is writing. The not top tier but paid model of ChatGPT can now get a pretty reliable A minus in grad student coursework for questions I ask with a little bit of fine tuning and, you know, smart adaptations of the questions you have, you know, of input and so on, it can probably get to an A. It's not quite at the level yet where I feel that it can rival an article that I write for my audience on my substack. But it's certainly not unimaginable that in two or three years it might get there. How should you or I reflect on whether there's really any point in continuing to do our professions under those circumstances?
- [16:33]
Tyler Cowen
Well, first of all, we're not stuck. So I've made very deliberate changes in my career and routines because of this. So I travel more, I go to more meetings, I spend more time mentoring people, I spend more time networking and I spend more time meeting people. The AI can't do any of those things. Right. It's not even on a trajectory to be competing with me along those dimensions. So I think I should be doing that and I am. And so far it's gone well for me and I hope it goes well for the world. So the first thing is not to think you're stuck. Now, young people, it's harder to say, I'm 62 and I don't need to plan for 40 years from now. If you're young, my advice would be watch everything closely, keep an open mind. Don't think there's a single answer for everyone. There will be plenty of work, and if you're a human who can manage AIs, you will be 10x or more productive than what you ever had imagined. So be ready for that if you're someone who can do it and why can't you do it? I don't see any intrinsic reason why most humans cannot manage AIs. I can see plenty of preference based reasons why they may or may not wish to.
- [17:48]
Yasha Monk
What does it mean to manage AIs, right? So presumably there's going to be two kinds of jobs. One kind of job, which certainly should be very lucrative, at least for the immediate future, is being involved in actually creating AI, in being part of the arms race between different companies and to some extent between different countries and who's going to have the best AI.
- [18:05]
Tyler Cowen
And that's very hard, right?
- [18:07]
Yasha Monk
Right, that's very hard. And it's going to be limited to a very small number of people. Right? So what you're talking about is more, you know, you have a person in the office who's the first to figure out how to make AI useful to whatever your company is doing, and that's going to give you a lot of value. What does that. That doesn't Necessarily take coding skills? Or does it. I mean, what. What does it mean? If you want to become really good at managing AI in the way you're talking about, how do you do that? What does, what does that mean to somebody listening right now who thinks I want to be able to do that? What should, what should the next step be?
- [18:37]
Tyler Cowen
I sometimes joke it's a bit like training a horse or training a dog that you have a willing but recalcitrant subject. You have to be smart. But it's not mainly about iq. It's about persistence and being willing to get inside the mind of the dog, the horse, or the GPT model. So say you want to start a small business. Maybe two years ago you would have had to hire 20 people. Soon enough you'll be able to just pay for an AI and say you'll be my finance department. Here are some basic instructions. And you'll give it access to, you know, to the flow of receipts and the like. And then you'll take another AI. Oh, you're my legal advisor. Or maybe it's one consolidated AI and you'll have a bunch of AIs doing accountant work, paperwork, what maybe 15 people in the company would have done, and you hire two or three people instead of 20, and you have a profitable small business. Now you have to figure out in your mind how to fit those pieces together. What can the AI do not do? When does it need checking? I'm not saying it's easy, but it's not about being a technical expert in the internal mechanics of AI. It's having a sense of how the pieces of a small business fit together. And what is it you need to monitor when and many, many, many more people will be doing that, and there'll just be a lot more projects, and those projects will themselves give rise to many new jobs. So I think we'll be at full employment more or less forever.
- [20:00]
Yasha Monk
Explain that argument to me. So, you know, of course there's a classic fallacy in economics where there's a certain set of existing jobs and disrupts those jobs. A lot of people worry that, hey, 20% of the jobs in our society are about to go away, perhaps will have really high unemployment. It often ends up being the case that the people who are highly trained for specific jobs end up struggling, perhaps for the rest of their careers. But the economy creates different kinds of jobs and new kinds of jobs. Right? But all of that is under the assumption that there's certain kinds of skills that humans have, but machines don't. Now we're getting to the point where, as you're saying, the latest AI model had an IQ of what, 157 or something like that? I mean, that is more than the vast majority of humans. We're seeing more and more robotics that are capable of doing physical feats of which few humans are capable. They're within somewhat limited range. There's still a little bit of path to be traveled there in terms of development, but presumably within a relatively short span of time, they will be able to match the human range of motion. Then marrying those two, putting the computer chip inside the brain or inside, you know, whatever physical part of the machine, the robot that is able to move around the world adaptly, that is very trivial. So then you'll have something that kind of can function similarly to a human. How are we so convinced that what proved to be true in earlier technological transitions is going to be true of this very different kind of technological transition?
- [21:32]
Tyler Cowen
But robotics introduces a whole new and different set of questions, and we can get to those in a moment. But let me just stick with AI more narrowly. There'll be so many new projects, like, we'll be able to transform nature, probably desalinate water at lower cost. We'll have so many new ideas for biomedical advances, they'll need to be tested through clinical trials. We'll need someone out there in Nevada pointing their finger what to put where, how to make it look nice. Humans are going to do all that. The wages of carpenters and gardeners will rise steeply, I'll predict. So again, plenty of jobs. They'll seem weird from our current point of view, but we won't be close to the end of scarcity. Now to bring in robotics, which was an additional topic for one thing. I just think that will take much longer. But the more of this you have, the more energy you need. So the notion of that a significant portion of humans are employed either in the energy sector or in the arts or in the direct service sector at some point, I think that's what we'll see. But I think robotics will take much longer, not just a few more years. Like there's some distance enough future where you can't predict anything with or without AI. And some of this is getting us to that point. Like if we don't have scarcity anymore and there's no jobs, our job will be to celebrate and pass around bottles of champagne.
- [22:53]
Yasha Monk
Is that a good or a bad future?
- [22:54]
Tyler Cowen
We'll have to learn to adjust to it. It'll be both. So I don't think it's an unalloyed, positive thing. But if your kid, you know, might have died of a brain tumor at age seven or whatever other tragedies would have come along and all those are eliminated, well, it's a good thing. Where will the challenge and meaning in life be? Will we feel humiliated, discouraged by the machines? We'll need new norms, new philosophies, maybe new religions. It's a big, big challenge. I don't think we should dismiss those issues. But like sitting here right now, what can I do? You know, in a sense, we're just waiting.
- [23:32]
Yasha Monk
Service sector jobs always going to be certain kinds of service sector jobs always going to lend themselves more to humans than others. Do you think that we will continue to prefer human teachers even if the teachers turn out to be less good at explaining certain things because we just have, you know, an evolutionary bias towards taking in a different way to human to human interaction? Or do you think that Whether it takes five years or 50 years, the development of more and more sophisticated eye and the development of robotics is going to get us to a place where, you know, seven year old kids are just as happy learning from, you know, Ms. Robot than from Ms. Smith, a current elementary school teacher.
- [24:13]
Tyler Cowen
My view is we will always have human teachers, but they may not exactly be teachers in this future. Maybe we'll call them mentors, but they will make lessons vivid. Probably the quote unquote teaching will be done, if not by AI already. Like young people learn more from YouTube, say, than from humans. So we're not even talking about exotic AI here. This is the world. But I think something like mentorship, vividness, role models, those will be humans for any foreseeable future. And those will be skills. People will learn more scientifically than they do now and they'll be better at them. In fact, we'll use data from the AI to teach ourselves how to be better mentors. Right now it's very like touchy feely. Oh, I feel he was a good mentor. He kind of did this, he kind of did that. We'll have incredible data and awesome mentors. Way fewer people will be discouraged or end up like on the wrong side of the track, so to speak.
- [25:08]
Yasha Monk
I get so many headaches every month. It could be chronic migraine, 15 or more headache days a month, each lasting four hours or more.
- [25:16]
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- [26:01]
Tyler Cowen
Why wait?
- [26:02]
Yasha Monk
Ask your doctor, visit botoxchronicmigraine.com or call 1-844botox to learn more. I guess that depends on whether we figure out the problem of how to motivate people, right? I mean, when we had MOOCs massive online courses, there was a lot of excitement that it would spread access to information to a tremendous number of people. And my understanding of research on it, and I haven't looked into it in detail, you may know much more about it. Tyler, is that if you are a preternaturally smart 14 or 15 year old, you know, in India or someone sub Saharan Africa, MOOCs really are something incredible for you. And if you are somebody with a good college or graduate degree who wants to, whether out of a hobby or for some professional need, expand your knowledge of some particular skill, MOOCs are pretty useful to you because you have the habits to study, etc. For a lot of a population, it turns out people take a couple of lectures in a MOOC and then they drop off because they don't have the habits to study. They don't have the social environment that facilitates that. MOOCs really haven't turned out to be a viable alternative to traditional universities for vast majorities of people. Is AI going to be different in that respect?
- [27:15]
Tyler Cowen
We don't know. One thing AI gives us a promise of is to study humans, video of humans, whatever data we have, and figure out motivation better. So imagine some kind of weird future where 40% of GDP is directed at human motivation. It's not impossible in some more distant future. Maybe that's what we should be doing by then because producing physical things will be easier. Energy is always there as a constraint. So the motivation sector, the energy sector, the personal greeting sector, some would say the sex worker sector, could become much more important.
- [27:53]
Yasha Monk
On that interesting note, I want to jump to a very different topic. You know, for decades a Lot of political scientists and economists, just ordinary people, were worried about global overpopulation works. Warning about the fact that because of the rapid growth rates around the world, we're all going to starve and we're going to run out of resources where, you know, huge bestsellers and they really framed a lot of mainstream political and economic policy. Now it looks like we may be facing the opposite problem in the coming decades. We have a stagnation of a population in countries like the United States, A rapid decline in countries in Southern Europe, in Eastern Europe, in East Asia, even relatively poor countries like India have now fallen to around replacement rate and likely to fall down further. Even deeply religious societies like Iran are now well below replacement rate. What's going on here?
- [28:48]
Tyler Cowen
Well, the cynical but possibly true explanation is that having kids just isn't that fun. And getting married at age 31 is for many people, especially women, a better deal. You're a woman, you choose a guy when he's 22, will he beat you? Will he be nice? Will he succeed? In a lot of cases, it's hard to tell. You marry the guy when you're both 31 or thereabouts, which is now the new average in a lot of Western Europe. You more or less know how things are going to go. But you start at 31, 32, it's much, much harder to get, you know, four kids in under your belt. I worry about this a lot. But the funny thing is we might end up with the worst of both worlds. That if you just to be contrarian for a moment, if you reinterpret the doomsters in terms of intelligence units and demand for energy, it seems that's just going to keep on going up even with shrinking population. So we could get the Doomster problem and we could get fertility collapse both at the same time. My goodness, that's a tough problem. We're going to need AI to help us solve it.
- [29:54]
Yasha Monk
So let's first of all explain why this is supposed to be a problem. I'm astounded by how many really smart, thoughtful people, when I raise this topic with them, say, well, but that's a good thing, right? It's good for the population to go down. There's too many of us humans in the world. We're making too much human use of resources. Why is this something that I take it you also think would pose a real challenge?
- [30:15]
Tyler Cowen
Well, the first order cut is that there's simply less happiness. Fewer people, fewer new ideas, less creativity. The longer run take is you asymptote to zero that has to be bad. And furthermore, along the way, I think really pretty quickly government budgets become unsustainable. So we've all a bit mortgaged our future against growth in gdp. There's debts all over the place and we've been relying on aggregate economic growth. I'm not talking per capita here, but aggregate to pay those off. And if we're all South Korea, the world's in for the biggest financial crisis it's ever seen and you know, probably within our lifetimes, not 200 years from now. So that's not, not sustainable. You can't just keep on having your population shrink and the poorer you are, maybe the harder it is to come up with subsidies for childbearing that would get you out of this trap. So there may be like Peter Thiel's called it, a point of no return. We don't know where that point is, but it may not be that far away because you get all these old people, they're not going to give up their Medicare, Social Security and your budget is frozen. And maybe we sort of ought to cut those things and pay a subsidy of $300,000 per kid. But that seems politically impossible.
- [31:34]
Yasha Monk
Right? And so there's a few things in what you said that I think are worth just drawing out. One, right, is that as you have population decline, the share of the older population gets higher and they then have more political weight and therefore they can push for policies that favor relatively older people even more. And so you can get a kind of self sustaining vicious cycle. The other thing that's I think very important to point out, and perhaps you can explain why that is, is a lot of people have the intuition of, well, look, I mean, we have these low birth rates and so perhaps our population is going to shrink, but they sort of assume that there's a natural stopping point to that process.
- [32:06]
Tyler Cowen
Right. And there isn't.
- [32:07]
Yasha Monk
Right. So explain why that is. I mean, first of all, I guess the idea is that like if you're shrinking, you continue to shrink as long as the birth rate continues to be low. Why might there not be countervailing mechanisms? Right. If one of the reasons why it's hard to have kids right now is that an apartment in New York is really expensive and the population falls sufficiently, but suddenly, you know, the existing housing stock is pretty plentiful for people living in that society. And so it becomes much cheaper to be able to rent an apartment in a desirable location where you also have separate bedrooms for two or three different kids. And so, you know, perhaps at that point the fertility rate will go up, sort of. How can we predict what the long run evolution of these fertility rates is going to be?
- [32:47]
Tyler Cowen
Well, that's a positive scenario. And while it's possible, I see no signs of it. So in much of Japan, real estate is very cheap. In rural Japan, and I don't mean the middle of nowhere, I just mean in like, not big city Japan, there are houses, quote unquote, for sale that seem to be selling at about zero price. You know, you have to maintain them or pay taxes on them, but it's super cheap. And I don't see that Japanese fertility has come back now. Could that change? Yes, but again, this has happened in so many different countries. These are not all NIMBY countries. They're not all like central London. Seems cheaper. Real estate may delay this process, but probably it won't reverse it. So there might be some other thing that would reverse the process, but no one's really found what it is. Some people say, well, only the Amish will be left and we'll all become Amish. I don't think that's true either. But again, I don't think that's really what we're hoping for either, even if that's how it works out, that we all become Amish.
- [33:50]
Yasha Monk
So that's an argument that I discussed on the podcast with Eric Kaufman. He has a book called the Religious Shall Inherit the Earth. And the logic of it is kind of compelling at the first cut, which is that if the great majority of the population has birth rates that are at replacement or well below replacement, and you have a relatively small group that manages to have an average five kids per person, you know, that's an exponential growth rate. And even if you start from a low base, over time that really shoots up and it doesn't take that many centuries until a group can go from 0.1% of a population or 1% of a population to being half a population, why don't you believe that? Do you think that there would be a mass secularization event among followers of that sect? Do you think that some of the economic conditions that allow them to have that many kids right now, like in the case of the Amish, you know, access to cheap agricultural land in the middle of Pennsylvania would run? What's the mechanism, though, to stop what seems like a neat numbers game from becoming reality?
- [34:50]
Tyler Cowen
All of that. But Lyman Stone has, I think, the best counter. He points out simply that the number of kids you want to have is not very heritable. If it were heritable, strongly we'd be in great shape. But just because your parents have five kids, your kind of intrinsic desire to have a lot of kids, there's some cultural force, but you don't inherit a desire to have five kids very much. So. The forces where you only have, say, one kid seem so general and far reaching that they probably will, at least on average, spread everywhere. And as long as society, on average is staying below 2 or 2.1, you're going to shrink. So that's somewhat of a delaying mechanism, which I'm all for, but it's probably not enough.
- [35:34]
Yasha Monk
But what about groups that have, not for genetic reasons, but for cultural reasons, been able to sustain these really high fertility norms in a context where the outside society has not sustained them for a long time? And that, at this point is true of the Amish, right? They continue, so far as I know, to have a lot of kids. Perhaps it's declined in recent decades. I'm not aware of data on that. It may be true. But, you know, even as American society as a whole has gone from the norm being to have three or perhaps even four kids to the norm being having two kids to the norm being that many people have fewer kids and it's become normalized to not have kids at all, they have sustained these pretty high fertility rates. Why do we think that suddenly they're going to cease being able to do so?
- [36:13]
Tyler Cowen
The Amish are a tiny group. I forget the numbers, but I'm not even sure it's at six digits. And they're subsidized greatly by the rest of America. If the rest of America is falling apart, the Amish can't stay. The Amish, they run out of income. The land is not worth much. But look here. Here's a scenario that maybe is a bit more general. If you go to Niger, in West Africa, a typical family has seven kids. They don't all survive, but seven kids is a lot. Maybe Niger will stay at seven kids because it will stay being like Niger. I've never been there, but I imagine it's pretty poor. And the world will be populated by people from Niger and Nigeria and some other nearby countries. That, to me, is the simplest way one gets out of it. I don't know how well that process will go for other reasons, like what norms and political beliefs will the Niger migrants carry with them. But again, that doesn't require any great stretch of the imagination. Fox News is now streaming live on Fox 1. When news breaks, we don't just report it. We go beyond the headlines to get the Full story. Get live coverage in depth, analysis and perspectives from the voices you trust all in one place.
- [37:36]
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- [37:37]
Tyler Cowen
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- [37:48]
Yasha Monk
So I was going to ask you about that. Basically, now every world region is at or below the replacement rate, but not Africa. Yeah, with the exception of sub Saharan Africa. Now, there's great variation within sub Saharan Africa and in particular we see that the fertility rate in sub Saharan Africa has fallen more rapidly than that in other regions relative to its GDP per capita. But so you can project that fall of a fertility rate out by a few decades and you get to the overall projection that by 2100 we'll be based with a globally falling population. But that of course depends on the idea that Africa's GDP per capita is going to continue to rise. And that's an assumption. So what do you think, as an economist is the most likely scenario here? Is Africa going to have rapidly increasing GDP per capita, which likely would then mean that its fertility rate would fall and according to recent evidence, perhaps fall even faster than that of other continents? Or could Africa continue to be at a level of poverty and lack of access to education that seems to correlate historically with these very high birth rates?
- [38:52]
Tyler Cowen
Well, I don't know. But I would say when you don't know, your best predictor is often what you've seen in the last 30 years. So if you add up African growth rates for the last 30 years, I don't know exactly what the number would be, but I suppose that's my best prediction for the next 30 years. It could just be we end up with a world that's predominantly, you know, African in the more proximate sense in origin. Obviously, it's all already African in the deeper sense in origin. So that's the single best forecast I have. I'm highly uncertain about it, but the other scenarios all seem to me not to work.
- [39:29]
Yasha Monk
What's the response to people who cheer the idea of a falling population for environmental reasons, who say that we're already using too many resources of a world and so therefore, you know, if we have fewer rich people, in particular in places like Korea and Italy and perhaps the United States using up all that CO2, that's something we should share?
- [39:48]
Tyler Cowen
Well, again, there's a one off effect and an ongoing effect. If someone thinks what we really need is to get down to a world of 5 billion people and then stick with that as a steady state. I don't dismiss that I'm not sure anyone has enough macro environmental expertise to fully evaluate such claims, but they could be true. But again, the problem is you don't just stick at 5 billion people. It seems that it would keep on shrinking and then you're screwed. So it's a hard box to climb out of. Another nice scenario, which again is maybe one of the more likely ones is simply, oh, say 15 years from now, people fall in love again with the idea of having kids and there's this radical cultural shift and we get back up over 2.0 US was over 2.0, what, a decade ago. Like it's not that far in a world to us.
- [40:42]
Yasha Monk
Yeah. On the environmental point, I think one of the things is that the sort of timescale of decline that we need on CO2 is much steeper and more radical than the timescale of decline on population. So the simple argument that I think people have in the back of our mind was like, oh, there's too many people. If we had some fewer people, that would be good for climate change simply doesn't add up because perhaps the US population will fall by 20% by 2050, but if we continue to exude 80% of a current level of CO2 by 2050, we still are going to get into really hot water of climate change. And so in order to reduce the amount of CO2 we emit by 90% or 90 plus percent, we need a complete system change that is sort of unrelated to those marginal changes in the population in the same timeframe. Does that seem right as a response to you?
- [41:31]
Tyler Cowen
I agree with that. And I would say the real variable for this question is energy usage, not total population. And I predict total energy usage will go up no matter what exactly happens with population. So that suggests to me geoengineering will be the regime shift. I'm not sure how well that will go, but I think that's highly likely in the pretty near future.
- [41:53]
Yasha Monk
So talk us through this. I was going to ask you about how you're thinking about climate change and the danger that poses both to long term economic development and to our quality of life. Where would you rank climate change in the sort of hit list of global threats?
- [42:08]
Tyler Cowen
It's not in my top few, but I still think it's significant. So there's different estimates that it might cost 5 to 10% of global GDP. I don't have a better estimate, but I worry those studies are underestimating the transition costs of dealing with the distribution of that 5 to 10%. There could be a Lot of fighting over it. You could have some countries geoengineering in one direction, like the us, Putin's Russia, geoengineering in another dimension, wanting the world to be warmer and a lot of things going badly wrong. So it's a great concern to me. It's not an existential risk, but I think the costs are probably somewhat higher than what we've been measuring.
- [42:52]
Yasha Monk
What are the top risks that outpace climate change?
- [42:55]
Tyler Cowen
Well, nuclear war, obviously, or other weapons of mass destruction. Future weapons may or may not all be nuclear, but they can be quite destructive. Will it be lasers? Whatever. But the chance simply that there's an accident in a major war, it seems to me, is always the number one risk and will be for as long
- [43:14]
Yasha Monk
as we're around to return to climate change. You've invoked geoengineering a couple of times. For people who don't know what that is, what does that consist in? And can it be a real part of a solution?
- [43:25]
Tyler Cowen
Again, this is outside the areas of my expertise, but from what I read, there are quite a few ways you can do it that are probably effective at pretty low cost. You think you don't necessarily take carbon out of the air, but what you do is you make the world less hot. And on a more local level, you can try to control climates in other ways. And again, I just think it's obvious we're going to do this. You look at some parts of India, Pakistan, the summers are so hot, people literally, you know, can't survive in them. At some rate, they'll get air conditioning. That's further demand for energy, by the way. And people will act to change the temperatures they're experiencing because the median voter will want it in many places. But what's the best technology for this? You should interview someone else. Ask GPT. That will know.
- [44:18]
Yasha Monk
Well, I have had some people on to talk about this and hope to do more of that. I mean, there's something very, very tempting to solar radiation management in particular because it's just so cheap relative to the underlying costs.
- [44:30]
Tyler Cowen
But the politics of who controls it and who gets the final say, that's my worry. The scientists I talk to tell me I don't have to worry about raw effectiveness per se, but so often our worst enemy is ourselves and we're not good at producing global public goods. Look at the war in Ukraine. Look at so many other things. How well are those going?
- [44:51]
Yasha Monk
How worried are you about drones? It seems like one way of thinking about military history, and I'm really not an expert in that. Field is that eras in which offensive technologies have the upper hand are quite dangerous to humanity. Eras in which defensive technologies tend to have the upper hand can lead to a reduction in conflict. Now, drones seem like they will really favor the offense over the defense. And they will also make countries that so far are quite safe, like the United States, much more vulnerable to all kinds of actions, whether it's from terrorists or from hostile states. And of course, if you combine drones with a warrior you mentioned earlier, which is, you know, various forms of nuclear threats, you arguably get a situation that's really quite concerning. I don't think we've quite grappled with how the technology of drones transforms warfare, but also basic kind of security questions of the 21st century so far.
- [45:50]
Tyler Cowen
Strong agree. That's my number two worry after nuclear war. And it could be you have a lot of public figures who just cannot go out in public anymore ever, because they'll be taken down. Now. There's a lot of anti drone defenses which Palantir andarell other companies are working on. So there's quite literally, but figuratively an arms race. We shouldn't assume the defenses are always going to stay in the lead there, but some of the time I think they will. So it's not an immediate civilization defeater, but again, it's my number two worry and it's a very big one.
- [46:24]
Yasha Monk
How should we think about the rate of scientific progress at the moment? We've talked about some areas in which it has been really tremendous, whether that's AI, whether that's drones, whether that's robotics. There's other areas, including I believe biomedical research, where it feels like we are not progressing as fast as we might have imagined 50 or 30 years ago. So how bullish are you about the rate of progress of science at the moment in general and what can we do to speed it up?
- [46:48]
Tyler Cowen
I'm bullish in two big areas, AI and biomedical research. I think biomedical research has done phenomenally well in the last five to six years. So the COVID vaccine worked. We did it right away. I Recall reading in April 2020 in the New York Times, quote, unquote, experts saying the best case scenario was a vaccine in three to four years. We have an anti malaria vaccine. I get that delivery is an issue, but it seems it works pretty effectively. Malaria is what, one of the two biggest killers in human history, something sickle cell anemia. It seems we will beat back. We're probably on the verge or some people would say we have it already. An HIV AIDS vaccine that is not Just managing the conditions, but stopping it and managing the condition works. 35 million people have died from HIV, AIDS by some estimates. And now you can have a normal life expectancy with the condition. So I think we've seen unbelievable progress recently. Immunology against cancer is working pretty well. I think in the next 30 to 40 years we're going to beat back almost everything, except possibly brain deterioration. That will be the binding constraint. Dementia, Alzheimer's, other brain conditions. I'm not saying we can't fix them, but the ways we would fix them give you, in essence, a new brain and then that's the same as you being dead. That's a simple way to put the problem. Whereas we can give you a new kidney and you're not dead. Right.
- [48:21]
Yasha Monk
So it seems like you have two beliefs that are in tension with each other. They don't necessarily contradict each other, one of which is that actually the rate of scientific research and progress has been very good, at least in these areas. On the other hand, you really worry about the structure of science and universities. I know that recently, for example, you posted New Accident Blog about why some top scientists have left Harvard for the private sector. Is academic science in a crisis and is that something we should worry about, or can the private sector simply compensate for it?
- [48:51]
Tyler Cowen
That was Alex's post. Let me add. I would say I'm worried about academia getting worse, but I think in a few key areas, both science and academic contributions to that science have been getting better. But I would add there's a large number of areas. The most obvious is construction, but that's far from the only one where we're not making progress at all. So let's celebrate the huge progress in AI and biomedicine. Those are very important areas, and AI progress is likely to spread. But in so many areas, we're still in this great stagnation, and academics haven't helped us either. It's a very uneven set of advances. It's not like the 1920s where more or less everything sped ahead.
- [49:37]
Yasha Monk
Other structural changes that could change that. I mean, I know that, you know, a huge share of scientists say that the constraints of how they get funding really drives what research they do. It's very common to basically write grants for incremental progress you've already made in the past, because that's really the best way of winning those grants, but that then locks you into doing further incremental research. It turns out that some of the federal funding agencies that were supposed to help fund ambitious work have both a bias towards More incremental conservative work and in the last years seem to have had better political priorities as well. You know, if you are the U.S. government science czar, you know, what three or four measures would you take to set scientists free to pursue more impactful research?
- [50:19]
Tyler Cowen
Well, there's plenty of fixes. I feel they're all politically impossible. It depends what you allow me to do. But I think simply taking the current budgetary levels, keeping them or even increasing them and just starting from scratch, deburcatize everything and treat it as if it's the first day, like National Endowment for the Arts. Its first day was 1965. They made actually then a lot of good decisions. And overall they keep on getting worse and more bureaucratized. They have higher staff and labor costs and slower and all the rest. So we know how to do it. I'm not sure we have a way of doing it with checks and balances where you can disassemble and reassemble agencies while keeping their talent and human capital more or less on board. But again, it's not, as they say, rocket science. We just have to de bureaucratize and if need be, to set up new institutions. That's totally new. Have like NIH 2.
- [51:20]
Yasha Monk
What exactly is the problem of bureaucracy? Is it just the cost that, you know, the share of the funding that goes towards people sitting around the NIH offices making decisions, or is it the way in which the bureaucratic process then structures incentives all the way down the scientific pipeline?
- [51:36]
Tyler Cowen
It's both, but the second is way larger as a problem. But it's both, of course.
- [51:41]
Yasha Monk
And explain to people who are not scientists what the nature of that problem is. Why is it that that deforms what people can do so badly, risk aversion
- [51:49]
Tyler Cowen
and conformism, and it's enforced by law, the fact that people can sue you. Everything needs process. Liberalism has become more and more about process. Fewer things are unlike, say, the Manhattan Project was. And it's partly for good reasons, you know, to just put a bunch of lunatics out on the in the desert and have them build an atomic bomb. It is a dangerous thing to do. Right. We did it. But it's not totally surprising that it's hard to do it again.
- [52:18]
Yasha Monk
This is a natural transition to something I wanted to ask you about, which is not just the incoming Trump administration and slacked economic policies, but in particularly the kind of doge element of it. How do you feel about the effort by Elon Musk and Vivek Ramoswamy to reform the federal bureaucracy and what Advice would you give them? What are elements where the federal bureaucracy really does need to be reformed, gutted, downsized? What are areas that it does well? Good way of pushing this reform agenda. What would be a bad way of pushing this reform agenda?
- [52:46]
Tyler Cowen
Well, I'm all for the Doge effort. I mean, personally, I probably would get rid of, I don't know, two thirds of all regulations, and I would bend downward sharply the trajectories on our government spending. But I fear they don't actually have a plan in place to do this. So you probably know that old book by Mo Fiorina, the Keystone to the Washington establishment. Congress is very, very important, and I don't feel the demand in Congress or from the voters to do this kind of thing. And the very legal standing of Doge is quite up in the air. What are the incentives within doge? Everyone works unpaid, or what are the chains of command? Or you just think through DOGE as its own organization. How will this go? I would just say, I don't know, I'm rooting for them. But it's not like a company where, you know, things can go well. So I sure hope they get somewhere, because if they totally fail, it will be a long time before anyone tries this again. I'm not sure I covered everything you asked me, but that would, at least on Doge, be my first cut at an answer.
- [53:51]
Yasha Monk
Well, I guess in a way, it's a test case for a larger theory, which is that there's these brilliant tech entrepreneurs who could improve the government. Now, I think that there's kind of two simplistic views of that. One is for one of the quote unquote experts in a lot of the mainstream who say, oh, Elon Musk is actually kind of an idiot, and look at his silly tweets. And so, and I think that's just facile. It's very clear that Musk is extremely effective at very difficult endeavors. But the other is to say, well, government, you know, these people are just idiots and we don't know what they're doing, and we, the brilliant outsiders, can come in and fix everything. That I think really underplays the kinds of structural incentives and obstacles that make it really hard to fix the government. And of course, there's an underlying difference in the risk tolerance that is appropriate to different endeavors. You know, if you have startup capital to start a company and that goes badly wrong, well, if you've wasted the startup capital and some of your investors might not be happy, but they basically know that they're going to be making 10 investments and eight of them probably go belly up. And as long as you tried hard, they're happy for you of taking the risk. If some core function of a government fails in a similar way and you're not able to deliver basic services to people for a little while, they're not going to be similarly forgiving, and they shouldn't be similarly forgiving. So how should we think about the ability of the tech sector to make a difference in government?
- [55:07]
Tyler Cowen
Well, not that many people involved in all this are stupid on either side. Maybe some at the Department of Education, but not in general. So, you know, Malay has a good chance of succeeding in Argentina, but that's because they ran out of money. The New Zealand reforms of the late 80s and early 90s mostly succeeded because they had to. The United States today is not in that position, and we have greater checks and balances than most countries. So I'm just not sure what we can do. Maybe the advances in liberty will come at the federalistic level and through the states. We've seen a lot of that already in Florida, Texas, Idaho. Maybe Doge will just get stuck again. I hope not. But I haven't yet seen the formula through which it can work. I'm sure there's a few things they can do. Get rid of the Consumer Protection Board funded through the Fed. It's probably not constitutional to begin with. That'd be great. But that's like a tiny drop in the bucket, right? I'm not really sure how you can pare back the regulatory state. My advice to them would be to prioritize and figure out what is really important. Obviously opinions on that will differ, but to just try to achieve a few of those priorities. And I wrote a Bloomberg column laying some of that out out for me, AI regulation, holding that off would be a priority. And on biomedical issues, deregulating our system of clinical trials would be a priority. But again, opinions on that will differ.
- [56:40]
Yasha Monk
What do you expect the Trump economic policy to be more broadly? Is he going to go through with very significant tariffs? How much of a risk would that be to the global economy? Do you expect some of the potential shakeup to be positive? Is it mostly downside? How should we think about what the Trump administration is going to do for the American economy?
- [57:02]
Tyler Cowen
I'm not sure I have special insight into this. I can look at the stock market and see the stock market does not believe the tariffs will be severe. I can look at Trump's earlier words dating back to the 1980s, and I can see Trump truly Believes his own talk about trade and tariffs, which would suggest something will happen. You know, when you're in serious doubt, maybe sometimes you fall back on your core models. A core model I have of American government is that enduring change tends to come on a bipartisan basis, whether we like that or not. I do see a bipartisan consensus against China. So my inclination is to expect much heavier tariffs on China. Trump declares victory, gets some symbolic concessions from Canada, Mexico, and other places, and that's what happens. But I don't know.
- [57:55]
Yasha Monk
I have your terrorists in China. A good idea. What should America's economic policy posture towards China be?
- [58:01]
Tyler Cowen
Adam Smith recognized long ago there's a national security argument for some tariffs. So if the US say, puts a tariff on some drone components from China or elsewhere, so we develop our own domestic drone component industry, in principle, I'm for that, but I understand at least some of the complications. So you put a tariff on components from China. Well, what if Chinese components get repackaged and sold through the Philippines, supposedly our ally? Do we put a tariff on the Philippines? How do we stop the Philippines producers from repackaging the Chinese components? Or do we truly, totally try to go it alone and just have it be a fully American sector? Or do we rely, say, on South Korea, which is great at producing a lot of things we need, but is itself a vulnerable country? Those are very hard issues. I don't think there's any way to really get them right. I would say I favor some tariffs for national security reasons, but even there, the case for them can be too easily overrated. And I'm not into just punishing China for the sake of. Punishing China.
- [59:11]
Yasha Monk
Yeah. So let's ask for the China question more broadly. I mean, obviously, as a first cut, we should be delighted that the country has rapidly developed economically and lifted hundreds of millions of people out of poverty. At the same time, the fact that it can now rival the United States, not just in aggregate gdp, but in many areas of high technology and potentially in military might, at least at some point down the line, is a potential national security threat. What should our attitude towards China be, and what should our hopes for China be?
- [59:40]
Tyler Cowen
The main danger I see is that China tries to take Taiwan. Either they succeed, or even if they don't succeed, the threat becomes very salient and vivid, and many more countries build or purchase nuclear weapons, and the world as a whole becomes much more dangerous. That, to me, should be what we're trying to stop. I don't know if we can stop it. And Taiwan is not a full cooperator in this by any means. But whatever we can do to strengthen the alliance with Taiwan and get Taiwan more ready and able to defend itself, to hold that off at bay and hope some kind of Chinese logic kicks in, where every year they say, not this year, next year it will be better, easier, our military will be more ready. And they say this for enough years that somehow the very option dribbles away and we're just in an entirely different situation. That's my hope. I think that's the game we have to play. And you play it in bits and pieces. There's not a grand master strategy you implement all at once. But that is how it could go. Well, I see a lot of scenarios where it doesn't go well.
- [60:50]
Yasha Monk
What do you think the future of the Chinese economy holds in storefront? I mean, you know, the country has had a tremendous economic development and clearly has very developed capacities in some sectors. At the same time, its overall GDP per capita remains $12,000 a year, according to the figure I just looked up. So, comparable to places like Mexico that aren't generally seen as incredible economic winners, and we've seen a relatively severe economic crisis in the last few years that the government in Beijing doesn't quite seem to have a plan for solving. Do you think this is going to turn out a temporary roadblock in the way that perhaps the Southeast Asian financial crises of the late 1990s created a temporary halt to the economic rise of some of those countries, but didn't ultimately change their economic trajectory? Or could we be at the beginning of a more secular stagnation in the way that happened to the Japanese economy, which was seen as the clear future global winner, the clear rival to the United States, and has turned out to barely grow since its growth model first ran into serious trouble in the early 1990s?
- [62:00]
Tyler Cowen
Maybe we'll get both of those. So maybe there's a future with one Chinese economy of, say, 150 million people that's super dynamic. It has electric vehicles better than ours. And Deepseek and AI just put out a fantastic announcement. I have to read through the whole thing. But China has dynamic companies in a way that Japan fully lost and has not really gotten back yet. So I don't think simple stagnation is the story. But to imagine China has this one very advanced economy and then, say, a billion people who are like Mexico, economically speaking, that would, to me, be the most likely scenario.
- [62:40]
Yasha Monk
I mean, if you looked at Japan in 1992, 1993, wouldn't you have said something similar that you Know, at that time, Japan still seemed to have these very, very dynamic companies like, you know, Toyota and, you know, conglomerates. And it's only sort of 20, 30 years down the line that we can say, well, they, you know, at that time are really at the forefront of technological development, etc. And the economic stagnation ended up taking them under as well. How do we distinguish between a story where, you know, this one element of a Chinese economy continues to thrive at an extreme level and the other stagnate, and a story where it's just too early for us to see the stagnation of technological development even in those sectors? Or is that to do with size? Is there something about China's size that allows it to preserve dynamism in parts of its economy that wouldn't be the case even for a relatively large country like Japan.
- [63:30]
Tyler Cowen
I think the size and scale really matter. It's interesting you bring up Japan in 1992. That was the first time I went to Japan and I loved my visit. But I went by Sony headquarters to see all the quote unquote, new products and the most exciting thing they had was three dimensional tv, which still has not really taken off. But I looked at it and I was like, yeah, this is it. And I, I didn't think they were doing great things in 1992. I thought Toyota cars were great. I owned one at the time, but have bought many of them. Have always been happy with those, but that's been it. And something like Sony now, I think they get most of their revenue from selling life insurance. So I think that Japan did not have innovating companies was evident by 1992. And you would not say that about China today.
- [64:23]
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- [64:51]
Yasha Monk
Why did South Korea overtake Japan? And is that a temporary phenomenon or is there some difference in the economic models that makes you expect that divergence is going to continue?
- [65:01]
Tyler Cowen
Well, that's basically a tie. I think Korea is ahead on a rounding error technicality. But there's a lot of similar forces going on in both places. Japanese birth rate is 1.3. In South Korea it's below now 0.7, by far the lowest in the world. So if Korea cannot fix that, they will fall behind again. 1.3 in Japan is not great, but at least it's 1.3. It's twice that of Korea. So that's the key question there. I think Korea will stay even with Japan if they can keep an even birth rate. I think for assimilating immigrants, Korea has some advantages over Japan. Japanese as a written language is impossible to learn. Korean is much easier. But I think Japan in particular, which is known for turning on a dime historically, will have to ask itself whether they will not end up adopting Roman characters and changing some very basic features of of how they communicate as a spoken language.
- [66:04]
Yasha Monk
At least for non East Asians. Japanese is probably easier than Korean, right? I mean it has the sort of six different levels of formality with which you have to address people and that's very, very hard. But its basic structure is not tonal, which might make it a lot easier to learn than Korean.
- [66:20]
Tyler Cowen
Korean is not tonal, is it?
- [66:21]
Yasha Monk
I believed it was, but I have to say that I don't know. So I may be wrong about that. You know, that's a question to ask ChatGPT while we're chatting, Let me see, is Korean tonal language much? My chatgpt is failing on me.
- [66:34]
Tyler Cowen
Natasha is saying it's not. But at least one of those countries needs its camel Ataturk to come along and I think at some point it will happen.
- [66:42]
Yasha Monk
In the meanwhile, while I fail to connect to the Internet sufficiently to answer this question through the help of Google, oai, what about Europe? And when we're talking about stagnation, Western, particularly southern Europe, are a natural part of it. It's a content that did have significant economic dynamism in the post war period that was once upon a time at the forefront of important technologies, particularly in the case of Germany. But that now just seems to have given itself over to persistent morosity in a very obvious way in Italy and Greece and so on. But the German economic model seems to have run aground as well. Is there any hope for Europe continuing to be a real economic motto? Or have they just missed the birth?
- [67:26]
Tyler Cowen
I'll just predict more of the same. They've missed the boat, they'll be okay. Their human capital is great. The culture, tourism systems of government work pretty well in most of those places. So I'm not mega pessimistic, but I don't see the scenario where it turns upward, Natasha now reassures me. Korean is not tonal.
- [67:47]
Yasha Monk
All right, well, good news for Korea, bad news for my credibility on East Asia. How bad is that decline going to be for Europeans? Does it just mean that they become this kind of economic sideshow with stagnating living standards, but basically they can sustain a pretty pleasant life? Or is being French or German in 25 years going to be just significantly less pleasant than it is today?
- [68:12]
Tyler Cowen
Oh, I think the former scenario, which is the status quo, to be clear. Right. It's not a prediction, that's a description. I don't see why they have to move backwards and they can free ride on the tech advances from other places. And you see, like Novo Nordisk in Denmark, that's a fantastic European success. So maybe they can have some more of those. But still, if they can get their fertility rates into an okay place, I think it'll just hang on and be okay.
- [68:42]
Yasha Monk
What makes the difference between when economic stagnation allows you to sustain a living standard and when does it sort of really turn into an acute problem? What are the determinants of that? How should we think about what Europe needs to do, if not to catch up to the United States or at the level of technology, to China at this point, but. But to at least make sure that it can still continue to, you know, offer its citizens a good quality of life and social services and some amount of social safety?
- [69:12]
Tyler Cowen
Well, a big determinant. There are levels of debt. So the euro crisis, for all of its terrible features, it did clear out a lot of the debt that was held. Now Italy has been a debt bomb, but they're actually growing again because of the Draghi reforms. That looks less hopeless. Germany has kept, as you know, to a manageable level for a long time. France has become finally a problem. So that would be a vulnerable point, would be France. But they're also. They at least maybe have the potential to be more dynamic than some of the other economies. Netherlands, I think, has produced some powerful companies and is doing great in agriculture. So I'm not pessimistic on them. And I think Sweden, Denmark, again, you could be more optimistic, maybe especially Sweden. So again, there are scenarios where they hang on and the debt problems remain contained. But if it all had like Italian level levels of debt, it wouldn't work.
- [70:14]
Yasha Monk
Let's compare France and Germany for a moment. I've made the argument recently, but I'm slightly hesitant in it, that France has a real political problem. It also has a real problem with its level of Debt per gdp. You know, they run a big deficit, but there's also some relatively obvious things they could in theory do to fix that, including reforming the pension scheme and so on. It doesn't feel to me like the basic French economic model is in the process of collapsing. There are some long standing structural challenges, but actually France feels more dynamic to me than it did when I first lived there about 20 years ago. Now Germany seems to me like a very different case. Right. That's a country that had a very well working economic model, largely based on its car industry, on high value manufacturing, as well as obviously a big service sector that depended on cheap energy from Russia, on exports around the world, but particularly to China, and on a technological advantage that is now very much at risk, particularly, but not only in the car sector. So that feels like a kind of hinge point where you could imagine a much faster decline or you could imagine them reconstituting the model and continue to grow as we did in the past. It feels like the variance of the outcome is much higher than in the French case.
- [71:29]
Tyler Cowen
I agree. I would stress the point, which I think is quite familiar to you, that when things are quite dire for the Germans, they actually rise to the occasion more than you might expect them to. And this has happened numerous times in the past. So I don't see why they can't do it again and rebuild their economy. Along other lines, there's still something about the disciplined accumulation of human capital and social norms they're quite good at. It's a relatively attractive destination for talented migrants as Europe goes. So I wouldn't bet against Germany, but I fully agree with your analysis, including on France, I've written as much. And Europe as a whole. If France and Germany muddle through and Italy doesn't explode, all things gonna work out right.
- [72:20]
Yasha Monk
In the rest of this conversation, Tyler and I continue our whirlwind tour around the world. I press him a little bit more on Germany's economic future. We talk about Argentina under Javier Belay. And one of the points that I found most interesting in the conversation, which is how to think about one's personal finances. My impression from the outside is that Tyler could have gone and made a lot more money by going into finance or some other kind of field. He doesn't seem to me to be motivated by maximizing money. How should we think about the role that money and finances play in our own lives? Tyler gave an answer to that that slightly surprised me. As always, if you want to get access to the full episode of the podcast and ad free access to every single episode, including our bonus ones. Please go to yashamonk.substack.com Support this podcast by becoming becoming a paying subscriber. Thank you so much. Thank you so much for listening to the Good Fight. Lots of listeners have been spreading the word about the show. If you two have been enjoying the podcast, please be liked. Rate the show on itunes, tell your friends all about it, share it on Facebook or Twitter. And finally, please mail suggestions for great guests or comments about the show to GoodFightPodmail. That's good. FightPodmail.com this recording carries a Creative Commons 4.0 International License. Thanks to Silent Partner for their song Chess Pieces.