Cowen, Tyler

economist, George Mason University; co-creator of Marginal Revolution; host of "Conversations with Tyler"; author of The Great Stagnation, Average Is Over, Big Business

Tyler Cowen: Economic Growth & the Fight Against Conformity & Mediocrity

Lex Fridman Podcast · Apr 10, 2021

• Tyler Cowen
• economics as discipline
• American dream
• capitalism and weirdness
• Soviet Union and Russia
• China's political economy
• cryptocurrency
• GameStop and Wall Street Bets
• academic conformity
• technological stagnation and optimism
• UFOs
• mentorship
• mortality

Core ideas

Cowen frames economics as simultaneously art, science, and "a kind of modern magic" (the idea that a policy change can make many people better off), but is skeptical it will ever become genuinely predictive like physics — its greater value, he argues, is in sharpening the questions people ask (citing game theory's role in framing, though not predicting, Cold War strategic stability). Pressed on nuclear risk, he argues low-probability catastrophic events become near-certain over a long enough time horizon, estimating civilization has perhaps "seven or eight hundred years" before some combination of nuclear, biological, or future destructive technology causes a catastrophe — while noting the probability rises as such technologies become cheaper and more accessible, and pushing back gently on Lex's hope that only rare, evil-but-inept actors would attempt mass destruction.

On the American dream, Cowen argues it remains substantially real — noting that Indian- and Iranian-American immigrants are currently the highest-earning groups in the U.S. despite facing discrimination — but that intergenerational mobility for native-born Americans, while roughly stable for the past ~40 years, is much lower than in the early 20th century, a fact he attributes partly to that era's low credentialism rather than purely to modern failures. He connects America's outsized global cultural and scientific influence less to language alone than to a distinctive tolerance (or even admiration) for being a "weirdo" — a trait he attributes to America being a self-selected nation of immigrants who already left something behind — arguing this makes the U.S. more creative than more socially secure but risk-averse peer nations (he cites Denmark), and that these two modes (American risk-taking innovation, European social smoothness) are complementary at a global scale rather than competing.

Discussing capitalism, Cowen self-identifies as "mostly a fan, subject to numerous caveats," favoring private ownership of capital goods in most domains while excluding things like military hardware, and citing America's specific blend as having an enduring racial injustice problem (dispossession of Native Americans, historical racial oppression) alongside genuine strength in creative destruction and immigrant opportunity, at the cost of weaker social safety nets than northwestern Europe. He argues no "pure free market" is coherently definable, since legal frameworks must still make consequential choices (property rights, IP law, enforcement priorities) that free-market rhetoric alone doesn't resolve — and, prompted on anarchism, argues all societies are already partially anarchic (there is no single final arbiter even within federal systems), so the practical question is how to "squish anarchy into the right corners" rather than eliminate or fully embrace it.

On the Soviet Union, Cowen argues what existed was not really centralized planning or communism in a meaningful sense but a decentralized, dysfunctional system of suppressed prices, barter, bribery, and favor-trading that progressively destroyed the information content of prices, produced an elite that eventually stopped believing in the system itself, and became unsustainable once ordinary Western living standards became visibly preferable even to mid-level Soviet officials. On contemporary Russia, he argues Putin's early (1999–2000) popularity rode a genuine growth boom now reversed into a fossil-fuel-dependent, structurally stagnant economy, driven by Putin's concentration of economic, social, and political power in a small, non-diversified elite — and states he views Putin's high approval ratings as "bearish" for Russia precisely because press control makes them hard to interpret as fully genuine, while acknowledging real, sincere popular support exists. On China, he argues its economic rise coincided with the dismantling of Mao-era welfare guarantees (the "iron rice bowl"), credits its meritocratic exam-based mobility system and urbanization-driven productivity gains as major but time-limited engines of growth, and is skeptical China will supplant the U.S. as the world's leading economy though he expects it will "muddle through."

Cowen discusses cryptocurrency with structured uncertainty: he thinks Bitcoin has durably displaced part of gold's traditional store-of-value role, but is much less confident (roughly "40/60" against) that Bitcoin or other cryptocurrencies will become a dominant transactional currency, arguing incumbent fiat systems already work well enough (citing his own fast, low-friction international bank transfer) that crypto advocates underestimate how hard fiat is to out-compete, and that DeFi's cost advantages partly reflect temporary regulatory arbitrage that will likely be curtailed. He similarly frames the GameStop/Wall Street Bets episode as a genuine but macroeconomically minor phenomenon — "a new esport," entertaining and not without real effects, but not evidence of a structural shift in economic power — and cautions against over-reading such micro-events as confirmation of larger narratives.

On institutions, Cowen argues academia is only "partially," not totally, bankrupt (pushing back on a more pessimistic view he attributes to Eric Weinstein), locating the deepest problem not at elite universities (which retain real tolerance for productive weirdness) but at ambitious "second-tier" schools that enforce rigid conformity while chasing marginal ranking gains, and separately worries that at places like MIT, junior faculty face much stronger pressure toward safe, "boring" work than senior faculty, with diversity-and-inclusion process meetings emerging, in his view, as a new mechanism for enforcing that broader conformity. He is notably more optimistic about recent technological progress than in his 2011 book The Great Stagnation, citing mRNA vaccines, promising anti-malaria and CRISPR treatments, and green energy/battery advances — largely attributing the acceleration to compounding gains in computation — while cautioning that historically, major new technologies (his example: radio's role enabling dictators) also tend to enable new forms of harm.

On UFOs, Cowen argues the credibility of high-level officials' private uncertainty (citing a conversation with former CIA director John Brennan) is itself meaningful "sociological data," and criticizes the common "argument from elimination" reasoning (ruling out mundane explanations and concluding aliens by default) as unpersuasive, concluding he personally suspects the phenomena are not extraterrestrial but that the underlying puzzle is genuine and likely fascinating regardless of the answer — while criticizing reflexive dismissal of researchers like Avi Loeb as intellectually unproductive, drawing an explicit parallel to how he thinks Ayn Rand is often dismissed rather than argued against. On art, he pushes back on the view that contemporary/abstract art is meaningless, comparing it to "a kind of mathematics they haven't learned yet," and separately reflects at length on Mexican regional cuisine (Hermosillo) and Japanese sushi mastery as examples of highly refined, non-obvious craft traditions worth taking seriously on their own terms.

He closes with practical life advice — actively seek multiple mentors (illustrating that even an ideologically mismatched mentor, in his own case an undergraduate Stalinist professor, can be immensely valuable) and build small, engaged peer groups around shared interests — and, on mortality, says what troubles him about death is not fear itself but not knowing "how the human story turns out," wishing (half-seriously) he could read a compressed future history of humanity before dying rather than face uncertainty about it.

Excerpts