Tyler Cowen

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Asking if innovation is over is no less narcissistic than suggesting that evolution is done. It flatters us to think that we’ve already had all the good ideas, that we’re the living end. More likely, we’re always closer to the beginning.

Of course, when looking at relatively short periods of time, there are ebbs and flows in invention that have serious ramifications for the standard of living. In Robert Gordon’s The Rise and Fall of American Growth, the economist argues that the 1870-1970 period was a golden age of productivity and development unknown previously and unmatched since.

In an excellent Foreign Affairs review, Tyler Cowen, who himself has worried that we’ve already picked all the low-hanging fruit, lavishly praises the volume–“likely to be the most interesting and important economics book of the year.” But in addition to acknowledging a technological slowdown in the last few decades, Cowen also wisely counters the book’s downbeat tone while recognizing the obstacles to forecasting, writing that “predicting future productivity rates is always difficult; at any moment, new technologies could transform the U.S. economy, upending old forecasts. Even scholars as accomplished as Gordon have limited foresight.” In fact, he points out that the author, before his current pessimism, predicted earlier this century very healthy growth rates.

My best guess is that there will always be transformational opportunities, ripe and within arm’s length, waiting for us to pluck them.

An excerpt:

In the first part of his new book, Gordon argues that the period from 1870 to 1970 was a “special century,” when the foundations of the modern world were laid. Electricity, flush toilets, central heating, cars, planes, radio, vaccines, clean water, antibiotics, and much, much more transformed living and working conditions in the United States and much of the West. No other 100-year period in world history has brought comparable progress. A person’s chance of finishing high school soared from six percent in 1900 to almost 70 percent, and many Americans left their farms and moved to increasingly comfortable cities and suburbs. Electric light illuminated dark homes. Running water eliminated water-borne diseases. Modern conveniences allowed most people in the United States to abandon hard physical labor for good.

In highlighting the specialness of these years, Gordon challenges the standard view, held by many economists, that the U.S. economy should grow by around 2.2 percent every year, at least once the ups and downs of the business cycle are taken into account. And Gordon’s history also shows that not all GDP gains are created equal. Some sources of growth, such as antibiotics, vaccines, and clean water, transform society beyond the size of their share of GDP. But others do not, such as many of the luxury goods developed since the 1980s. GDP calculations do not always reflect such differences. Gordon’s analysis here is mostly correct, extremely important, and at times brilliant—the book is worth buying and reading for this part alone.

Gordon goes on to argue that today’s technological advances, impressive as they may be, don’t really compare to the ones that transformed the U.S. economy in his “special century.” Although computers and the Internet have led to some significant breakthroughs, such as allowing almost instantaneous communication over great distances, most new technologies today generate only marginal improvements in well-being. The car, for instance, represented a big advance over the horse, but recent automotive improvements have provided diminishing returns. Today’s cars are safer, suffer fewer flat tires, and have better sound systems, but those are marginal, rather than fundamental, changes. That shift—from significant transformations to minor advances—is reflected in today’s lower rates of productivity.•

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In a belated London Review of Books assessment of The Second Machine Age and Average Is Over, John Lanchester doesn’t really break new ground in considering Deep Learning and technological unemployment, but in his customarily lucid and impressive prose he crystallizes how quickly AI may remake our lives and labor in the coming decades. Two passages follow: The opening, in which he charts the course of how the power of a supercomputer ended up inside a child’s toy in a few short years; and a sequence about the way automation obviates workers and exacerbates income inequality.


In 1996, in response to the 1992 Russo-American moratorium on nuclear testing, the US government started a programme called the Accelerated Strategic Computing Initiative. The suspension of testing had created a need to be able to run complex computer simulations of how old weapons were ageing, for safety reasons, and also – it’s a dangerous world out there! – to design new weapons without breaching the terms of the moratorium. To do that, ASCI needed more computing power than could be delivered by any existing machine. Its response was to commission a computer called ASCI Red, designed to be the first supercomputer to process more than one teraflop. A ‘flop’ is a floating point operation, i.e. a calculation involving numbers which include decimal points (these are computationally much more demanding than calculations involving binary ones and zeros). A teraflop is a trillion such calculations per second. Once Red was up and running at full speed, by 1997, it really was a specimen. Its power was such that it could process 1.8 teraflops. That’s 18 followed by 11 zeros. Red continued to be the most powerful supercomputer in the world until about the end of 2000.

I was playing on Red only yesterday – I wasn’t really, but I did have a go on a machine that can process 1.8 teraflops. This Red equivalent is called the PS3: it was launched by Sony in 2005 and went on sale in 2006. Red was only a little smaller than a tennis court, used as much electricity as eight hundred houses, and cost $55 million. The PS3 fits underneath a television, runs off a normal power socket, and you can buy one for under two hundred quid. Within a decade, a computer able to process 1.8 teraflops went from being something that could only be made by the world’s richest government for purposes at the furthest reaches of computational possibility, to something a teenager could reasonably expect to find under the Christmas tree.

The force at work here is a principle known as Moore’s law. This isn’t really a law at all, but rather the extrapolation of an observation made by Gordon Moore, one of the founders of the computer chip company Intel. By 1965, Moore had noticed that silicon chips had for a number of years been getting more powerful, in relation to their price, at a remarkably consistent rate. He published a paper predicting that they would go on doing so ‘for at least ten years’. That might sound mild, but it was, as Erik Brynjolfsson and Andrew McAfee point out in their fascinating book, The Second Machine Age, actually a very bold statement, since it implied that by 1975, computer chips would be five hundred times more powerful for the same price. ‘Integrated circuits,’ Moore said, would ‘lead to such wonders as home computers – or at least terminals connected to a central computer – automatic controls for automobiles and personal portable communications equipment’. Right on all three. If anything he was too cautious.•


Note that in this future world, productivity will go up sharply. Productivity is the amount produced per worker per hour. It is the single most important number in determining whether a country is getting richer or poorer. GDP gets more attention, but is often misleading, since other things being equal, GDP goes up when the population goes up: you can have rising GDP and falling living standards if the population is growing. Productivity is a more accurate measure of trends in living standards – or at least, it used to be. In recent decades, however, productivity has become disconnected from pay. The typical worker’s income in the US has barely gone up since 1979, and has actually fallen since 1999, while her productivity has gone up in a nice straightish line. The amount of work done per worker has gone up, but pay hasn’t. This means that the proceeds of increased profitability are accruing to capital rather than to labour. The culprit is not clear, but Brynjolfsson and McAfee argue, persuasively, that the force to blame is increased automation.

That is a worrying trend. Imagine an economy in which the 0.1 per cent own the machines, the rest of the 1 per cent manage their operation, and the 99 per cent either do the remaining scraps of unautomatable work, or are unemployed. That is the world implied by developments in productivity and automation. It is Pikettyworld, in which capital is increasingly triumphant over labour. We get a glimpse of it in those quarterly numbers from Apple, about which my robot colleague wrote so evocatively. Apple’s quarter was the most profitable of any company in history: $74.6 billion in turnover, and $18 billion in profit. Tim Cook, the boss of Apple, said that these numbers are ‘hard to comprehend’. He’s right: it’s hard to process the fact that the company sold 34,000 iPhones every hour for three months. Bravo – though we should think about the trends implied in those figures. For the sake of argument, say that Apple’s achievement is annualised, so their whole year is as much of an improvement on the one before as that quarter was. That would give them $88.9 billion in profits. In 1960, the most profitable company in the world’s biggest economy was General Motors. In today’s money, GM made $7.6 billion that year. It also employed 600,000 people. Today’s most profitable company employs 92,600. So where 600,000 workers would once generate $7.6 billion in profit, now 92,600 generate $89.9 billion, an improvement in profitability per worker of 76.65 times. Remember, this is pure profit for the company’s owners, after all workers have been paid. Capital isn’t just winning against labour: there’s no contest. If it were a boxing match, the referee would stop the fight.•

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In a piece at the Los Angeles Review of Books about Tyler Cowen’s Average Is Over, a meditation on meritocracy run amok, Guy Patrick Cunningham compares tomorrow’s potentially technologically divided society, a sci-fi-ish dystopia few people would find acceptable, to life in the Middle Ages. An excerpt:

“Though Cowen doesn’t see it, the future he lays out seems rife with obvious, intrinsic structural inequalities that will make it very hard for anyone born outside the elite to actually show enough ‘merit’ to rise into it. And when he breezily asserts, ‘The more that the high earners pull in, the more people will compete to serve them, sometimes for high wages, and sometimes for low wages,’ and that, ‘making high earners feel better in just about every part of their lives will be a major source of job growth in the future […] Better about the world. Better about themselves. Better about what they have achieved,’ it becomes hard not to see this as a new form of aristocracy — one where people born with certain advantages are able to leverage them even further than today’s wealthy. Certainly, a smart, capable aristocracy, one theoretically open to talented outsiders, but an aristocracy all the same.

Cowen is careful to note that this system ‘is not necessarily a good and just way for an economy to run,’ but he certainly sees it as a given. Interestingly, he is also keen to emphasize the autonomy of the individual in the hyper-meritocracy. This isn’t itself surprising. But Cowen’s efforts to square the system he anticipates with humanistic ideas about individual agency fall flat. When he defends the possibility of building third-world style slums in the United States, he insists, ‘No one is being forced to live in these places […] I might prefer to live there if my income was low enough.’ Cowen essentially defines choice down to the absence of force. But this is meaningless — after all, no one chooses to live in a slum, unless the alternative is homelessness. Choice only matters when there are real alternatives to pick from. When Cowen compares a hyper-meritocratic society to the Middle Ages, he does so merely to point out that it is possible for a deeply unequal society to remain stable over a long period of time. But the comparison brings to mind another thought instead — that the values that underlie hyper-meritocracy are as un-humanist as those of the Medieval period.”

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In a post for the “Upshot” section of the New York Times, economist Tyler Cowen suggests a variety of ways technology may begin to reverse the income inequality it has lately helped grow. Many of the ideas are modest and incremental, but there’s one giant one: The rising fortunes of emerging powers like China may eventually also help enrich Americans when such nations lose interest in making knockoff Apple products and create original companies as innovative as Apple. An excerpt:

“A final set of forces to reverse growing inequality stem from the emerging economies, most of all China. Perhaps we are living in a temporary intermediate period when America and many other developed nations bear a lot of the costs of Chinese economic development without yet getting many of the potential benefits. For instance, China and other emerging nations are already rich enough to bid up commodity prices and large enough to drive down the wages of a lot of American middle-class workers, especially in manufacturing. Yet while these emerging economies are keeping down the costs of manufactured goods for American consumers, they are not yet innovative enough to send us many fantastic new products, the way that the United States sends a stream of new products to British or French consumers, to their benefit. 

That state of affairs will probably end. Over the next few decades, we can expect China, India and other emerging nations to supply more innovations to the global economy, including to the United States. This shouldn’t be a cause for alarm. It will lead to many good things.

Since the emerging economies are relatively poor, many of these innovations may benefit relatively low-income Americans.”


At Pacific-Standard, Steve Swayne predicts that brain damage caused by football will force the end of most American high school and college programs within 15 years. It’s difficult to imagine that the coup de grâce will be administered so swiftly, but class-action suits will likely proliferate as we proceed. One note: The editor who wrote the article’s subheading should realize that “futból” also has a nasty head-injury problem. From Swayne:

“I’m not the first to make these suggestions; in a 2012 story in Grantland, economists Kevin Grier and Tyler Cowen looked at historical models of businesses dying off and provided some illustrations about how America would look without football. And the NCAA’s recent announcement giving more autonomy to the biggest conference schools will, in my estimation, only accelerate the speed of the changes as colleges and universities re-evaluate their finances and mission and weigh the place of football to both.

Even if football’s demise doesn’t come to pass as starkly as I imagine and they outline, we all can see that the world of football is changing rapidly and dramatically. At first the NFL was a league of denial when it came to the connection between concussions and brain damage. Then, having been sued by former players, the league offered a limited settlement. Now, ‘the N.F.L. has made an open-ended commitment to pay cash awards to retired players who have dementia and other conditions linked to repeated head hits,’ according to the New York Times. In short, the league is acknowledging that football can be extremely hazardous to your mental health.

It’s why I believe institutions of learning are going to re-evaluate the place of football and other high-impact sports in their missions. And I believe this re-evaluation is coming sooner than any of us imagine.”

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Great interview by Tyler Cowen at American Interest with Ralph Nader, the consumer watchdog and politician who’s mostly been right and occasionally colossally wrong, tied to the latter’s publication of Unstoppable, a book about finding political common ground in a divisive age. In one exchange, Nader decries the corporatization of sports, which he believes has made us passive spectators. I suppose this might be true of athletics, but I don’t think in a broader sense that the average person has ever participated more in society than right now. Of course, a participatory culture is only as good as its participants. An excerpt:

Tyler Cowen:

Do you think we need a more communitarian culture to push back against the corporate state and its abuses? I’m very struck by something in your book The Seventeen Solutions, for instance, where you talk about how America needs a new tradition of sports. Sports, you say, shouldn’t be something corporate-run that people watch on television, but something they do themselves, something that creates community, something that brings people together. Is that kind of social cohesion a necessary first step?

Ralph Nader:

Yes. We’ve become too much of a spectator culture, spending the better part of each day in front of screens. One of the consequences is that the few more athletic kids play while the rest watch, and the lack of physical activity leads to obesity. It’s not just youngsters; adults conform with the purposes of corporate advertising. The processed food producers and some other corporations, like pharmaceuticals, get rich when Americans get fat.

Corporations are also extremely adept at commercializing childhood and maneuvering around or undermining parental authority. They urge children to nag their parents at a young age to buy junk food, soft drinks, and violent video games. You see fewer kids out in the street now, just playing. These old games we used to play, like hopscotch—kids today wouldn’t even know what you’re talking about. But they do know a lot about video game violence and the heroes and villains involved.

So I think we do need a broad recognition of the need to bring the neighborhoods and communities into more participatory sports. Just a hoop, and throwing the ball into a hoop—anything to connect human to human rather than let kids wallow more and more in virtual reality. The whole electronic world is affecting us in ways we have yet to discover. That amount of time spent day after day in front of these screens can’t not have an effect on the human mind, and probably not a healthy one.”

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I put up a post just a couple of weeks ago about Thomas Piketty’s Capital in the Twenty-First Century, and since then it’s quickly become an unlikely blockbuster, sold out in brick-and-mortar stores and ranked #1 on Amazon, the latest green shoot in the Occupy mindset which blossomed in these scary financial times. At Foreign Affairs, economist Tyler Cowen provides a well-written review of the work, which he finds impressive but (unsurprisingly) disagrees with in fundamental ways. The opening:

Every now and then, the field of economics produces an important book; this is one of them. Thomas Piketty’s tome will put capitalist wealth back at the center of public debate, resurrect interest in the subject of wealth distribution, and revolutionize how people view the history of income inequality. On top of that, although the book’s prose (translated from the original French) might not qualify as scintillating, any educated person will be able to understand it — which sets the book apart from the vast majority of works by high-level economic theorists.

Piketty is best known for his collaborations during the past decade with his fellow French economist Emmanuel Saez, in which they used historical census data and archival tax records to demonstrate that present levels of income inequality in the United States resemble those of the era before World War II. Their revelations concerning the wealth concentrated among the richest one percent of Americans — and, perhaps even more striking, among the richest 0.1 percent — have provided statistical and intellectual ammunition to the left in recent years, especially during the debates sparked by the 2011 Occupy Wall Street protests and the 2012 U.S. presidential election.

In this book, Piketty keeps his focus on inequality but attempts something grander than a mere diagnosis of capitalism’s ill effects. The book presents a general theory of capitalism intended to answer a basic but profoundly important question. As Piketty puts it:

‘Do the dynamics of private capital accumulation inevitably lead to the concentration of wealth in ever fewer hands, as Karl Marx believed in the nineteenth century? Or do the balancing forces of growth, competition, and technological progress lead in later stages of development to reduced inequality and greater harmony among the classes, as Simon Kuznets thought in the twentieth century?’

Although he stops short of embracing Marx’s baleful vision, Piketty ultimately lands on the pessimistic end of the spectrum. He believes that in capitalist systems, powerful forces can push at various times toward either equality or inequality and that, therefore, ‘one should be wary of any economic determinism.’ But in the end, he concludes that, contrary to the arguments of Kuznets and other mainstream thinkers, ‘there is no natural, spontaneous process to prevent destabilizing, inegalitarian forces from prevailing permanently.’ To forestall such an outcome, Piketty proposes, among other things, a far-fetched plan for the global taxation of wealth — a call to radically redistribute the fruits of capitalism to ensure the system’s survival. This is an unsatisfying conclusion to a groundbreaking work of analysis that is frequently brilliant — but flawed, as well.”

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It’s not that we’re entering a post-jobs world but one where automation, along with other economic factors, may make for permanently higher unemployment levels. Many types of work will vanish and not everyone will be suited for the new normal. Not all clerks can become nurses. From Tyler Cowen in the New York Times:

“How afraid should workers be of these new technologies? There is reason to be skeptical of the assumption that machines will leave humanity without jobs. After all, history has seen many waves of innovation and automation, and yet as recently as 2000, the rate of unemployment was a mere 4 percent. There are unlimited human wants, so there is always more work to be done. The economic theory of comparative advantage suggests that even unskilled workers can gain from selling their services, thereby liberating the more skilled workers for more productive tasks.

Nonetheless, technologically related unemployment — or, even worse, the phenomenon of people falling out of the labor force altogether because of technology — may prove a tougher problem this time around.

Labor markets just aren’t as flexible these days for workers, especially for men at the bottom end of the skills distribution.”


Very happy to see that the bizarre attack on economist Tyler Cowen at George Mason didn’t result in any serious injury. Strange world.

I think any nation as mobile and armed as this one (though thankfully there was no gun involved in this case) desperately needs universal healthcare with a strong mental-wellness component. Are there fewer incidences of gun violence in a country which has abundant firearms and universal coverage (e.g., Canada) than in the U.S., which is only now belatedly trying to guarantee care for all its citizens, because insured people can see a doctor when they need to? There are probably lots of cultural reasons for the disparity, but it seems like focus in this area could be beneficial.

From a really interesting 2009 interview Cowen conducted with philosopher Peter Singer, a dialogue about using immigration as a poverty-fighting tool:

Tyler Cowen:

For instance, in my view, what is by far the best anti-poverty program, the only one that’s really been shown to work, and that’s what’s called ‘immigration.’ I don’t even see the word ‘immigration’ in your book’s index. So why don’t we spend a lot more resources allowing immigration, supporting immigration, lobbying for immigration? This raises people’s incomes very dramatically, it’s sustainable, for the most part it’s also good for us. Why not make that the centerpiece of an anti-poverty platform?

Peter Singer:

That’s an interesting point, Tyler. I suppose, one question I’d like to ask is: is it sustainable? Isn’t it the case that if we take, as immigrants, the people who are the most enterprising, perhaps, of the poor countries that we’re still going to leave those countries in poverty, and their populations may continue to rise, and eventually, even if we keep taking immigrants, we will reach a capacity where we’re starting to strain our own country?

Tyler Cowen:

There’s two separate issues: one is ‘brain drain’ from the third world. I think here’s a lot of research by [Michael Clemens], showing that it’s not a problem, that third world countries that have even somewhat functional institutions tend to benefit by sending people to other countries. India’s a good example: a lot of Indians return to India and start businesses, or they send money back home. Mexico is another example. Maybe North Korea is somewhat different, but for the most part immigration seems to benefit both countries.

I don’t think we could have open borders; I don’t think we could have unlimited immigration, but we’re both sitting here in the United States and it hardly seems to me that we’re at the breaking point. Immigrants would benefit much more: their wages would rise by a factor of twenty or more, and there would be perhaps some costs to us, but in a cost-benefit sense it seems far, far more effective than sending them money. Do you agree?

Peter Singer:

I must admit that I haven’t thought a lot about immigration as a way of dealing with world poverty. Obviously, from what you’re saying, I should be thinking more about it, but I can’t really say whether I agree until I have thought more about it.”

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The opening of “The Robots Are Coming,” Gavin Kelly’s smart and sober-minded Guardian piece about the rise of the machines and what that will mean for job markets in automated societies:

“Whether it’s our humdrum reliance on supermarket self-service tills, Siri on our iPhones, the emergence of the drone as a weapon of choice or the impending arrival of the driverless car, intelligent machines are woven into our lives as never before.  

It’s increasingly common, a cliche even, for us to read about the inexorable rise of the robot as the fundamental shift in advanced economies that will transform the nature of work and opportunity within society. The robot is supposedly the spectre threatening the economic security not just of the working poor but also the middle class across mature societies. ‘Be afraid’ is the message: the march of the machine is eating into our jobs, pay rises and children’s prospects. And, according to many experts, we haven’t seen anything yet. 

This is because the power of intelligent machines is growing as their cost collapses. They are doing things reliably now that would have sounded implausible only a few years ago. By the end of the decade, Nissan pledges the driverless car, Amazon promises that electric drones will deliver us packages, Rolls-Royce says that unmanned robo-ships will sail our seas. The expected use of machines for everyday purposes is already giving rise to angst about the nascent problem of ‘robot smog‘ as other people’s machines invade ever more aspects of our personal space.

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Here, in no particular order, are this year’s 20 selections. These pieces, which made me think or reconsider my opinions or just delighted me, are limited to ungated material that’s only a click away. (I included work from publications such as the New York Times which allow a certain amount of free articles per month.)

  • The Reality Show” (Mike Jay, Aeon) Brilliant essay that points out that the manifestations of mental illness are heavily influenced by the prevailing culture. In our case: ubiquitous technology.
  • Invisible Child–Girl in the Shadows: Dasani’s Homeless Life (Andrea Elliott, New York Times) A tale of two cities in present-day New York told through the story of a talented grade-school girl trying to make it through the hard knocks of class divisions. What’s expressed tacitly is that if the best and brightest homeless children only have a so-so shot at success, those less gifted have almost none. 
  • The Robots Are Here” (Tyler Cowen, Politico Magazine): The best distillation yet of the economist’s ideas about where the technological disruption will lead us as a society. I’m not completely on board with his forecasting, but this article is smart and provocative.
  • In Conversation: Antonin Scalia(Jennifer Senior, New York) Amazing interview with the Supreme Court Justice which reveals him to a stunning, and frightening, extent.
  • Return of the Oppressed (Peter Turchin, Aeon) The father of Cliodynanics forecasts a dark future for humanity thanks to spiraling wealth inequality.
  • Omens (Ross Andersen, Aeon) With a focus on philosopher Nick Bostrom, the writer wonders whether humans will survive into the deep future.
  • Thanksgiving in Mongolia(Ariel Levy, The New Yorker) Heartrending story of a reporter’s loss in a far-flung place is personal journalism at its finest.
  • Blockbuster Video: 1985-2013 (Alex Pappademas, Grantland): A master of the postmortem lays to rest not a person but a way of life which is disappearing brick by brick and mortar by mortar. 
  • The Corporate Mystique” (Judith Shulevitz, The New Republic) A reminder that a female CEO is not a replacement for a women’s movement.
  • The Global Swarm” (P.W. Singer, Foreign Policy) The author considers privacy as drones get smaller, smarter and seemingly unstoppable.
  • The Master” (Marc Fisher, The New Yorker) A profile of a predatory teacher is most interesting as an extreme psychological portrait of the cult mentality.
  • Why the World Faces Climate Chaos” (Martin Wolf, Financial Times) An attempt to understand why we cling to systems that doom us, that could make us the new dinosaurs.
  • The Hollywood Fast Life of Stalker Sarah” (Molly Knight, New York Times Magazine) Thoughtful article about celebrity in our age of decentralized media, in which fame has entered its long-tail phase, seemingly available to everyone and worth less than ever. 
  • Academy Fight Song(Thomas Frank, The Baffler) The author plays the role of designated mourner for common sense in U.S. higher education, which costs more now and returns less.
  • The Wastefulness of Automation(Frances Coppola, Pieria) A smart consideration of the disconnect of free-market societies that are also highly automated ones.

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The Robots Are Here” is an excellent, thought-provoking article by Tyler Cowen at Politico Magazine which considers what our progress with data and automation has wrought. If you’re not familiar with the George Mason economist’s work, this piece is a wonderful entry point. He begins by looking at the prescience of an Isaac Asimov story which predicted the intersection of deep data and the democratic process. An excerpt:

“Nearly 60 years after Asimov anticipated a decidedly dramatic intrusion of machines into our politics, we may not (yet) be offloading our democratic responsibilities to computers, but we are empowering them to reshape our economy and society in ways that could be just as profound. The rise of smart machines—technologies that encompass everything from artificial intelligence to industrial robots to the smartphones in our pockets—is changing how we live, work and play. Less acknowledged, perhaps, is what all this technological change portends: nothing short of a new political order. The productivity gains, the medical advances, the workplace reorganizations and the myriad other upheavals that will define the coming automation age will create new economic winners and losers; it will reorient our demographics; and undoubtedly, it will transform what we demand from our government.

The rise of the machines builds on deeper economic trends that are already roiling American society, including stagnant growth since 2001 and a greater openness to trade and foreign outsourcing. But it’s the rapid increase in machines’ ability to substitute for intelligent human labor that presages the greater disruption. We’re on the verge of having computer systems that understand the entirety of human ‘natural language,’ a problem that was considered a very tough one only a few years ago. We’re close to the point when we can fit the (articulable) knowledge of the entire world into the palm of our hands. Self-driving cars are making their way onto streets in California and Nevada. Whether you are a factory worker or an accountant, a waitress or a doctor, this is the wave that will lift you or dump you.”

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I’ve written before that I don’t think it’s clear how we reconcile an automated society and a capitalist one. We managed to reinvent work in America during the Industrial Revolution by throwing ourselves into new information businesses (marketing, public relations, advertising, etc.). Perhaps such alternatives will emerge again. If not, we need to reconfigure our economic model, maintaining free markets but sharing the wealth somehow. Otherwise inequality will reach traumatic levels. At the New Yorker blog, Joshua Rothman interviews Tyler Cowen about these issues and others. I have questions about Cowen’s vision of America’s future, but he always makes intelligent points. The interview’s opening:


In Average Is Over, you argue that inequality will grow in the U.S. for the next several decades. Why?

 Tyler Cowen:

There are three main reasons inequality is here to stay, and will likely grow. The first is just measurement of worker value. We’re doing a lot to measure what workers are contributing to businesses, and, when you do that, very often you end up paying some people less and other people more. The second is automation—especially in terms of smart software. Today’s workplaces are often more complicated than, say, a factory for General Motors was in 1962. They require higher skills. People who have those skills are very often doing extremely well, but a lot of people don’t have them, and that increases inequality. And the third point is globalization. There’s a lot more unskilled labor in the world, and that creates downward pressure on unskilled labor in the United States. On the global level, inequality is down dramatically—we shouldn’t forget that. But within each country, or almost every country, inequality is up.


You think that intelligent software, especially, will make the labor market more unequal. Why is that the case?

 Tyler Cowen:

Because of the cognitive requirements of working with smart software. And it’s also about training. There’s a big digital divide in this country.”

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I really enjoyed “Why Texas Is Our Future,” economist Tyler Cowen’s Time cover story about the Lone Star State becoming the template for America, but I have to wonder if Texas is even the future of Texas, let alone the rest of the country. I’m not saying demographic shifts will completely change its nature–some things are deeply ingrained–but I wonder if the state will always be so red. It may have been better for Time to do a split-cover issue asking if Texas or California will be America’s future. (Though Massachusetts may actually have them both beat.) A few more quick questions and comments about the piece:

  • Growing Mexican-American voting power goes unmentioned. It likely won’t help Republicans in that state or nationally in the near future.
  • The politicians who favor the type of policies Cowen thinks are the future (low taxes, little or no social safety net) are also usually the same ones with extreme views on social policies. You can’t uncouple the two and far-right stances on reproductive rights and immigration and race and education and child health care may cost them at the ballot box.
  • You can’t assume that the influx of new citizens from disparate places to Texas won’t alter its political landscape. New arrivals may initially be attracted by no state income taxes, but they may grow weary of some of its less-appealing side effects.
  • It’s hard to see how Texas’ seemingly endless cheap land could apply to most smaller American states. The supply just isn’t there. Zoning-law changes can help somewhat, but you can do just so much with so little.
  • Citizens moving to Texas in large numbers is impressive, but many more people just voted against the Texas model in the last Presidential election. And, no, it was not just about the candidates’ personalities.
  • On this passage: “The individuals moving up the economic ladder are the ones who’ve responded to this competition by upgrading their skills and efforts. The ones moving down are largely those who have failed or been unable to respond at all.” I know people like Cowen who have been successful for a long time believe stuff like this, but it just isn’t true. There’s a lot more randomness and luck than a statement like this acknowledges.
  • It’s certainly not Cowen’s responsibility in predicting the future to skew his opinions to the more humanistic path, but I think he’s way too fatalistic about Americans accepting greater and greater income inequality. His view of the future is pretty chilling and only some of it has to be true. Sure, automation will become more prominent, but we do not have to politically allow our country to become an even more extreme version of haves and have-nots. I don’t think people will forever be satisfied by bread and Kardashians.

From Cowen on the Texas model:

How did Texas do it?

Texas Monthly senior editor Erica Grieder credits the ‘Texas model’ in her recent book, Big, Hot, Cheap, and Right: What America Can Learn From the Strange Genius of Texas. “The Texas model basically calls for low taxes and low services,’ she says. “In a sense, it’s just a limited-government approach.” Chief Executive magazine has named Texas the most growth-friendly state in the nation for nine years in a row. The ranking is based on survey results from its CEO readership, who grade the states on the basis of factors such as taxes and regulation, the quality of the workforce and the living environment. Cheap land, cheap labor and low taxes have all clearly contributed to this business-friendly climate. But that’s not the whole story.

“Certainly since 2008, the beginning of the Great Recession, it’s been the energy boom,” SMU’s [Bernard] Weinstein says, pointing to the resource boom’s ripple effect throughout the Texas economy. However, he says, the job growth predates the energy boom by a significant margin. “A decade ago, before the shale boom, economic growth in Texas was based on IT development,” Weinstein says. “Today most of the job creation, in total numbers, is in business and personal services, from people working in hospitals to lawyers.”

Of course, not everyone’s a fan of the Texas model. “We are not strong economically because we have low taxes and lax regulation. We are strong economically because of geography and geology,” says Scott McCown, a former executive director of the Center for Public Policy Priorities who is now a law professor at the University of Texas. “We’ve built an economy favoring the wealthy … If that’s the ultimate end result of the Texas model in a democratic society, it will be rejected.”

So will the rest of the country follow Texas’ lead? People are already voting with their feet. The places in the U.S. seeing significant in-migration are largely in relatively inexpensive parts of the Sun Belt. These are, by and large, affordable states with decent records of job creation–often with subpar public services and low taxes. Texas is just the most striking example. But Oklahoma, Colorado, the Carolinas and other parts of the South are benefiting from the same trends–namely that California, New York and the other high-tax, high-cost states are no longer such good deals for much of the U.S.’s middle and lower-middle classes.

The Americans heading to Texas and other cheap-living states are a bit like the mythical cowboys of our past–self-reliant, for better or worse.•

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In his appearance on EconTalk, Tyler Cowen said something that I really agree with: We already have our next great teaching tool, and it’s games. There’s no reason why students in a classroom setting can’t learn physics or mathematics or language through video games, if we can just get past our belief that learning most be painful. Of course, as Cowen pointed out, we also have to commit to games en masse since the production of popular ones is remarkably expensive. From a Yahoo! article about students repurposing their free iPads:

“You have to give school officials in Los Angeles credit for a good idea: put iPads in the hands of over 650,000 students to give them the most advanced learning tools available in an effort to boost their interest in academics.

But the $1 billion plan is taking some heat after students in the nation’s second-largest school district cracked the tablets’ security settings to forgo reading, writing and ‘rithmetic and instead post on Facebook and play games during class time.

‘They kind of should have known this would happen,’ said Maria Aguilera, a student at one of the schools where games briefly replaced academia. ‘We’re high school students after all. I mean, come on.’

The top game choices? Temple Run, Subway Surfing and an unnamed car racing game.”


Just as good as Russ Roberts’ EconTalk episode with David Epstein is his recent show with economist Tyler Cowen, whose new book, Average Is Overlooks at life in a more-autonomous future. The guest sees the coming years being increasingly meritocratic, though with merit having shifted from those who are great to those who great at interfacing with machines. On that point is an exchange about freestyle chess, in which a human and computer team up to challenge another computer. Cowen points out that the best human players usually don’t fare too well in these competitions, and are often outdone by lesser players who are superior at knowing when to trust their non-human partner. Cowen guesses at future population distribution in the U.S. and how cities will change, and explains why he thinks income inequality is rising at the same time that crime rates are falling. He’s optimistic about life in 50-70 years, but believes the next few decades will be a painful mix of positives and negatives. 

I doubt we’ll ever really be a meritocracy. Even if we were, the idea that a small number of us, 15% or so, will flourish and have tremendous advantages and the rest will be second-class citizens with very nice toys and tools, just makes me sad. Even if it means that we’re wealthier in the aggregate, I still feel depressed about it. Beautiful cities where no poor people can afford to live doesn’t sound Utopian to me. Listen here.

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In Tyler Cowen’s smart New York Times editorial “Who Will Prosper in the New World,” the economist tries to identify the victors and the victims in a highly automated society. In one passage that I don’t excerpt, he suggests that the studious who take advantage of online learning will do best, but some of the most studious people I know are struggling the most right now. And I wonder if an ageist culture like ours will respond to older folks who continue to educate themselves. We’ll see. Here’s an excerpt about some of those he believes Big Data will diminish:

“Who will be most likely to suffer from this technological revolution?

PEOPLE WITH DELICATE FEELINGS Computing and software will make it easier to measure performance and productivity.

It will be harder to gloss over our failings and maintain self-deception. In essence everyone will suffer the fate of professional chess players, who always know when they have lost a game, have an exact numerical rating for their overall performance, and find excuses for failure hard to come by.

Individuals will have many measures of their proficiency. They will have an incentive to disclose that information to get the better job or social opportunity. You’ll assume the worst about those who keep secrets, and so openness will reign. Many of us will start to hate the idea of Big Data.

PEOPLE UNLUCKY IN HEALTH CARE Quality surgery and cancer treatment cannot be automated very easily. They will be highly expensive, and unlucky health breaks will be all the more tragic because not everyone will be able to afford the best treatments.

With marvelous diagnosis available online, some people will get the right treatments early on, whereas others will know exactly what they are dying from.”


Although I don’t think Amazon’s entry into the art market can make that scene any more ridiculous than it already is, economist Tyler Cowen writes disapprovingly of the early returns in a Marginal Revolution post. An excerpt:

“I expect the real business here to come in posters, lower quality lithographs, and screen prints, not fine art per se.  And sold on a commodity basis.  There is nothing wrong with that, but I don’t think it will amount to much more aesthetic importance than say Amazon selling tennis balls or lawnmowers.

Should you buy this mediocre Mary Cassatt lithograph for ‘Price: $185,000.00 + $4.49 shipping’?  (Jeff, is WaPo charging you $250 million plus $4.49 shipping?  I don’t think so. )

One enduring feature of the art world is that a given piece will sell for much more in one context rather than another.  The same painting that might sell for 5k from a lower tier dealer won’t command more than 2k on eBay, if that.  Yet it could sell for 10k, as a bargain item, relatively speaking, if it ended up in the right NYC gallery (which it probably wouldn’t).  Where does Amazon stand in this hierarchy?  It doesn’t look promising.

Their Warhols are weak and overpriced, even if you like Warhol.  Are they so sure that this rather grisly Monet is actually the real thing?  I say the reviews of that item gets it right.  At least the shipping is free and you can leave feedback.

I’ve browsed the ‘above 10k’ category and virtually all of it seems a) aesthetically abysmal and b) drastically overpriced.  It looks like dealers trying to unload unwanted, hard to sell inventory at sucker prices.  I’m guessing that many of these are being sold at multiples of three or four over auction price histories.”


At the excellent Marginal Revolution blog, economist Tyler Cowen takes on a thought experiment: What if we all died at forty? An excerpt from his answer:

“One question is how child-bearing norms will evolve.  There will be considerable pressure to have kids at age eighteen or so.  (It might be considered unethical to have a child at age thirty-five, although if the fertility rate falls enough the economy might shift heavily into orphanages and this could be considered virtuous nonetheless.) I predict many people would become much stricter in their morals and more religious, and they will have children quite early.

Other people would attempt to maintain a collegiate lifestyle through their death at age forty.  There would be a polarization of outcomes and approaches to life.  Old age as an equalizer, and as an enforcer of responsible savings behavior, would be gone.

The likelihood of warfare would rise, if only because the sage elderly won’t be around and male hormones will run rampant.” (Thanks Browser.)


Economists Tyler Cowen (who has read more more books than all of us combined) and Kevin Grier have a smart article at Grantland that reveals how countries can improve their odds of earning medals at the Olympics. An excerpt about the divergent performances of China and India, two countries with similarly huge talent pools:

“Will China and India, the two countries with populations over 1 billion, dominate the Olympics of the future, especially as they become wealthier?

To date, their Olympic performances are almost polar opposites. China has become an Olympic powerhouse while India has underperformed. From 1960 to 2000, China won 80 gold medals, while India won only two. Over those 11 Olympiads, India only won eight total medals while China won over 200. While China has grown faster and is richer than India, the difference in wealth can’t begin to account for the chasm between their Olympic results.

In their book Poor Economics, MIT economists Abhijit V. Banerjee and Esther Duflo attribute India’s dismal Olympic performance at least partly to very poor child nutrition. They document that rates of severe child malnutrition are much higher in India than in sub-Saharan Africa, even though most of sub-Saharan Africa is significantly poorer than India.

Even the significant segment of the Indian population that grows up healthy is at a disadvantage relative to China. The Chinese economic development model has focused on investment in infrastructure; things like massive airports, high-speed rail, hundreds of dams, and, yes, stadiums, world-class swimming pools, and high-tech athletic equipment. And while India is a boisterous democracy, China continues to be ruled by a Communist party, which still remembers the old Cold War days when athletic performance was a strong symbol of a country’s geopolitical clout.”

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A concise explanation of why labor disputes in sports are so tortuous and odd, via Tyler Cowen and Kevin Grier, on Grantland:

Why are labor disputes in sports so weird?

The bosses control the whole sector and face little competition when it comes to hiring labor. Since the merger with the ABA in 1976, the NBA is a monopoly and operates in a manner (it monopolizes!) that would be illegal outside the sports world. Unlike in Silicon Valley, there are no NBA “start-ups.” You cannot create a new NBA team without permission of the incumbent owners. The league also has to approve changes in teams’ location and ownership.

What does this mean? The owners can get together and agree to jointly cut expenses, that is, the player salaries. Players have limited opportunities to play professional basketball in other countries, but realistically, if you are a world-class professional basketball player, you probably want to be in the NBA.

The star players are the only counterweight to management’s power. To a large extent, they ARE the NBA’s product. Because of this, the owners aren’t talking about using replacement players, and some stars are getting decent offers to play overseas during the lockout. These factors are a cause for concern for the owners and put limits on how much they can extract from the players.”


Final ABA Slam Dunk Contest, 1976:

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Interesting idea from William J. Stuntz’s The Collapse of American Criminal Justice (via Tyler Cowen at Marginal Revolution), which argues that NYC is far more violent than it was a century ago, but we don’t notice because emergency medical care and surgical procedures have improved so markedly that there are fewer fatalities. The only caveat is that I’d be curious as to how exhaustive statistics were 100 years ago. The passage:

“New York is America’s safest large city, the city that saw crime fall the most and the fastest during the 1990s and the early part of this decade.  Yet New York’s murder rate is 80 percent higher now than it was at the beginning of the twentieth century — notwithstanding an imprisonment rate four times higher now than then.  That crime gap is misleadingly small; thanks to advances in emergency medicine, a large fraction of those early twentieth-century homicide victims would survive their wounds today.  Taking account of medical advances, New York is probably not twice as violent as a century ago, but several times more violent.  At best, the crime drop must be counted a pyrrhic victory.”


Bill the Butcher, old-school:

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That close and obsessive reader, Tyler Cowen of the Marginal Revolution, posted this great passage from Kitty Burns Florey’s book, Script and Scribble: The Rise and Fall of Handwriting:

“There’s a popular myth that NASA spent ‘millions’ of dollars developing a pen for astronauts to use in the weightless environment of a space ship — while their sensible Russian counterparts were happy to use the low-tech pencil.  Alas, for all its appeal and plausibility, this is not true.  Initially, astronauts and cosmonauts were both equipped with pencils, but there were problems: if a piece of lead broke off, for example, it could float into someone’s eye or nose.  A pen was needed, one that would defy gravity, write in extreme heat or cold, and be leak proof: blobs of ink floating around the cabin would be more perilous than a stray pencil lead.  A long-time pen maker named Paul C. Fisher patented the ‘space pen’ in 1965 (which he had developed at the cost of a million dollars, at the request of but not under the auspices of NASA.)  NASA bought four hundred of them at $6 each, and, after a couple of years of testing, the pens were put into space.”


Manufacture of the Fisher Space Pen:

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"He rereads what you probably haven't heard of, like Anton Chekhov's Sakhalin Island."

A couple of passages about the voracious reading habits of economist, excellent blogger and The Great Stagnation author Tyler Cowen, from a new Businessweek profile of him:

“When Tyler Cowen was 15, he became the New Jersey Open Chess Champion, at the time the youngest ever. At around the same age, he began reading seriously in the social sciences; he preferred philosophy. By 16 he had reached a chess rating of 2350, which today would put him close to the top 100 in the U.S. Shortly thereafter he gave up chess and philosophy for the same reason: little stability and poor benefits.

He’d been reading economics, though. He figured that economists were supposed to publish, and by age 19 he had placed two papers in respected journals. As a PhD candidate at Harvard, he published in the Journal of Political Economy and the American Economic Review. ‘They were weird, strange pieces,’ he says, ‘but still in good journals, top journals. That cemented my view that I could, you know, somehow fit in somewhere.’ I ask him what he was like, what made him doubt he could fit in.

‘I was like I am now.’

‘You’ve always been like that?’

‘Always. Age 3. Whatever.’

‘What did you do at age 3?’

‘Read a lot of books.'”


“Tyler Cowen has read what’s listed in Harold Bloom’s The Western Canon, though not, he concedes, every single last one of the Icelandic sagas. He rereads what you probably haven’t heard of, like Anton Chekhov’s Sakhalin Island. For the Brazil trip, in case he runs out of new books, he has also brought Neal Stephenson’s 1,100-page Cryptonomicon, which he has already read. Fiction slows him down, he says, which makes packing easier. He carries a Kindle but reads paper when he can; he says he’s invested too much time on the rhythm of how the eye tracks the page. Several people have told me the same story about Cowen: They have watched him read, and he scans a page as others might scan a headline.”


Cowen visits Big Think to discuss the free market and morality:


Immigrants arrive at Ellis Island in NYC in 1902.

Annie Lowrey’s Slate piece,Let in the Super-Immigrants!,” argues that America’s quickest path to economic turnaround is to fast-track educated alien workers to citizenship status, favoring the highly skilled over the poor, huddles masses. The opening:

“This winter, George Mason economist Tyler Cowen published The Great Stagnation, an ebook arguing that the United States has exhausted all its easy sources of growth. We have, Cowen says, no more low-hanging fruit: no more cheap frontier land to farm, no more places to build new interstates, no rural homes to electrify, no more girls to send to school and then add to the workforce. From now on, Cowen says, growth will be slower, and transformative innovations like toilets and telephones will be rarer.

Cowen is alarmingly convincing, and The Great Stagnation received a round of queasy applause from the chattering classes—including from this publication. But maybe there remains one last shiny, fat apple hanging right in front of our faces, one last endeavor that would bring us fast, costless, and easy growth. It is immigration reform. The United States can grow faster by stealing the rest of the world’s smart people.

Today, the Obama White House is reaffirming its pledge to do just that.”


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