Tyler Cowen, George Mason University | Stubborn Attachments
Today we’re joined by Tyler Cowen, economist at George Mason University.
Noticing progress is the first step if we want to accelerate it or keep it going. Education and life expectancy are increasing while poverty and hunger decrease. Tyler compares this progress with a crusonia plant, a mythical crop that generates more output every period.
In his work he has surveyed our rapid progress, the stumbling blocks to this progress that are becoming more common, and how we might work to mitigate the stumbling.
Tyler Cowen has a Ph.D in economics from Harvard University and is currently a professor of economics at George Mason University. He has edited the volume Public Goods and Market Failures, and has written Explorations in the New Monetary Economics with Randall Kroszner. His most recent book, The Complacent Class…
Tyler worked on his book Stubborn Attachments over 20 years, off and on. It’s his most philosophical book, a labor of love that was eventually published with Stripe Press.
Tyler’s graduate economics work influenced the book, focusing on welfare economics. How do we know that one policy is better than another? Economists typically invoke cost-benefit analysis, but this doesn’t create a grand picture of social systems, it more lends itself to static issues.
Another influence on the book was Derek Parfit’s Reasons and Persons, which Tyler considers one of the great books in philosophy. There is an appendix that argues that the rate of social discount should basically be zero.
In addition to these, he was reading bigger picture philosophers but found that his own views were not represented in the stuff he was reading. Way back in school, he’d read Wealth of Nations too.
Piecing all of this together with his own thinking, he worked on developing an argument where the primary good at the social level is to maximize what he calls the “rate of sustained economic growth.”
As a group, we can’t agree on how valuable all the different parts of life and the world are to each of us, there’s just too much.
But maybe, we could agree that a society as a whole, say current day America, is a better place than current day Albania or Congo: can we say this? What would we be agreeing on? Perhaps that a much wealthier society is probably going to be a better place to live.
If your view is like his that the future is as important as the present, this implies that economic growth is how we get to versions of the future in which there are much better places to live.
“If the future really matters, we can’t be doing things that are going to wreck the future.”
Another qualifier on the argument in the book: there are aboslute human rights that should be respected, and these should constrain what we can do to maximize economic grwoth.
Not a complex ontology of rights that a consultant might come up with, but more “don’t torture people” kinds of things, more straightforward decency.
The final caveat: the book thinks about wealth not just in terms of GDP. Leasure time and other such goods don’t show up in GDP. When he talks about maximizing economic growth, he takes into account non-market goods. Small differences in growth rates make huge differences over time.
This is a moral framework for thinking about politics: it puts productivity and economic growth and sustainability at the center of our thought.
We care about a lot of things: beautiful art, justice, fulfilling our duties. This complex mix, we’ll never totally figure this out for all people. What’s the closest thing we can agree on? Maybe that a rich society like the US is better than a poorer place like Albania.
Early editions of the book also discussed existential risk, but as more and more thinkers began to cover those topics he removed those sections.
Known issues with the argument (that Tyler steelmans in a presentation to Stanford available online):
1. The non-human world: how do we weight the interests of human beings vs. non-human animals? The interests of animals and humans do not co-move in simple ways. This framework is not good at handling this.
2. When you talk about sustainable economic growth, there are two values: the living standards and the risk that you might not get there. If you’re working on extremely long time scales, then existential risk will far outweigh economic growth in your calculations. Tyler is working on more modest timescales for the longevity of human civilization, and his model works best for those who are working on similar timescales.
The contention that we should have a zero discount rate sounds like exactly the kind of narrow, very specific objective value theory that we’ve been trying to avoid and that you seem to be trying to avoid. Avoiding “should” statements and taking as given only things with very wide applicability. How do you come to this?
I’m a big fan of objective value theory, I don’t think you can get around it. Social choices have to be made, and to make them you need to believe that you’re doing a good rather than bad thing.
I’m saying we should apply zero discount to well-being and happiness, not to money flows that are reinvested.
Having a zero discount rate means that the good to the much larger populations of the future far outweighs any good to our current population. Does this put us in a bad bargaining position with the future because we need to align current interests to get to that future?
The zero discount rate doesn’t put us in a bad bargaining position. The most good we can do for future generations is to build them good institutions and norms, and that’s also what’s good for us.
In our introduction you talk about sustainable economic growth. In context of the type of voluntary cooperation we discuss in this group, how do you think that the kind of unbounded investor returns that centralize power and force involuntary cooperation between people because of the power imbalance. How should our society move towards a future with economic rule that don’t centrlize power in these ways?
If Facebook or some other company has harmful monopoly power, and you used anti-trust laws to break these companies up, this should lead to economic growth and is therefore aligned with my model.
How do you internalize externalities to put profit to work making people’s lives better?
Look at the institutions that most improve lives. I think policy changes like carbon taxing and anti-trust laws can help with this.
What’s one thing you wish people like the people on this call would most come to understand?
One thing is the social benefits of religion: I’m not religious myself but it shouldn’t be discounted.
Another: Some notion that a lot of things in the world ought to get done more quickly. You see this in the vaccine distribution across Europe and the world. I hope this is a wake up call that we have institutions built for repetition of routine tasks, not good for emergencies and crises.
How do we do that?
In most institutions, there are too many layers of no. It takes too to do anything. There is far too much credentialism. And there is often way too much software, technology only works when you do it well.
At the end of the day, a lot of tasks require a kind of brute physical mobilization that we’ve forgotten how to do.
What could a theory of political philosophy like yours be used for? One thing seems like AI: what values to give AI systems, what psychology to give digital beings to maximize their good?
I consider myself a “two thirds utilitarian.” There are realms where utilitarianism doesn’t work well: non-human animals, alien beings, sentient AIs and disabled humans.
I think you encounter the same sets of problems in these cases. It seems to me that religious thought is a better starting point for many of those issues.
There’s some sense of a quality of mercy that may not be universally applicable but is not provided at all by secular thought. This provides us norms that we can’t entirely justify but that we need.
I’m curious whether the zero discount rate poroposal is a mechainms desing or is adescription of what has been happnieng or should be happening. Would it affect your gramework to change it for an afjustable discount rate for impact?
I favor a simple rule. I don’t think we’ve been following it, climate change policy shows this. So much of American government doesn’t even run on two year cycle, it runs on a less than one week media headline cycle. Not always in bad ways but very often in bad ways.
People often ask: does the rate of discount HAVE to be zero? Well, your inputs are fuzzy, so there’s no “real” zero, but if there’s any explicit discount rate you begin to compare gods to people and this is a slippery slope to attempting to quantify subjective things. So it’s ZERO!
How do you think about tradeoffs: higher growth for some large number of people that means less growth for other groups? How do you build institutions that are able to make these tradeoffs?
If you get to a wealthier society, over some time horizon many of these tradeoffs disappear. Over say 5 years, there are many tradeoffs. But over decades, these tradeoffs tend to fall off and the comparison is based on other metrics.
Religion does this: “don’t steal from your neighbor, you’ll be glad you didn’t in the afterlife!”
I read your Bloomberg piece on “Sins of Omission vs. Commission” and have been thinking about what’s going on with the vaccine FDA pipeline. How do we get the public to recognize sins of omission by our institutions?
Ideas really matter: if you speak to the public health people, they are quite conservative in their approaches. Until that changes by a new generation entering those positions, it won’t. It’s about educating the new generation with these ideas preparing for them to take power.
It’s like monetary policy: people are upset about joblessness or wages, never “monetary policy”. Vaccine policy is the same, it takes big shifts of public opinion and knowledge. The next generation of public health people are reading our arguments and it’s quite possible that a generation from now many of these sorts of things will end up looking quite good.
While sustainable exponential growth is great, we have a pretty bad track record of pricing externalities and making things sustainable. Is that endemic? Or can we get better?
I don’t think our track record is so bad. I used to be highly pessimistic about climate change, but now we see great trends in alternative energy sources and electric infrastructure.
If anyone should be optimistic, it should be a Canadian.
What about proposals like Gross Domestic Happiness as opposed to growth?
I think properly understood it is not THAT different from wealth.
If you look at what 10 or 12 countries immigrants want to go to, it’s pretty clear which they are and they tend to be the wealthier places.
What needs to change about the field of macroeconomics, why has it come up short in understanding growth?
I think a lot of macro is underrated and it has done better than people think. The disagreement about the stimulus seem mostly political not economic.
There is something hard to understand about economic growth that comes from human culture. The Confucian systems of east Asia have clearly created economic growth, but these don’t necessarily translate to other cultures.
If having low friction barriers to doing business are dependent on trust, and ease of doing business is correlated to growth, how do we seek to optimize trust in a society?
I think the US now has a much higher trust than media might have you believe, especially in business contexts.
That said, there is a common pattern in American history. An example is Pearl Harbor: a terrible mistake that we came back from stronger than ever. Vaccines are the same now: bad initial rollout but huge numbers now.
My model of the US may be: We have high trust but a lot of dormant assets, and it takes us a lot of time to get our act together, but we finish strong.
Please follow up with me if you would like to! My email is online.
My advice for crypto people: nobody seems to know what’s going on in that field. Don’t get locked into particular positions, don’t get too dogmatic, and keep building!