00:00hi everyone welcome to the Asics insi
00:02podcast I'm sonal and we're here today
00:04our special guest is Tyler Cohen who is
00:06a professor of economics how should I
00:09describe you there's so many things I
00:10could say about you I sometimes say I
00:11specialize in being a generalist oh I
00:13love it so he specializes in being a
00:15generalist and I generalize in being a
00:17specialist Alex rampell our general
00:21partner who covers FinTech and many
00:23other things as well and we're here to
00:25talk about Tyler's new book the
00:27complacent class and the subhead is a
00:29self defeating quest for the American
00:31Dream I think the best way to kind of
00:33kick it off Tyler is if you could tell
00:35us what is the primary thesis of your
00:37book individual American lives have
00:39become better in so many ways our lives
00:41are safer we're more comfortable and
00:44we've all sought that but there's a
00:46problem at the collective level there
00:48are more barriers to entry in our
00:49economy than ever before productivity is
00:51slower we're taking fewer risks we're
00:54more concerned about burrowing inside
00:56and matching with people like us and
00:58less about doing something grand and
01:00external so in the long run as our
01:02productivity and mobility slows down at
01:04some point we just can't pay the bills
01:07so this is a story about why things have
01:09gone wrong but at the same time it's
01:11trying to explain well we are the
01:13problem but they've gone wrong precisely
01:15because in some ways we've been doing
01:17well by ourselves it's almost
01:18counterintuitive where would you say
01:20technology plays a role in that in that
01:23sort of specifically and the reason I
01:24bring it up is because I've been
01:26thinking for a long time about the
01:27simplest definition of technology is
01:28what can I do it in three words its
01:30tools for change and that is essentially
01:33the opposite of any kind of complacency
01:35but yet you argue in your book that
01:36technology is actually a driver for some
01:38of that complacency that in fact some of
01:40the very algorithms that we use for
01:42matching for instance or helping to
01:45create this a lot of the biggest
01:46advances in technology lately has been
01:49about our leisure time they've made us
01:51happier but they're not necessarily
01:52generating that much in terms of jobs or
01:55in terms of revenue we've become
01:57phenomenally productive manipulating
01:59information in different ways and this
02:01again is in contrast to changing the
02:04physical world so a lot of the earlier
02:0520th century we built grant structures
02:08we could get around more quickly and
02:09we've lost a lot of interest in doing
02:12now we connect to friends more
02:13effectively we trade information this is
02:16great for people who love information
02:17but for people who need really a better
02:19life fundamentally in more material
02:21terms they're the group of people that
02:23have become less happy well one of the
02:25lines in your book that really stood out
02:27to me and I put a question mark with an
02:28exclamation point next to it is we are
02:30using the acceleration of information
02:32transmission to decelerate changes in
02:34our physical world and I found myself
02:37very much disagreeing with that actually
02:39because we're seeing the exact opposite
02:40that in fact you're beginning to see the
02:43physical world reshape around these
02:45cloud-based tools that are making people
02:46move around in different ways getting in
02:48strangers cars apartments how is this
02:50well I think we're close to agreeing you
02:52said we're beginning to see this affect
02:54the physical world and I think that's
02:56right but if you look at the actual
02:58trend for the last 10 or 15 years it's
03:00that you can stay at home and be happy
03:03for a week or longer and have everything
03:05delivered to you and watch stream in
03:07nothing's yeah and you Spotify and be a
03:10couch potato and cocoon and follow your
03:13fins through Facebook now I actually
03:15don't think those will be the trends for
03:17the next 30 years I feel our physical
03:19world is in some way about to break
03:21loose and change and we'll be in a
03:23country which is more dynamic but more
03:25violent more chaotic and you see some of
03:27that already in politics but what we
03:30have done is build cocoons for ourselves
03:32and technology has enabled that and the
03:35fact that most commutes are worse
03:36it simply matters a lot less because you
03:38don't have to go there anymore mm-hmm
03:40that's a funny poster and it said
03:42introverts unite in your own respective
03:44rooms in your own respective I don't
03:47think that's a bad thing because you may
03:48be physically complacent but you're
03:50actually mentally and emotionally more
03:52Restless than you might be than ever
03:54before because of the internet
03:55connecting things in unexpected ways and
03:57this could play out from some farmer in
03:59India who now sees a whole different
04:01life and the ability to connect with
04:03someone in California through his phone
04:05where he could never have done that
04:07before and that's the exact opposite of
04:09complacency in my view I think it's a
04:11very good deal for well-off people
04:12educated people in the United States and
04:15it's a great deal for the previously
04:17poor people in say China in India yeah
04:19but most people still live in the
04:21physical world and they're shaped by how
04:23the physical world operates
04:25and there's a dynamism to place and
04:27culture and personal connections and the
04:30happenstance of everyday life that
04:32fundamentally shapes what kind of
04:34country you have what kind of culture
04:36you have and we've dropped the ball on
04:38that because the elites are so entranced
04:41by their new control over information
04:43and they see a lot of poverty ending
04:45elsewhere in the world wonderful
04:47developments but again you see in recent
04:50political developments something's gone
04:52wrong and we forgotten about the big
04:54middle chunk of this country so in your
04:57book you talk about the three different
04:59subtypes of complacency or complacent
05:01classes there was the privileged group
05:03yes and I kind of think of them it's
05:05just being much more rooted in the
05:06status quo you see if you are privileged
05:08and that was part of the status quo
05:10anything that repudiates that is bad you
05:12have those that are digging in and those
05:14that are getting stuck
05:15maybe you describe that a little bit
05:17more because I thought that was in it
05:18that wasn't like when I think about this
05:19election I really looked at it is the
05:20people that wanted the status quo voted
05:22for the status quo candidate and no
05:24matter what Donald Trump did like his
05:25his famous quote of exhortation I could
05:28shoot somebody on Fifth Avenue and
05:29nobody would care it probably was
05:30accurate for people that weren't voting
05:32for him but were simply repudiating the
05:35status quo so how do you think about
05:36that and that because I don't think of
05:38that as complacency I think we're
05:39disguising our own complacency zin a
05:41number of different ways so if you take
05:43the educated elites who mostly voted
05:46against Trump there are actually the
05:47people most likely to complain about
05:49inequality or complain about global
05:51injustice or to be quote unquote doing
05:54something but a lot of that is a kind of
05:56placebo to assure themselves that
05:59they're doing something and if you
06:01compare today to previous historical
06:03eras I think we're going through a kind
06:05of protest theater in many ways people
06:08do things on Facebook Twitter they think
06:09that's effective I suspect it's not it's
06:12hard to prove it's not maybe protest is
06:14really actually another form of
06:15complacency to your point let's die for
06:17a couple of minutes on social media
06:19because there's been three waves of
06:20discussion around social media and sort
06:22of the political sphere one social media
06:24you know driving things like the Arab
06:26then you had well no it was great for
06:29the social and the group and some of the
06:30organizing and sure reporting and
06:32sharing but not necessarily and actually
06:34affecting the actual change and there
06:35was a lot of discussion and research
06:37recently in this interesting maybe third
06:39or fourth wave there's this discussion
06:41of how social media is literally
06:44of centralized information you know and
06:47this is not just about fake news and
06:48we're credibility's resides and what
06:51these things mean does that reinforce
06:53the complacent class or does it actually
06:54expose people I mean I guess one of the
06:56things I'm trying to get at is sort of
06:57is matching the same thing as being in a
06:59filter bubble see I don't even think we
07:01know yet that social media are good for
07:03us so if you go back a few decades
07:05people have always wanted to establish
07:07their identities and before you had a
07:10Facebook page or whatever else you might
07:12have used you did it more by how you
07:14dressed especially your taste in music
07:16you made various kinds of bold
07:19statements some of which were ridiculous
07:20and retrospect but they gave the culture
07:23a kind of dynamism and music was
07:25incredibly important in people's lives
07:26the books you read there's a reason
07:28myspace was the first exactly semi
07:30successful social network so there was
07:31an implicit cross-subsidy to culture in
07:34the physical sense and now that you can
07:36tell people who you are and maintain
07:38your friendships through social media
07:40you don't need books and music in the
07:42same way you may be interested in them
07:45but they don't have cultural potency
07:47anymore and there's some big pluses and
07:49minuses but I think we're using social
07:51media to be complacent well oh this is
07:53who I am and my friends they're great
07:55and I'm in touch with a signal not to
07:57actually direct they sound so good it
07:59feels so good and there's a rule of
08:01thumb and there's something that feels
08:02really good that's when we need to be
08:04especially suspicious I think it also
08:06begets a form of cowardice and and
08:08callousness so that the comedian louis
08:11i forgot which late-night show he was on
08:13but i thought this was very it was very
08:15insightful he was saying he does not
08:17like his children using phones and it
08:19wasn't the traditional reason of it
08:20causes cancer it doesn't it's not on
08:22yeah irradiation it wasn't any of the
08:24silly things you said that normally when
08:26you're ten and you're trying to learn
08:27empathy if you go up to somebody and say
08:30like in your school and say you're fat
08:32and ugly I don't like you that person
08:33will start crying you're lazy when I say
08:35these terrible things like look at the
08:37effect that it has on this human whereas
08:39when you do it via text message you say
08:40you're fat ugly hahahahaha or email or
08:43email or Twitter and it's this kind of
08:46asymmetry you're not even asymmetry it's
08:47a one-way form of communication even
08:50though it is of course it
08:51asynchronous and the emotional response
08:55is often muted I mean there's the old
08:57adage of like never argue with somebody
08:58on the internet never be the comments
09:01that my other famous cartoon on xkcd is
09:06there is somebody saying like hey honey
09:07hold on I'm gonna come back to bed but
09:09somebody is wrong on the internet and I
09:12cite that one often but you know at
09:15least in real life you have to engage
09:16with people and it's very very hard to
09:18just say like I mean the ad hominem
09:19attacks that that go on just incessantly
09:22on the Internet you know it's just it's
09:24you really lose a lot of faith in
09:25humanity if you start reading the the
09:27comments anywhere else because you don't
09:31really worry about you just kind of you
09:33ship them into the void and that that's
09:35often problematic the stability of our
09:37politics might rely on a certain kind of
09:39hypocrisy you pretend the other people
09:41don't dislike you so much but now we see
09:43yeah and polarization has gone up and my
09:46other worry with social media I like the
09:48idea of a society based on the notion of
09:50an individual quest to find the perfect
09:53movie or to track down a used book
09:55you've been looking for and all of a
09:58sudden our old quests are gone it's very
09:59easy to match to what you want and
10:01that's that's wonderful it's fulfilling
10:03but at the same time there's an
10:06emptiness where that metaphor used to be
10:08and we need to redefine individual quest
10:11as something significant for an age of
10:13social media and I don't think we've
10:15done that yet and that too has taken
10:16away from dynamism this goes - it's
10:18something that I feel very strongly
10:19about and have long desired which is
10:21there is no perfect recommendation
10:22algorithm and one of the favorite things
10:24that used to do as a child is you go to
10:26the library you'd like you know browse
10:27book racks and find something now Amazon
10:30gives me recommendations and they're
10:31just too hyper optimized and specific
10:34there's not a sense of serendipity and
10:35discovery in it I'll take the other side
10:37of that if you go back to the biggest
10:39advances in communication
10:41besides you know whoever came up with
10:42graphics on on cave walls during the
10:45caveman era you know you have the
10:46printing press and that allowed mass
10:49dissemination and mass copying but still
10:51there was a centralized control you
10:52actually had to own a printing press you
10:53had to be able to operate it right
10:54there's a fiction a barrier tent and
10:56then you know the nostalgia for the
10:58small bookstore well who is actually
11:00selecting the books that went in the
11:01bookstore he was limited by by space
11:04by dimensionality yeah the limitation of
11:06the bookshelf now the nice thing is that
11:08anybody can become yes the fact that
11:10anybody can become a published author
11:12within seconds means that you can't have
11:15a proliferation of fake news the fact
11:17that you have nine thousand channels
11:19means that you're not going to have like
11:21the most-watched show on American TV I
11:23think was the finale of mash what was
11:25that a hundred million people tuned into
11:26that like when will that ever happen
11:28again I mean maybe it's the Superbowl
11:30but even that is kind of dropping like
11:32you have much less centralization
11:35yes you do have things like the rule of
11:37the algorithm is now going to get to
11:38show you but at least there's more
11:40there's more choice that's available as
11:42opposed to this kind of like there is no
11:44cabal organizing which hundred books
11:47were really there but there kind of was
11:49it's like an elite of editors deciding
11:51look you will see these ten books on
11:52your bookshelf I mean that's true
11:54and now you know Amazon their first
11:56collaborative filtering algorithm was
11:57called used cosine similarity so it used
11:59actual math to figure out people that
12:01like this actually like that and it was
12:03much more it was much more democratized
12:05in terms of the the set of information
12:07that was available to you yet the flip
12:09side of that when you think about the
12:11algorithm say on Facebook like I used to
12:13hate this notion that what my friends
12:15read on Facebook is what I'm gonna want
12:16to read it's absolutely freaking not
12:18true I'm far more interested in what
12:19strangers who have similar interests as
12:21I do want to read and so what's
12:23interesting is that you do have this
12:25phenomenon where because of social media
12:27and some of these matching algorithms
12:29you have people organizing in different
12:32ways that you could physically that you
12:34can never do before so I'd love to hear
12:36your guys's thoughts on that especially
12:38in the context when the themes you talk
12:39about in your book Tyler about
12:40segregation and this is like the reverse
12:42before it would be like a closed Enclave
12:44and now we're looking at exposure across
12:46communities if we think of 1990 at that
12:49time I feel information space was far
12:51too underdeveloped relative to physical
12:53space if we think of 2017 I worry that
12:57information space and what you can do
12:59with information has outraced
13:01the physical world the physical world is
13:03much more segregated by income Yesha lee
13:05here in the bay area yeah but in many
13:07parts of America so I think we need some
13:10intermediate point and to go back a bit
13:12one of my recent vows is that when I'm
13:15in a city and I'm looking for
13:17refused to use the Internet and I just
13:19walk around and I try to find something
13:21this led me to banana Thai restaurant in
13:23downtown San Francisco by the way which
13:25is very good but at the same time if one
13:28is doing that you need to realize partly
13:29that works because some other people are
13:31saying Yelp to monitor quality so what
13:35we can do to get to some healthier
13:37intermediate point where you get away
13:40where rents are so high in the
13:42productive cities and there's this
13:43extreme segregation by income I do think
13:47we've gone to four toward information
13:49which is ultimately a centralizing force
13:51you have Google and Facebook and Amazon
13:53you know companies I love I'm not anti
13:55corporate in that way but I want to see
13:57more secession from those platforms and
14:00that's very hard to manage precisely
14:02because they work so well on a related
14:04note we often hear about NIMBYism and in
14:07our own backyard not in my backyard and
14:08there's a lot of tension between
14:10availability of supply of housing and
14:13and demand and people in San Francisco
14:16not wanting new people to come into
14:18their neighborhoods but in your book you
14:19say like NIMBYs just one specific
14:21physical manifestation of a broader
14:23mentality of stasis there's also 9e
14:26which is not in my election year NIM -
14:29not in my term of office very relevant
14:31today on the day of the inauguration
14:33lulu locally undesirable land youth nope
14:37not on planet earth cave citizens
14:40against virtually everything and then
14:42banana build absolutely nothing anywhere
14:45near anything is that real stuff did you
14:46make that up it's real stuff the general
14:49problem is veto points build up in a lot
14:51of systems and you see this also in
14:53companies as they grow larger and more
14:55bureaucratized it's harder for them to
14:56be dynamic yeah that's a really great
14:58point to just pause on for a second
15:00because in this podcast we're not just
15:02talking about politics it actually plays
15:03a big corporate absolutely even a fairly
15:05small levels like 50 or 100 employees
15:08you observe this setting in depending on
15:10the activity the United States has
15:12gotten to the point where you could say
15:13our Constitution in the broad sense of
15:15that word it's been gamed and then
15:17you've had some political figures come
15:20in not just to this country but in a
15:21number of other countries who have
15:23figured out how to crack that game and
15:25the forces that might have responded
15:27have actually been too paralyzed or too
15:30to mount an effective response so we're
15:33seeing those highly effective structures
15:35crumble and they're crumbling precisely
15:37because they're effective can you give
15:38me an example so you look at the United
15:40Kingdom the forces that wanted brexit
15:42they mounted a much more effective
15:44campaign and the pro remains side which
15:46I was sympathetic with they had very
15:48poor arguments in response they were
15:50less well coordinated they were less
15:52willing to tell untruths and they lost
15:54pretty badly and that they were shocked
15:56by that loss so we're seeing a whole
15:58bunch of systems precisely because they
16:00make people pretty happy and entrench
16:02them and we all love certain kinds of
16:04tenure and security in our lives then we
16:07stick there and we become less able to
16:10respond and then that's precisely when
16:12we're the most vulnerable is when we're
16:14feeling good about things so when this
16:16country people say well we had Obama
16:18I left him now we have Trump how can
16:20that be part of the message of my book
16:21whatever you might think of Obama Trump
16:23that's not counterintuitive that's
16:26actually the way things can work well
16:28there's a certain asymmetry to this as
16:30well one of the descriptions of 9/11 was
16:34that was a ten thousand dollar operation
16:37it was obviously horrific but it was a
16:39few first class plane tickets the
16:41guerrilla warfare and how much money has
16:44the United States spent in response and
16:46this was not lost on Osama bin Laden
16:47this is how the Soviet Union was
16:49partially bankrupted in the Afghani war
16:50which is the amount of money that the
16:53incumbents it's almost like a parallel
16:54to entropy where the amount that you
16:56have to take something down is much it
17:00requires much less including on the
17:01ethical line as well which is like all
17:04right if you want to maintain the status
17:06quo and the status quo is rooted in call
17:09it telling the truth you're not willing
17:10and it turns out that telling the truth
17:12is actually not as an effective it's not
17:14as effective in terms of persuading the
17:15populous as telling non truths there is
17:18an asymmetry in terms of how quickly you
17:20can take something down as opposed to
17:22building it up a super relevant the
17:23example that just flitted through my
17:25head is both of you were talking is what
17:26happens with anti-vaxxers and and people
17:29who are Pro vaccinations a regular you
17:30know entrenched complacent in their
17:32belief that oh vaccinations is a very
17:34accepted thing we're not going to go
17:35back to an era where people question the
17:37need to do vaccinations and then you
17:39look at these these beautiful graphics
17:41like you LOD Lawton and my
17:42and Resta did an amazing visualization
17:46and analysis of it one of the most
17:47fascinating things is that the group
17:50that's not complacent about their status
17:52quo anti-vaxxers is more organized more
17:56coordinated they care more ya hear more
17:58that's the problem is that's the
18:00asymmetry it doesn't matter who's right
18:02or who's wrong it matters who cares more
18:04I mean that if anything that's the
18:06heuristic for figuring out who's going
18:07to win an election my favorite movie is
18:09probably the Godfather I think this was
18:16part two where Michael goes to Cuba yeah
18:18this is part Michael goes to key Hammond
18:21Roth he suddenly becomes very very
18:23concerned that this whole like that
18:26Batista will be overthrown because he
18:28sees a guy blow himself up it was
18:30actually like an act of terrorism one of
18:32the rebels blew himself up and took a
18:33police captain with him and he said like
18:36you see that like they actually care you
18:38can learn every business lesson but this
18:42is this is actually why he pulls out of
18:44the whole Cuban thing I mean that and he
18:46thought Hyman Roth was trying to kill
18:48him but take that aside the real issue
18:50was that the rebels cared more because
18:53if you are in the entrenched elites I
18:55mean like you don't want to lose what
18:56you have if you have nothing to lose I
18:58mean this is one of the problems like if
18:59you look at the troubles in the UK in
19:01Ireland if you look at the
19:02israeli-palestinian conflict here in the
19:04US when you don't have any opportunity
19:07for growth or change yeah I mean if you
19:08if you have a strong economic base I
19:11mean there are counter examples to this
19:12but if you have nothing to lose and
19:14everything to gain then you just you you
19:17adopt a different mentality in a
19:19different way of acting out you probably
19:21are less complacent than people that
19:23really want to maintain the status quo
19:24but my numerous trips to India and China
19:27over the last 10 15 years were a big
19:29influence behind this book because you
19:31visit India and China and in most parts
19:33you see a new country every three to
19:36five years Americans typically contrast
19:38their own nation with Western Europe
19:40that's the tradition and then America
19:42feels so dynamic because Western Europe
19:44is even more sluggish and stagnant and
19:46that's a big mistake the notion that you
19:48should stop being Tocqueville don't
19:50compare yourself to Europe so much the
19:52action is an India and China view this
19:54country through that
19:55and you get a very different vision you
19:58then see us as much more complacent I
20:00totally agree we had Joel makeer on this
20:02podcast and when he described the
20:04culture in the Republic of Letters and
20:06all these factors that contributed to
20:07the Industrial Revolution the thought
20:09that kept going through my head over and
20:10over and over again as like this is
20:12China this is China this is China this
20:14is not the u.s. anymore we're not this
20:16group that's ambitious
20:18and hungry in the same way one of the
20:19questions you ask in your book is like
20:21what does a dynamic non complacent
20:23society look like so it is are you
20:26saying it is like an Indiana China
20:27because they have so much change
20:29physically happening because some people
20:30would also argue the opposite in the
20:32case of China where you have this fake
20:35inflation of building to inflate
20:38manufacturing you know the appearance of
20:40manufacturing I would also argue that
20:41necessity with the right economic system
20:45in place necessity breeds ambition and
20:48you know what why be ambitious if you
20:51have everything provided for you yeah I
20:52don't need to do anything and there is
20:54the socialist form of that there is the
20:57you know great-great great-granddaddy
20:59was a billionaire and left me lots of
21:01money and then nobody in that whole
21:02generation decides to work again if you
21:04look at the gentrified glasses of
21:05Western Europe I mean why work why be
21:09ambitious at all reading Jane Austen
21:11novels I was always shocked that people
21:12get to literally hang out all day living
21:13off like their ass it's very hard to
21:14have ambition for a certain goal if all
21:16of your needs are taken care of either
21:18under a you know highly socialist system
21:20which might be the problem with
21:21stagnation in parts of Europe
21:23or under a gentrified system where my
21:27family has had billions of dollars
21:29because where the the do whatever is in
21:31France or in England where we have owned
21:33all of this land and we are effectively
21:35just rent takers without actually
21:36needing to build anything or do anything
21:38that applies to this phenomenon that's
21:40always fascinated me about immigrants
21:41we're the first generation and second
21:44and third generation of immigrants were
21:45always agitating against this
21:46complacency but then that effect has
21:49been documented very well disappears
21:51after the third generation for that rare
21:53reason so I'm Jewish and you know the
21:56first immigrant communities that they
21:58came in you know after the pogroms in
22:01Russia they were very very poor their
22:04children did well and became doctor like
22:05it was like be a doctor like at the time
22:07he was you know doctor lawyer
22:09if you're a total failure be an
22:10investment banker or something like that
22:11and these children were overworked not
22:13necessarily in a bad way this is again
22:15ambition necessity bread this ambition
22:17and it was also a love of education and
22:19then there was this reaction of it's
22:22like my parents made me work too hard
22:23and now I'm wealthy and I don't want to
22:26see my kids suffer like I did I'm not
22:28going to push them through this
22:30overexertion yeah and then it over
22:33rotates and then if you have too much
22:35wealth this is the difference between
22:36wealth and income if you have no income
22:38but lots of wealth you can breed
22:41complacency from a lack of him I mean
22:43I'm using complacency in a different
22:45form than you are right but I'm using it
22:46in terms of like just no ambition
22:48whatsoever well the phrase in the book
22:50which I think describes us perfectly at
22:52both an individual generational company
22:53political geographic level is a sense of
22:56urgency that is the perfect way of
22:58describing it if you look at inequality
23:01of wealth rather than income a lot of
23:02Western Europe has higher inequality
23:04than America does we think of this as
23:06the country of great inequality but
23:08that's income in terms of wealth it's a
23:10very mixed comparison I worry about
23:12Millennials as a generation I think they
23:15will do fine because they're many of
23:18them inheriting stocks of wealth but the
23:20generation after them may not have that
23:22same buffer and so much of economics
23:24income is easier to measure than wealth
23:26so papers are in about income but wealth
23:29so often is the more important variable
23:31that's the stock and it's much harder to
23:33measure but I think that drives the
23:35world more than economists often like to
23:37admit that's a really interesting it's
23:39also interesting like all of Tax Policy
23:40like if you really want to invigorate
23:42the economy you have these stagnant
23:44pools and you don't want pools of
23:46anything to be stagnant I mean if its
23:48water outside after rain mosquitoes grow
23:50there you want to have movement in the
23:51economy you want to have movement of
23:53actual like assets and wealth and that's
23:55one of the problems corporate cash is
23:57the new stagnant corporate cash is the
23:59new stagnant pool the problem is that
24:00even if you get it moving again like
24:02repatriation if I could design any ETF
24:04right now going to this administration
24:06it would be a companies that have the
24:09largest percentage of offshore cash
24:11relative to their current market cap is
24:13the problem is that if you don't have
24:15something else that you're willing to
24:16build or wanting to build again it's
24:18almost a lack of ambition at the
24:20corporate level and also like just a
24:22because if you have somebody that has no
24:24know ownership and it kind of is
24:26suffering from an agency problem within
24:27their own corporation you want to get
24:29the stock price up and you want to
24:31optimize for the next five-year period
24:33where your own your own compensation
24:34benefits but you're gonna have two
24:36trillion dollars that comes back to the
24:37u.s. from the Cisco's and GES and
24:40predominately apples of the world that's
24:42right now offshore it's already been
24:44taxed offshore it comes back here but
24:46what do you do with it does apple decide
24:48to go build its own car or a shuttle to
24:51Mars you affect dividends to its dock
24:53hold it exactly it's probably going to
24:55go to buybacks M&A and dividends yeah
24:58and a lot of that is just kind of like
24:59reshuffling as opposed to actually
25:01building anything new but I think we're
25:02headed back toward more dynamism in the
25:05US in the US and we will hate it because
25:08it will disrupt us if you look at the
25:10great age of American dynamism late 19th
25:12early 20th century it's a terrible
25:14horrible time in some ways with great
25:16suffering and the technologies we invent
25:19different parties use against each other
25:21and we may be headed for a new version
25:23of that but I think dynamism and
25:25unpleasantness so often come together so
25:28America will become dynamic again
25:30everyone's all excited like we're gonna
25:33stacked on top of what we have now but
25:35that's not how it works is that what you
25:37mean when you describe in your book the
25:39great that's a great reset that the old
25:41way at some point you cannot continue
25:43with and you do get new dynamism and new
25:46technologies that really fundamentally
25:48change things and in the very long run
25:50er are great for your country but you
25:52have significant numbers of decades
25:54where there's really also a higher level
25:55of suffering and uncertainty is it just
25:57not the inevitable cyclical progression
26:00that happens throughout history or is
26:02there something different happening
26:03right now no it is the cyclical
26:05progression but we ceased believing in
26:07that so in America you have the
26:09progressive movement which has its
26:11left-wing form but on the right there's
26:12its classical liberal libertarian form
26:14where you think things will just keep on
26:16getting better and markets will
26:17liberalize and will spend more on social
26:19welfare and poverty will be alleviated
26:21and we'll all be freer and we've had
26:23that vision since I think sometime in
26:26the 1960s at least educated classes and
26:28we're now learning that was a kind of
26:30lie and we told it to ourselves to make
26:32ourselves feel better but there's no
26:36live Iran most of it and we're seeing a
26:38lot of backward movements including on
26:40gender equality it's not clear that's
26:42moving forward and you know I would
26:44agree with racial tolerance a very mixed
26:46picture hard to assess overall but it's
26:48not the standard progressive story my
26:51period but this all become
26:52professionalized yeah it's just become
26:53more domesticated and appearing more
26:56acceptable but in reality it's like ten
26:59times worse than equality theater just
27:00like we have protest right yeah this is
27:02the age of equality theater but the
27:04ancient Greeks also a lot in Indian
27:06philosophy people understand cyclicality
27:08very well oh yeah that's the normal
27:10belief in human history we were just
27:12born at a period of time where we did
27:14basically see just decades of progress
27:15Soviet Union Falls China reforms India
27:18gets wealthier so you over extrapolate
27:20and you think we're just going to get
27:21more and more of that and that's the
27:23biggest intellectual mistake we've
27:25probably made there's a thought
27:26experiment which is what if a newspaper
27:29were published once every 100 years the
27:31problem with this the current publishing
27:34rate of news it used to be twice a day
27:36back when you had evening paper yeah
27:38then it went to once a day there was
27:40cable news and now there's like
27:41second-by-second Twitter right now when
27:44you're looking at the the distance
27:45between two points on this curve you
27:47kind of over optimize for bad like
27:49everything is bad you don't say like if
27:51you had a hundred your paper comes out
27:53in 20 1719 polio wiped out that would be
27:57a big one infant mortality down from 25
28:00percent to four percent worldwide I mean
28:02if you look at a long enough time
28:04horizon how old did the average human
28:06live to be 200 years ago versus now
28:08these things are not necessarily better
28:10I mean these are all heuristics for
28:11looking at improvement in human lives
28:13and decreases in human suffering but
28:16over a long enough time horizon I agree
28:17like there's there's a certain
28:18cyclicality and these things don't
28:20monotonically increase like there's not
28:22monotonic human improvement but over a
28:24long enough time horizon it seems like
28:26there have been just almost objective
28:28improvements across every one of these
28:30too many 50 to 60 year time horizon I'm
28:33quite optimistic about almost the whole
28:35world but I think on 20 to 30 year time
28:37horizons we've significantly underrated
28:40the force of pessimism
28:41that's fascinating the frequency of
28:44sampling and instrumentation makes you
28:46over optimized for the bad but went on a
28:50and fewer moments of instrumentation at
28:54you optimized for the good but I don't
28:56think you optimize I think that's that's
28:57the only story that's worth telling yeah
28:59I mean the Brangelina breakup wouldn't
29:02make the hundred-year paper
29:03I mean maybe 9/11 would would be hard to
29:05have a hundred year history book they
29:07would not include the many wars that
29:08derive from that but compare that to
29:11World War two right I mean compare that
29:14to World War one a lot of other
29:16calamities that really hit hit the
29:18entire planet those would probably the
29:20ones that would be optimized for on the
29:21bad side yeah most of the things are
29:23actually objectively good and they are
29:24driven by technology talking about this
29:26movement this dynamism this creation and
29:29building how does this come then to this
29:31question of measuring the dynamism
29:33because one of the biggest debates that
29:34plays out all the time especially in the
29:36technology world how does it come to
29:37measuring the information economy in GDP
29:40productivity growth is very hard to
29:42measure but by the best measures we have
29:44it's considerably lower today than it
29:47was in the 1950s or 60s certainly much
29:50lower than it was in the 1920s now some
29:52people say well information technology
29:54is in a kind of invisible form of
29:57productivity but even when we try to
29:58measure that it doesn't seem to close
30:00any more than a third of the gap keep a
30:03lot in mind a lot of information
30:04technology is bought and sold so you buy
30:06an iPhone that shows up as a transaction
30:08you buy broadband cable you see an
30:10advertisement on Facebook you buy
30:12something that counts in GDP so the
30:14truly unpriced gains from information
30:17technology I don't think are nearly big
30:19enough to close the gap and there's been
30:22a real decline in productivity a real
30:24decline in wage growth and that's the
30:26number one economic dilemma in this
30:28country is most people feeling they're
30:31not making advances their children won't
30:33be better off than they are may even be
30:35worse off what do you do about that you
30:37can't just wake up well I'll invent
30:39something today you need long slow
30:41building processes that get you out of
30:43it and one of the things that we talked
30:44about here is that this the last 10 or
30:4715 years a lot of the productivity and
30:50information enhancements have been
30:51consumer is Facebook a boon for
30:54workplace productivity because a lot of
30:56these things actually they're great for
30:58consumers in terms of wasting time and
31:00wasting time is almost antithetical to
31:02doing things at work
31:04because actually I remember my company
31:06trial pay we were a payment company
31:08predominately doing payments for digital
31:10goods and games you know when people
31:11really started picking up and paying for
31:13digital goods when Monday morning at 9
31:15a.m. 10 a.m. why would that be it wasn't
31:18the weekend the weekend people want to
31:19go outside they can do they could do fun
31:21things if you're trapped in office space
31:23like literal office space and you have
31:25nothing to do or maybe you do have
31:27something to do and you want a
31:28procrastination tool so so there's that
31:30element and reading my blog is the same
31:32by the way that is actually a
31:36Productivity killer and like there are
31:38two ways of really approaching this you
31:40could say all right we're going to clamp
31:42down and prevent you from looking at
31:44everything and actually be authoritarian
31:46in terms of what you do at work but then
31:48there's too much competition and
31:49probably you would lose the the best
31:51workers there so that would be very hard
31:52to organize but the glass-half-full way
31:54of looking at it is that actually we're
31:55poised for corporate productivity like a
31:58lot of these tools like the Facebook's
32:00the Twitter's a lot of the wealth
32:01generation that's happened on the
32:03technology side has really been directed
32:05towards consumers I would actually argue
32:07that slack is one of many that will help
32:09corporate improvements I mean the other
32:11is that I mean you're right it's it's
32:13very very hard to measure some of these
32:14things and GDP fails to capture the fact
32:17that when Encyclopedia Brittanica and
32:19its ilk went bankrupt
32:21that was probably decreasing GDP that
32:23was replaced with Wikipedia which had no
32:26effect on GDP whatsoever at least not
32:29directly measurable and maybe you had a
32:30new generation of people that became
32:32nuclear physicists and are working on a
32:34nuclear reactor right now because of
32:35something they read on Wikipedia that
32:37they Albia would not have been able to
32:38do if they had to spend $2000 for
32:40Encyclopedia Britannica so on this note
32:42Tyler in the book you make the argument
32:45because one of the things about the
32:45Wikipedia and GDP argument and will
32:47Kerry made on the podcast we've talked
32:48about this in numerous forms that free
32:50is actually the wrong argument and that
32:52it's things are really not free which I
32:54found very counterintuitive when I saw
32:56that you wrote that I was like what this
32:58is I don't understand that
32:59well the real opportunity costs are
33:01often those of time and detention and
33:03people spend time as you say on Facebook
33:05at work and there is a benefit to that
33:07because keep in mind they used to go to
33:09the water cooler and trade jokes and
33:10this may be better it may actually help
33:12you keep attention or get more done it
33:14may keep you in your office in some ways
33:17the workspace has invaded your weekend
33:19and evenings in ways that were not
33:21previously the case because of
33:22information technology so it's a complex
33:25trade-off but I think with many new
33:27technologies in human history the first
33:29twenty thirty years they don't deliver
33:31what they promise and then there's a
33:33huge explosive takeoff precisely when
33:35everyone's all disillusioned so I think
33:37we're actually on the verge of a new
33:39tremendous productivity breakthrough
33:41unlike a lot of people in the valley I
33:43don't think it's coming yet and I think
33:44we've still been in stagnation yeah and
33:47we're waiting waiting waiting and when
33:49it arrives we'll actually be upset
33:51because it will destabilize our cocoons
33:53and the other note going back to this
33:54theme of mobility and portability and
33:56there's so many forms that we talk about
33:57this both in terms of physical movement
33:59there's portability of benefits like
34:01with you know Affordable Care Act /
34:02Obamacare and the decoupling of having a
34:05stay in your job in order to get
34:07there's portability in the notion of
34:08using your mobile phone as your home
34:10essentially in your book Tyler you wrote
34:12this line that Americans are outsourcing
34:16their mobility and capacity for economic
34:18adjustment and I thought that was so
34:21interesting we move across state lines
34:24much less than we used to compared to
34:26the post-war era and one reason for that
34:28is just most parts of the country
34:29economically speaking they're more like
34:31each other than they used to be so the
34:33idea that you move from Mississippi to
34:34Detroit take a job in the automobile
34:37factory it's mostly gone but there's one
34:39group of people in particular Latino
34:41immigrants who move around a tremendous
34:43amount and if there's an economic shock
34:45whose labor adjusts while someone has to
34:48leave the declining place and move to
34:50the growing place its Latino immigrants
34:52we've out sourced mobility and that kind
34:54of dynamism to that group and also Asian
34:57immigrants to some extent yeah
34:58but that's the way in which we're
35:00relying on immigrants for our dynamism
35:02which it's great we have immigrants but
35:05it's also dangerous that we it kind of
35:09goes in parallel with lack of ambition I
35:12mean an complacency from it's not even
35:14the elites it's just people that have
35:16just become acclimated and one way of
35:18becoming acclimated is if you become a
35:20homeowner both for tax policy reasons
35:22that are backwards and for just personal
35:26reasons you have less ambition and more
35:29complacency in terms of
35:30routing yourself and your family and
35:32that was actually kind of related to the
35:33themes even of our recent podcasts on
35:34point and the idea of not having to have
35:37necessarily all your wealth tied up into
35:39your home which by the way is another
35:40thing you talk about in your book this
35:42fact that because people have so much
35:44wealth tied up in their homes they're
35:46not buying cars in the same way they're
35:47not you know moving out of their homes
35:49it's an over leveraged yes alright and
35:52like that that's the thing like if
35:54anything like new immigrants have no
35:57leverage and they're there there's good
35:58and bad to that but the upside is the
36:01mobility whereas if you have somebody
36:03that's leveraged five to one which is
36:05the average homeowner like that that's a
36:07weapon of mass mass destruction that is
36:08that is keeping them in a certain state
36:10earlier we were talking about tension
36:13between the printing press and the
36:14internet and one of the themes in your
36:16book you talked about is how fewer
36:17Americans are directly involved in
36:19innovation yes you talk a lot about how
36:21the tools of creation in many ways are
36:23becoming democratized in a way that they
36:25never were before previously you had to
36:27have a printing press or access to a
36:28printing press now you can literally
36:29anybody can write a medium post or post
36:32online or do certain things we talked
36:34about code which is not materially
36:36limited in any way Instagram I mean I
36:37think of that as a democratizing tool
36:39for creators who are not fancy
36:40photographers so tell me what you mean
36:43when you say fewer Americans are
36:44directly involved in innovation here
36:46clearly more and more people are
36:47involved in innovation but if you think
36:50of the economy as a whole most jobs or
36:52service sector jobs and as best we can
36:54tell again it's hard to measure but
36:56productivity growth in those sectors is
36:58about zero so most people are working in
37:01sectors where they're used to zero
37:02productivity growth high inefficiency
37:04large parts of education and healthcare
37:07and government afflicted by mammals
37:09disease yes and they can have very
37:11backward information technology or
37:13they'll invest in a lot of IT but maybe
37:15not really use it for very much and
37:17again I do think eventually that will
37:19change but not tomorrow and not next
37:21year and a lot of the real productivity
37:23historically always has been in
37:25manufacturing right that's seven to
37:27eight percent of the workforce now it
37:28used to be over 30 percent so most
37:31people are used to a life were in their
37:33sector they see new software coming in
37:35but they don't actually see huge
37:37productivity gains and that contributes
37:39to this static sense of the world that
37:41again you just don't see in India or
37:42China where the whole country
37:44changes every five years Tyler thank you
37:46for joining the a6 and Z podcast my
37:48pleasure it's been an honor
