Category Archives: Tyler Cowen is my Favorite Blogger

The introverted anthropologist

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I found the Tim Ferriss/Tyler Cowen podcast very worthwhile, probably more than you will. Points that struck me were:

–Tyler talks about economics as a branch of anthropology.

–Tyler says that he is very even-tempered and rarely unhappy.

–Although it is structured as Tim interviewing Tyler, about 2/3 of the way through, Tyler turns the tables and starts interviewing Tim. One of Tyler’s questions is “What is your theory of you?”

This led me to think that

1. There is a tendency for introverts or guys who are on the spectrum to become anthropologists. My anthropological theory of this is that everyone needs to understand other people in order to get along in the world. Some people are born with or quickly develop instincts for doing that, and they don’t have to think about it much. Those of us who start out with deficits in that area will compensate for those deficits by developing coping strategies. We use our conscious minds to try to figure out what makes human beings tick in general and what makes particular human beings tick. To the extent that we are systemizers, we tend to prefer economics or anthropology to psychology.

2. My theory of me is that I grew up with some innate introversion compounded by an absence of siblings. I had a lot of cognitive ability, which I used to try to acquire social skills intellectually. I became an economist/psychologist/anthropologist/sociologist/political scientist out of necessity. I suspect something similar of Ferriss, of Tyler, of Robin Hanson, of Scott Alexander, . . .

3. Like Tyler, I think that I am almost always in a good mood. Even when I am depressed, I am not sad, if that makes any sense. At the low end of my personal Minsky cycle I lack creativity and energy, but I am still happy. My blog persona is much crankier than I am in real life.

4. Tyler says that it is important to make people feel good about themselves. I agree intellectually, but I have a strong urge to challenge people when I think they are wrong. Even though I know that writing a negative book review is like telling a new mother that she has an ugly baby, I still do it. Tyler will not. If he says that a book “arrived in my pile” or that he “liked it but didn’t finish it,” I infer that it sucked. When I read a bad book, or a bad blog post, the only way I can restrain myself is to self-regulate and avoid commenting. That fails when I am commissioned to review a book and I don’t feel I can turn down the request (more often, I will turn down the request). Or occasionally, as with Deaths of Despair or Phishing for Phools, I feel compelled to shout that the Nobel Laureate wears no clothes.

5. Tyler is currently fascinated by the problem of discovering and developing talent. When I was a middle manager at Freddie Mac, that is the aspect of the job that gave me the most satisfaction, by far. Whenever another department hired one of my staff away from me at a big salary increase, I loved it, feeling that it validated my talent-development skills. The best was when I brought someone in as a financial analyst in Financial Research. This was over the mild objections of an HR person, who complained that the young man had no finance background. Within a year, he was hired away by the Corporate Finance department, and he kept getting promotions (way above me), ultimately becoming the head of a different department with a couple hundred people and a ton of profit-loss responsibility.

Giving globalization a bad name

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Reacting to a post by Peirre Lemieux on the coronavirus, Alberto Mingardi writes,

Will people learn the lesson, and realize that a closed economy is poorer, as Pierre hopes? I fear not. Though the emergency measures somehow provide us with a preview of the kind of country the economic nationalists would like us to live in, they will quickly turn the tables, blaming the virus on globalization, and making trade with China the villain of the story. Italy’s reaction to coronavirus is convincing other countries to treat Italians as we treat ourselves – limiting direct flights, imposing quarantines, etc. This will also increase the perception that reliance on international trade is a weakness, thereby fueling a renewed rhetoric of the marvels of autarky. Sure enough, when people travel they carry their diseases with them: this is not news. Prepare for a new nationalist narrative built around this idea.

I agree. I don’t think that this will make people appreciate globalization–quite the opposite.

Incidentally, I think that this makes it unlikely that President Trump will suffer a political setback because of the coronavirus. Closing the border is his signature issue, and the Democrats have staked out a position as the “resistance” to that. I know that they think they can benefit from this crisis, but I would be surprised if they do.

As for the economics of the crisis, I see it in terms of a PSST story. Many patterns of specialization and trade depend on globalization. The conventional wisdom seems to be that the central banks will be prominent actors, but I could not disagree more. I would suggest that instead of monitoring the Fed, one should watch the transportation hubs–especially ports–and manufacturing centers. To the extent that the attempts to contain the virus cause those places to be shut down, patterns of specialization and trade will be broken, and there won’t be anything that the Fed can do about it.

In my view, Scott Sumner and Jason Furman and other macroeconomists who apply a monetarist or Keynesian “model” are simply not capable of interpreting the world as it really exists. That is a harsh judgment, but I cannot be more gentle.

As Peter Zeihan puts it,

Modern manufacturing is a logistical marvel that taps hundreds of facilities in dozens of countries, but that system is based on frictionless international trade. Break just a few links and the entire network collapses. A modern car has about 2000 parts. If you are missing ten, you’ve got a large paperweight.

I suspect that for the economy, the best-case scenario is that authorities gradually decide that it’s not such a crisis, they let everyone go about their business, and whoever gets the virus, gets it. The worst-case scenario is that clusters of cases continue appearing, and each appearance leads authorities to strangle more transportation and production centers. If the latter happens, then I am pretty sure you will find the PSST paradigm more useful in explaining and predicting outcomes.

Paula Bolyard draws an interesting analogy with the Y2K computer scare. If that analogy proves correct, then we should be closer to the best-case scenario. But one thing about the Y2K scare is that it had a definite endpoint–by mid-January of 2000, doomsday was a dud. I only see the coronavirus panic ending when the media can no longer attract eyeballs to the story.

As to the outlook for the virus itself, consider three scenarios:

1) the proportion of people exposed to the virus approaches 100 percent

2) the proportion of people exposed to the virus approaches 0.

3) the proportion of people exposed to the virus approaches some middle number.

I am not a virologist, but this virus seems optimized for spreading. So wouldn’t you bet on 1)?

Suppose that the virologists in the media successfully convince us to become OCD handwashers and germophobes. Will that actually be able to stop the virus? What other consequences, good and bad, might accompany such a change in culture?

Note that I wrote this at the end of February, adding the Bolyard paragraph on March 2 and the references to Peter Zeihan and Jason Furman on March 6. By the time this post appears, I may have to correct some of my claims in light of developments.

UPDATE: John Cochrane has thoughts. Also, Scott Alexander. And Tyler Cowen.

Did you two visit the same future?

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Ross Douthat writes,

the supposed cutting edge of capitalism is increasingly defined by technologies that have almost arrived, business models that are on their way to profitability, by runways that go on and on without the plane achieving takeoff.

Today is the publication date for Douthat’s The Decadent Society. So by the time you read this, I should have read some the book.

Also sharing Douthat’s viewpoint is the blogger It’s Only Chemo. Pointer from Tyler Cowen, who we know is of a similar persuasion.

Earlier in the month, there appeared The Future is Faster than you Think by Peter S. Diamandis and Steven Kotler, which takes the opposite position. They talk about what has almost arrived with excitement, not with irony. They sound to me like venture capitalists who believe every pitch they’ve ever heard.

I fall somewhere in between, but I lean more toward Diamandis and Kotler.

Catch phrases, intellectuals, and shelf life

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Scholar’s Stage writes,

tweeters maintained that no one who was a prominent writer and thinker in the aughts has aged well through the 2010s.

Pointer from Tyler Cowen, who offers some characteristically terse and contrarian suggestions for how a public intellectual might maintain a long shelf life.

I would note the irony of using Twitter to sniff at others’ short shelf lives. My other thoughts:

1. What do we mean by “shelf life?” To me, it means being a focal point for discussion for a long time. I would focus on the shelf life of one’s ideas rather than on one’s personal shelf life. For example, Paul Krugman has had a long personal shelf life, but I can think of only one of his ideas–the liquidity trap–as having a long shelf life, and very little of his personal shelf life depends on that idea.

2. Note that an idea does not have to be accepted universally to have a long shelf life. Many of us do not buy the liquidity trap.

3. Note that an idea does not have to hold up well to have a long shelf life. “The End of History” has enjoyed a long shelf life.

4. Catchy phrases help an idea’s shelf life. Bell Curve, Bowling Alone, The Long Tail. John Maynard Keynes, Milton Friedman and Paul Samuelson were skilled at producing phrases that caught on.

5. The Original Position is another great catch phrase. I think that Rawls has enjoyed a much longer shelf life than he deserved. Perhaps because his book had at least one other great catch phrase, Justice as Fairness.

6. r>g is another compelling catch phrase. Who would have thought?

6. Tyler is good at coming up with phrases that catch on: Great Stagnation, Average is Over. Others who have coined more than one successful catch phrase include Steven Pinker, Malcolm Gladwell, and Peter Thiel.

7. Robin Hanson probably has come up with more ideas that deserve a long shelf life than anyone I can think of, but he needs better catch-phrases.

8. I have plenty of ideas with good catch phrases: Null Hypothesis, PSST, Suits vs. Geeks, stimulate demand and restrict supply, three axes, etc. But they don’t get picked up and amplified by other people. Perhaps because I have not followed Tyler’s second rule of advice, which is “Avoid criticizing other public intellectuals.” Maybe that’s really the most important rule of all.

Tyler Cowen on Charles Murray

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Cowen writes,

“8. The shared environment usually plays a minor role in explaining personalities, abilities, and social behavior.”

Here I have what I think is a major disagreement with Murray. If he means the term “shared environment” in the narrow sense used by say twin studies, he is probably correct. But in the more literal, Webster-derived conception of “shared environment” I very much disagree. Culture is a truly major shaper of our personalities, abilities, and social behavior, and self-evidently so. For my taste the book did not contain nearly enough discussion of culture and in fact there is virtually no discussion of the concept or its power, as a look at the index will verify.

Now that I have taken a first pass through the book, I believe that this criticism is unfair and should be retracted. Murray uses the term “milieu” to cover what Tyler means by “culture,” and Murray says everything about “milieu” that Tyler would want him to say about culture.

What Murray means by “shared environment” is just about anything that can vary within a (cultural) milieu. Parenting, schooling, government taxes and transfers, etc. All of it runs up against a broader version of the Null Hypothesis. But Murray says very clearly and emphatically that the milieu matters a great deal.

I wish that Murray had written Human Diversity under a pseudonym. Perhaps “Thomas Piketty” or “John Rawls.” It deserves the sort of study and discussion that was afforded Capital in the 21st Century or A Theory of Justice.

Tyler Cowen interviewed

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I think that the interview at The American Interest is the best interview of Tyler that I can recall. I don’t really want to pick out any one excerpt, but semi-randomly–

Ambition is distributed in a funny way and not everyone is going to have it. And the people who don’t have it. . . . There’s not some future where they’re paid like $300,000 a year, but even so, they’ll do fine.

Concerning alcohol, he says,

I don’t think it’s feasible to ban it, but the evidence that it destroys lives is phenomenal, and I think we should shun it socially to an extreme. And it’s one of our great crimes as a society that we don’t do that.

Trust problems

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In a conversation with Tyler, Reid Hoffman said,

I almost never meet with an entrepreneur that doesn’t come from an introduction from someone I trust. . .

the way that I do investing is entirely through my network

He also says,

most jobs are described as “must have a BA or a BS,” a bachelor’s degree, whereas a lot of jobs don’t actually need that. But it’s like, “Okay, what’s the simplest credential that everyone’s aware of that I could throw on the table that says you have some capability of learning, and you’ve been trained in some learning institution?”

And one of the things that I actually wrote is an essay that’s, I think, on both LinkedIn and reidhoffman.org, is thinking about creating a diploma that’s not this old sheepskin, but actually is a modern set of attributes and set of characteristics. And we could start looking at these certificates as something that has a much richer language that can apply to different things.

Can entrepreneurs, especially using artificial intelligence, create a more efficient solution to trust problems than Reid Hoffman’s reliance on his personal network, or hiring organizations’ reliance on college diplomas? There is a lot of money to be made if you can solve trust problems more efficiently. That is the way that financial technology firms make their money.

Or how about the trust problems involved in evaluating contentious books? Consider Nancy MacLean’s attack on James Buchanan, or Diana West’s books on Communist influence in the U.S. government.* Could an AI program walk through the webs of sources of such books and give a measure of the reliability of the narrative, which presumably would be less costly than having humans try to settle the issue?

*West argues, for example, that Lend-Lease was passed under Soviet influence. Even though she knows that it was passed in March of 1941, before Hitler surprised Stalin by invading Russia. In March, the Soviets were adhering to the Non-Aggression pact with Germany, and only Great Britain was eligible for Lend-Lease.

Null Hypothesis watch

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In 1987, Peter Rossi wrote,

The Iron Law of Evaluation: “The expected value of any net impact assessment of any large scale social program is zero.”

The Iron Law arises from the experience that few impact assessments of large scale2 social programs have found that the programs in question had any net impact. The law also means that, based on the evaluation efforts of the last twenty years, the best a priori estimate of the net impact assessment of any program is zero, i.e., that the program will have no effect.

The Stainless Steel Law of Evaluation: “The better designed the impact assessment of a social program, the more likely is the resulting estimate of net impact to be zero.”

This law means that the more technically rigorous the net impact assessment, the more likely are its results to be zero—or not effect. Specifically, this law implies that estimating net impacts through randomized controlled experiments, the avowedly best approach to estimating net impacts, is more likely to show zero effects than other less rigorous approaches. [pg5]

The Brass Law of Evaluation: “The more social programs are designed to change individuals, the more likely the net impact of the program will be zero.”

This law means that social programs designed to rehabilitate individuals by changing them in some way or another are more likely to fail. The Brass Law may appear to be redundant since all programs, including those designed to deal with individuals, are covered by the Iron Law. This redundancy is intended to emphasize the especially difficult task in designing and implementing effective programs that are designed to rehabilitate individuals.

I arrived at this by following Tyler Cowen’s recommendation to check out Gwern and starting to read the latter’s essay on why correlation is so frequent and causation is so rare.

My comments on the Rossi article.

1. James Manzi had very similar thoughts in Uncontrolled. Is that correlation or causation? Concerning the “brass law,” Manzi said that you are more likely to effect change by taking people’s nature as given and changing their incentives.

2. Imagine how much more often we would see these sorts of results if it were not for social desirability bias in reporting on interventions.

Should libertarians heart state capacity?

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Tyler Cowen thinks they should.

State Capacity Libertarians are more likely to have positive views of infrastructure, science subsidies, nuclear power (requires state support!), and space programs than are mainstream libertarians or modern Democrats.

This is the most interesting post I have read this year. Note that I am composing this on January first.

What’s not to like about state capacity?

One strand of conservatism, represented nowadays by Yuval Levin, sees the state taking away functions from other institutions, weakening them. For some folks, that is a feature, but for these conservatives it is a serious bug.

One mainstream libertarian argument against a strong state stresses the lack of skin in the game. Wrong coat, wrong price, in Milton Friedman’s famous explanation. But that is a distributional problem, and Tyler doesn’t care much about distribution or static efficiency. Focus instead on growth.

Rent-seeking? Again, if it only affects static efficiency, it’s a second-order problem. Same with Hayek’s knowledge problem.

Perhaps minarchism was appropriate when wealth was embedded in tangible land and capital. Just have government protect private property.

But Tyler would argue that intangible sources of wealth require more complex rules and more concentrated expertise.

I don’t think that it follows that we need more state capacity. Private coalitions can put together rules. The Internet Engineering Task Forces are an example. If you respect technocrats, fine. Just don’t pretend that government does a great job of hiring and incenting them.

In a democracy, politicians specialize in instilling fear. I see the climate issue as an illustration of fear-installation rather than as an issue where our best hope is more state capacity.

It is true that state capacity and development are positively related. But I suspect that once you control for average cognitive ability the state-capacity variable drops out of the growth equation.

ICYMI: sex differences and personality

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Scott Barry Kaufman writes,

On average, males tend to be more dominant, assertive, risk-prone, thrill-seeking, tough-minded, emotionally stable, utilitarian, and open to abstract ideas. Males also tend to score higher on self-estimates of intelligence, even though sex differences in general intelligence measured as an ability are negligible [2]. Men also tend to form larger, competitive groups in which hierarchies tend to be stable and in which individual relationships tend to require little emotional investment. In terms of communication style, males tend to use more assertive speech and are more likely to interrupt people (both men and women) more often– especially intrusive interruptions– which can be interpreted as a form of dominant behavior.

Pointer from Alex Tabarrok. I think that the fact that women are relatively more likely to be in charge of small businesses than large corporations has something to do with personality differences.

See also Tyler Cowen’s post on gender differences in word use in research papers.