Tyler Cowen on the Economics of Big Business, Progress, and Pandemics

[0:00:00 Speaker 0] Mm hmm. Welcome to Policy McCombs. A data focused conversation on trade offs. I’m Carlos Car Value from the Salem Center for Policy at the University of Texas at Austin. With us today we have economists. Tyler Cowen from George Mason University, in addition to being accomplished research and economic style, is the author of several best selling books, including The Great Stagnation and, More recently, Big Business. A Love Letter to an American anti Hero. Tyler is the author and co author of one of the best economics blogs out there, Marginal Revolution. He writes a weekly column and Bloomberg News and is also the host of a great podcast. Conversations With Tyler Tyler Welcome to Policy McCombs.

[0:00:47 Speaker 1] Happy to be here. Thank you,

[0:00:49 Speaker 0] Um, let me start by asking a couple of questions and big business. So let’s just go to the title like you call big business an anti hero. And why? What is it to love about it?

[0:01:01 Speaker 1] Well, the big news of today when we’re recording is that the American pharmaceutical company Pfizer has come up with a vaccine against Covid 19 that is more than 90% effective. That’s pretty awesome. Big business did that we’re recording this over. Zoom Our That’s a big business. Uh, Amazon NBA have performed much better over the course of this pandemic than, say, the United States federal government. So I feel in our society. Big business is somewhat underrated.

[0:01:36 Speaker 0] It’s under rated as an anti hero from From what size and what are the parties of society that tends to be skeptical or critical of big business these days?

[0:01:44 Speaker 1] Well, the Progressive left it’s a major theme of their arguments is to be anti big business. It’s hard to find any cases where they will say anything nice about business, but to be clear often, the right wing is just as guilty, just in different ways. Donald Trump will yell at businesses, tweeted them on them, say they’re evil. You know, media is the enemy of the people. Uh, this business can’t be allowed to outsource for the rhetoric as a whole is more pro business. But the actual behavior in many ways is just as bad. And it’s not respecting underlying legal foundations that enable big business to prosper.

[0:02:25 Speaker 0] How about us? As a business as many universities professors have, what’s our our general, uh, produced positions are big business.

[0:02:33 Speaker 1] Well, universities are among the most left leaning institutions in American society. So they’re anti big business rhetoric. And to go in the direction of the progressive left, Yeah, business should be taxed. More should be regulated more. You could have a lower overall status for problem. Major problems. You look always to the government. So academia, my point of view, is a very slanted perspective. Big, ordinary people on the street, the better sense of big business than do academics on average.

[0:03:09 Speaker 0] Yeah, I was gonna ask you about the performance of big business during the pandemic, and you already alluded to it. Um, it’s been It’s been impressive to me at first when? When we’re going into the lockdowns In March, I was concerned of big disruptions in supply chains and so on. And I’m stunned by how how smooth things were from from from their perspective. And

[0:03:29 Speaker 1] companies in particular, have done a phenomenal job. You know, arguably, our major tech companies are the best drawn, best functioning institutions human history ever has seen. I know people can be afraid of them for that same reason, but how much they have knit us together, supply chains up and running Venice means of communicating. Classes have kept on running in highly imperfect forms. I get my goodness better than nothing, and it’s been a relative success of adjustment. Uh, and again, most of that thanks, I think, goes to the drive. But sector a government has done in a pretty poor job at multiple levels.

[0:04:11 Speaker 0] Would you say that businesses in the U. S. Are are better run in some ways or would do we learn anything about that during this crisis? Or or it strikes you as no major differences Across across countries,

[0:04:25 Speaker 1] there are longstanding indices of managerial quality and productivity. United States is a clear number one. I have not seen an empirical study across nations during the pandemic. It seems intuitively obvious to me. American business, because it is so strong in tech, has really done remarkably well and almost certainly extended its lead in those regards.

[0:04:48 Speaker 0] So just to close on this one, um, the news of today, the Pfizer news. But it was also a news from a smaller, uh, bio bio company in Germany. Right?

[0:05:00 Speaker 1] Correct by two immigrants, Children of Turkish guest worker parents. Amazing.

[0:05:06 Speaker 0] Amazing right. And do you do understand the details of where they working in collaboration or those? Those are two separate news. I haven’t.

[0:05:12 Speaker 1] They work in collaboration, so fights are in terms of making it and distributing it is a much, much larger company and with much stronger roots in the United States. The original work and idea comes from Germany. A wonderful example of the benefits of globalization.

[0:05:30 Speaker 0] So speaking of it, um, I guess it’s a good Lupin globalization here. You you You were you talk about pandemic way before covid was around us, you had some written about it. You had examples in your book, a textbook for undergraduates on on pandemics being potentially a a counter example to the positives of trade. Um, give me a sense of your sort of what sparked your interest about pandemics. And what was the reason why you were maybe thinking about this even before, uh, the world started, you know, looking at a real problem.

[0:06:03 Speaker 1] Well, mostly, it came from studying history, right? Endemics recur fairly regularly. So in around 2004, 2000 and five, I wrote a long policy paper from Mercatus. What we should do to get ready for the next pandemic. And to me, this really seemed quite urgent. Avian flu is a possible risk at the time. I think general knowledge of history is the key input. We’re very short sighted. And we have short memories. Arguably the last two pandemics not counting HIV AIDS, which is somewhat separate category. But we’re 1968 1957. It’s a long time ago. People forgot and needed to be reminded. And in fact, we did screw it up badly in the now. At some point in time, us was ranked as the nation is ready to respond. And I guess we were on the biomedical front, but not otherwise.

[0:06:56 Speaker 0] Yeah, it seems that, uh well, one of the one of the things that we’re gonna go back to covid in a second. But one of the things that strikes me as a big criticism of the US is it has to do actually, with our system of government, of federalism, where where it becomes very difficult to coordinate a lot of these things, right? A lot of these, these actions and processes, you don’t have a clear plan ahead of time. Uh, they’re 50 units and perhaps even more than 50 units. Because when you look even within state governments, a lot of the public health apparatus might be in counties or might be in cities, and it’s just it’s just there was no coordination, no real ability to to to to to have an organized plan, being

[0:07:35 Speaker 1] a large nation. It’s very hard to stop it in every place. So what New Zealand did what Taiwan did, also shutting their borders that work well. In fact, I don’t think the United States could have done the same or Brazil for that matter. So that’s our problem. We still could have done better. We did work very hard to make up for it on the biomedical friend with astonishing success in terms of speed.

[0:08:00 Speaker 0] So So just going back to the textbook example, right? So how how would you rate after our learning now and and and And during 2020 would you would you change at all your views on trade and immigration, given the lessons of 2020 or or not not really

[0:08:20 Speaker 1] Well, I think 2020 has shown, if you’re a not too large nation and you can contain the virus early. Then you should shut your border. And it pains me to say that because I’m a big fan of immigration, I would gladly, you know, at least triple What were the prior levels of immigration? I still hold that view during a pandemic. If you can keep people out, is a big advantage. And we saw this with Western Europe in August. People came back from vacation, significantly accelerated the spread of the virus, have much larger problems. After they thought they had it under control. I wouldn’t say this is a totally new view of mine. I did suspect it was true before 2020 but seeing 2020 I’m fairly convinced, at least for a set of countries, they need to close and lock their borders. It’s a very large countries. It’s just, you know, may not work, period. You can’t necessarily keep everyone out.

[0:09:15 Speaker 0] Yeah, I think one of the only large countries that have an easier time with that will be Australia. Right again. The the island, uh, exactly. Helps helps a lot. All right, So So just wrapping up on big business. Um, big deck these days, a lot of the news, and there’s a lot of a lot of hoopla around there. They’re they’re managing of big media and so on and so forth. But just a while back you had some conversations on on the whether or not big tech was close to a monopoly or close to something that would deserve some sort of antitrust scrutiny. So how would you? How would you summarize your argument? I think it was against that, right? You think that’s not necessarily anywhere close to being the case that we need to be, um um, checking them for anti stress?

[0:10:00 Speaker 1] Well, the major tech companies typically have either a free product such as Google or Facebook, or the other activity they do to generate revenue selling ads. They face a lot of competition and offer really very low prices. So I think that’s the overall framing of the antitrust question. If you just asked me that a very specific question, like have Google and Apple committed particular antitrust violations, I think the odds are they have. I don’t think the answer is to split them up. I don’t think the answer is to have a punitive penalties. I don’t think you can say they’re totally innocent of antitrust violations. So the way Google allows people to pay for search results or elevates its own connected businesses in search why Apple manages its APP store. But my inclination is still not to actually trust antitrust authorities to get the remedies right. If someone says it’s a case there, I mean, I would agree largely Depends how you you frame it If you think like the whole company has some big monopoly thought to be dynamited. I’m very strongly opposed.

[0:11:10 Speaker 0] And you think that this is now something that was, uh, we Are we moving it all that way? I fear I fear that that both sides here seem to be particularly skeptical Both sides of political spectrum since we particularly skeptical of the attack these days. And you Do you see any movement? Um, I don’t know what the expectation, the direction they think that that now, under a new administration, we’re gonna be less or more aggressive, towers them or for

[0:11:33 Speaker 1] Department of Justice recently filed a suit against Google, or it is there’s a suit coming against Facebook, I actually think with Aydin winning. Although the Democrats are more skeptical attack. Intellectually, we’ll have divided government is not the sense, like all tech helped Donald Trump steal the election. I actually think it would be this long, drawn out stupid battle that won’t lead to very much and that the landscape has changed. That said, once an antitrust suit is open and all the different states are in on it as well. Many different things can happen. Political risk. The major tech companies doesn’t look much higher now than it did say a year ago. Uh,

[0:12:15 Speaker 0] okay, my best guess

[0:12:17 Speaker 1] would be either the government doesn’t win the lawsuits or they settle in a fairly quiet way or the thing drags on this ugly but doesn’t fundamentally change the sector, and their share prices reflect in last week or two.

[0:12:31 Speaker 0] That’s right. That’s right. Um, let’s change gears here to talk a little bit about about progress studies. A little A little over a year ago, you wrote a piece in the Atlantic with Patrick Collison, co founder and CEO of Stripe, argued that we need a new science, a new signs of progress, And what do you mean by that? Yeah,

[0:12:48 Speaker 1] well, as you’re an academic yourself as you know so much of academic research is to carve out a small piece of territory that will get you good enough letters to get tenure, and no one will really object to. I would like to see fewer people do that and to produce synthetic knowledge that has direct practical value, say, within economics. My field, I think the field economics of science. Right now it’s not one of the top 20 fields. I’m not sure it’s one of the top 40. I think it should be one of the top three Fields Bay. That to me would be progress studies, so people can point and say, Oh, this person is doing this That person is doing that That’s true. But there needs to be a fundamental elevation and revaluation of research work relevant to progress. I think we’re actually starting to see some of that, but I’d like to see a lot more

[0:13:43 Speaker 0] so when you when you when you say when you say studies related to progress, just like trying to understand the cause and effect and the effect of the progress that we have experienced or or

[0:13:52 Speaker 1] or so every economist in my opinion, did spend a fair amount of time studying what caused the industrial revolution and what caused the East Asian economic growth miracles. It’s not that I feel I have the answers that everyone has to agree. Those are now topics that many people study. Many people don’t think about much at all. Me those co totally central to the curriculum.

[0:14:17 Speaker 0] And and so so you claimed economics for not being paying attention to this or other social sciences. Well, it strikes me a lot of social science, including economics. These days have a tendency to try to focus on problems trying to understand what we have a problem here. Let’s try to understand the causes of that problem. We have another problem there. Let’s try to understand the cause of the problem as opposed to to look for the big picture of like what? We have a lot of good things that happened that you understand the reasons why the good things that happened. Would you agree with that? The general assessment?

[0:14:46 Speaker 1] Yes, I know economics better than any other field, of course, but my sense from what I know is all of the social sciences have this problem. No, there’s plenty in fact on sociology of science. As you can see, if you want to say, read a good book on, how could we improve? National Institutes of Health? Uh, pal, that’s very hard to do. It’s not the kind of question people work on. That to me is deeply strange.

[0:15:18 Speaker 0] And you do you think that that somehow relates to the our lack of understanding of progress is potentially one of the reasons why productivity has been to gain. Maybe there’s a bigger question productivity. You write about productivity decades not only in in an academic space, but I think in academic space, something that you worry a lot about as well, Right? You, um um,

[0:15:39 Speaker 1] government science policy could be better. Regulatory policy could be better. I’m very move to see how rapidly we made progress on a vaccine. That, to me, is one sign things are turning around. Government did actually call in Nobel laureate Michael Kramer and ask him will tell us, but again a good vaccine quickly. And he told them, and they basically did what he recommended. But we are seeing some very positive signs, and I give Michael Kramer a lot of credit for having worked on that begin with, but it’s not all doom and gloom on the research for an But again, I would like to see most academics work on problems of progress, whereas now it’s still a minority.

[0:16:26 Speaker 0] Let me give you an example of something that I do here at U T. I teach a class where, where it’s a classical policies, evaluating policies and this like the You know, the slogan of our center here is always trying to understand trade offs about about changes. And and but it’s there’s a class two freshmen. So So they come in and and and I tried to talk to them about the fact that a policy is an attempt to change the world around you. For you to change the world around you is important to understand where you are, uh, and understand that the facts around you right now. So we we started by talking about progress about about exactly the sort of hockey steak, right? A human human progress since the Industrial Revolution. But even before I start talking about that, I have a survey with them where ask a bunch of questions about about state of the world and you know this is not something new. You know, this by lots of other people have worked on it and like Hans Rosling and some others, to demonstrate that people have a very doom and gloom view of the world. You don’t understand that things are much better than they actually think they are right now. Um, and and that’s all that’s all fine. We understand that we is kind of nice to have the contrast of Okay, here’s what you think. And here’s what reality is. And students get a good reaction out of that. Um, but my my one of the concerns I haven’t I don’t know if you share, is that that is a different. It’s very rare in the experience they will have at universities these days. I think the students going to come in and and that sort of like doom and gloom view of the world is going to be emphasized in a lot of their classes that there will be taking in and a lot of the rhetoric around the university in particular, I think the notion around critical race theory it’s somewhat incompatible with the notion of progress studies that you describe and you think about? I don’t know. Have you thought about that? Have you thought about that general aspect of the social sciences? How does that play a role with our students?

[0:18:17 Speaker 1] You know, I think progress studies is a very different emphasis from a lot of what goes on in the humanities, I would stress I do see any of room in progress studies for people to study what you might call racial progress using rigorous social science. I’m all for that. Uh, but a close race theory to me, seems like a less constructive emphasis. So that would be another area that should be part of the picture, Not something outside of it. So we’ve been talking about scientific progress, but it’s not the only form of progress, right? Progress and discourse, progress and gender relations. Progress in race relations, many other areas. One thing I always loved about Brazil. I know it’s not exactly where the country is at right now, but your motto, I mean, how is it you say it in Portuguese?

[0:19:06 Speaker 0] Oh, you

[0:19:07 Speaker 1] progress. You say it properly. Say it

[0:19:11 Speaker 0] with a progressive.

[0:19:12 Speaker 1] What does that mean in English?

[0:19:14 Speaker 0] So Miss Order and progress, which, by the way, my wife she was an American. She she’s like, Oh my God, that’s the most fascist thing I’ve ever heard in my life. So she thinks the fascist model. Uh, but what I can see. I understand. Go

[0:19:28 Speaker 1] ahead. It’s still early in the 20th century fell in love with modernism. Not always. It’s better sides. There was too much August comped, right? There’s alien mentality. Uh, this idea that it was a nation committed to progress. You do see in, like the dams the scale and scope of building ambition of what the country can be. It doesn’t always work out. Well, I get that. But I’ve long admired that side of Zale without wanting to embrace every part of how Brazil has

[0:19:59 Speaker 0] done it. We used to call the Brazil. Is the country the future, and we know the future never arrived for us. That’s that’s one of the problems we face, but we still have to put the country in the future. Um, it used to be a thing that people say in Brazil quite a lot. Um, all right, let’s turn to the pandemic now and and first of all, let me. Let me thank you for the amazing covers the marginal revolution has had in terms of just so much good stuff there and learning a lot about what was happening in the world. Following through through through your work with Alex been really great.

[0:20:32 Speaker 1] Um,

[0:20:33 Speaker 0] but I want to get back to march, and and I’m you know, I’m looking forward to have this conversation with you because I was a little bit surprised by your I guess. I guess if I were to predict your reaction to what we saw in March in terms of government interventions, I’ll be surprised. I was surprised that you are less skeptical of their value. Then Then you were quickly. So help me understand your your your thinking through that thinking through what we saw in March 1 of the things that you’re looking at, What were the initial maybe epidemiological models? What are the evidence that you’re looking at that made you so convinced, or or more convinced that the strong actions that governments are taking were somewhat justified and and and warrant

[0:21:12 Speaker 1] Well, I don’t think all of those actions were warranted just to be clear, but keep in mind back in March, we understood much, much less, about Covid 19 than we do now. So just to mitigate risk, I thought that was a case for locking down many things. Not all things we had seen. Two particular cases. One was Wuhan, China, where the number of deaths was was very, very high, the city completely at the grind to a halt. And then there was northern Italy, where again you had a much higher death rate. What we’ve seen since then, the beginnings of the problem in the US came to the New York City area, where again the death rate was quite elevated and I thought, and still think at that time in March, the idea of locking down a significant fraction of human to human interaction through the business fear was the right thing to do. Think of New York City had done that two weeks earlier. We would right now be in a much, much better position, with many fewer casualties, much less spread, much less political disruption in the northeast of this country didn’t lock down soon enough. There were all kinds of crazy over each, like Oh, you can’t go to the park and even then it was clear to me we didn’t know. Now what we know about outside relatively safe, you know, people going to the park as an outlet, it will stop them from doing other, more dangerous things. But we way overreacted. That general kind of response, I still think, was the right thing to do. And it helped by time. During that time, we learned what is more safe, what is less safe. And when we reopened, uh, you know, we managed okay. Not as well as we could have. Not enough testing, but we did manage in some manner.

[0:23:05 Speaker 0] So So let me guess. You know, when you say that the the actions that that we saw in March, the more aggressive actions, maybe it should have come a little earlier. Especially Northeast once once. Uh um And but so you would agree that those temporary measures that allowed us to learn a little bit, uh, gave us some time to to prepare? Do you think the tiny of them in terms of the because One of the things that I observe is that there is geographic variation. And when the pandemic hit certain places, right, but we sort of all went into a panic and lock it down at the same time. So I think there was a lot of damage that was done by Texas, for example, locking down in early mid March where it wasn’t here yet. We just didn’t have enough to spread here. So so that created, for example, the fatigue of six weeks later were like, Well, we need to do something else and we opened. And then, of course, it hits us because, you know, this thing is already everywhere. There’s no stopping from getting to Texas in a way that that so then we have our wave in the summer that was pretty bad and but somewhat managed under without without any other extreme lockdown. So, um,

[0:24:10 Speaker 1] much of the country locked down too early and the Northeast clearly locked down too late. That’s how I would put it. But

[0:24:16 Speaker 0] wouldn’t. Wouldn’t you agree that it was almost impossible to know when to do it?

[0:24:20 Speaker 1] It was like

[0:24:21 Speaker 0] we don’t have the models. Um, that’s why I want to touch on the on the on the epidemiology here. There was a lot of quick trust given to a set of scientists that quite honestly and I think you rated them quite poorly in your writings as well that we’re just not ready for it. They didn’t have to write models. They had models that were, you know, cartoonish. In some ways that did not really help public policy in any meaningful way.

[0:24:44 Speaker 1] Sure, but, you know, I wrote at the time, most of the country is locking down too early, so I don’t think it was impossible to know that. And if we had taken that first two months then used it to build up testing capacity, it would have been quite easy to know where in different places should lock down. I don’t think one should infer from all this. Well, the whole lockdown was a mistake. We did many parts of it badly. We could have done it much better, obviously, with more testing. But even just more common sense. And, uh, that’s not what we got. And I agree about lockdown feeds completely. So at the time, these places maybe should have been locked down. There were like, he we did this four or five weeks. We lost a lot of jobs. We got nothing. We still don’t see any virus we’re not going to keep on going. That’s understandable,

[0:25:33 Speaker 0] right? And that, I think, I think, created the whole problem of any kind of attempt to do something later would be very difficult, right? Because the prescription of that policy in the first place didn’t do anything. I didn’t hire

[0:25:46 Speaker 1] Mexico. Mexico is a country that didn’t really lock down at all. Their casualty rate is very, very high. So again I think some degree of lockdown was called for. I wouldn’t even the bad way we did it. I wouldn’t trade in our response for that of Mexico. They’ll also had trouble, as you know.

[0:26:05 Speaker 0] Yeah, but I actually think Brazil is in some ways, uh, did somewhat relatively the same as the US and which is striking to me that that a country that starts at a much lower, much lower health status and it doesn’t have as good hospitals and have enough health care capacity has been able to manage, uh, at the same level of, of of, of death per capita. I suppose

[0:26:28 Speaker 1] you have no winter, right? Practically speaking,

[0:26:32 Speaker 0] we have no enterprise decision. That’s right. That’s right.

[0:26:35 Speaker 1] We had our worst problems in the coldest part of the country when it was still quite cold. So the seasonal variable in retrospect seems more important. People mention this at the time, but it does seem a bigger deal,

[0:26:49 Speaker 0] all right. Do you think that the surge that we’re seeing right now is mostly mostly coming from that?

[0:26:54 Speaker 1] The surge in the United States?

[0:26:56 Speaker 0] Yes, Europe

[0:26:57 Speaker 1] is its weakest in the South, but the European surge it’s seasonal, but for a different reason. I think it’s August vacations and subsequent spread, rather than not necessarily being called the European Mediterranean is not really that cold Right now. Parts of it are having very severe problems, and that seems to come from vacationing.

[0:27:18 Speaker 0] And you, How do you How do you look at what the UK is doing right now? Or other parts of Europe? They think that their lockdowns are still the right the right prescription.

[0:27:27 Speaker 1] They’re locking down too many things too severely again. It depends exactly where you mean, so you say the UK, But Scotland and England are themselves in very different positions. London in the north are in very different positions. If someone says Liverpool needs a pretty serious lockdown. I’m inclined to agree. It doesn’t mean the whole country should lock down. Everything in Scotland probably shouldn’t lock that much at all. So it’s really a very finely grained set of decisions which most countries not done so well with

[0:27:58 Speaker 0] right that they’ve been too blunt and and and and to centralize in some ways, right? Not not taking advantage of the information locally. So, um, would you say to the US again, going back to our discussion on federalism that may be the lack of of, um, coordination might have hurt us. But perhaps the lack of coordination also gives us the ability to do the implementation of these policies in different ways in different times. Potentially if needed.

[0:28:24 Speaker 1] Yes. I think our response In the long view of history, we look somewhat better than it does right now. That’s

[0:28:30 Speaker 0] interesting. Um, now, now, let me ask you about economists. During this time, you saw a lot of a flurry of papers by economists early on papers on trying to use a lot of the If you look at epidemiological models, they’re they’re they’re not very different in the use of partial differential equations for example than than a lot of economists use in microphone, for that matter. So you saw a lot of macro economists writing papers early on trying to modify the models that were being put forward by epidemiologist, and and so that was kind of a positive thing. I think the field of economics came to to to the help of this new problem, but not not a lot of people thought about and provide a good knowledge. Now I don’t see those papers or that knowledge really being being put forward in front of policymakers. I think that the the epidemiologists that were the first ones that policymakers talk to are the ones that are talking to them right now. Still, for whatever reason, they are the experts and and they’re the only ones the policy makers look to. Um, so how would you rate the response by the profession by the economics profession on on? So that was a positive, I’d say.

[0:29:41 Speaker 1] But I think that they have

[0:29:42 Speaker 0] been not as vocal as participant in the in the decision making process, as I would I would have voted.

[0:29:48 Speaker 1] I don’t think those papers have had impact, you know, as you were saying? I think the problem is fundamental. I guess I do blame the profession. As I would blame epidemiologist. The key decisions are about what we would call public choice, like, what will people actually put up with? Is this sustainable so you can solve for the optimal whatever you know at the wazoo, if you don’t have a sustainable plan, people will rebel against it, as they did in Europe as they did in many parts of this country, not Vermont. I get that. So it should have been public choice economists doing the work, so I don’t think our response on that was helpful. It was not worse than the epidemiologists. Really helpful response was the work Michael Kramer and his team had been doing for some time on advance market commitment, and that was like an a double plus home run. And we’re seeing the benefits now with the new vaccines.

[0:30:43 Speaker 0] So the I’m thinking, I’m thinking about somebody that I thought that has has been doing good work, but I don’t think I had the impact that I respected. Emily Emily Oster on the work that you’ve been doing on on schools trying to point out that the high trade off that we’re paying the price they were paying on having schools close, for example, and and the the sort of data suggesting that the impact of schools open openings are not particularly bad on the dynamics of the pandemic. Um, but I just I just felt that the profession as a whole did not spend enough time trying to make the exact same case that she was making, at least for the the the area of study that she sort of focus a lot on right Children and and raising Children, et cetera. So, um,

[0:31:27 Speaker 1] and I get these work on that I’m not convinced we currently no. The final answer.

[0:31:33 Speaker 0] Oh, I I agree that we don’t know the answer, but we do at least have some information that I mean, uh, maybe maybe I am too skeptical of of the value of, uh of lockdown in particular for younger 300 folks. But, um, I think we learned some lessons throughout the process. I think there’s variation already on school openings versus school closings. There’s variation on what universities did, and we observed that the variation doesn’t seem to correlate very strongly with any you know, any any big improvement or a big, big, big worsening. I think that there are a lot of it happens the way it’s going to happen, and we don’t have much control over it. So the attempt at least to put that information together even though I agree with you that we don’t know we don’t know the final. The final answer, uh, will be very helpful to help mitigate the process. And I don’t think we saw enough of that coming from the Yukon profession.

[0:32:23 Speaker 1] I looked at all of that work. I advised my own university to stay open in hybrid fashion. We did. It’s actually gone pretty well, so I mean, that’s my inclination. But still, I think we will know much more say, two years from now.

[0:32:39 Speaker 0] That’s true. Once everybody’s vaccinated and we are, we are exactly, uh, the other thing that I like I like to bring up is that you made a a prediction. I suppose you call that we’re gonna go into a yo yo model. I think you’re pretty, right? I think you just got it. Got it to be what we end up, ending up here, Right, Um, of this the cycles of the virus coming in and and a little bit of locking down and then open it up. And but, um, the very beginning without the massive testing processes, And nobody seems to be actually have to be able to be incapable of doing in a way that the test and concentrates necessary to really put a lid on the on the pandemic. Um, it was almost, like unavoidable. Right? You’re gonna lock down. You’re gonna open it up because nobody can stay locked down for that long. It’s going to come back to lockdown again. And we’re seeing this way. It’s coming in. Um, what do you think could have it would have been possible, really? To have accomplished to avoid this, uh, assume we did the right thing and locking down in the in the first place at the right timing. Do you think it would have been possible to have effective testing and contact tracing done, uh, to the government in order to to to to to to have this been a better a better outcome of the end?

[0:33:58 Speaker 1] We could have had more rapid tests more quickly if

[0:34:02 Speaker 0] excuse

[0:34:03 Speaker 1] my sneeze. Not for government regulators. I mean, the tests are still there and not approved, so we could have done much better now. Contact tracing certainly can name countries where it has worked. I tend to doubt it could have worked that much better in this country or in, say, England. So I’m forward in the abstract. It’s not a thing. I’ve been pushing the United States. It’s just culturally very alien to us, and people are not inclined to cooperate. You can say that the successes and, you know I’ll acknowledge that. So I just think more rapid fire testing, including at home, would have made a big difference. Even on the yo yo, I’ve been a little surprised and how much risk people are willing to bear. I thought everyone would be just a bit more terrified and more staying at home. And about that, I don’t think I ever wrote down my prediction. I know mentally what it was, and on that I’ve been wrong.

[0:35:00 Speaker 0] Interesting. So, um, so you think you think it’s the let’s say, a college student. Do you think that they are being two, our risk tolerant?

[0:35:13 Speaker 1] Well, it depends how they’re behaving the

[0:35:16 Speaker 0] typical one that you’re seeing out there. They seem to be going to parties. They don’t say. I I don’t think there is a big change in behavior on on those students. For the most part,

[0:35:26 Speaker 1] I think that’s both a Prudential and immoral mistake. Moral mistake because it’s unlikely they’re totally segregated from older people. It’s a Prudential mistake, and I know people who have been hit by this. There is a chance of long term damage. I’m not sure what that chances look. The vaccine is coming just to say to yourself, I’m going to have you know, eight or nine months of my life where I either don’t party, are the only party with people who are very safe, and I’m very close to because that’s so hard, you know, with people in 1957 have found that so impossible. But to me it’s a kind of social deterioration. Poorly we’ve formed on that. So a wide scale ignoring what should be a stronger social norm.

[0:36:16 Speaker 0] Um, all right, so moving forward. What’s happening? What’s happening next? You think that this is it? The vaccine is gonna come in in a month. We’re gonna start, vaccinate getting vaccinated and we’re out of the woods in a couple of months, or

[0:36:29 Speaker 1] and no, not a couple months. The question is how rapidly delivery and distribution will go. Even our performance so far probably will take so much longer than people are thinking. So maybe, and it is normal. Americans are starting to get vaccinated in March, which is more than a couple of months. It’s within sight, and then how many people will want it? How long will it take? How the cold storage facilities work? There are still major, major challenges. This is a very definite turning point. I think that an awful lot of things will be normal by September. I’m not a certainty. It’s the best default assumption. Someone just invited me to give a talk in Wyoming in late September. I’ll think about whether or not I’ll do it. Our covid. If I say no, it won’t be because of Covid.

[0:37:24 Speaker 0] So so in that in that I actually didn’t have that question when you mentioned this and I think this is a good point. Do you think we’re going to see a big change in our business now? Individuals, particularly particular universities and going around giving talks. Um, I find out what we’re doing here today. You’re visiting. You’re visiting us? Uh, Texas. Of course. We’re missing a big part of that. Those interactions would be nice to have you here. Have you go to lunch with us, talk privately and so on. But the I think we quickly turn into this model where we have these conversations over online. You’re going to give a talk online this afternoon, and and lots of people can throw up and watch later because it recorded, um, do you see a big change coming our way? I mean, it’s sort of like permanent changes. Staying.

[0:38:04 Speaker 1] I see a big permanent change. If you mean business travel, business conferences and academic talks. I think at least a third of the physical travel will never come back. And, uh, it’s a lot. Well, I think it’s ultimately for the better. I’m not saying it’s for the better. Right now. You’ll have greater choice, so people who want to travel can travel. It’ll be easier on departmental budgets. You’ll have these other people, like we all know, Zoom, and no one will think it’s weird. You’ll have all these great zoom talks, so it will have ended up is a pretty wonderful adjustment.

[0:38:42 Speaker 0] And how about how about the teaching side of it? Um, you mentioned you mentioned the you know, the adjustment wasn’t, of course, perfect. We’re giving something up. But you also have been a big proponent and investor an investor financially, I don’t know, but like you’ve been putting a lot of time and effort into online education through Marginal Revolution University and the resources associated with your book and so on. Do you see this? This being like a shock that is going to basically demonstrated. Listen, this works and we can do a lot more with levels

[0:39:11 Speaker 1] again. I don’t think face to face will disappear at all. If you do 25 30% of your degree online and you live on campus and you have all those other benefits and you get to know your professors, that will be the world to come. And again, I think after some while it will be clearly better than what we have been doing.

[0:39:32 Speaker 0] I just fear that universities are so conservative and and and so tied to the way they do things that it’s gonna be. They’re gonna fight it off. Our administrator is gonna be fighting it off any kind of movement of direction. But I’m hopeful. I’m hopeful that at least I’ve learned that I can do a lot of different things in my teaching that can be complemented and improved by. I don’t mind. So

[0:39:51 Speaker 1] a lot of these schools I don’t know about yours. Mine actually is fine, but a lot of them are strapped for money. But when there’s a cheaper zoom alternative, I mean, they’re conservative, they’re terrible, they’re bureaucratic. It’s all true. At the end of the day, this forced their hand and then the fiscal constraints. It’s gonna stick some of it.

[0:40:10 Speaker 0] That’s true. That is true. All right, Before we wrap up, I have to. I mentioned my wife earlier. She’s a big fan. She made me promise that I would do a round of under the radar over radio for you. Of course. Okay, alright. Absolutely. All right. So we started a tough one. Climate change.

[0:40:27 Speaker 1] Well, you need to specify what exactly the question is. The risks of it are still underrated, if that’s what you mean. I think the pandemic has shown where fools and how we respond to crises. But whatever you think of the objective data, I would say the human response as a problem is still underrated. We’re not going to respond. Respond optimally. So I say underrated as a problem.

[0:40:49 Speaker 0] Underrated as a problem. Okay, I’m trying to be more specific. If you look at the Peruvian tax that we should be post proposing on on carbon in order to solve this externality

[0:41:02 Speaker 1] overrated.

[0:41:03 Speaker 0] Overrated? Okay,

[0:41:03 Speaker 1] How much progress we’ve seen, like electric cars, Tesla, solar battery without much in the way of carbon packed like you can either do it or you can’t. And yes, as an economist, I believe in elasticity ease. In this particular case, I think there is somewhat overrated. I’m fine with the carbon tax. I don’t think it’s a difference maker. Not a thing to go to the mat for It’s the marginal improvement. At the end of the day, I think we’ll do most of it without a carbon tax.

[0:41:35 Speaker 0] Brazilian food.

[0:41:37 Speaker 1] Brazilian food is one of the world’s greatest glories. Fucking beans, dishes of like menace might be my favorite meet in southern Brazil, I think is better than Argentina, even to something you wouldn’t think like the Sushi and Rio or the Italian food in Sao Paulo. Like a double plus world class, it’s one of the great parts of the world in which to eat. I love Elmo, Elmo Kika, you know, from the Northeast. Like, where does one stop just like the oranges, the fruits of the many yolk flour sandwiches? My goodness, so many glories and Brazilian food Maybe even under aided by Brazilians.

[0:42:16 Speaker 0] I would

[0:42:17 Speaker 1] like that answer.

[0:42:18 Speaker 0] I I love that answer. I love that. I thought that you’d be You’d be like You understand how, how vast and variety and the number of variety of foods we have. And that’s really great

[0:42:28 Speaker 1] to support our in progress, right? You see it in the

[0:42:30 Speaker 0] cuisine? Exactly. Alright. Northern Virginia,

[0:42:36 Speaker 1] drastically underrated. So you can still afford to live here. Winter isn’t that called? You have three airports. Incredible, amazing ethnic food with great diversity. Are you near Washington? But also away from it for so many trees here, you can buy like a very nice home, clearly under a million dollars. In a way you cannot in New York or California or Boston. So I think it’s, at least for me the best place in the world to live. But not just for me. The nice things it has it has wonderful parks, public libraries. Ah, it’s hard to be. Text line here is pretty reasonable. Pretty low.

[0:43:20 Speaker 0] Sorry, Texas.

[0:43:23 Speaker 1] I’m not sure if it’s underrated anymore. I mean, it’s been underrated. I wrote this big story that was on the cover of Time magazine, predicting what a bright future Texas would have.

[0:43:32 Speaker 0] When was that? I don’t think I read that one.

[0:43:35 Speaker 1] It was like eight years ago. I’m not sure. And you just look how many cities Texas has that are growing like crazy. But it seems to me by now this is well known. It’s become properly rated, but the bullish story is still true, like I’m not repudiating, that it’s just so obvious everyone knows it.

[0:43:55 Speaker 0] So finally, getting rated on marginal revolution

[0:43:59 Speaker 1] getting raided on marginal revolution, I think it’s underrated. Like Steve Levitt once told me, the one thing that did the most to sell copies of Freakonomics would be marginal revolution covering it. So I’m not sure everyone knows that, but it really goes a long way. Publicity and marginal revolution have no business being nice to me Are nice to me. So maybe, actually, it’s overrated. Like people who are like paying you at Harvard. They’re working harder to be nice to me than I am to be nice to them. What does that tell you? It’s weird.

[0:44:32 Speaker 0] Well, I can tell you that. I can tell you that my highlight of my of my 2020 has been being called excellent and marginal Revolution. Not by you by Alex. But that was that was definitely a highlight of my career. So I think I think it’s underrated.

[0:44:45 Speaker 1] Thank

[0:44:45 Speaker 0] you. All right, Tyler, thank you so much for joining us. And look forward to talk this afternoon.

[0:44:52 Speaker 1] Catch you later today. Thank you. Bye.

[0:44:57 Speaker 0] Thanks for listening to policy on McCombs. Mhm. Mm. Yeah