Tyler Cowen on Economic Growth, Big Business, Weirdos and the Fight Against Conformity

High-Level Overview

Lex Fridman sits down with Tyler Cowen, the George Mason University economist behind the Marginal Revolution blog and the Conversations with Tyler podcast, for a sprawling, playful tour of economics and the rest of human life. They start with whether economics is a science at all, move through nuclear risk, the American dream, capitalism, communism, Russia and China, universal basic income, immigration, cryptocurrency and the WallStreetBets saga, and then wander into UFOs, contemporary art, Michelangelo, Mexican food, sushi, Bruce Springsteen, love, mentors and mortality.

The tone is warm, curious and frequently funny. Cowen answers in short, aphoristic bursts, and Fridman keeps delighting in his phrasing. A recurring thread ties everything together: Cowen's belief that weirdness, openness and competing points of view drive progress, and that conformity and mediocrity are the real enemies, whether in universities, governments or culture. The conversation swings freely between economic analysis, geopolitics, personal taste and big philosophical questions, with Cowen's optimism about new technology running through it.

The Discussion Explores:

• Why economics is part art, part science and part magic, and why it helps you ask better questions rather than predict
• The long-run odds of catastrophe from weapons of mass destruction
• The state of the American dream, social mobility and why America is a great place to be a weirdo
• The case for big business, and why people take its achievements for granted
• Cowen's shift from stagnation pessimist to growth optimist, plus his views on Russia, China, UBI, immigration and trade
• Money, Bitcoin, DeFi, Dogecoin and WallStreetBets as a new form of esports
• Conformity in academia, the humanities moving to podcasts, and why UFO reports deserve serious attention
• Art, food, music, advice for young people, love and the one thing Cowen regrets about death

Deep Dive into Main Ideas

Economics as Art, Science and Magic

Fridman opens by asking whether economics is art, science, philosophy or magic. Cowen says it is all of the above. The magic is "the notion that you can make some change and simply every once better off," which he calls a modern magic that replaced old-style magic. It is an art because its models are not very exact, and a science because occasionally propositions are falsified and a few basic truths hold.

But he is blunt about its limits: "I don't think economics will ever be very predictive. It's most useful for helping you ask better questions." Game theory, he notes, never predicted whether the USA and USSR would go to war, but knowing it makes any discussion of strategic conflict far richer.

That leads to nuclear risk. Asked whether he is surprised humanity has not destroyed itself, Cowen says no, because it is a low-probability event, but "I think we will destroy each other with those weapons. Eventually." Keep running the clock on a small chance and it happens, perhaps not between the US and Russia but between other powers, and perhaps with bioweapons rather than nukes. He has argued that at best we have seven or eight hundred years before a civilization-setting-back catastrophe. He thinks human nature is mostly cooperative (what economists would call a trembling hand equilibrium), but outliers like Hitler appear, and cheaper weapons raise the odds. He adds an unexpected defense of bureaucracy: navigating it requires building alliances, which tends to screen out pure evil.

The American Dream and a Nation of Weirdos

Fridman, who immigrated from the Soviet Union, asks whether the American dream is still alive. Cowen says it mostly is. The highest-earning groups in the US now include people of Indian and Iranian origin, which he calls amazing. For native-born Americans, intergenerational mobility has been fairly constant for about 40 years, though it was much higher in the early 20th century, when few people had credentials. He calls the lack of opportunity for the bottom half of Americans a disgrace, and notes the dream has had problems from the start for Black Americans, women and others. He also points out that joining the English-language network, largely because of the internet, is worth far more than it was 30 years ago.

On capitalism, Cowen favors private ownership of capital in most areas (not F-16s) and says "Business is great at getting things done." America's downsides include an enduring racial problem, the treatment of Native Americans, weaker communities and more precarious lives than in Germany or the Netherlands. But the upside is creativity: "It's a better country in which to be a weirdo than say Germany or Denmark." Because immigrants are people willing to leave everything behind, America "Makes us a nation of weirdos. And weirdos are creative." He sees the American and European models as complements: one part of the world full of risk-taking innovators, another enjoying smooth lives and six weeks off.

On Grigori Perelman turning down the Fields Medal, Cowen approves: "Look, prizes are corrupting." In his experience Nobel winners tend to become less productive and repeat their older messages. Later he extends the idea to inherited wealth: great creators like Mozart and James Brown rarely had big cushions, and inheriting too much money is like winning a prize.

Competition, Anarchy and Ayn Rand

Cowen says competition's value depends entirely on the legal framework. With rule of law and reasonably just property rights it works well; without them, as in nature, it becomes bloody. The fight for territory is the main thing to keep out of competition. He wants US healthcare to be much more competitive, because patients are treated "like an idiot or like a child" rather than customers. There is no such thing as a well-defined pure free market, he argues, since every market needs a legal order deciding things like intellectual property.

On anarchism (Fridman has been talking with Michael Malice), Cowen would not scrap the Constitution, but says all societies are in some regards anarchistic, especially across borders. The goal is good anarchy rather than bad: "You want to squish your anarchy into the right corners."

Ayn Rand was a big influence on him growing up, especially Capitalism: The Unknown Ideal and its idea that wealth creation deserves high status, which he thinks is completely correct. But having read Plato first, he disagrees with her on most philosophy: in a Socratic dialogue the wisdom lies in bringing points of view together, and she lacks that. His theory is that Rand's secret is that she was Russian, from her purges of friends to her vision of strong women and sharp sexual difference. He cites dialogue-like works he loves: Boswell's Life of Johnson, which he calls one of the greatest philosophy books ever, Mill and Harriet Taylor, Plato and Socrates, Goethe's Faust and Shakespeare.

In Praise of Big Business

Discussing his book Big Business: A Love Letter to an American Anti-Hero, Cowen points to the pandemic. Amazon upped its delivery game almost overnight, food delivery worked, Zoom moved higher education online in about two weeks, and the NBA canceled early and then pulled off its bubble without a single case. Big business, he says, has mostly been a hero throughout American history.

Why the negativity, then? Cowen thinks most people are high in neuroticism: ten compliments and one insult, and the insult bothers you more. He cites Martin Gurri's thesis that the internet lets us see more of everything, so we find more to complain about. The same applies to Congress and other institutions. He urges people to give new things like Clubhouse a chance and to praise those getting things done. Clubhouse itself is not for him in the long run, though: podcasts have more reach, and his core asset is reading fast (he listens at 1.0x, not 1.5x). He thinks Clubhouse is perfect for tributes, like an episode of Steve Jobs anecdotes, and that loneliness will persist after the pandemic.

From Great Stagnation to Growth Optimism

Cowen long agreed with Eric Weinstein, Peter Thiel and Robert Gordon that growth had slowed, the argument of his 2011 book The Great Stagnation. Even then he predicted the slowdown was temporary, lasting about 20 years. In the last two years he has become much more optimistic, citing breakthroughs in green energy and batteries, mRNA vaccines, an anti-malaria vaccine in stage three trials, and CRISPR against sickle cell anemia, many rooted in better computation. He expects some version of driverless vehicles too. His pessimism is different: major new technologies tend to be used for violence, as radio aided the rise of dictators. He is bullish on America.

On communism, Cowen jokes that his life as a tenured professor comes close to it and works pretty well. The Soviet system, though, devolved into barter, bribes, favors and malfunctioning incentives, with prices set too low and shortages everywhere, held together by an ever-growing pile of lies until even the elite stopped believing. Russia under Putin had excellent growth from around 1999 or 2000 but has since had years of negative growth; the structural problem is the lack of consistency among economic, social and political power, with wealth concentrated in few hands. The most talented Russians leave, which removes opposition. He sees Putin's high approval as partly sincere but views it as bearish.

China has done amazing things, but Cowen notes it still lags far behind Japan, South Korea, Taiwan, Hong Kong and Singapore. Its rise coincided with dismantling the "Iron Rice Bowl" welfare system, and its exam system genuinely lifts talented rural kids. He worries about power concentrating in one person and the treatment of Jack Ma, but expects China to muddle through rather than overtake America.

UBI, Immigration and Trade

The UBI version that makes most sense to Cowen is Mitt Romney's version for kids, because children should not suffer for their parents' mistakes. For adults he thinks people can adjust, noting that Japan and the US, the most robot-intensive societies, were at full employment before the pandemic. A high UBI could worsen loneliness because people do not really want to sit at home.

He disagrees with Eric Weinstein on immigration: he thinks immigrants have raised US science's talent level, citing Katalin Karikó, the Hungarian scientist behind mRNA vaccines who was ridiculed and could not get papers published but stuck with it. He would give a green card to anyone with a plausible graduate degree, and proposes "open borders for Belarus." He also backs free trade more than Weinstein, though he makes exceptions for vaccines and military components, since countries may cut off exports in a crisis.

Money, Crypto and WallStreetBets

"No one knows what money is. Probably no one ever knew," Cowen says. He thinks Bitcoin has taken over much of the space held by gold, which seems sustainable, but compares its valuation to Andy Warhol paintings rather than money. He is "40, 60" on DeFi and prediction markets, meaning somewhat more likely to fail than succeed, partly because regulation will remove their cost advantages. Celebrity coins like Dogecoin look to him like baseball cards: fun collectibles, not macroeconomically important. Fiat money works well; he sent money to a family he supports in Ethiopia and it arrived in under 24 hours.

WallStreetBets, he says, is "a new esport, more fun for many, but more expensive than the old esports." Stock prices will end up where they ought to be. The real macro phenomenon is that "Everyone's weird now": the internet lets us be weirder and perhaps makes us weirder, like chess players now using odd openings they can research online.

Conformity in Academia and the Humanities on Podcasts

Fridman worries that universities like MIT resist hiring weird junior faculty. Cowen thinks academia is only partially bankrupt, unlike Weinstein. "The biggest problem to me is the rank absurd conformism," especially at second-tier schools trying to be a junior MIT, which enforce mediocrity more strictly than Harvard does. He would rather they pick a model, like Chicago or the older Caltech, and be weird in it. They agree that diversity discussions have become a new mechanism for enforcing conformity. Cowen tells Fridman that his podcast is the humanities, which have innovated through podcasts even as university departments struggle.

Taking UFO Sightings Seriously

Cowen thinks the Navy data seems serious, and notes that senators and former CIA director John Brennan, who told him alien origin was the single most likely explanation, were briefed by their smartest people and told "we don't know." He treats that as sociological data. Still, he suspects the objects are not alien. He rejects the argument from elimination: "The positive evidence that it's aliens is still quite weak. The positive evidence that it's a puzzle is quite huge." If everything were declassified, he expects more evidence pointing to the same puzzle, not hidden aliens. The deeper lesson is that government cannot bring itself to any new belief.

Art, Food and Music

Cowen thinks only about 10% of people truly long to create art, and he is not one of them, though playing guitar badly helped him appreciate music. His two greatest artworks are Michelangelo's Pietà and David, and Vermeer's The Art of Painting in Vienna stunned him at 23. He says smart people's biggest mistake is dismissing contemporary art: "It's just like a kind of mathematics they haven't learned yet."

For a last meal he would fly to Hermosillo in northern Mexico, where the food nominally resembles American Mexican food but is transformed by air-dried beef, fresh and varied chilies, diverse wheat, unpasteurized cheeses and no reliance on refrigeration, which he says made American and Russian food worse early on. Talent flows into cooking in Mexico, China and India. Sushi, he says, is like the Beatles' White Album: it sounds simple but is intensely produced. He feels a little bad for master sushi chefs, calling them sacrificial victims he benefits from, while Fridman defends the joy of endless drilling from his martial arts experience. On Bruce Springsteen, Cowen picks Born to Run and Darkness on the Edge of Town.

Books, Advice, Love and Death

His three books: Plato's Dialogues, which he started at 13; Ayn Rand's Capitalism: The Unknown Ideal; and Friedrich Hayek's essay "The Use of Knowledge in Society" from Individualism and Economic Order. Hayek explains how one copper mine problem raises prices worldwide, leading people everywhere to economize, which Cowen calls an AI problem that markets solve.

His advice: first, get mentors in anything you want to learn, and to get them, "Be interesting, be direct and try." Bad mentors do little damage because they are easy to drop; his own undergrad mentor was a Stalinist who taught him a great deal. Second, build small groups of peers who talk about your shared interest almost daily, since remarkably little has been done outside small groups.

On love, Cowen offers a Darwinian layer and a poetic layer, recommending John Keats. He shares that his wife was born in Moscow, he adopted his Russian-born daughter, and his father-in-law, who lived through the Stalin era and World War II, died a week before the conversation. He does not fear death much: "For me, the worst thing about death is not knowing how the human story turns out." He would love to read a Wikipedia page on the rest of human history before dying, but not a page on the meaning of life, which he thinks is best found through cultures, art, travel and mathematics.

Conclusion

This conversation is a showcase of Tyler Cowen's range: a serious economist who is equally at home discussing nuclear risk, Hayek's price system, Hermosillo tacos and Springsteen. His core message is optimistic but hard-headed. Economic growth may be returning thanks to computation, mRNA and energy breakthroughs; big business deserves more credit than it gets; and crypto, WallStreetBets and UFOs are fascinating puzzles, though probably not the revolutions some expect. Beneath it all is a defense of weirdness and dialogue against conformity: wisdom comes from ideas meeting, progress comes from outsiders willing to be different, and a good life is built with mentors, small groups of peers and endless curiosity.

This is a summary of "#174 – Tyler Cowen: Economic Growth and the Fight Against Conformity and Mediocrity" from Lex Fridman Podcast, giving you the GIST so you can decide if you want the REST. Listen to the full episode.