0:33 Intro. [Recording date: March 2 8, 2017.] Russ Roberts: Tyler's latest book is The Complacent Class: The Self-Defeating Quest for the American Dream, which is our topic for today.... What do you mean by 'the complacent class?' Tyler Cowen: That something is wrong in America and there is less urgency about solving that problem than[?] ever before. And in some critical regards, social change has slowed down. We are less innovative, less mobile, and more segregated. That would be the nutshell version. I could give you some examples. Russ Roberts: So, to me--and this is my only, the intellectual problem I have with the book. Of course, I have quibbles here and there; there are a lot of fascinating ideas in it. But, to me, your definition of complacency is more a description of statis, a case of a reduction in dynamism. Which certainly you write about a lot in the book. But I don't sense the distinction between a less dynamic, more stable economy and a complacent one. So, tease that out a little bit for us. Tyler Cowen: The rate of productivity growth in the United States has had periods of being higher and lower in American history. In a lot of the late 19th century it's not even clear according to the numbers that our rate of productivity growth was always so high. Yet American society was not complacent. We had a frontier mentality, an immigrant mentality; we were very likely to move across state lines; we were willing to accept a lot of risk. And that in turn helped us later on, get the rate of productivity growth up higher. But I see today it's a culture where younger people are more willing to keep on living with their parents, less interested in buying a car, more likely to aspire to being on Disability as a kind of future, and less interested in, you know, protests and social change than, say, they were in the 1960s or in the 1970s. Those to me are all signs of complacency. Russ Roberts: So, one argument against that, which you make in the book--I don't think you agree with it--but part of this is sort of the result of the fact that life's pretty good; we're richer than we used to be. And one could view this as what economists call an income effect--meaning something we want more of as we get wealthier, and certainly as we get wealthier one of the things we want more of is safety. We want more stability. Is that part of the answer? Or the explanation? Tyler Cowen: That is part of what drives complacency. But I don't think the choice to be more complacent is welfare maximizing for society as a whole. So, there's an external social benefit to risk taking, both in a lot of economic models and in my argument. A way of looking at our current problems is that everyone slows down change, in the longer run someone has to pay the bills; and we're not doing a very good job of that, I would say. Russ Roberts: Well, some of that's politics. We'll come to that. Tyler Cowen: Oh, of course. But politics reflects us. Russ Roberts: No, no, no; I'm agreeing with you. But what interests me about your central thesis of the book is that in many ways it's a cultural claim that could be explained partly by economic factors. But you are mainly talking about what's happened to America culture over the last 40 or 50 years. Is that accurate? Tyler Cowen: That's right. I view this as starting, really, in the very late 1970s, early 1980s, when people decided the risks and volatility of the 1960s and 1970s were simply too much. And largely they were right, but we've gone too far in the opposite direction.

4:44 Russ Roberts: So, to give you an anecdote--and your book is a mix of lots of data, but also lots of anecdotes and interesting speculation--I think about my father, who was born in Memphis, Tennessee in 1930. His father was a peddler, and I think my dad had a very strong desire to not be a peddler and to get out of Memphis. And he became the first person in his family to get a college degree--ended up getting a Master's Degree, even; and got out of Memphis very shortly after I was born--when I was 1 year old. You point out that one of the ways that this complacency manifests itself is less physical mobility in the United States. Talk about what we know about that, that fits in. Tyler Cowen: Yeah. The rate of moving across state lines is down about 50% from its 20th century peak from 1948 to 1971, insofar as we have the data. So, people are just staying put more often. Some of that is a kind of complacency. Some of it is simply it's a pain in the neck to move. I haven't moved myself in a long time, and I'm glad that I haven't. The net result of that socially is, labor markets become less flexible; we become more locked into jobs; the economy changes more slowly. And it affects the entire mentality of the United States. We no longer think of ourselves as such a pioneer nation. What we do is make our places nicer. We don't transform them in radical ways--build new infrastructure. A lot of aspects of our society actually are in decline. Just try taking the train up to New York City. Russ Roberts: Yeah, I have. Many times. It's a bit of a crapshoot. Tyler Cowen: You take it because the plane flight is even worse, right? Russ Roberts: Yeah, exactly. I take it because the delay of loading and security is more pleasant. But then the ride itself is a mixed bag. Sometimes it's more pleasant on the plane; but often the train is more pleasant. I like getting up and walking around; and it's a little more comfortable seat, etc., etc., etc. But, there are some surprises that you perceive, as you point out, or imply, that are unexpected in terms of arrival, delay, etc. Tyler Cowen: It's stunning to me: The trip is probably worse than it was 50 years ago. Russ Roberts: But there's WiFi! But it's really bad WiFi. It's a little better. I don't know. There's probably less leather in the seats, on average. Now, you mention this in the book of course because it's an important economic factor in a lot of different areas: but, one of the things that's made that mobility--the physical mobility we're talking about--less pronounced is various restrictions on the supply of housing, zoning, and so on-- Tyler Cowen: And occupational licensing. Yeah. Russ Roberts: Well, I want to come back to that. But I want to talk about housing in particular. It's really attractive for young people to live in vibrant cities like New York, Washington, Boston, San Francisco; and it's incredibly expensive. And it's not just the fact that the demand is high because it's nice to live there. The restrictions on supply have made the rents dramatically higher. How much of that is part of the problem? Tyler Cowen: I don't think we have a way of measuring that empirically, how much of the problem it's explaining. I think it's most likely the single most important factor. And the complacency is the general social notion that as long as we're "making our cities nicer," that there's not some long run consequence to all of this, and we can more or less ignore that and feel good about the fact that Washington, D.C. is a more gentrified place than it was, say, 10 or 15 years ago. And of course also much more expensive. Russ Roberts: Yeah. You mentioned occupational licensure. You mention it in the book but you don't talk about it much. Why is it important? What's changed? Tyler Cowen: I don't think it's one of the most important factors. I think it's a significant factor. So, as more and more people have service sector jobs and in general as our economy ossifies and becomes more ruled by special interest groups operating through government, a higher percentage of jobs are covered by licenses; and transferring or getting a license from one state to another--[?] not to be assured--there's some consortia and the like. And this means people who have licenses are less likely to move across state lines. You'll notice the rate of moving, like across counties within a state, is not really down very much. It's really longer-distance moves that have declined, not short-distance moves.

9:33 Russ Roberts: While I was reading your book I thought about the aftermath of the housing boom in places like Las Vegas and other so-called Sand States--Arizona and elsewhere, parts of Southern California. And a rather large number of folks were put out of work when that boom ended. Millions of construction workers. Millions of manufacturing workers around the same time were also out of work, due to of course a variety of factors--automation and foreign trade. And I find it interesting that we as a profession haven't used that as a remarkably--as far as I know; tell me if I'm wrong--a remarkably interesting experiment. Here are these folks who have been making a very good living in these fields for their skillsets; and all of a sudden they are confronted with the fact that, 1). Their job is gone, and 2). It might not come back for a long time, if at all. And: What did they do? Did they just stay in Nevada? Did they migrate to other states for other types of construction, manufacturing jobs? I don't think we took advantage of that. Maybe sociologists have. Tyler Cowen: I agree. That's under study. One kind of thing that goes on: there may be a kind of Prisoners' Dilemma problem. So, everyone says, 'Well, let the other people leave.' You think, 'Well, maybe jobs will come back.' You may expect not as many jobs will come back. So you'd like to be the one who stays; the other people leave and you apply for that new, smaller number of jobs and get something without having to move away. But if everyone feels that way, then no one leaves; and mobility ends up that it's stuck. I suspect that's an issue. It's hard to prove. Russ Roberts: Yeah. It's hard to sustain that without some kind of safety net or other alternative ways to keep food on the table, since this didn't take 6 months, but it's a multi-year phenomenon. It's hard to--lots of migrations-- Tyler Cowen: Spouses who work. Russ Roberts: Yeah, true. Tyler Cowen: There's some of that. There's savings. There's black- and gray-market labor; driving Uber. There's things you can do that may not be great for your future but will enable you to keep on eating, in addition to steady unemployment insurance and welfare.

11:43 Russ Roberts: So, you know that--and this is an interesting observation: I've moved a lot more than you have, I suspect. I've lived in maybe 10 different places growing up and as an adult. And, I was born in the South; I went back to the South a lot as a kid and a teenager, and as an adult. And when I was going back to the South in, say, 1962, having lived in Moses Lake, Washington, it was pretty obvious that the South was really different. And you point out that those differences--somewhat for the better, of course, but for whatever conclusion you might want to draw, a lot of the differences between the different regions of the country have homogenized. They've gone away. Why is that? Why do you think that is? And how does that fit in with your thesis? Tyler Cowen: I think different parts of America have become more homogeneous, in part because we're more of a service-sector economy. And service-sector jobs are often a bit the same everywhere. Not in Silicon Valley. But if you look at the economy of Columbus, Ohio, Denver, Colorado, many parts of northern Virginia or where you live in Maryland, there's a sense of, you know, retail and health care and personal services and some business services. And the sameness--those tend to be sectors that have low rates of productivity growth. So you're not going to move from one part of the country to another, say, to work in a Starbucks, most likely. You might have some other reason for wanting to move. But it's not like the automobile sector in Detroit where people move to Detroit to get those jobs. Or, mining during the California Gold Rush. Again, Silicon Valley would be the exception. But most of this country is not like that any more and it doesn't drive much labor mobility. Russ Roberts: Well, as you point out, I live in Montgomery County in Maryland, and it's actually the case that even though the mix of stores in my brother and sister's town in Memphis, Tennessee that I mentioned, are roughly the same as the ones we have here. Their malls actually look better. Because their zoning, and I think county restrictions are that it's easier to start new stuff. And so the architecture of those service providers is newer, and it looks better. That's the only heterogeneity that you kind of get. It's not particularly attractive: as you point out, architecture is kind of an unexciting period in American history. But, it's a little more aesthetic compared to the older stuff that's here in Montgomery County. Tyler Cowen: It's also a sameness of outlook. You can go to Arlington, Virginia, Ann Arbor, Michigan, Santa Monica, California; and something about how people think feels the same, how they vote, whom they've decided to live next to, how they date. And it's not that all of America is like that. But the fact that people are clustering more by political ideology I think is unhealthy and is giving us much worse governance than used to be the case.

14:55 Russ Roberts: Now, some of the complacency that you talk about comes from the fact that we're older, as a population. I looked up the data. The median age in the United States has risen steadily since 1970, from 28 to 37 in 2010. That's actually an enormous increase. Tyler Cowen: More to come. Russ Roberts: Yeah. There's more to come. It's the Baby Boomer population aging; and then people living longer--when they do get older, dying later on average. How much of that is part of our--you talk about the lack of innovation. How much of that is just due to aging? Tyler Cowen: I think some. But if you look at Millennials as a generation, they, in some critical regard seem to be less dynamic. I'm not suggesting any kind of moral flaw in them-- Russ Roberts: You curmudgeon-- Tyler Cowen: But a lot of them have grown up in a slow economy. They have higher student debt. Their opportunities have not been so great, and I think that's shifted their cultural outlook. They are used to an American government that fails at major tasks. So, whereas I grew up with the space program, which put a man on the moon, maybe they grew up with the second Iraq War or the Financial Crisis; and I think that shapes their outlook. And they are pretty young. So I don't think it's only a matter that we're older as a nation, though of course that's true. Russ Roberts: You talked about, mentioned earlier about lack of interest in cars; you document that in the book, about how unexcited teenagers are today about, say, getting their license, compared to a generation ago. And I think that's true. Of course, some of what's going on under the surface is more dynamic. You know, it's one thing to say, 'Teenagers just want to sit at home,' or live longer at home. But of course, as you point out in the book, the car of 1970 is today's computer app or today's smartphone. Which is a way of expressing oneself. It's the way to meet other people. Is some of the apparent complacency we are talking about and lack of dynamism just harder to notice? Tyler Cowen: Well, so many of the tech innovations encourage leisure at home. So, Amazon will ship you all kinds of things. You can watch so many movies and TV shows on Netflix. The idea of cocooning has become easier, more comfortable, more fun. Obviously that's a pleasure. We all experience it. But when that comes at the expense of, you know, actually productivity gains in firms, and people moving around, developing an actual dynamic mentality, you know, the research of Raj Chetty--one of the things I think it shows is that you can't deny that the physical and geographic spaces you live in, where you are, matters. How you are growing up; the people you are interacting with face to face. And I think in all those areas we are not making huge progress. And we so often are using information technology to slow down change rather than to accelerate it. Russ Roberts: I want to use you as an example--or maybe me--to take this point a little further. So, you--on the surface, Tyler Cowen is stuck in a rut. He is still at George Mason. He's been there forever. He's still living in Fairfax--or wherever you live: I apologize; I don't know exactly. Tyler Cowen: I used to live in Falls Church. I don't say I'm not changing here. Russ Roberts: Okay. So, on the surface, though: You're the same professor; and we know professors are risk-averse: they don't take chances; not innovators. And yet, you've done incredible innovation. You started a blog that's one of the most popular, top 3 probably economics blogs, Marginal Revolution. You have an online university: a set of videos which you're creating. You do podcasts like I do, Conversations with Tyler. True, some of them are in person, in front of an audience. But I think a lot of what we are actually doing--I'm just wondering if some of the ways that we observe economic activity in America is not capturing the dynamism that's actually there. Tyler Cowen: There's two different points in that. One is how you and I should think about our own lives. I would just say, within academia we are the exceptions, and the overwhelming trend I see is people who get tenure--my goodness, they have tenure and they don't take additional risks. And I'm pretty sure you agree with me on that. Russ Roberts: I think I do. Tyler Cowen: And I think overall academics are among the most complacent of the complacent groups in American society. Russ Roberts: Fair enough. Tyler Cowen: The second is how to measure the gains from the Internet. And there are now a few papers which I've written about in the book and in some columns which try to measure those gains and look at: Do they overturn the notion of the productivity crisis? And they don't. Those gains simply aren't large enough to restore productivity numbers to where they used to be. So, it's wonderful-- Russ Roberts: You are talking about the unmeasured parts of the Internet, or the unpaid-for parts, etc. Right? Tyler Cowen: Correct. And a lot of it of course is paid for and it's in GDP (Gross Domestic Product). But there are some unpaid-for parts. And those just don't seem large enough in value to restore productivity gains to where they used to be. And I think just if you look at how are people in this country reacting to the new world they live in, whether it's how they are voting or polarization or the opioids crisis, the behavior of men in the workforce, the decline in the number of Mexican immigrants who want to come here--there's a lot of other non-CPI (Consumer Product Index) requiring data that to me suggests we are not improving the world at the rate we used to, and that's a big form of complacency.

20:35 Russ Roberts: It's hard to understand why that is. I know there are a lot of different theories, and I'll let you share what you think are some of the more plausible ones. But, you think about--and there's a big question today: It appears that college graduates don't have as great a future as they once had. And yet, if you major in a STEM (Science, technology, engineering and mathematics) field, it seems to me that--an of course that's a small proportion; it's not a majority. But if you major in a STEM field, it seems like the world is going to be your oyster. There's going to be an enormous amount of opportunity for you. So, how much of this--going back to one of your earlier books, The Average Is Over, is a mix of people who have tremendous opportunity and others who just are going to struggle to be part of any of that economic growth? Tyler Cowen: Well, I agree. If you are a person who today is hell-bent on creating opportunity--possibly you are even an immigrant--you are very good with information technology, that group of people is extremely non-complacent in America today. It's just that it's a fairly small minority and it doesn't describe the nation as a whole. Because [?] we're having more specialization and noncomplacency; and I think that's politically and also sociologically dangerous. We're relying on fewer and fewer people to be noncomplacent--a kind of free riding occurring. Russ Roberts: You mentioned the opioid crisis. It's come up quite a bit recently on various programs--with Sam Quinones and Tom Wainwright and Angus Deaton. It's a large phenomenon--that, and the heroin problem. Let's just call it--I think of it as the escape problem. How do you understand it? Tyler Cowen: Some of it I think is regionally economic development in this country, it's not even as it used to be. There's less catch up from poorer regions. Which used to approach the per capita levels of the better-off regions, and now, you know, the Rust Belt is not catching up to Silicon Valley. And I don't think it will any time soon. So there's something about technology that encourages clustering and more geographic specialization and face-to-face. So you have dying areas. Offensive politics isn't doing much for people--or I think you and I would largely agree. And then, some drugs are better and more potent than before--not better for you, but they, you know, give you a more intense high. They are easier to get. Prescription practices it seems to me need to be revised significantly both in terms of how they are legally regulated but also the voluntary institutions. And to me what's striking is, you know, the drug of the 1980s was cocaine, which riles people up. And a lot of the recent drugs--the opioids and also some marijuana--they are drugs that put you to sleep. And people want that kind of escape. And they are not drugs that make you violent: that's obviously in some ways a good thing. But precisely for that reason they can in some ways destroy you more easily. You're simply there in a corner and you are less of a social problem in the short run. And so it continues. Russ Roberts: So, if I were doing so really cheap armchair psychology, which we're all somewhat prone to: Taking the long, long view one might be tempted to think about Brave New World here a little bit--Aldous Huxley's book--and the drug Soma. Is it possible as religion becomes less important to people, less attractive, as work becomes harder to find, that even the comforts of the Internet are not as much as a solace? And that we're heading toward a really not-so-attractive future? Tyler Cowen: For many people, but not all. I think it's important that you mention religion. True belief and sincere participation in religion is a significant bulwark against, say, becoming an opioid addict, or even having big problems in the labor. And it gives you a social network and people to look after you. This country is becoming less religious. I feel overall that's to its detriment. I say that as a non-religious person myself. I think that's yet another factor.

25:01 Russ Roberts: You mention monopoly power as part of the challenge that there's less churn and dynamism in the market for firms. What's the evidence that that's real? And why would it be important, if it is? Tyler Cowen: I tried to word that carefully in the book. Concentration indices are up now as we both know those can be misleading. You can have potential competition in an area, and I think due largely to the Internet we do have more potential competition today. There's more globalization. It's funny to me the people who on the one hand complain, 'Well, the Chinese are competing against us too much' are then saying on the other hand, 'Well, there's much more monopoly.' Like, those can both be true at the same time. But you need to be very careful as to what exactly is going on. I think a lot of the increase in concentration ratios is coming from one of two factors. One is just bad law, bad regulation. So, the health care sector. It's much more concentrated. Probably a lot of that is just regulations are so high for hospitals, for insurers. There are bigger economies of scale. That might not be the only reason. But I think it's a big one. The other thing going on in concentration indices is I do think, for more or less purely market reasons, retailing is more concentrated. There are more and bigger chains. There is less turnover. I don't view that as a major social problem. But I think it's a symptom, a more general sense of our economy just even changing that much any more. And the chains are mostly winning out because they have better customer service. Probably they have better product selection. But again in the longer run, I do think there's some social cost in terms of less entry, less disruption, less product innovation. Again, not a big problem in my view. But it's not my ideal for the America economy, where like chains last forever. Russ Roberts: Yeah. I'm with you on that. I wonder a lot about that regulatory burden. Let's talk about that for a minute. Just to make the argument clear, it's really at the heart of the root of the Bootlegger and Baptist argument, of Bruce Yandle: that firms will often support regulation, painting themselves as in favor of safety, or whatever it is, but knowing at the same time that they'll profit from it. And they'll profit from it because their smaller competitors won't be able to absorb the compliance costs. This appears to be happening in the financial sector right now in the aftermath of Dodd-Frank. And, that argument--I find it deeply appealing, partly because--I'm not a big fan of regulation, per se. I'm not anti-regulation literally, but I'm a skeptic of. And I also like it because it's kind of cool--it's kind of contrary and clever--it's a cool, hidden insight. But I wonder also if it's true. It's very hard to quantify. It's true there are a lot more pages in the Federal Register. But, is it genuinely harder to, in new areas, start a business, thrive, etc.? Do we know much about that? Tyler Cowen: Yeah. At Mercatus, we've compiled a data base of regulations where we analyze them linguistically and we try to see what you can learn from that. I think the overall picture is complicated. So, longstanding sectors typically are becoming much more regulated--too regulated, I would say, in almost all cases. The good news is that there are some newer sectors such as Information Technology (IT) and parts of the Internet which are not that regulated at all. So, describing that picture in terms of averages or even medians is probably not an accurate way to look at it. But I think the significant fact here is simple: Longstanding sectors are stultifying. You see this in big pharma--there was talk of Donald Trump appointing a fairly radical deregulator to head the FDA (Food and Drug Administration). The big pharma companies were not pushing for this. If anything they were worried. They wanted an establishment pick. So, I see a good deal of anecdotal evidence that this problem is getting worse. Not really having any new banks--since like Dodd-Frank's there's one new Amish bank somewhere that's very small. So, we're shutting down too many parts of our economy. And it can even be the case--each one of those decisions can feel like the right thing to do, but again, the end result is you get lower rates of economic growth; and compounded, the long-term results of that is just a disaster. Russ Roberts: You're somewhat--you make the point that our perception of the innovation nature of our economy is exaggerated and incorrect--that innovation has slowed down, even with the Internet. And you picked on Elon Musk as an example of someone who has held out, an extraordinary innovator, and yet his ideas may not have any viability. The Hyperloop seems like a long shot, as you point out. Tyler Cowen: And they need big subsidies, it seems, too; even that may not be enough. Russ Roberts: Yeah. Which is not good. But, if you had to ask me who are the Thomas Edisons of our era, I don't--he's probably not the right figure to use. But you like to point out that the transformation of life from 1900-1950 or 1960 or 1970 is much greater than how much life has been transformed in recent decades. And if I had to pick a figure who was transformational, I would pick Jeff Bezos. And I would pick Steve Jobs. And they have changed our lives in extraordinary ways. Now, there might be some negative effects, like the fact that--and I don't have one of these, but you can have a button next to your washing machine that you can push to bring Tide to your house via Amazon. I agree--that's remarkable; it's not that exciting. But so many aspects of Amazon and so many aspects of the Apple transformation of the phone, music, the computer, have really changed--certainly your life and mine in just extraordinary ways, in terms of access to information, books, facts, ideas. Life has changed a lot. So, when you talk about complacency, one of my problems is--again, going back to my dad--again, people in their 80s, people in their 70s, and somewhat even me, someone in his 60s--life is changing so fast, it's hard to keep up with being able to turn everything on and keep it charged. It's a hugely different life than we had 25 years ago. And I see lots of change. Do you disagree? Tyler Cowen: Well, I think Bezos and Jobs are good picks, but I would say in the earlier part of the 20th century you had figures like that in literally every part of the American economy, and right now it's only in a few areas. And if you just [?] measure simple variables--what's the consumer surplus from having an Internet connection?--it actually doesn't seem extraordinarily large. If the price goes up, people do less of it more or less at normal rates. And I think it's striking that you mention the two of us as examples. I have a much earlier book called The Age of the Infovore, where I argue that for people who are obsessed with information, like the two of us arguably are, life is indeed much, much better. And this is all, you know, a fantastic revolution. But, that's actually not most people. It's possible the median American did not read a single book last year. There's a lot of watching of cable TV; and a lot of lives haven't changed that much, and maybe phased substitutes in for what used to be Network TV, and that's an improvement. Russ Roberts: Small. Tyler Cowen: But I think you are extrapolating too much from our lives, people we know--the so-called coastal elites. And in this country, the number of people who think their lives will not be better than that of their parents seems to be rising, considerably. Russ Roberts: Well, it's an excellent point. And it would certainly also apply to our listeners right now. Most of them--most of you out there-- Tyler Cowen: Infovores: why are they listening to us? [?] Russ Roberts: We're probably in this same group. I wish it were larger--more numerous, that is. I don't want you to get larger. And we of course have our many, many fine episodes on weight loss that many of you have benefited from.

33:54 Russ Roberts: But it's certainly true that it is most fun for the infovore. Again, this is a record for most references to my dad: My dad, on his iPad, which wasn't easy for him to use, at 86, but he listens to the Limelighters, which is a group I bet you know, Tyler-- Tyler Cowen: Of course-- Russ Roberts: But most of our listeners will not know. A folk group of the 1960s. He listens to opera. His world is so rich musically now because of the Internet. And those of us sitting in front of our TVs--the TV we're watching is a lot better. The screen is better; the show is better. Netflix and others, HBO (Home Box Office) have transformed visual TV, television. It's just an amazing thing. But where I'll agree with you is that maybe I exaggerate day-to-day life, because I have too much leisure. Too much time to spend as an infovore surfing that virtual world. Tyler Cowen: Yeah. I agree television is much better. But I think it's striking that music and movies are almost certainly worse. What's happened with music is that people can listen so easily to the best of the past, the amount of attention paid, royalties paid to currently-created music is falling. And what I find remarkable is I can listen to music from the, say, early to mid-1990s--say, Alanis Morissette. And if that same music came out today, I wouldn't know it was 20, 25 years old. It sounds the same. There's not that much innovation. So I think we need to ask ourselves if information technology is in every way, so dynamic, so wonderful, why is our music sounding the same and not really going anywhere? If you are in 1967 and you heard music--I mean, even from five years earlier--forget about 20--it would have sounded quite different and archaic. I think movies also--hard to prove, it's a subjective evaluation--but obviously much worse. There are [?] franchises that rely too much of CGI (computer-generated imagery). They have worse performances, worse dialog, and are not, close, say, to the Hollywood masterpieces of the 1970s. So, you know, again: TV is much better. I would readily grant that. But if you are only getting 1 out of 3, and then we're thinking this is all so wonderful--I think we should be more skeptical there. Russ Roberts: Well, audio is better. Because we have podcasts. Tyler Cowen: Oh, sure. Russ Roberts: That's a joke. But it's sort of true. Tyler Cowen: No--but it's true. It's a true joke. Russ Roberts: Right. It was meant to amuse, but there was truth behind it. Tyler Cowen: Learning is much better for those who love learning. Right? Russ Roberts: Yeah. For sure. Tyler Cowen: And that's probably your father, too. Russ Roberts: Yeah, for sure. I'm going to push back a little bit on the movie thing. I do think that a lot of the things--we don't call them movies, but serials like House of Cards, Sherlock,-- Tyler Cowen: That's television. Television is better. But, movies? They're worse. Russ Roberts: Yeah, well, they kind of merged together, I would argue. But maybe that's a distinction worth making.

37:03 Russ Roberts: There's a strange part of your book, which I enjoyed a lot, where you sort of complain, but certainly observe that we don't riot as much as we did in the 1960s and 1970s. And there's a theme in that section that that's not necessarily a good thing. So, talk about that change--and I thought you had some great insights into policing in there. Talk about why that's changed and what it portends. Tyler Cowen: Well, I don't favor rioting. I've also never done it myself. But that said, the fact that it is so much less frequent I think we should think critically about and not just cite as a completely positive thing. We have bureaucratized protest in this country. Like most other things, it's much harder to get the necessarily permits and clearances. You can be shut down at any time for national security reasons. There are more bureaucracies you need to go through. Strictly on the private side, it's much more a matter of having PR (public relations) consultants and people managing your event than it used to be. So, the fixed costs are higher; the law is tougher; the regulations are more onerous. And I wouldn't call that I direct restriction on freedom of speech, but I don't think it's an entirely positive thing, either. And the police in turn have learned a great deal. They make sure demonstrations don't get out of control. They have better surveillance, communications; they apply management technique. For the most part--Ferguson was an exception--they defuse trouble before it gets started. And there's been this overall pacification of our culture which on any given day, week, or month is [?] to be preferred. But, in the longer run it means we lose our ability to course-correct. Again, I just want people to think more critically about this. Russ Roberts: Let's go back to something we were talking about a minute ago because I want to hear you talk about this piece of it. You write very beautifully about your childhood and young adulthood, and then the present, and how you were straddling two worlds and how you appreciate that; and how young people today--they are in one world. Talk about what you were referring to there. Tyler Cowen: Well, you and I, we belong to what I think will be seen as a unique generation. We grew up without having an Internet, so we had to learn how to look for used books, how to track down scholars, how to make personal contacts in a particular way, how to use a library--in the old fashioned sense: one had to browse the shelves for books. The only book you might have in the house might be a great classic, Tocqueville, and you would read it for the 5th or 6th time and study it in depth, because you couldn't go browse your Twitter feed. Now, that had big advantages, and also big disadvantages. But then when we're in, you know, more or less our 30s, we're still young enough to adapt to this new Internet world, where there's blogs, there's Twitter, there's search, there's reading small bits of things. So many things are searchable; it's so email people and contact them. You can watch the speakers you love on YouTube and so on. And, the ability to have both of those worlds of learning I feel is quite special. And it's actually one of the greatest blessings of my life that most people my age don't appreciate; and those who are either too old or too young to have bridged those two areas, I feel they are missing something quite significant. By the way, I think it was Ben Casnocha who first made the point to me, so I would credit Ben--who I believe I do in a footnote. He said, 'You're so lucky, Tyler.' I said, 'What do you mean?' And then he explained this to me. And Ben is young--he's, I think not even 30. Russ Roberts: Yes. But why do you--you're not much of a curmudgeon. I try not to be one. I think as you get older you drift inevitably toward curmudgeonliness. But what would be the argument that, let's say, a young person would--how would you convince a young person that they missed something? Most of them would think you are crazy. Why would you want to go wander in a library or use a map, or, you know? Tyler Cowen: I don't think those young people do think I'm crazy. And I talk to young people all the time. And I often make this point to them. And I don't think I know of any case of any one who has failed to grasp it. Maybe they hadn't understood it to begin with, but when I say it, the response is a kind of astonished recognition, is what I find. Russ Roberts: Well, say it again. Say it again. We're talking about nostalgia for 1990, right now, is what we're talking about, right? This pre-internet era. Tyler Cowen: [?] but before. Russ Roberts: No, I know. But that's how recently-- Tyler Cowen: But even before the 1990s, really. Russ Roberts: Sure, of course. But there's a certain strangeness to how--go ahead. Tyler Cowen: Social media can distract you and keep you busy and keep you too tied up with fairly short or even sometimes superficial messages. There's something addictive about it. Though they're nonetheless very powerful tools for learning and connecting. We should agree with that. And we may even think the new world is better on net. But there is something from the old world when you didn't have that, that you had to master other ways and styles of learning. And if you can put that together with the new approaches, that's just very powerful. And people I tell this point to, generally they get it. And I think the younger people get it all the more, because they lived a downside of the tech world more directly. Russ Roberts: I agree with that. We've talked on here a number of times about how--people are aware of this challenge--we could call it an addiction to Twitter or to Facebook or to your phone. Tyler Cowen: Or to your podcasts. Russ Roberts: Yeah. Well, they don't come out often enough. I guess you could listen more than once, think of this-- Tyler Cowen: Go to Liberty Fund conferences--I know you do all the time--and if you look at probably the smartest, most incisive, insightful commentators; and then just ask yourself, like, 'On average are those people spending more or less time on social media than the other participants?' We know the answer. I think there's something to that. Russ Roberts: My view on this is that, you know, I keep the Jewish Sabbath, so I'm guaranteed a 25-hour window every week without electronic devices. Which I'm grateful for, for many, many reasons. But that's one of them. And I think--I'm not suggesting that more people are going to become more religious Jews. But I do think there will be some cultural pressure to find ways to detach oneself from devices and the Internet, going forward. Do you agree? Tyler Cowen: Yes, I do. I already have people writing me declaring their intention to "quit Twitter." As if it were a drug. We'll see if they do. But that they're even thinking about it-- Russ Roberts: Yeah. I think about it myself. It's not so much for me an addiction as the snark factor occasionally wears me down. One of the reasons I stick with it is I think I should be able to get over that. But it's not so easy. Tyler Cowen: You also raised a demographics question in what you said. So, I find in my own life I was most pessimistic as a teenager, in the 1970s, when I really thought the world was falling apart. And, maybe in a way it was. And then over the next two decades I became much more optimistic. I think my optimism peaked in the mid- to late 1990s. And I think since then, not in absolutely terms--I know all the numbers on poverty reduction and life expectancy that you do. But, if you just ask the question today, 'Do more people believe in freedom than in the 1990s?' I think the answer is 'No.' I think that's extremely important; and I think we should be more pessimistic in some significant ways. Russ Roberts: Yeah, what's happened to me--I think I developed a reputation as an optimist, somewhere--certainly my own self-image had that as my character. And the financial crisis was a jarring realization that I'd been overly optimistic. Tyler Cowen: It was 9/11 for me. Russ Roberts: Yeah, that, too. I remember after the anthrax scare wondering if we'd ever be able to have commerce again across international borders and state lines, and how incredibly destructive that would be. That turned out not to be a worry that was real. But, it of course could happen again, things like that. But what I find interesting--the financial crisis was a big jar of my worldview of optimism, thinking processes would just work out better. And then, in the last 5 years what's happened--and I don't know if this is what I consume or if it's real; I can't tell yet and maybe it's too early--this feeling that I'm doing fine, and other people aren't. Which is, I think, where the rest of the world was over the last 25 years. I don't know if that's a media-generated problem or whether it's real. But I think we'll get more information on it going forward. Tyler Cowen: I find Russia, Turkey, some aspects of China, Syria to be very, very troubling. There you have countries which ought to be become more free, at least by my views of the 1990s; and they're becoming less free. And I don't think we really have a perfectly good explanation for why. Russ Roberts: Well, I was thinking about people in the Rust Belt; but I'll add that, too. Tyler Cowen: Well, sure. They are much better off than people in Syria. Russ Roberts: Of course. But offsetting that is this unbelievable revolution that you and I read about--you perceive it because you travel, but the transformation of life in China over the last 25 years is a wonderful thing. And mainly really, really good; and a source of some optimism. Tyler Cowen: But surely we all have some fear, even if it's not our modal forecast? There are some features of the world today that look a bit too much like 1910 for comfort. Where living standards are rising but some cultural foundations are eroding, some ideas are getting worse. Attachment to liberty is dwindling. And what's the long-run sustainability of that? I don't think any of us know. But I think our level of concern there should be rising. Russ Roberts: Well, I think what makes you an interesting thinker, Tyler, is that even though you are trained as an economist, you don't think it's all about money and you don't think it's all about markets. They are important, of course. But I think some listener would say, '1910? What was wrong about 1910?' Well, it was 4 years before 1914, which was an upheaval, of the First World War, which was an upheaval which changed everything. Led to WWII. It's--culture matters. And the perception of who we are and our identity matters. And I think it's something you do very well. Tyler Cowen: Keep in mind, a lot of my earliest economic research was on the economics of culture, and that's always stuck with me. It seems to me still a missing element in most economic models. Including narrowly-based macro. Russ Roberts: Yeah, for sure.

48:10 Russ Roberts: Speaking of culture, you write about architecture and fashion. Which, again, most economists don't. You argue they've become more stable. What do you mean and why do you think that is? Tyler Cowen: In the United States I think contemporary architecture is only very rarely good. There are a certain number of trendy, expensive buildings; one may or may not like them, but at least they are an attempt to do something ambitious. Russ Roberts: They grab your attention. Tyler Cowen: Yes. And again, opinions may vary but at the very least I admire the ambition. I find it striking the extent to which we've used our wealth to build more structures, and hardly any of them are as nice as, say, an old-style Georgian home as you would see in London, when people were much, much poorer. I don't mean a little poorer. You know, they were many multiples of times poorer. And yet many of them lived in nicer buildings, and we don't seem to care. It seems to me interiors are vastly improved with every generation, including ours compared to 30 years ago; and obviously to some extent that's what people value. If you have a theory or what's wrong with the world is that people are getting too good at leisure at home and not good enough at interfacing physically, geographically with everyone else, and then you see the way that architecture is evolving: that interiors just are better every year. And next year your sort of main, mediocre, ugly, and not even worth looking at--that to me is at least an interesting parallel. Russ Roberts: And maybe you know about this. I don't; I wouldn't be surprised if you do. Obviously a college campus, many college campuses, are designed to evoke the college campuses of, really 16th, 15th century England. Some do it well. Some don't. And of course there are many exceptions. There are beautiful campuses that don't do that. But it seems to me that a lot of what we do is imitate the past. And certainly one of the things that we do, as you point out, is we don't do anything radically different. But is there any measure of that? I don't mean empirically. Do you have any intuitive feel that we just have a nostalgia for the past and continue to build buildings that look something like they used to? Tyler Cowen: I think it's a running out of ideas, a sense that in architecture everything has been done; that even shock value has lost its shock value. And if I--when I visit universities, colleges, which I do all the time, there are hardly any new ones which I consider attractive at all. Somewhere like UBC (University of British Columbia) in Canada--that's stunning. But it's more the site than necessarily what they have built. And furthermore, that's Canada. So, even our universities with main endowments, they don't look better than historical buildings. So, there's something about the older notion of culture--kind of the visual, the physical, the regional--that we can't do very well any more. Same, you could argue, about public sculpture. Or even just go to Alexandria, Virginia and look at some of the 18th century homes. People still live in them. They are less practical, but the notion that they really do look nicer than something built last year--maybe back then per capita income was, what? $200 a year? Hard to measure, right? Russ Roberts: Less. Tyler Cowen: But that to me--we don't think enough about. Probably less. When it comes to culture, it's much easier to have negative progress than when it comes to purely material goods. And maybe that's a problem for the sustainability of our world. Russ Roberts: Talk about fashion and how casualness has emerged; and the role that signaling plays in how we dress. Tyler Cowen: Well, being a casual person myself, I'm very glad being casual is in vogue, and probably will stay in vogue. But what I find striking is societies with a lot of upward mobility often tend to have strict dress codes. So you see this today with Mormons, at Mormon businesses. You see it in Japan in its heyday years--you know, the businessman or journeyman suit, they more or less all looked the same. There's something about upward mobility where actually clothing is not that casual and one is being more formal in trying to impress; and that is a [?]. But the thing about being casual is it actually makes it harder for people to prove themselves. So, Bill Gates goes to a meeting and he may show up dressed very casually; but he's still Bill Gates--either everyone knows or if you really needed to, you could Google him. So there's a code of casual that's actually very difficult for, say, people from other cultures in America to master or demonstrate that's actually made signaling harder. Just that right way of looking casual is in a funny way more conformist than like the blue suit and tie, which you could do and then innovate around and try to climb to the top. So I find this disturbing, the more I think about it. Russ Roberts: I think you're in a small group there, but it's interesting about being, finding it disturbing, but it's an interesting observation. And as you point out, most of us are pretty happy about the trend overall. But it is interesting how that's happened. It's not obvious to me how or why that has happened. Any thoughts on that? Maybe you just gave them. I'm not sure. Tyler Cowen: Your father may have told you stories about how men were expected to wear ties. Sometimes even sitting at home and expected to wear hats. So, I think there's something about formality and hierarchy that actually can make mobility more possible. That's a politically incorrect thing to say. But the notion that like all ideas are tolerated, that everything is equally valuable and you can sort of wear any kind of clothes you want provided you somehow feel like you could be living in downtown San Francisco, I think that's a very alluring but very dangerous cultural move we've made. The places where you see it at its most extreme are exactly the places where it's hardest for other people to move in--you know, get a cheap apartment or flat and work their way up. And that to me is no coincidence. It's enforced by building restrictions. You go to a Silicon Valley party, people show up in their shorts or flip-flops; and maybe they earn a lot of money. And that's actually part of the problem. It's a very counterintuitive view, but I think the more one goes around the world looking at it this way, the more it makes sense. Russ Roberts: Yeah, I like your point that there's real art to looking good casually. I don't know if that agrees or disagrees with the rest of the thesis. But I do think it's--instead of getting a very highly tailored and expensive suit, now you have to know exactly how to match your tee-shirt with your running shoes in a way that doesn't make you look the wrong kind of geek or whatever it is. Tyler Cowen: Yes, so say you are an immigrant to this country and you show up at a workplace and they tell you, 'Look, put on a blue suit jacket and a tie, and burgundy shoes.' I mean, don't you feel immense relief at that, actually? Russ Roberts: Yeah, of course. Yeah, for sure. Tyler Cowen: Whatever else might be thrown at you. And that's really just the point right there. And once you get that intuition, just apply that logic more broadly.

55:44 Russ Roberts: You mentioned de Tocqueville a few minutes ago as might be being your only library book. But you spent quite a bit of time on him in your book. Talk about what he meant by pantheism and how you see it relating to transcendence and the current situation in America. Tyler Cowen: Tocqueville's notion of pantheism, I'm not sure I understand. And I haven't read Tocqueville in the original French. But at least, as I read him, Tocqueville as a theorist saw America was headed in a direction of greater complacency, much greater mediocrity--noting, and indeed insisting that mediocrity is greatly underrated or undervalued. Like, a mediocre life is a wonderful thing to have. But nonetheless markers of social status would ossify, and through a kind of indirectly enforced conformity change in this country would slow down. And de Tocqueville arguably was the first theorist of the complacent class. And I try to give him full credit for that. I think it's remarkable how much of that he saw in advance. Now, he calls it pantheism, by which he does not seem to mean the Spinoza notion of identifying God with the material universe. For him, I think it's a way of thinking about how idolatry works in this new society--that people copy each other to an extreme degree. In a way he's the forerunner of Rene Girard in his passages still. Russ Roberts: What's the concept of transcendence and why is that important? Tyler Cowen: Transcendence gives us something beyond ourselves to aspire to, gives us external standards. It gives us a kind of hierarchy or rigidity, even if we use it just to rebel against. And that's very useful. You know, another group in American life that I view as not very complacent, and that would be Mormons: They have a robust middle class, high income growth, a lot of mobility; very good social indicators. There's a new Megan McArdle piece on this on Bloomberg today. And they're also the group--they have a lot of hierarchies in various ways yet in other ways are highly egalitarian. Very entrepreneurial and dynamic. Very religious, of course. And I think there are lessons in the Mormon experience, too. Russ Roberts: You also have some praise for immigrants and the dynamism that they had. Tyler Cowen: You know, I think immigrants are more neurotic than average. And that's very useful. You actually want a country in some ways filled with neurotics or partial neurotics. They are driven or they are motivated. And immigrants have so often in the past refreshed this country's dynamism. They are doing it now again to some extent, to the extent that's happening. And, life as an immigrant is extremely uncomfortable. I think those of us who are not immigrants forget that. My wife was not only an immigrant, but a refugee from Soviet Russia. And when she came here, it was a long, long time before she fit in again or knew how things worked, or, you know, started her second career. It's very difficult. And we now have this view like people born here shouldn't have to go through something like that. That, again, is another way of framing this complacency. Immigrants rarely think that. They all know they are in for big adjustments. And even if they don't know it at first, it hits them over the head. Russ Roberts: You say something, which I found really provocative in the book about politics. You say, "Elections these days often seem more about who is to blame than who is to govern." What do you mean? Tyler Cowen: Well, Trump has turned out to be the master of that. You know, I wrote that sentence when I had no inkling Trump would win. But if you look at his tweet stream, it's remarkable how much he's still blaming Hillary Clinton for this, that, and the other. He now likes to blame Paul Ryan. I'm not saying there's nothing you can blame those people for. But, look: He's President. Actually, one might expect he takes responsibility for governing and getting something done. But he's rather obviously wallowing in blame. And the two parties blame each other. So, the Republicans vote to repeal Obamacare, what, 60 times or so? And then they get in power; and it doesn't seem they can do it? What does that tell you about complacency? Most parts of the Budget, the two parties for all of their symbolic differences are very much in agreement about, and probably even Obamacare will not fundamentally change or go away. That to me is an underappreciated truth. It's been pointed out before. But I don't think we've really internalized how much of a stronghold that has over what happens or doesn't happen in this country.