Episode Summary
Executive Summary: Tyler Cowen discusses his predictions for a 'great reset,' noting that the 2020 pandemic and social crises arrived faster than expected. He argues that U.S. institutions like the Fed and Supreme Court have performed well, while the regulatory state and Congress have faltered. Cowen anticipates a burst of dynamism in biomedical innovation post-crisis, but remains cautious about other sectors. He also addresses the tension between his cyclical view of history in 'The Complacent Class' and his long-term growth advocacy in 'Stubborn Attachments,' emphasizing that liberal institutions can support centuries of growth, though weapons of mass destruction pose an existential risk. The interview covers topics such as the role of big business in innovation, the limits of online education, the decline in aesthetic quality of towns like Parkersburg, and advice for young people on finding mentors. He also previews his upcoming book on talent identification and signaling.
Main Topics: The Great Reset and Institutional Failure (Priority: 5/5): Cowen predicted a crisis requiring flexibility in 'The Complacent Class' (2017); he now sees it unfolding with the pandemic, highlighting failures in the regulatory state and Congress but good performance from the Fed and Supreme Court. Dynamism and Innovation Post-Crisis (Priority: 4/5): Cowen foresees a surge in biomedical innovation but is uncertain about other sectors; he cites Tesla's stock as a market signal of dynamism but remains cautious overall. Cyclical vs. Long-Term Economic Growth (Priority: 4/5): Cowen reconciles his view in 'Stubborn Attachments'—advocating sustained growth with liberal institutions—with the cyclical downturns noted in 'The Complacent Class'; he suggests short-run cycles but long-run persistence. Big Business and Startups (Priority: 3/5): Cowen defends big business as the primary driver of productivity and innovation, whereas the decline in startups is concentrated in retail and not uniformly concerning. Education, Mentorship, and Talent Development (Priority: 4/5): Cowen discusses the limits of online education (MRU supplements but doesn't replace face-to-face), the value of mentors, and the stability of temperament after age 18; he previews his upcoming book on 'talent' focusing on spotting and signaling. Gender and Societal Change (Feminization) (Priority: 2/5): Cowen argues that increased safety and reduced restlessness (feminization) are net positives, and that reversing this trend would be counterproductive. Existential Risks: War and Pandemics (Priority: 5/5): Cowen expresses high probability of a nuclear detonation in the interviewer's lifetime (>70%), worries about future major wars due to low-cost weapons, and notes that pandemics combined with war are a 'doozy' scenario.
Key Arguments: The U.S. regulatory state and executive branch have failed during the pandemic, while the Fed and Supreme Court have performed well (Cowen). Biomedical innovation will accelerate dramatically post-pandemic, but other sectors may not experience the same dynamism (Cowen). Economic growth can persist over centuries with liberal institutions, even though short-run cycles occur—cyclical and long-term views are not contradictory (Cowen). Big businesses today are highly innovative and face contestability; the decline in startups is concentrated in retail and not a broad concern (Cowen). Online education (e.g., Marginal Revolution University) can replace at most 20-30% of traditional education; face-to-face remains central due to socialization, mentorship, and hierarchy learning (Cowen). Mentors provide a glimpse of potential and are critical for development; small groups of good friends are equally important (Cowen). Temperament is relatively stable from age 18 to 70, though women may change more due to life experiences like childbearing (Cowen). Nuclear weapons remain an existential risk; the chance of a nuke being used (non-tested) in the interviewer's lifetime is over 70% (Cowen). The best optimistic scenario: a V-shaped recovery by March 2021, a 40-60% effective vaccine, and a resumption of global cooperation (Cowen).
Data Points: Time horizon for human civilization: 700-800 years more 'left in us' - Cowen semi-seriously estimated the remaining time for civilization on Earth, assuming no space colonization. Death rate reduction in U.S.: quarter to a fifth of what it was a few months ago - Cowen notes that by August the death rate has fallen significantly, better than most predictions. Probability of a nuclear detonation in interviewer's lifetime: over 70% - Cowen expects a nuke to be used (likely a terror attack) within the interviewer's lifetime. Percentage of face-to-face education replaceable by online: 20-30% - Cowen argues that only the worst 20% of education can be replaced by online resources; the rest requires in-person interaction. Startup decline concentration: remarkably concentrated in retail - Cowen notes that the decline in startups is not broad but specific to the retail sector. Time until predicted great reset: 5-10 years - Cowen originally thought the reset was 5-10 years away, but it arrived sooner. Tesla stock value compared to GM and Ford combined: worth more than like General Motors Ford and a few other auto companies put together - Cowen finds Tesla's market cap puzzling but defers to the market.
Pivotal Quotes: "I think in any year, the chance of a war is quite small, but if you just let the clock tick for long enough, a major war will happen." — Tyler Cowen: Responding to the question about the 800-year time horizon and why civilization might end due to weapons of mass destruction. "If you want to look at who are the innovators right now who are fighting against complacency, it is big business to a considerable extent." — Tyler Cowen: Defending big business as a source of dynamism and innovation, countering the notion that startups are the only innovators. "So think of that process continuing. We have more remedies, not just a vaccine, and then kind of a forty percent or sixty percent quality vaccine by early twenty one. And then a V shaped recovery by March. And then we open up borders again and the world resumes. That's also quite plausible." — Tyler Cowen: Describing the optimistic scenario for recovery from the COVID-19 pandemic.
Implications: The analysis suggests that listeners should prepare for ongoing institutional fragility and potential major crises (pandemic or war). However, biomedical innovation may boom, offering long-term benefits. For individuals, investing in mentorship and developing talent (especially through signaling and spotting) become crucial. The optimistic scenario is plausible but not guaranteed; a pessimistic scenario combining war with pandemic remains a real risk.