Tyler Cowen

26:43It's close to a necessity, but you do see cases where small countries have global impact. So we're here in Italy. You can debate like what exactly was the country back then. But Florence and other parts of Tuscany, including Siena, they spread what we now call the Renaissance to much of the world. So through ideas you can, but in terms of military power, there was a brief window where the Dutch Republic and Portugal through shipping had an outsize influence because they did colonialism pretty early and pretty rapidly and took over places that weren't ready. So that would be an exceptional period of time.

27:22But for the most part, it's difficult. So an example today would be Taiwan, which makes these very high -quality computer chips through TSMC. And everyone's afraid of that going offline. It could lead to a global recession. So people are very focused on Taiwan in part because of this chips. You wouldn't say they rule or control anything, but they take on this outsized importance. And Taiwan obviously is a very small place. You can go like north to south. What? Four or five hours. But it's rare for an input like that to be in so few places. So there are good chips made in South Korea. The Japanese are gearing up their chips production, which I think will go very well.

28:04And actually a bunch of companies in the US are, which in a selective way will probably go well. How did Taiwan become the chip place? Partly corporate leadership. But I think they got lucky. So these chips are very important because AI is turning out to be so important. And I don't know that the Taiwanese saw that at the time. Maybe they did, but it wasn't obvious. They just were going to make these chips. It's a small country. There aren't that many other things you can do. So a lot of the top talent in Taiwan wanted to work in manufacturing. It would be as if a lot of the most talented Americans who go into finance, tech, or entertainment, like wanted to make cars, which is not how our country has evolved.

28:49But it's going to mean your chips are really good. That's why these Biden attempts to spend all this money on catch up chips. Our talent just doesn't want to do it. They don't want to work in a factory and earn manufacturing wage, or isn't Taiwan they did. So I think that's the big reason why luck is a big reason why. But keep in mind, Taiwan was a Japanese colony for quite a while. So so many aspects of life in Taiwan feel like Japan. So this Japanese sense of perfect near perfect quality refinement, the Taiwanese had some of that to begin with. Picked up more of it from being so connected to Japan.

29:26And then when the time came to do chips, they had a clear lead and just built on it. Do you know if the Taiwanese feel more connected to Japan or China? Depends who they are. So if you are what they call native Taiwanese, which means you were there before people left mainland China during and after the communist revolution and your first language is Taiwanese, there's a very good chance you're pretty suspicious of the ethnic Chinese, including your own country people, and that you might side quite a bit with Japan. A very good chance of that. But the normal ethnic Chinese who came from the mainland in the late 40s, 1950s, they would be more sympathetic toward things ethnic Chinese and it's a real division in Taiwanese society.

30:15And opinions on Taiwanese independence, unification with the mainland, they depend a lot on whether it's native Taiwanese or those from the Chinese mainland and their descendants. Have you spent time in Taiwan? Oh a bunch of times. It's a great country. What is it like to describe? Everywhere is crowded, but in a way that's exciting. Food is amazing. There's something about this heightened sense of Asia where there's signs everywhere or neon or lights and traffic and people and motorbikes that I think Taiwan delivers to you more consistently than any other part of Asia I've been in. And it's also completely safe, high standard of living, everyone's super nice.

30:57I worry they're too nice to defend themselves. Does it feel like a big American city? No, it feels like a mix of Chinese and Japanese and other independent influences. The infrastructure looks very Japanese. So visually, when people arrive, they'll almost think it's a Japanese city. Now the lettering won't validate that. And culturally it's pretty different. But just the way like traffic lights look, street intersections look, architecture looks like the newer parts of Tokyo. I don't mean the contemporary parts, but parts that were built right after the war. Taiwan will look like that. And like there's very, very good sushi in Taiwan.

31:42People don't expect that. That's again, Japanese influence and people there enjoy it. So it's a, a sushi generous as a country. This incredible scenery, the bus ride down the East Coast is one of the best trips I've ever taken. And then you go to the middle of the country, there are all these marble gorges. It feels very exotic. You're surrounded by marble and these canyons. It's pretty amazing. When you would go, would you go just for curiosity or for purpose? I mean curiosity is a purpose, right? Yeah. So I just moved to California and I thought that was my chance to do a big Asia trip. And I first went to Taiwan, I guess that was 1988.

32:22And I spent like a good two weeks there, really went around a lot. Just blew my mind. I'd never seen Asia before. Pre -World World One, from then to now, how have the allegiances around the world worked and how they changed? Well, pre -World War One, obviously you have colonialism. Tell me the straight colonialism first. I would define colonialism as the attempt by various powers, typically European, to take over foreign lands and turn them into territories or being ruled by the mother country. So Britain did this the most, at one point the British Empire was quarter of the globe, which is amazing.

33:05But earlier to it, actually were the Dutch and Portuguese, because in terms of having the ships to get far, they got going before the British did on a larger scale. And you also had these companies set up, so like the British East India Company, the government didn't have the tax money or the resources to do this all themselves. So they'd say to a private company, we're going to charter you, make you a state monopoly, part governmental, but also commercial. We're going to let you farm these territories for your own profit. And in turn, we expect you to bring them under the flag in some way and make them, you know, British or Dutch, or actually I think the first company was from the Muscovy Company.

33:47And that's how colonialism got started, was with these companies. But as the government's grew, populations grew, more tax revenue, the government stood it themselves. So the British government, the crown, ends up taking over India. Tell me the thought process behind it. Was it just about manifest destiny? Having more land was better. In the case of the British and India, the British very much believed that what they were doing was good for India. Some of that was self -deception, but it was also good for Britain. It was a new market for British goods. India had to be open to British goods in a way that Britain was not open to Indian goods.

34:23And Britain also thought somewhat correctly, well, if we don't take this, some other country will, and they'll do a worse job of it. So the British colonies on average have done the best. You see this in the data. So when the British took India, it's not something I would approve of, but I think it's a very understandable decision. And there were significant benefits, some of which persist this day, most notably the English language. But at first it's the British East India company, but in the 18th century, you have a series of incidents where the British East India company acts very brutally, and also itself does not have the resources to manage India.

35:00A lot of the big problems behind British colonialism in India was the money they would spend when basically to defense and maintaining order and never to developing the human capital of the place. So they would put in infrastructure, canals, waterways, trains, but in terms of education and skills of the people, they did very little in some ways, even held people back or set different groups against each other. So India didn't develop that well. The British were unhappy, so they decided to take control away from the East India company and put it properly under the crown, just to say America was under the crown, not ruled by some British company per se.

35:40And they thought, well, this is going to go better for us to put it under the crown. Maybe it was better to put it under the crown, but India still didn't grow very rapidly. And a lot of the 19th century Indian per capita income, it even goes down under British rule. So there's some investment in the future with railways and the language, and maybe like building it out as a more coherent nation state, but it doesn't end well. And after the British leave, India grows at a higher rate than it did when the British were there.

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37:49The world is the world's most popular and most popular. Was there anywhere where colonialism was a happy story for everybody involved? Well not everybody, but look at Singapore. That was a British colony, right? Singapore right now is one of the richest nations in the world. Richer per capita than the United States. Social conditions are very good. Singapore was doing pretty well early on. The British Navy used it as a major base. That helped Singapore in GDP. Without Britain, the Singapore today would not be possible without colonialism. In my opinion, yes. So I think if you take a small area, which is what Singapore is, and you cultivate it intensively to develop it, that can succeed.

38:32So the parts of India that did best under... Singapore is still part of Britain. No, totally independent. And when did that happen? So the British leave, I could be off by year or two, but I think that's 1961. And Singapore is part of Malaysia. So, Malay was a part of the British Empire and Singapore and Malaysia were together. The British leave and they leave those two together in the same common boat. And then the Malaysians were afraid of civil war because that new unit had about an equal number, and they were in the same language terms of Malays who were typically Muslim and Chinese who are not Muslim and then also some of Indian ethnic background.

39:10So Malaysia kicked Singapore out of the Union. So the Malays, the Muslims, could be a majority because they wanted to be in charge and basically control things. So Singapore was on its own. They were terrified. A lot of Singaporeans thought will never survive. Chairman Mao will take us over. Indonesia will take us over. But they had incredible leadership under Lee Kuan Yew and a whole talented bureaucracy, which actually the British had helped to build up. And they pulled off one of the most amazing economic growth performances in the history of the world. Is that the only one or there are others you can think of?

39:44Oh, there's some others. So take Puerto Rico. Which first was Spanish imperialism, but more importantly was seized by the United States in the Spanish -American War. This is now the 1890s. Puerto Rico, because it is part of the United States as a territory, is much richer than other parts of the Caribbean, say Dominican Republic. And that's a case colonialism had some high costs. Different people were killed in prison. That was bad, but overall Puerto Rico has done much better as part of the US. And of course many more Puerto Ricans just come to the US and have automatic privileges as citizens.

40:20How would you compare the European Union to colonialism? Well, there's sort of like colonialism, but with no one in charge. And maybe that was a bit like colonialism. The EU has nobody in charge. There are people in the bureaucracy, but it's never clear where actual power lies. It's the kind of things get regulated but without accountability. Is that a good thing? No, I think the EU has been great for Eastern Europe, which otherwise faced catastrophe. Places like Poland, as we said, have done incredibly well. But it has led to far too much regulation, say on Italy or most of Western Europe. When did Poland get into the EU?

41:00I don't remember the year that that was fairly early on that they met the criteria. The Poles, because they had the tradition of the Catholic Church, and they had labor union opposition to Soviet rule and occupation. Came out of communism pretty ready to actually be a functioning capitalist democracy. They had shock therapy. They got the transition away from communism over pretty quickly, because of their long history of being slaughtered by the Russians. They wanted nothing more to do with looking back in that direction. So they just leapt into the arms of Western Europe. Did the capitalism thing?

41:37Did the nebocracy thing? We're ready to join the EU pretty early on. And they basically, since then, since the 1990s, they've had four to five percent growth, not counting the COVID year and so on, but typically year, like four to five percent growth every year. And if you do that, they're now close to as rich as Spain and Italy and Japan, and like two, three more years, they'll be there, or maybe they're there now, depending on how you measure the things. Who are the other countries that did well from the EU and who did poorly from the EU? Well, Slovenia did very well. So keep in mind they were part of former Yugoslavia, which had a very bloody civil war in the 1990s.

42:17There would always be the danger that some parts of the former Yugoslavia would seek to reimpose their will on Slovenia. The EU just stopped that. Slovenia now is a pretty wealthy nation, fully democratic, quite stable. It's small. It's dull, you could say, but it's a beautiful country. It's like a total success. And you would credit the EU in large part, in addition to the Slovenians themselves. But man, you look at Western Europe, and it's all just too much regulation. We were talking earlier about food regulations on Italy, making it harder to grow and sell natural foods, but that's just one small pebble in this huge mound of excess regulation.

42:59So you'd like to get the good side of the EU and not the bad side. I worry that when the East is really caught up, which will be soon, a lot of it, that there might just mainly be a bad side. Poland will be rich enough to defend itself. They might even build her by nuclear weapons. So at some point the East won't be in any danger of being reabsorbed by the Slavic peoples or Russia to the East of them. And then they might just be like an overly regulated place and not really have the benefits anymore. We were talking about the allegiances around the world since World War One, what they were and how they've changed.

43:36Oh yeah. Well, it's so crazy in those earlier times. So the allegiances just keep on shifting. So in 1914 comes and Britain and France are allies in the first World War. This is a shock to many people because they had been historic enemies. But basically Europe is not stable across any of those years. It wasn't like the bipolar world order. We have nuke's USSR has nuke's. That was bad for many people, but it was pretty stable. What we have now may not be stable, but you have all these European powers forming reforming alliances, trying to get a leg up on the other powers. Tell me some of those alliances that changed over the years just so we could picture the shifting sands.

44:16Well, you have Napoleon who takes over France and then decides he wants to take over more parts of Europe. Many of those parts aren't even nations at the time. So a significant number of non -French Europeans welcomed Napoleon because it was freer for them than what they had had to begin with. The most notable example of that would be the Jews, but not just the Jews. Parts of Germany, parts of Italy, it's like, hey, this is better. And in the back of their minds, people thought, well, if Napoleon helped turn France into a real nation, eventually he'll be gone. And we're going to become a real nation as well, but we needed this transition stage.

44:54So nationalism starts arising in many parts of Europe, including Italy. You could say most of all Italy. So by 1860s, 1870s, like most of Italy as a nation is somewhat in place. But again, there's not any real loyalties across these countries. So they fight over colonies. That's often British versus French like who'll get their first or who's going to push them out. Germany didn't have the Navy. So they had few colonies. They had what we now call Namibia. What was Namibia called then? It took a good question. Was it Southwest Africa? It's had so many names. And then the British took it over and it was consolidated under some kind of South Africa.

45:37And then the African general and it along with other parts of southern Africa. So it had a British affiliation for a while. And now of course it's truly independent. But I'm told there's still like German style buildings in Windhook, which is a, I believe a Dutch word, but German style buildings there because it was a German colony. But there just weren't many German colonies. So you have all these mini wars and conflicts like in the early 1900s over places like Morocco or you have two Balkan wars. You know, the first one like Bulgaria takes some parts of the Balkans and then some of the other Balkan nations reorganize.

46:18They had been historic enemies, but they have a temporary alliance to take things back from Bulgaria. But then you know, two years later, World War I starts and there's a whole different set of alliances altogether. Countries like Italy, Turkey, switch sides over time. It's sufficiently complicated. I can't give you a super clear narrative as to who is on whose side when. But think of it as there's just a lot of different powers. It worked best when Britain was fairly dominant and kept a lid on things. But with the rise of Germany, that was slated to end and it turned into two world wars. And probably, you know, I was going to even without Hitler Hitler made it much worse, more evil, more brutal.

47:02But I still think you would have had some kind of second world war without Hitler. Who are the other countries that switch sides? Estonia has a complicated history. So Hitler liberates them from the Soviet Union. They had been briefly independent, were then taken over. Hitler liberates them, but they realize pretty quickly it's not such a wonderful liberation. But they're still always trying to play both sides off against each other. How can we be independent? As Stalin starts winning the war, they see the Soviet troops are going to take them back. And of course that's what happens. So they're always just readjusting their position.

47:42Bulgaria, Romania, Hungary, have various flirtations with Hitler and fascism, which are not permanent, but like you know, recur. And their records are not as good as people sometimes think. So a lot of people sided with Hitler because they hated the Soviets. And they didn't yet understand that Hitler might be even worse. But I think maybe one thing they did understand, and on this they were correct. They knew the Soviets or Russians were there forever and Hitler was not. And that for them, even if Hitler was more brutal as a killer, maybe it was something easier for them to deal with because they could look forward to Hitler going away.

48:25And Russia's not really ever going to go away. Tell me about the fall of the Soviet Union. Well, that's a period you could say it's like 1989 through 1992. And a number of things happen. I would say a fundamental development is just the Soviet elites themselves stopped believing in their own system. And too many of the winners realized that if they would just leave the Soviet Union and live in middle -class life in Switzerland, never mind the US, that they'd have a better life. And when the evil people who are benefiting themselves are not benefiting anymore, your systems and a lot of trouble.

49:03Because who's going to hold it together? And on top of that, you had the United States with Reagan spending a lot more on defense. Basically, well, we're not going to let you beat us. We're going to stay ahead of you. US at high economic growth in a big part of the 80s. And then the bottom falls out of the price of oil. So Soviet Union was a major oil exporter. And you could say that was the approximate cause, not like the fundamental cause. And why did that happen? More supply comes online. So you get Mexico, you get Venezuela, you get more discoveries in the Middle East. North America more is discovered.

49:37So just more supply because the price was high in 79 and 73. So the Soviets relied on that money. And it was gone, at least for a while. Some of that came back. And that bankrupted them. So you have a bankrupt system, can't outspend the US. You're not going to win any wars. And the elite don't believe in it anymore. So Gorbachev pulled out the last brick when he just said, I'm not going to play along. I mean, let these Eastern European nations free. I mean, let them cross the border instead of giving the order to shoot. In a way, that was so shocking. I remember this clearly at the time. I thought, wow, this is great.

50:19But the Soviets are going to give the order to shoot. And it will be this terrible tragedy. Thousands will cross. It'll be this bloody massacre. And no one shot. And of course, by that point, you figure a lot of the soldiers themselves. Like they don't want to shoot. It's like it might be their cousin or their brother even. And some of the soldiers escaped for that matter. So once the doors were open for Eastern Europeans to migrate, East Germans come to the West. I think Hungary was the first place you could get out of quite easily. It was just all over. And then in Russia, people are like, hey, you know, can we go?

50:56And Gorbachev just said, I'm not going to do this anymore. There was an attempted Kudaita against him. That coup failed. Whole thing to me still seems mysterious. At the time, I remember thinking, well, this coup will succeed. I read all my media about it. You asked me earlier on. How do you make a judgment? I made the judgment. Oh, the bad guys are going to win. I was wrong. And how did that impact the rest of the world? Well, Eastern Europe changes radically. A lot of it, such as Poland and Slovenia, really decide they're going to find ways to do this. To maneuver, to become part of the West.

51:32That takes them some time. It also meant Yugoslavia starts to fall apart. That leads to a bloody war they are, which is terrible. That eventually is resolved, mostly by NATO and the United States. China, instead of a more powerful Soviet Union, they can start to see a future with the weaker Russia. And that has been realized where now we have the Stragon -Berrolyans, but China is by far the senior partner. And Putin is the one who has to take orders from Beijing. How long has that alliance been? As a powerful thing, I think it's quite new. So it's something you read about, say, seven, eight years ago.

52:10And then all the smart people said, well, this is not going to last. These countries have been historic enemies getting back to shifting alliances. But so far, it's lasted. How they've been historic enemies? Oh, of course, because they're both militaristic. They're next to each other. There's a fair amount of territory, especially in the United States. And then there's a lot of people who are in Eastern Russia that has very few Russians living in it. And the Chinese move in as merchants as they tend to do. And some of these parts of Eastern Russia have more ethnic Chinese who are Chinese citizens also living in them than they do Russians.

52:44So at some point, if you're China and you're richer and you're stronger and you have more than 10 times the population, you're like, hey, why isn't this ours? That may get happened. But China thinks about it and Russia worries about it. So I guess I don't think they'll be allies forever, but it's held up pretty well so far better than the academics with their theories were telling us. What do you think caused them to align? In the case of Russia, I just think it's desperation. So they needed money. China had a lot of excess reserves. China has very few allies like Cambodia. It's not really worth anything as an ally.

53:28North Korea isn't actually their ally. It's more a thorn in their side. Pakistan at times pretends to be an ally. It's not really. And with nuclear weapons, China cannot push them around as much as they would like. So here's an actual ally that will help you geopolitically counter the United States. So there was convergence of interests.

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55:21For a long time, it didn't seem like China and the US were aligned on their interests. Didn't the US really help build China? Of course. And Nixon went over there, as you know, in the early 70s in Kissinger, and there were all kinds of verbal deals made. Maybe we'll never know the exact truth. But I think basically they said, well, you help us by siding against the USSR, which China did. They kept their end of the bargain. And we will in turn do a bunch of things to help you. We still don't know what was promised exactly. But we did a bunch of things to help China with trade and the WTO and recognizing them, downgrading how we treat Taiwan.

56:04On many, many things, protecting Middle Eastern oil for them, which we do. Free of charge, I might add. So some said a weird bargains, but those have not been eternally in the self -interest of either country. But clearly at first they were, that's why we did them. It seems like over time when the landscape changes to rethink what worked in the past and change according to the changing conditions seems like a natural way to proceed. But if you're not going to stay fresh, it's very hard for these people. They're surrounded by other bureaucrats. If you're a state president for the US, everyone wants to be in your good graces.

56:45So they don't want to deliver you the wrong kind of bad news. You have to stay well informed. That's hard to do. And there's so much internal politics that to keep a clear vision of what you can do externally. I don't think any of these countries, Russia, China or US have really succeeded at that. The internal stuff is too strong. That's a recurring theme in world history. I mean, the guy who kept an external vision was the most evil one of all, which was Hitler, who had his goals, which were like the worst goals ever. But he didn't let internal German politics get in his way. He said, I'm willing to go down and lose to see through these goals.

57:21So that has its own dangers. But it's striking how much Hitler bent the bureaucracy to his will in bad ways. And in these other countries, it's much hard. It's hard for our president to have a new and fresh foreign policy vision, no matter who is our next president. How has or how will the war in Ukraine impact the rest of the world? Well, it depends how it goes, of course. And I don't have a good prediction for that. But if Ukraine is perceived as losing, which is slightly different from saying it's lost. But if it's perceived as losing, many other places will try to grab territory. And you already see, like Venezuela, trying to grab the oil rich part of Guyana, US had to give them a stern talking to Brazil had to raise its hand.

58:13But they tried and they they know that we noticed that. And like who was thinking about Venezuela and Guyana, but it turns out there was some old colonial agreement between England and Spain. And they said the agreement was unjust. Like who even knows or cares anymore. And that's just all going to come out of the woodwork around the world. That may happen even if Ukraine is not perceived as losing. But I think that will be the main effect. And then China will say, well, US started to try to defend Ukraine, but they quit in some way. And so we're going to move on Taiwan. And that would matter a lot for Asia, of course.

58:52South Korea, Japan would build nuclear weapons. The chance that Taiwan would lose I think is fairly high. If you go to Taiwan, they're not a very militaristic people. They're so nice. It worries me. Like you go to Finland, the super nice people, wonderful country, but they all take defense very seriously. And if it were them against Russia, Finland would put up a damn good fight and they haven't the past and they held their own held their country. People perceive Taiwan as a squish country. I hope it's not true. But all the people I know, like who live there, they tell me it's true. Tell me the story of Venezuela going back in history.

59:34I've never been to Venezuela. I've been afraid to go for quite a while. Post World War II for a lot of that time, it was the wealthiest country in Latin America. And it was very pro -American and they drove big cars and people had a lot of hope for them. What allowed that to be the case? Some of it was just oil, but I think also being positioned on the Caribbean slash Atlantic better access to the United States at a time where just not everything was a long distance flight. That helped. Some of the education system was decent. It was a pretty worldly place. They just had some things going for them.

1:00:14Some of it surely was luck. It's relatively consolidated as a country compared to some other parts of South America. So a lot of it is bunched toward the north and a lot toward the bottom. This is Amazon and that's not that much part of the country. So it was an actual unified country earlier than say Colombia had been and then it was wealthier than Colombia. But now that's been reversed. So they somehow got too much corruption. Chose some bad leaders, which is their own fault, but also has to just be some bad luck. Had a flirtation ongoing with Cuban socialism and Fidel Castro like worst decision ever.

1:00:59But it's still somehow inexplicable to me. Why was it the worst decision ever? They nationalized their most important sectors, most of all oil and everything became governmental, large S and they stopped producing things. And it all became about handing out candy to the voters. And it became not just corrupt in the people raking off oil money way, but corrupt in the entire electoral system became itself fully corrupt. And they had both corruptions still have to a very high degree. And the place was several times richer than it is now. I guess you look at say the 60s or parts of the 70s when they peaked.

1:01:38Like it's not that it's grown slowly. It was several times richer than it is now. It's one of the world's biggest disasters. Maybe the biggest. When these things happen, is it always a matter of corruption? Or can it be something else? A lot of times it's bad ideas and they had both. So it was like the perfect negative storm. You know, corruptions in every system, but some places control it and other places don't. So corruption is a bit question begging when people say it, but I would just say you know when you go to theory, a lot of times we don't know like what ultimately drove the collapse of Venezuela.

1:02:11Yeah, I would say at least I don't know. And the books I've read on this, it's not clear to me. There's a lot of answers that are correct, but somewhat question begging. As in corruption, what tend to be the key bad ideas that lead to bad outcomes for governments politics. This is the salvation of human beings. Allivating poverty should be the immediate priority of a poor government. In reality, the immediate priority should be law and order and incentives for people to produce things. Not alleviating poverty. You'll alleviate a lot more poverty that way. And that's what Singapore did. Tell me more about incentives.

1:02:47You need to know if you're going to set up business in a country, you can do it quickly, predictably. And then the stuff you produce won't just be taken from you. And Venezuela lost that many places I've lost that like you, but didn't even allow it to begin with. And the places that have really grown. Like Japan, Singapore, South Korea, you know if you start a successful business, you'll be allowed to see it through. It's pretty simple, but to have the will and discipline that the government wants to see it through and the citizens support them and turn their back on the short run grabs. A lot of countries don't do it.

1:03:25We hope El Salvador is doing it now. We'll see. Given declining birth rates, how do you see a shift of global economic power in the future? Well, a pretty big chunk of the world's population will be in Africa within a few decades. I forget the exact numbers, but just the Atlantic Delta centered around Nigeria will have many hundreds of millions of people. And whether or not it will grow well, its economic importance will be much higher. And just as a source of talented migrants, Nigerians already are quite in demand as talented migrants. It's a source for music. It's already again very important, as I'm sure you know that will only grow.

1:04:08So it's going to shift a lot of balance of power to that one part of Western Africa. And a few other parts of Africa, most of Africa is pretty underpopulated and empty, but not that part. Where else are birth rates level or going up? Tanzania will be one of the largest most populous countries in the world. They still have a pretty high birth rate. And English has a real presence there. Kenya birth rates fall at a lot, but they still will be significant. So the kind of Ethiopia, Tanzania, Kenya, corner of East Africa. And then that Western Atlantic Delta are just going to go crazy. And everyone will court them.

1:04:50It's already the case. What's the connection between China and Africa? China decided quite some time ago to make Africa a priority. They lent a lot of money to African nations, much of which they won't get back. African nations, I would say, largely have gained China. Chinese didn't always know what they were doing. Just have not had a lot of experience in foreign affairs, because under the communist years, they were very inward looking. They still are, in fact. So, US Britain have made so many mistakes, but they learned some things from those mistakes. China is going through its mistake making phase.

1:05:29And I think China has built a lot of infrastructure for those places. A lot of its oaste. Some of it's not oaste. And China will see very little from it. When I was in El Salvador, you go to the capital, San Salvador, Central Square. The Chinese gifted them a huge public library, which is beautiful. And in amazing shape, in better shape than any other building around, with the hope of getting influence. I mean, China has nothing from them. A big chunk of their population lives in the US. They use the US dollar. They're just not going to pry El Salvador away from the US. And China has just made a lot of mistakes.

1:06:12Well, are these countries that China has made these mistakes in places that love the United States? I think these countries politically are not loyal to either China or the US. They just go their own route. That's fully understandable. But they like the US much, much more. I don't think that really gets us anything. Maybe it does in the world of entertainment or culture. It does not politically. But they're well aware. There's a large, highly successful black community in the United States, which they relate to. And a pretty deep way. And China has a reputation for being fairly racist and looking down on them.

1:06:53And I don't think any of that is going to go away. So US always screws up by neglecting Africa. And that's probably never going to end. And our voters don't really want to do anything to help Africa. Maybe that's the mistake. But at the end of the day, I don't know if we did more what it would buy us. I think we should help them more with public health for humanitarian reasons, like get them more anti -malaria vaccines. But we'll do better if we don't expect anything back. And I think we'll actually increase the chance we do get something back. How will the changes in birth rates around the world impact our daily lives?

1:07:35Well, you'll have fewer grandkids. Right? On average, in any particular case, who knows? But right now, the US fertility rate is at 1 .63. And it's been falling. It was above two before the pandemic. So recently it was at or above replacement no longer. No one knows if it will bounce back. But places will be emptier. It depends where you go. So there'll always be some cities like New York that so many people come from the world. It's never going to be at all empty or empty or but a lot of the country will be emptier. Somewhere like I don't know, Louisville, Kentucky. Could just be emptier, which is bad.

1:08:20You can't make people have kids. It's not that easy. Is it always bad? I think it's always bad for the US. If you are Eritrea or some parts of Bangladesh, it's not always bad. But wealthier countries, I think it's always bad. You mentioned a lot of turmoil happening in different places in the world right now. Which are the ones that you think will have the biggest impact on our daily lives? Well, if anything happens with China in Taiwan, that will affect us all. There would probably be a global depression and the possibility of a war where the US could truly lose. I don't mean like Vietnam lose, like we run away with our head between our tails and can always win, let something later on.

1:09:01But really lose. And the other possibility would be something in Eastern Europe where nuclear weapons get used. And no one can really predict that. I don't think anyone's going to nuke us wherever we're living. But it would somehow fundamentally change the world levels of risk. A lot of the assets you hold would be much lower in value. There'd be different kinds of panic. Travel already has been altered. Like I can't go to Russia. Don't want to go to China. A whole bunch of places I used to go. Be able to go. Have you ever been to China? Yeah, like 11 times, I think. In detail, long trips to the countryside everywhere.

1:09:39What were those experiences like? I loved them. I would love to go to China again. But I know if I go now, they're going to strip all my devices. And there's some small chance they'll detain me. Or just like take video of me in my hotel room. I don't, you know, I'm not up to anything illicit, but I don't really want it. So if China is somehow free or it's one of my favorite places to go. People are so friendly, incredible food. All the parts are different. You're just seeing a whole civilization being built in front of your eyes. It's super exciting.

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1:11:38We've seen politics in the US getting, let's say, more colorful. Do you see it ever going back? I think it's going to stick. And it already has been sticking. So some of it is like Trump is unique. But even if you pull Trump out of the equation, just the discourse around the memes. It's like the first true election of memes. Memes about vans, the sofa. Like it didn't even happen. It's a weird thing. But it's kind of stuck. Can you predict any time in the future where things will feel more settled? I don't see it coming any time soon. Give me an idea of what not soon is. Let's say the next five years, I don't see it settling down.

1:12:18The things like the wars are not going to have some simple, fast -ile ending. Seeing through the results of the elections, that's going to take probably, you know, full terms. Yeah, hard to see what this simple stable outcome is going to look like. We're just the United Kingdom. There's all these riots going on. You know, they're close to like zero economic growth until the last quarter. They're not bankrupt, but fiscally, they're in very bad shape. Maybe a financial crisis in their future. It's not going to be resolved quickly. When government policies don't work, why do they continue? Well, they have vested interest groups that favor them.

1:12:59But also, this change is very hard. So when a policy is put into place in the US in particular, there will be connected federal, state, local, county, city, whatever. The regulatory bureaucracy laws passed. And it's also supposed to fit together. I'm not saying it fits together nicely, but you end up with a lot of distinct discrete pieces ruled by different entities. And to unpick and unpack them all and undo it, it rarely happens. So we deregulated the airlines. I think that was 1974. And we did it just by abolishing one agency. Civil aeronautics board. We just disappeared it. Tony Ciprono style overnight.

1:13:39It was great. It worked. Hardly ever, do you have that option? I wish we had it more. What do you think governments are good at doing as opposed to private interests? If it's the US government, the US government is very good at sending around piles of money to people. Some of whom need it, some of whom don't. Add relatively low cost. Is that a good thing? It's a good thing and a bad thing, right? Because it's low cost. They do too much of it. But in fact, they can do it. And there's no private charity that could do it with equal efficacy. Is it done with efficacy? People demand the current social security system.

1:14:19You can debate whether it's a good idea. Is it a weird mix of like a forced saving scheme and transfers that wouldn't, on its own, make sense? But it's never going to go away. And our government, I would say, does a better job running it than most governments do running theirs. You know, all this good stuff is relative. So people from other countries come to the US to learn from our system more than we go to theirs to learn from their system. And that would include reasonably well -run governments like in Western Europe. So sending around piles of money we're pretty good at developing innovations through our military, like the internet, we're very good at.

1:15:01And I would say we're very mixed in quality at defending allies, but we have deterred a lot of wars. We're often bad at it when we actually have to do it. But the threat of who I have to face the US here, it has stopped many, many wars, and we're good at that. And then what are private institutions better at? Innovating, just maintaining quality control, not stultifying, cooperating, being dynamic, like most things, almost everything else. I would say private is better at. What are some areas that countries spend a lot of money and get very little in return for? Again, it's going to depend on the country.

1:15:45You know, if it's Western Europe, a lot of them still spend some amount on their militaries and they do not have effective fighting forces. They need to either spend less or more, I would say more, but to spend one and a half percent and got a bunch of guys who run around quote unquote training, but couldn't fight, does not make any sense. Now, if it's the United States, I mean, we're really bad. In the wrong areas, we spend far too much on health care and we're just going to keep on doing it. And a lot of governments are not so bad at that. But we are. I think some areas of health care we should spend a lot like pharmaceuticals, which I think have a very high return, but a lot of forms of surgery, I think have a pretty low return, and a lot of extending life has a pretty low return, and we spend a lot on it.

1:16:35But again, that will vary across governments. US has its own pathologies, we're really bad at trying to build infrastructure cheaply. But Spain, which is not the most efficient government in the world, is pretty wonderful at building infrastructure cheaply. Like how that happened. It's a big puzzle. I ask people this a lot. I still don't fully get it, but it's clear in the numbers. Spanish trains subway, not perfect, but it works fine. Like a third of the cost per mile compared to the US. What's their genius secret? You know, we can't learn it from them. We're not doing it. What is state capacity libertarianism?

1:17:14It's the view that individual liberty is of supreme importance. Capitalism is a good thing. But to keep this all running, you need your government to do a bunch of things very well. That could include national defense, certain public health measures. I'm not saying we do all these well, but it's a deviation from pure libertarianism, which is always anti -government, and it's just recognizing you're relying on government to protect some of your liberties, and you need some actual competence in your bureaucracy. And partly it's seeing that some parts of American government are much worse than what you can see abroad, like infrastructure costs compared to Spain, or intelligence of top bureaucrats compared to Singapore, and just wanting us to do better.

1:18:03I would say that sociologically, state capacity libertarianism is a recognition that some parts of working in the government have to be high status. So a lot of libertarians, they want to downgrade everything governmental because it works poorly, and I feel I understand that pretty well. But if it's all a low status thing to do, you're going to get really bad government, and you're going to have less freedom at the end of it. So that's one other way to think about it. Are you wrote a book called The Great Stagnation? What was the Great Stagnation, and does that still apply today? I date the Great Stagnation as from 1973 to about 2015 or 16.

1:18:43It was a period when wages didn't go up much. Economic growth was slower. There was not other than the internet, not a lot of new tech, and I would say a lot of the internet disappointed, or in some ways might have even made some things worse. I think it definitely is over with AI and some advances in biomedical science. And you look at the data, economic growth is higher, wage growth for actual working Americans is higher than it had been. So is many decades, basically a 40 -year period, when things weren't working very well, and I feel it sapped our national mood, I think we're still in the after effects of that.

1:19:25It'll take 20 years maybe for us all to cheer up. And what shifted it? What got us out of it? I think the internet finally paid off, not just social media, which I'm not a hater of, but it's not the grandest thing you necessarily can do, but the internet enabling scientific collaboration, I think really paid off in a bunch of areas, things like weight loss drugs, which seem to work, and are going to be a big advance for many millions of people. The anti -malaria vaccine seems to work, won't help Americans much, but it'll be great for the world. And just some renewed sense of dynamism, some of that I think is just luck comes and goes.

1:20:05It may go again. But what you call the colorful nature of politics is part of that. So a lot of people, like they say they love progress, and then they hate the colorful nature of politics. You cannot entirely pick and choose. When the world is changing a lot, your politics does become more colorful. It can be more hate -filled, which is bad, but a lot of America's greatest errors are politics have been weird. And it means, like you can't control the discourse. So you need to just loosen up a bit and recognize a lot of progress is going to feel bad to you. And just deal with it, focus on your projects, and try to make that progress better.

1:20:43Tell me about the gap between a GDP that's going up and workers still not being able to pay their bills. Well, you have periods in history, where maybe GDP goes up, but it all goes to some scarce factor. Like say, the price of oil is very high, or in some American cities, still to this day, parts of the Bay Area, the price of land is so high, so much of the progress goes to the landlord. Now, fortunately, the US is a big country, and we have all these new places growing, Texas, Nashville, or wherever, where that's not the case. But it's partly the case, and we've had higher interest rates so people who rely on debt, while some of those returns go to people who are lending money, that's not ideal.

1:21:30So partially, you always have it, but some places and periods, it's extreme and bad. Other times, it's manageable. One of our blessings as a nation is having these 50 diverse states, so we just never have it everywhere. And somewhere, like the UK, part of their problem is, so much of the returns go to London, nothing against London, which I love, but it's not healthy for their country, and a lot of it also goes to London landlords. How do you view progress, or if a country's doing well, if the big numbers look good, but the actual people are suffering? Well, then it's a mixed bag, but you want to invest more in the forms of progress that will help everyone.

1:22:15And some of the recent advances, like the weight loss drugs, the people who will benefit from those, over time, as they become cheaper, will be lower earners. Most billionaires are pretty thin. In fact, they don't need weight loss drugs. So that will have very egalitarian effects. Tell me about progress studies, and how you can tell when things are getting better. I think if you're in a place, you often have a pretty good immediate sense, but you need to back that up by looking at numbers and asking if you can trust the numbers, which is a big issue, and then also looking at migrations, are people moving in or out?

1:22:56Is capital moving in or out? So we talked about El Salvador. There's one estimate, maybe an exact, but it said migration out of El Salvador went down 60 % in two years. Maybe off a bit, but that's a real effect, right? It's telling you something. So when a number of pointers are all steering your attention in the same direction, you can feel there's real progress. Tell me about online education. I run an online education YouTube channel. It's called mru .org, and it's three economics education. And when I say free, it's also no ads. I get nothing from it. It's run on a nonprofit basis. And my co -creator, Alex Taber, Ochanai, we have made hundreds of videos to teach the world economics, often with subtitles and major languages, and giving away economics for free.

1:23:52So it's been my personal ambition to teach more people economic styles of reasoning than anyone has ever done. It's one of my projects. I don't think I'll succeed in being the most, but it's what I'm shooting for. That's great. And we get, you know, like tens of millions of views in a year, and it's a great project to have.

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1:25:42What are the other online learning tools available that you've seen that have been quality? Well, chat GPT and Cloud 3 .5 from Anthropic and the other AI services, what Meta has, from Google, they're all amazing. They're the best learning devices we have. We're just figuring out now how to use them. Tell me about why you think they're a good learning device when the quality of information you get for them is a question mark. It's the case with any information we get, but one thing you can do, for instance, is just ask two different services, the same question. And compare the answers, if there's something scurry, you'll notice right away.

1:26:20But if you get an answer, say, from GPT, and you just ask it, are you sure? Most of the time, if it made a mistake, it'll give you a correction. So there's things you can do to get better answers. And the more detailed and specific your question, the less likely it is to hallucinate. So I would say once you work with these things for five or ten hours, you can improve their efficacy severalfold. At no monetary cost, you just have to pay a bit of attention. It seemed like it would be nice if it could tell you if it was hallucinating. It can tell you, you just have to ask it again. So there was a case the other night we were talking, I said, I'll talk about Woody Harrelson movies with a Valley Girl accent.

1:27:01And the first time it did the accent, but not strong enough. And then I said, make the accent stronger. And it was better, you heard. You have to kind of whip it into shape. But we're going to build ones soon, where you don't have to whip it into shape. They'll just be a setting. And you change the setting. These things came out so quickly, it was like a race to be first. They're very all -purpose. There's going to be like the Rick Ruben setting. I see. The Tyler Cowan setting. I see. And you'll build it in advance. I think it's already technologically possible at a reasonable cost. It just hasn't been done yet.

1:27:37I'm not against the hallucination answer. But I'd like to know that that's what it is. Yes. Because if we take it at face value, that's not always the best choice. What we would need to do is run the query through two or three systems but have one answer pop out. And then say your iPhone would measure how much did the three answers agree with each other and give you a percentage based on that? It just would cost more. It's on its way. What if you get an answer and you say, I don't think that's right? Will it argue, yes, it is right? Or will it give you a different answer? If it's right, it will usually hold its ground.

1:28:16And just say, no, that's correct. And stay there. It's not perfect. But again, if you compare it, say, to a mainstream newspaper, it's pretty good. And the more analytic your question, the less likely it is to give you BS back. Like that corporate income tax question I mentioned to you before. It never gives me a BS answer. Somehow it knows I'm serious. It sounds weird, but it knows your mood. If you ask it some frivolous question about Hillary Clinton, like, no way, should you trust that answer? Any topics you would avoid asking about besides Hillary Clinton, they just say, probably don't trust this for mayi, but these are the kind of things you probably get a better response.

1:28:57If you play with it a lot, you know there are questions, it always gets wrong. And here's an example of one of those. If you ask it, name me three famous people who share the same birthday. It will basically never get it right. Why is that? It's a very easy question. I know. It does worse on easier questions. That's one thing you learn. But also, it's giving you what is statistically the correct average answer. And when it comes to birth dates, it can't be the average that's right. It has to be the exact birth date. So questions where the average is good enough, and questions where the average is totally misleading, you develop an intuitive sense for that when you work with these things for a while.

1:29:40So you say it's good with statistics, let's say. When the average is good enough, if you need the exact, you've got to be more careful and ask it sequential questions to get at the exact answer. But there's another service called perplexity, which is amazing. I think it was an out last time we chatted. And perplexity double checks the answer it gives you against the internet. And then it gives you a link. It says, you can check whether my answer is correct at this link. So perplexity essentially is not wrong very often. But it has lower power than GPT because it's devoting, you could say, some of the computational energy to checking the answer.

1:30:23But again, all these things are converging. Does it take longer as well? Maybe a little, but it's very quick. It's not slow. GPT now is so quick, it's the quickest. Perplexity .ai, you should use, and you can always check the answer. And it's up to date, like GPT is brought up to date, maybe every few months, but perplexity is fully up to date all the time. Real time. But it's not as smart as GPT or Claude. But again, all these things will converge and you'll get everything you want in one bundle soon enough. How quickly do they get better? The companies keep this a bit of a secret, and everyone on Twitter loves to speculate.

1:31:03Like, ooh, it got smarter for me last week. I'm asking your experience, though, based on your experience, because you use it all the time. Yeah, I think a fifth of the time they get worse. But most of the time they're getting better. Every four to six weeks in subtle ways. That's my initial of it getting worse. How could it ever get worse? They're complicated, like machines of estimation. And as they get better at estimating some things, they may get worse at estimating other things. So on some kinds of simple questions, like questions so simple, you maybe wouldn't ask it. They don't always get better.

1:31:39So in terms of practical use, they're pretty much always getting better. And at the moment, clearly, Claude 3 .5 is the best one of all the systems. And it's not the one most people use. So most people haven't even seen the current best. GPT4 is the most popular, but it's not the very, it's number two, it's not the very best. Claude is really smart and subtle, and it sounds more human. They decided on purpose to make GPT sound not human. Claude is a poet. Any thoughts on the future of work? I think it will change a lot. So many of your work tasks, no matter what your job you will do with AI, any job that has meetings, it can take notes on your meetings and give you a digest, for instance.

1:32:25It's almost every job. Any job where you gather data on something, like a doctor might spend two hours a day taking notes of our patients and turning those notes into something in a file. It will do all that, you know, in a second, for basically every job. And it can already do this. It's not a question of when. It's just when this person adopted. So it's happening, as they say, right now. Camila playing chess. How do you get good, and can anybody get good? Anybody can get good, but not anybody can get very good. So you need to enjoy the game. And most people don't enjoy it that much. And then in some mix of being analytical and spatial ability and willingness to concentrate, you probably need to be in the top, I don't know, 15%.

1:33:15And if you have that and enjoy the game, then you can get good just by playing online and reading and hiring a tutor, the tutor could even be a computer. And just keep on playing. And you'll get good. Now when I played chess as a kid, I started at 10 years old. Now, when you're in a computer thing, this was not a factor. I had to take a bus into New York and play in real tournaments. And then I had books at home, where I'd like to open the book and be over the board. It now feels very primitive. But that's what people did then. And it was much harder to get good. So like the age of top grandmasters that just keeps on falling, we now have great players who are 12 years old.

1:33:54I understand that the old way of learning was harder. Are we sure long -term that the old way of learning was not in fact better? Magnus Carlson has made a version of this point. He said he's of the age where the computer wasn't that good yet and he had to think through all the positions himself. And he feels he's a better player for that reason. And the younger players still have not caught up to him. So I think that is correct. But I still see that on average, the players are better now than 20 years ago. Like you can't fault the computer that much. Mostly they're better. But the very best player is still somewhat from the pre -computer error.

1:34:33In the pre -computer error, did chess players keep getting better? Yes. So maybe... Yeah. Just having... Being in better physical shape. So if you go like the 1960s, it's this belief in chess, probably a myth, but who knows that if you smoke cigarettes, it's good for your brain. So a lot of top chess players smoke. No. Nicotine is good for your brain. Yeah. Then they smoke while they played. Now, like, no way does that happen. You're not even allowed to smoke while you're playing. But they're people who are in great physical shape. And many train almost like Olympic athletes. And that helps them somewhat.

1:35:10And the earlier times, chess players were older, overweight, or whatever, they were not in great physical shape. They kind of looked like wrecks. So it was harder to stay focused for a longer period of time, basically, because... But it's interesting, like these players with less stamina would play a 24 -game match. And players today are like, ooh, that's too long. I don't want to do that. And there, you know, there'll be like a 12 -game match. So who had the greater stamina? You've got to wonder sometimes. Is there an argument that with this increased efficiency of AI, we lose something in that translation.

1:35:48By the human not walking through the steps, do we lose something? My games had more drama. Bobby Fisher's games had more drama. The computer doesn't care about drama. And whether you're aware, or not, you learn from the computer. So games today have less drama. And they're less interesting. They're less fun. They're more accurate. I don't like that. But, you know, it is what it is. I think we're in perfect machines. And if we live in a perfect simulation, I'm not sure we belong. I don't know that humans, the imperfect humans, fit in the perfect simulation so well. We want a game to have a kind of overarching, narrative structure that, in a way, misleads us, because it's not always the best move.

1:36:32We want to see our plans through. It's part of being human. It can be a mistake. Like, oh, I moved by Rookspawn. Now I've got to move my Rook. Well, maybe not, you know. And the younger players, they had that trained out of them. And there are fewer distinct styles. You see this, you know, in sports. With sport of metrics. There used to be all different ways of swinging the bad, of throwing a pitch, of shooting the basketball. It's a lot more homogenized now. In the homogeny, is there less of a chance for a new revolution? Yeah. Can it break through still come? No, I think there's more breakthroughs.

1:37:09They just might not be as dramatic. So I can basketball all this three -point shooting. It wasn't even AI, just math and computers. Oh, it's worth taking these shots. And it's worth learning how to do it from the time you're six. And it was a huge revolution. And then there's like the teardrop, two pointer, which has become a lot more popular. And oh, you've got to start learning that at age 10. But people do it. And then oh, you have all these beautiful teardrop shots. So I think it's a lot more innovation. But there is something maybe mechanical about it. It's disturbing or less pleasing. And you think those got more popular based on statistics?

1:37:45Absolutely. That's interesting. And I've talked with some of the people who do the stats. Nate Silver, by the way, works on this topic too. You can talk to him about it. And there's just some stuff that works. And now everyone does it. And this idea like, oh, this fellow had his unique coaching style. Maybe with the psychology of the players, but not with what kind of shot to take. It's way more uniformed. What makes a good chess player? Love of the game, hard work, and being, you know, a really good chess player, being in the top 1 % of the top 1 % when it comes to talent. But what's the skill set?

1:38:26What else does being good at chess apply to in the world? I don't think that much. These top chess players, they're brilliant, but I'm not sure they all would do amazing things if they couldn't play chess. That might just be brilliant people who end up wasting their talent. Maybe there's two types of chess players, and Magnus once made a point like this. There's those who have incredible intuition at judging positions, and they don't calculate that much. And there's those who are incredible calculators. And I think those are fairly different skills. And the best players are quite good at both, but you have to be very good at at least one of them.

1:39:01And you could be like a top 30 player, being truly graded only one of them. That's interesting. Yeah. That's interesting. Is it at the point now where the computer can always beat the best chess player? Always beat. I would say if Magnus played the computer a thousand times, he might draw it once, but probably not. So always is a tricky word, but that's pretty extreme, right? So he would likely lose 999 games to the computer? Absolutely. And he would admit that. And the computer's even better now than it was a year ago. So it's tough. What are the things that the human can do that the computer can't do that you can't imagine the computer catching up?

1:39:46I think the computer can catch up on everything and mostly has, but I'll give you a few examples. Understanding blockaded positions. Cases when simply no progress can be made. Computers still can have problems with that. I'm not saying chess. Oh, in general. In general, let's go beyond chess now. What can it, what will the computer never be able to do? What is a human skill set that a human can do that a computer can never do? I don't think computers will ever be sentient the way we are. But I believe at some point they'll be able to outthink us at virtually everything. And that point is not right before us, but I'm not talking about a million years from now.

1:40:28I'm saying within the lifetimes of our families, this will happen. And in most areas, it's happened already. So I've been experimenting with economics. I go to Claude 3 .5 and I give it economics questions. Very often it does better than I will do. And I'm a PhD economist trained at Harvard. Still very active. So it doesn't beat me on everything. It often does the worst on very simple questions. But it beats me out a lot. So you've got to take that seriously. An economics is not a memorizing thing. It's not a pure calculation. It's a thinking through problems with multiple steps. Like if I ask a question, like please outline all the factors that might matter to understand the incidence of the corporate income tax on labor, capital and land.

1:41:23It's like a pretty classic economics question. I don't beat it. If I'm really paying attention, I think I would do as well as Claude. But I'm not doing better. What are the areas where you would do better? Very simple questions. Like so simple, they're stupid. If you just ask it, what is economics anyway? It doesn't do that well. The simpler you make the question. That was the first question I asked you last time we sat down. Yeah, I'm still ahead of it. The simpler the question, the vaguer the question, how the human's still doing better. And it doesn't even have to be a top human to do better than the computer.

1:42:06We hear fear of jobs be glossed to AI. What jobs will increase because of AI? Well, I think AI, for instance, will enable a lot of scientific advance. So desalinating water will become quite affordable and building out the parts of the world that are currently too dry will create an enormous number of jobs, including in the US, but maybe most of all in Northern Africa, in Middle East. That's great. And that'll be a phenomenal thing. That's great. That would be one example. Just new projects. I think the demand for carpenters, gardeners. But I don't just mean mechanical road labor. That might be done by robots.

1:42:45But people who build out things creatively. Like probably the people you have helping you with this place. The demand for them is so going to go up. Like the cost of initiating a project is what's going to go down. Because you have this co -planor, the AI, who does it with you. So people who work on projects in physical ways, where they also use their brain. Demand for that will skyrocket. And those people, a lot of them already are more than professors. But they're really going to earn more than professors. And they deserve it. How will AI and hardware come together? It's striking to me when I talk to very talented teenagers, which I do multiple times a week.

1:43:28In the last, say, nine months, many more of them want to go into robotics. So the brilliant teenagers of the world have decided robotics is where it's at. I suspect they're correct. And robotics are now possible because AI is working. So sort of what you might call telling the robot what to do. In essence, we've mastered with large language models. And we will, in turn, use the experience of robots to feed data back into the LLMs. And the experience of robots will be the missing piece for LLM data. That's what most people don't see yet, but these teenagers do. That dual back and forth. And I think it's going to be amazing.

1:44:08That's really interesting. Like the robot will go through the world as you or I would, taking data, send it to something we used to call in LLM, but by then will be a bigger, grander thing. And it will learn, like kids learn. Last time we spoke, you said you didn't see happiness as a worthy goal. What do you see the primary measures of a life well -lived? I think you should have projects and work on your projects, and build them out, and try to improve them. And in the process, try to improve yourself. I think you'll end up happier that way. I'm not against happiness. But if you target happiness, I'm pretty sure that's a disaster.

1:44:49And you ask, like, what are generic pieces of advice I give? This is one of them. Does tell people, like, what are your projects? What's like your signature product, the thing you're most proud of or most interested in doing? Does it really resonate with you? Are you surrounding yourself with people who believe in that? Simple stuff that people don't always think it through. So productivity is number one for you and the way you feel based on being productive is the reward. Absolutely. And this includes family. Like one of your projects is to build out, in some manner, a successful family life.

1:45:24If you were a high school student today and you're graduating, would you follow the same path that you took whenever it was or today, would you do something different? Like, would you learn economics from your courses instead of going to every one school? Our courses, by the way, are now in 20 % of US high schools. Well, the men... And they're very big in India. Places you would expect. I would have a very different life if I were growing up today and in a way that reflects poorly on our world. So... What choices, what different choices would you make today based on what you see? When I became an economist, grad school, I wouldn't say it was a LARC, but it was very de -bureaucratized.

1:46:08You showed up, you learned what you wanted to, especially at Harvard where I went. And you sort of went off and you did what you wanted to. And the world would, to some extent, accept that. And now the filters are so conformist and so strong. Like, they have raised the average quality. But it's a bit like a Ferrerio station tested every song. Well, does this sound like a hit? You know, in the longer run, you end up with fewer actual important hits. If you demand everything, be a certain level of quality, because you homogenize it. So we've homogenized the product and bureaucratized it. And it takes many more years to get through.

1:46:45You have to jump through many more hurdles. In a way where I think I'm poorly suited for that kind of patience. That's my drawback, but it's just a fact. And I think I might be more of an internet creature from the beginning. And not even be a professor would be my guest. Getting an academic job today, very different from how I was when I did it.