The a16z Show - a16z Podcast: Technology, Mobility, and the American Dream

Episode Date: March 1, 2017

The irony of our systems working so well -- technological, corporate, and yes, even political -- is that we've become too comfortable: matching to others just like us, producing less, taking fewer risks. But isn't the very point of technology to make our lives more comfortable? Yes... until "we" -- whether an entire class, generation, ethnic group, or country like the U.S. -- become a little too complacent. Or so argues Tyler Cowen in his new book, The Complacent Class: The Self-Defeating Quest for the American Dream. We've even outsourced our mobility to immigrants, observes Cowen (who is also a prolific economics blogger, columnist, and professor at George Mason University and director of the Mercatus Center there). Which is great... until you realize we're also giving up so much of that dynamism ourselves. This complacency affects everything from how economies to corporations to individuals grow, and we discuss how in this episode of the a16z Podcast (with Alex Rampell and Sonal Chokshi). "The general problem is that 'veto points' build up in a lot of systems as they grow larger and more bureaucratic." That's why we have NIMBYism (and a bunch of other such -isms). Corporate cash becomes the new stagnant pool (watch out for those mosquitos!). The stability of real estate becomes a trap. Social media (and even some protest) becomes signaling vs. actually doing something. As for culture: Who defines it? And is it time to bring back the individual quest? Stay Updated:Find a16z on YouTube: YouTubeFind a16z on XFind a16z on LinkedInListen to the a16z Show on SpotifyListen to the a16z Show on Apple PodcastsFollow our host: https://twitter.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Hi everyone. Welcome to the A6 and Z podcast. I'm Sonal and we're here today. Our special guest is Tyler Cohen, who is a professor of economics. How should I describe you? There's so many things I could say about you. I sometimes say I specialize in being a generalist. Oh, I love it. So he specializes in being a generalist. You generalized in being a specialist. That's Alex Rampel, our general partner, who covers fintech and many other things as well. And we're here to talk about Tyler's new book, The Complacent Class. And the subhead is a self-deafel. Feeding quest for the American dream. I think the best way to kind of kick it off, Tyler, is if you could tell us what is the primary thesis of your book. Individual American lives have become better in so many ways. Our lives are safer. We're more comfortable. And we've all sought that. But there's a problem at the collective level. There are more barriers to entry in our economy than ever before. Productivity is slower. We're taking fewer risks. We're more concerned about burrowing inside and matching with people like us and less about doing something grand and external. So in the long run, as our productivity and mobility slows down, at some point, we just

can't pay the bills anymore. So this is a story about why things have gone wrong, but at the same time, it's trying to explain, well, we are the problem, but they've gone wrong precisely because in some ways we've been doing well by ourselves. That's almost counterintuitive. Where would you say technology plays a role in that, in that sort of specifically? And the reason I bring it up is because I've been thinking for a long time about the simplest definition of technology is. Like, can I do it in three words? It's tools for change.

And that is essentially the opposite of any kind of complacency. But yet you argue in your book that technology is actually a driver for some of that complacency, that in fact, some of the very algorithms that we use for matching, for instance,

are helping to create this. A lot of the biggest advances in technology lately have been about our leisure time. They've made us happier, but they're not necessarily generating that much in terms of jobs or in terms of revenue, we've become phenomenally productive, manipulating information in different ways. And this, again, is in contrast to changing the physical world. So a lot of the earlier 20th century,

we built grant structures, we could get around more quickly, and we've lost a lot of interest in doing that. Now we connect to friends more effectively. We trade information. This is great for people who love information, but for people who need really a better life fundamentally in more material terms, they're the group of people that have become less happy. Well, one of the lines in your book that really stood out to me, and I put a question mark with an exclamation point next to it, is we are using the acceleration of information transmission to decelerate changes in our physical world. And I found myself very much disagreeing with that, actually, because we're seeing the exact opposite, that, in fact, you're beginning to see the physical world reshape around these cloud-based tools that are making people move around in different ways, getting in strangers, cars, apartments, houses. Well, I think we're close to agreeing. You said we're beginning to see this effect the physical world.

world. And I think that's right. But if you look at the actual trend for the last 10 or 15 years, it's that you can stay at home and be happy for a week or longer and have everything delivered to you and watch streaming on Netflix and use Spotify and be a couch potato and cocoon and follow your friends through Facebook. Now, I actually don't think those will be the trends for the next 30 years. I feel our physical world is in some way about to break loose and change and will be in a country which is more dynamic, more violent, more chaotic, and you see some of that already in politics. But what we have done is build cocoons for ourselves,

and technology has enabled that. And the fact that most commutes are worse, it simply matters a lot less because you don't have to go there anymore. Actually, I saw a funny poster, and it said, introverts unite in your own respective rooms and your own respective homes. So I don't think that's a bad thing because it may be physically complacent, but you're actually mentally and emotionally more restless than you might be than ever before because of the internet connecting things in unexpected ways. And this can play out from a farmer in India who now sees a whole different life and the ability to connect with someone in California through his phone where he could never have done that before.

And that's the exact opposite of complacency in my view. I think it's a very good deal for well-off people, educated people in the United States. And it's a great deal for the previously poor people inside China in India. Yeah. But most people still live in the physical world, and they're shaped by how the physical world operates. And there's a dynamism to place and culture and personal connections and the happenstance of everyday life that fundamentally shapes what kind of country you have, what kind of culture you have. And we've dropped the ball on that because the elites are so entranced by their new control over information. And they see a lot of poverty ending elsewhere in the world, wonderful developments.

But again, you see in recent political developments, something's gone wrong and we've forgotten about the big middle chunk of this country. So in your book, you talk about the three different subtypes of complacency or complacent classes. There was the privileged group. Yes. And I kind of think of them as just being much more rooted in the status quo. You see, if you are privileged and that is part of the status quo, anything that

repudiates that is bad, you have those that are digging in and those that are getting stuck. Maybe you describe that a little bit more because I thought. I thought that was in, like when I think about this election, I really looked at it as the people that wanted the status quo voted for the status quo candidate. And no matter what Donald Trump did, like his his famous quote of our exhortation, I could shoot somebody on Fifth Avenue and nobody would care. It probably was accurate for people that weren't voting for him, but we're simply repudiating the status quo. So how do you think about that? Because I don't think of that as complacency.

I think we're disguising our own complacencies in a number of different ways. So if you take the educated elites who mostly voted against Trump. They're actually the people most likely to complain about inequality or complain about global injustice or to be quote-unquote doing something. But a lot of that is a kind of placebo to assure themselves that they're doing something. And if you compare today to previous historical errors, I think we're going through a kind of protest theater in many ways. People do things on Facebook, Twitter. They think that's effective. I suspect it's not. It's part to prove it's not. Maybe protest is really actually another form of complacency to your point. Let's dive for a couple of minutes on social media because there's been three waves of discussion around

social media in sort of the political sphere. One social media of, you know, driving things like the Arab Spring. Then you had, well, no, it was great for the social and the group and some of the organizing and sure, reporting and sharing, but not necessarily in actually affecting the actual change. And there was a lot of discussion and research around that. And now recently in this interesting, maybe third or fourth wave, there's this discussion of how social media has literally imploded any sense of centralized information. You know, and this is not just about fake news and where credibility resides and what these things mean. Does that reinforce the complacent class or does it actually expose people? I mean, I guess one of the things I'm trying to get at is sort of is matching the same

thing as being in a filter bubble. See, I don't even think we know yet that social media are good for us. So if you go back a few decades, people have always wanted to establish their identities. And before you had a Facebook page or whatever else you might have used, you did it more by how you dressed, especially your taste in music. You made various kinds of bold statements, some of which are ridiculous in retrospect, but they gave the culture a kind of dynamism. And music was incredibly important in people's lives, the books you read. There's a reason Myspace was the first semi-successful social network. So there was an implicit cross-subsidy to culture in the physical sense. And now that you can tell people who you are and maintain your friendships through social media, you don't need books and music in the same way.

You may be interested in them, but they don't have cultural potency anymore. And there's some big pluses and minuses. But I think we're using social media to be complacent. Well, oh, this is who I am. And my friends, they're great. And I'm in touch with them every day. It's enough to signal not to actually do. Correct.

It sounds so good. It feels so good. And as a rule of thumb, and there's something that feels really good, that's when we need to be especially suspicious. I think it also begets a form of cowardice and callousness. So the comedian Louis C.K., I forgot which late night show he was on, but I thought this was very, it was very insightful. He was saying he does not like his children using phones, and it wasn't the traditional reason of it causes cancer. It doesn't. It's not ionizing radiation. It wasn't any of the silly things. He said that normally, when you're 10 and you're trying to learn empathy, if you go up to somebody and say, like,

in your school and say you're fad and ugly, I don't like you, that person will start crying. you realize, oh, when I say these terrible things, like look at the effect that it has on this human, whereas when you do it via text message, you say, you're fat and ugly, ha, ha, ha, ha, ha. Or email. Or email. Or Twitter. And it's this kind of asymmetry or not even asymmetry. It's a one-way form of communication, even though it is, of course, I mean, it's an asynchronous. It's asynchronous. And the emotional response is often muted. I mean, there's the old adage of, like, never argue with somebody on the intranet. Never read the comments, et cetera. As a corollary of that adage.

My other famous cartoon on XKCD is there's somebody saying like, hey, honey, hold on, I'm going to come back to bed, but somebody is wrong on the internet. Totally. I love that cartoon. And I cite that one often. But, you know, at least in real life, you have to engage with people. And it's very, very hard to just say, like, I mean, the ad hominid attacks that go on just incessantly on the internet. You know, it's just, it's, you really lose a lot of faith in humanity. If you start reading the comments on YouTube or on Facebook or anywhere else, because you don't really worry about, you just kind of, you ship them into the void. And that's often problematic. The stability of our politics might rely on a certain kind of hypocrisy. You pretend the other people don't dislike you so much. But now we see that they do. Yeah.

And polarization has gone up. And my other worry with social media, I like the idea of a society based on the notion of an individual quest, to find the perfect movie or to track down a used book you've been looking for. And all of a sudden, our old quests are gone. It's very easy to match to what you want. And that's wonderful. It's fulfilling. But at the same time, there's an emptiness where that metaphor used to be. And we need to redefine individual quest as something significant for an age of social media. And I don't think we've done that yet. And that too has taken away from dynamism. This goes to something that I feel very strongly about and have long desired, which is there is no perfect recommendation algorithm. And one of the favorite things that used to do is a child, as you go to the library, you'd like, you know, browse book racks and find something.

Now Amazon gives me recommendations, and they're just too hyper-optimized and specific. There's not a sense of serendipity and discovery on the Internet. Although I'll take the other side of that. If you go back to the biggest advances in communication, besides, you know, whoever came up with graphics on cave walls during the caveman era, you know, you have the printing press. and that allowed mass dissemination and mass copying, but still there was a centralized control. You actually had to own a printing press. You had to be able to operate it. Right. There's a fiction, a barrier to entry. And then, you know, the nostalgia for the small bookstore, well, who was actually selecting the books that went in the bookstore?

It was limited by space and by dimensionality. Yeah, the limitation of the bookshelf. Now, the nice thing is that anybody can become, yes, the fact that anybody can become a published author within seconds means that you can have a proliferation of fake news. The fact that you have 9,000 channels means that you're not going to have like the most watch show on American TV, I think was the finale of MASH. What was that? A hundred million people tuned into that. Like, when will that ever happen again? I mean, maybe it's the Super Bowl, but even that is kind of dropping.

Like, you have much less centralization happening there. Yes, you do have things like the rule of the algorithm is now going to get to show you. But at least there's more choice that's available. It's a long tail. It's kind of like there was no cabal organizing, which, hundred books were really there, but there kind of was. It's like an elite of editors deciding. Yeah.

You will see these 10 books on your bookshelf. I mean, that's true. And now, you know, Amazon, their first collaborative filtering algorithm was called, it used cosine similarity. So it used actual math to figure out people that like this, actually like that. And it was much more democratized in terms of the set of information that was available to you. Yet the flip side of that, when you think about the algorithms say on Facebook, like I

used to hate this notion that what my friends read on Facebook is what I'm going to want to read. It's absolutely freaking not true. I'm far more interested in what strangers who have similar interests as I do want to read. And so what's interesting is that you do have this phenomenon where because of social media and some of these matching algorithms, you have people organizing in different ways that you could physically, that you can never do before. So I'd love to hear your guys's thoughts on that, especially in the context of one of the themes you talk about in your book, Tyler, about segregation. And this is like the reverse before it would be like a close enclave. and now we're looking at exposure across communities.

If we think of 1990, at that time, I feel information space was far too underdeveloped relative to physical space. If we think of 2017, I worry that information space and what you can do with information has outraced the physical world. The physical world is much more segregated by income, especially here in the Bay Area. Yeah, that's very true. But in many parts of America. So I think we need some intermediate point, and to go back a bit, one of my recent vows, is that when I'm in a city and I'm looking for restaurants, I now refuse to use the internet.

And I just walk around and I try to find something. This led me to Banana Thai restaurant in downtown San Francisco, by the way, which is very good. But at the same time, if one is doing that, you need to realize, partly that works because some other people are, say, using Yelp to monitor quality. So what we can do to get to some healthier intermediate point where you get away from this world where rents are so high in the productive cities and there's this extreme segregation by income,

I do think we've gone too far toward information, which is ultimately a centralizing force. You have Google and Facebook and Amazon, companies I love. I'm not anti-corporate in this way, but I want to see more secession from those platforms, and that's very hard to manage precisely because they work so well. On a related note, we often hear about nimbism

in our own backyard, not in my backyard, and there's a lot of tension between availability of supply of housing and demand and people in San Francisco not wanting new people to come into their neighborhoods. But in your book, you say, like NIMBY's just one specific physical manifestation of a broader mentality of stasis.

There's also NIMI, which is not in my election year. Nimtu, not in my term of office. Very relevant today on the day of the inauguration. Lulu, locally undesirable land use. Nope, not on planet Earth. Cave. Citizens against virtually everything. everything. And then banana. Build absolutely nothing anywhere near anything. Is that real stuff?

Did you make that up? It's real stuff. The general problem is veto points build up in a lot of systems. And you see this also in companies as they grow larger and more bureaucratized. It's harder for them to be dynamic. Yeah. That's a really great point to just pause on for a second because in this podcast, we're not just talking about politics. It actually applies to big corporate culture too. Even at fairly small levels, like 50 or 100 employees, you observe this setting in, depending on the activity. The United States has gotten to the point where you could say our Constitution, in the broad sense of that word, it's been gamed. And then you've had some political figures come in, not just to this country, but a number of other countries who have figured out how to crack that game. And the forces that might have responded have actually been too paralyzed or too ineffective to mount an effective response.

So we're seeing those highly effective structures crumble, and they're crumbling precisely because they're effective. Can you give me an example? So you look at the United Kingdom. forces that wanted Brexit. They mounted a much more effective campaign. And the pro-remain side, which I was sympathetic with, they had very poor arguments in response. They were less well-coordinated. They were less willing to tell untruths. And they lost pretty badly. And they were shocked by that loss. So we're seeing a whole bunch of systems precisely because they make people pretty happy and entrench them. And we all love certain kinds of tenure and security in our lives. Then we

stick there and we become less able to respond. And then that's precisely when we're the most vulnerable is when we're feeling good about things. So in this country, people say, well, we had Obama, I loved him, now we have Trump. How can that be? Part of the message of my book, whatever you might think of Obama Trump, that's not counterintuitive. That's actually the way things can work. Well, there's a certain asymmetry to this as well. One of the descriptions of 9-11 was that was a $10,000 operation. It was obviously horrific, but it was a few first-class plane tickets. It's like guerrilla warfare disproportionate. And how much money has the United States spent in response? And this was not lost on Osama bin Laden. This is how the Soviet Union was partially bankrupted in the

Afghani war, which is the amount of money that the incumbents, it's almost like a parallel to entropy, where the amount that you have to, to take something down is much, it requires much less, including on the ethical line as well, which is like, all right, if you want to, you want, to maintain the status quo and the status quo is rooted in, call it telling the truth, you're not willing, and it turns out that telling the truth is actually not as an effective, it's not as effective in terms of persuading the populace as telling non-truths. There is an asymmetry in terms of how quickly you can take something down as opposed to building it up. It's super relevant. The example that just flitted through my head as both of you were talking

is what happens with anti-vaxxers and people who are pro-vaccination, a regular, you know, entrenched complacent in their belief that, oh, vaccination is a very accepted thing. We're not going to go back to an era where people question the need to do vaccinations. And then you look at these beautiful graphics like Gilad Lothan and my friend Renee DeResta did an amazing visualization and analysis of it. And one of the most fascinating things is that the group that's not complacent about their status quo, anti-vaxxers, is more organized, more coordinated. Well, they care more. They care more. That's the problem. That's the asymmetry. It doesn't matter who's right or who's wrong, it matters who cares more.

I mean, if anything, that's the heuristic for figuring out who's going to win an election. My favorite movie is probably the godfather. Me too. I love that movie. They're both phenomenal. I love the godfather. So I think this was part two where Michael goes to Cuba. Yeah, this is part two.

That is part two. Michael goes to Cuba. To meet Hyman Roth. He suddenly becomes very, very concerned that this whole, like, that Batista will be overthrown because he sees a guy blow himself up. It was actually like an act of terrorism. One of the rebels blew himself up and took a police captain with him. And he said, like, you see that?

Like, they actually care. I mean, you can learn every business lesson as far as I'm concerned from the godfather. But this is actually why he pulls out of the whole Cuban thing. I mean, that and he thought Hyman Roth was trying to kill him. But take that aside, the real issue was that the rebels cared more because if you are in the entrenched deletes, I mean, like, you don't want to lose what you have. If you have nothing to lose, I mean, this is one of the problems. like if you look at the troubles in the UK in Ireland, if you look at the Israeli-Palestinian conflict. Here in the U.S. when you don't have any opportunity for growth or change.

If you have a strong economic base, I mean, there are counter examples to this. But if you have nothing to lose and everything to gain, then you adopt a different mentality in a different way of acting out. You probably are less complacent than people that really want to maintain the status quo. But my numerous trips to India and China over the last 10, 15 years, were a big influence behind this book, because you visit India and China, and in most parts,

you see a new country every three to five years. Americans typically contrasts their own nation with Western Europe. That's the tradition. And then America feels so dynamic because Western Europe is even more sluggish and stagnant. And that's a big mistake. The notion that you should stop being Toghville,

don't compare yourself to Europe so much. The action is in India and China. View this country through that lens, and you get a very different vision. you then see us as much more complacent. I totally agree. We had Joel Muk here on this podcast, and when he described the culture and the Republic of Letters

and all these factors that contributed to the Industrial Revolution, the thought that kept going through my head over and over and over again, is like, this is China, this is China, this is China, this is not the U.S. anymore. We're not this group that's ambitious and hungry in the same way. One of the questions you asking your book is, like, what does a dynamic, non-complacent society look like? So are you saying it is like an Indiana China because they have so much change physically happening? Because some people would also argue the opposite in the case of China where you have this fake inflation of building to inflate manufacturing, you know, the appearance of manufacturing.

I would also argue that necessity with the right economic system in place, necessity breeds ambition. And, you know, why be ambitious if you have everything provided for you and you don't need to do anything? And there is the socialist form of that. There is the, you know, great, great, great granddaddy was a billionaire and left me lots of money. And then nobody in that whole generation decides to work again. If you look at the gentrified glasses of Western Europe, I mean, why work, why be ambitious at all? Reading Jane Austen novels, I was always shocked that people could literally hang out all day living off like there. It's very hard to have ambition for a certain goal if all of your needs are taken care of,

either under a highly socialist system, which might be the problem with stagnation in parts of Europe, or under a gentrified system where my family has had billions of dollars because we're the do-whatever's in France or in England, where we have owned all of this land and we are effectively just rent-takers without actually needing to build anything or do anything. That applies to this phenomenon that's always fascinating me about immigrants, where the first generation and second and third generation of immigrants are always agitating against this complacency. But then that effect has been documented very well, disappears after the third generation for that very reason. So I'm Jewish. And, you know, the first immigrant communities that came in, you know,

after the pogroms in Russia, they were very, very poor. Their children did well and became doctor. Like it was like, you know, be a doctor. Like at the time, it was, you know, doctor, lawyer, or if you're a total failure, be an investment banker or something like that. And these children were overworked, not necessarily in a bad way. This is, again, ambition. And necessity bred this ambition, and it was also a love of education. And then there was this reaction of it's like, my parents made me work too hard, and now I'm wealthy, and I don't want to see my kids suffer like I did. I'm not going to push them through this over-exertion. And then it over-rotates. And then if you have too much wealth, this is the difference between wealth and income. If you have no income,

but lots of wealth, you can breed complacency from a lack of... I mean, I'm using complacency in a different form than you are, but I'm using it in terms of like just no ambition whatsoever. Well, the phrase in the book, which I think describes as perfectly at both an individual, generational, company, political, geographic level, is a sense of urgency. That is a perfect way of describing it. If you look at inequality of wealth rather than income,

a lot of Western Europe has higher inequality than America does. We think of this as the country of great inequality, But that's income. In terms of wealth, it's a very mixed comparison. I worry about millennials as a generation. I think they will do fine because there are many of them inheriting stocks of wealth. But the generation after them may not have that same buffer. And so much of economics, income is easier to measure than wealth. So papers are written about income. But wealth so often is the more important variable. That's a stock. And it's much harder to measure. But I think that drives the world more than economists often like to admit. a really interesting. It's also interesting, like all of tax policy, like if you really want to invigorate the economy, you have these stagnant pools. And you don't want pools of anything to be stagnant. I mean, if it's water outside after rain, mosquitoes grow there, you want to have movement in the economy. You want to have movement of actual like assets and wealth. And that's one of the problems. Corporate cash is the new stagnant pool. Corporate cash is the new stagnant pool.

The problem is that even if you get it moving again, like repatriation, if I could design any ETF right now going to this administration, it would be a companies that have the largest percentage of offshore cash relative to their current market cap. The problem is that if you don't have something else that you're willing to build or wanting to build, again, it's almost a lack of ambition at the corporate level. I mean, also like just a lack of risk taking because if you have somebody that has no ownership and it kind of is suffering from an agency problem within their own corporation, you want to get the stock price up and you want to optimize for the next five-year period where your own compensation benefits, but you're going to have two trillion dollars that

comes back to the U.S. from the Cisco's and GEs and predominantly apples of the world. That's right now offshore. It's already been taxed offshore. It comes back here, but what do you do with it? Does Apple decide to go build its own car or a shuttle to Mars? Or give back dividends to its stockholders? Exactly. It's probably going to go to buybacks, M&A, and dividends. A lot of that is just kind of like reshuffling as opposed to actually building anything new. But I think we're headed back toward more dynamism. In the U.S. In the U.S.

And we will hate it because it will disrupt us. If you look at the great age of American dynamism, late 19th, early 20th century, it's a terrible, horrible time in some ways with great suffering. And the technologies we invent, different parties use against each other, and we may be headed for a new version of that. But I think dynamism and unpleasantness so often come together.

So America will become dynamic again. Everyone's all excited, like, we're going to get 4% growth stacked on top of what we have now, but that's not how it works. Is that what you mean when you describe in your book the Great Reset? That's the Great Reset, that the old way at some point you cannot continue with, and you do get new dynamism and new technologies that really fundamentally change things. And in the very long run, are great for your country, but you have significant numbers of decades where there's really also a higher level of suffering and uncertainty. Is it just not the inevitable cyclical progression that happens throughout history, or is there something different happening right now? No, it is the cyclical progression, but we ceased believing in that. So in America, you have the progressive movement, which has its left-wing form, but on the right, there's its classical liberal, libertarian form, where you think things will just keep on getting better and markets will liberalize and we'll spend more on social welfare and poverty will be alleviated and will all be freer.

And we've had that vision since, I think, sometime in the 1960s, at least educated classes. And we're now learning that was a kind of lie. And we told it to ourselves to make ourselves feel better. But there's no guarantee we can deliver on most of it. And we're seeing a lot of backward movements, including on gender equality. It's not clear that's moving forward anymore. Oh, I would agree with that. Racial tolerance, a very mixed picture, hard to assess overall, but it's not the standard progressive story. my theory of this all become professionalized. It's just become more domesticated and appearing more acceptable, but in reality, it's like 10 times worse underneath the surface.

The quality theater, just like we have protest theater. Yeah, you're right. This is the age of equality theater. But the ancient Greeks, also a lot in Indian philosophy, people understand cyclicality very well. Oh, yeah. That's the normal belief in human history. We were just born at a period of time where we did basically see just decades of progress, Soviet Union Falls, China reforms, India gets wealthier.

So you over extrapolate and you think we're just going to get more and more of that. And that's the biggest intellectual mistake we've probably made. There's a thought experiment, which is what if a newspaper were published once every hundred years? The problem with the current publishing rate of news, it used to be twice a day, back when you had evening papers. Yeah. Then it went to once a day. There was cable news. And now there's like second by second Twitter.

Right now, when you're looking at the distance between two points on this curve, you kind of overoptimized for bad. Like everything is bad. You don't say, like if you had a hundred year paper comes out in 2017, oh, that's so interesting. Polio wiped out. That would be a big one. Infant mortality down from 25% to 4% worldwide. I mean, if you look at a long enough time horizon, how old did the average human live to be 200 years ago versus now?

Now, these things are not necessarily better. I mean, these are all heuristics for looking at improvement in human lives and decreases in human suffering. But over a long enough time horizon, and I agree, like there's a certain cyclical. and these things don't monotonically increase. Like there's not monotonic human improvement, but over a long enough time horizon, it seems like there have been just almost objective improvements across every one of these dimensions.

On any 50 to 60 year time horizon, I'm quite optimistic about almost the whole world, but I think on 20 to 30 year time horizons, we've significantly underrated the force of pessimism. That's fascinating. The frequency of sampling and instrumentation makes you over-optimized for the bad, but when on a longer time scale and fewer moments of instrumentation,

you optimize for the good. I don't think you optimize. I think that's the only story that's worth telling. Yeah. I mean, the Brangeline breakup wouldn't make the 100-year paper. I mean, maybe 9-11 would. It would be hard to have a 100-year history book that would not include the many wars that derive from that.

But compare that to World War II, right? I mean, compare that to World War I, a lot of other calamities that really hit the entire. planet, those would probably be the ones that would be optimized for on the bad side. But most of the things are actually objectively good. And they are driven by technology. Talking about this movement, this dynamism, this creation and building. How does this come then to this question of measuring the dynamism? Because one of the biggest debates that plays out all the time, especially in the technology world, how does it come to measuring the information economy in GDP? Productivity growth is

very hard to measure. But by the best measures we have, it's considerably lower today than it was in the 1950s or 60s, certainly much lower than it was in the 1920s. Some people say, well, information technology is a kind of invisible form of productivity, but even when we try to measure that, it doesn't seem to close any more than a third of the gap. Keep in mind, a lot of information technology is bought and sold, so you buy an iPhone. That shows up as a transaction. You buy broadband cable. You see an advertisement on Facebook. You buy something. That counts in GDP. So the truly unpriced gains from information technology I don't think are nearly big enough to close the gap.

And there's been a real decline in productivity, a real decline in wage growth. And that's the number one economic dilemma in this country is most people feeling they're not making advances, their children won't be better off than they are, may even be worse off. What do you do about that? You can't just wake up, well, I'll invent something today.

You need long, slow building processes that get you out of it One of the things that we talk about here is that the last 10 or 15 years, a lot of the productivity and information enhancements have been consumer. Is Facebook a boon for workplace productivity? Because a lot of these things, actually, they're great for consumers in terms of wasting time. And wasting time is almost antithetical to doing things at work. Because actually, I remember my company, Trial Pay, we were a payment company predominantly doing payments for digital goods and games. You know when people really started picking up and paying for digital goods?

When? Monday morning at 9 a.m. 10 a. Why would that be? It wasn't the weekend. The weekend, people want to go outside. They can do fun things. If you're trapped in office space, like literal office space, and you have nothing to do, or maybe you do have something to do and you want a procrastination tool.

So there's that element. Reading my blog is the same, by the way. Monday morning, 9.30 a.m. Oh, my goodness. You get like a big hike. But that is actually a productivity killer. And like there are two ways of really approaching this. you could say, all right, we're going to clamp down and prevent you from looking at everything

and actually be authoritarian in terms of what you do at work. But then there's too much competition and probably you would lose the best workers there. So that would be very hard to organize. But the glass-half full way of looking at it is that actually we're poised for corporate productivity. Like a lot of these tools, like the Facebooks, the Twitter, is a lot of the wealth generation that's happened on the technology side has really been directed towards consumers. I would actually argue that Slack is one of many that will help,

corporate improvements. I mean, the other is that, I mean, you're right, it's very, very hard to measure some of these things. And GDP fails to capture the fact that when Encyclopedia Britannica and its ilk went bankrupt, that was probably decreasing GDP. That was replaced with Wikipedia, which had no effect on GDP whatsoever, at least not directly measurable. And maybe you had a new generation of people that became nuclear physicists and are working on a nuclear reactor right now because of something they read on Wikipedia that they, albeit would not have been able to do if they had to spend $2,000 for Incyclopedia Britannica. So on this note, Tyler, in the book, you make the argument,

because one of the things about the Wikipedia and GDP argument, Mukiri made it on the podcast, we've talked about this in numerous forums, that free is actually the wrong argument and that it's things are really not free, which I found very counterintuitive when I saw that you wrote that. I was like, what? I don't understand that.

Well, the real opportunity costs are often those of time and attention, and people spend time, as you say, on Facebook at work. And there is a benefit to that, Because keep in mind, they used to go to the water cooler and trade jokes. And this may be better. It may actually help you keep attention or get more done. It may keep you in your office in some ways. And clearly, the workspace has invaded your weekend and evenings in ways that were not previously

the case because of information technology. So it's a complex trade-off. But I think with many new technologies in human history, the first 20, 30 years, they don't deliver what they promise. And then there's a huge explosive takeoff precisely when everyone's all disillusioned. So I think we're actually on the verge of a new tremendous productivity breakthrough. Unlike a lot of people in the valley, I don't think it's come yet. And I think we've still been in stagnation.

Yeah. And we're waiting, waiting, waiting. And when it arrives, we'll actually be upset because it will destabilize our cocoons. And the other note, going back to this theme of mobility and portability. And there's so many forms that we talk about this, both in terms of physical movement. There's portability of benefits, like with Affordable Care Act slash Obamacare and the decoupling of having to stay in your job in order to get benefits. there's portability in the notion of using your mobile phone as your home essentially in your book, Tyler. You wrote this line that Americans are outsourcing their mobility and capacity for economic adjustment.

And I thought that was so interesting. We move across state lines much less than we used to compared to the post-war era. And one reason for that is just most parts of the country, economically speaking, they're more like each other than they used to be. So the idea that you move from Mississippi to Detroit take a job in the autumn of the era, factory, it's mostly gone. But there's one group of people, in particular, Latino immigrants, who move around a tremendous amount. And if there's an economic shock, whose labor adjusts, well, someone has to leave the declining place and move to the growing place. It's Latino immigrants. We've outsourced mobility and that kind of dynamism to that group and also Asian immigrants

to some extent. Yeah. But that's a way in which we're relying on immigrants for our dynamism, which it's great we have immigrants, but it's also dangerous that we give. outsourcing it for myself. Well, it's, it kind of goes in parallel with lack of ambition, I mean, and complacency from the, it's not even the elites. It's just people that have just become acclimated. One way of becoming acclimated is if you become a homeowner, both for tax policy reasons that are backwards, and for just personal reasons, you have less ambition and more complacency in terms of uprooting yourself and your family. I mean, that was actually kind of related to the themes even of our recent podcast on point.

and the idea of not having to have necessarily all your wealth tied up into your home, which, by the way, is another thing you talk about in your book, this fact that because people have so much wealth tied up in their homes, they're not buying cars in the same way. They're not, you know, moving out of their homes. It's an over-leverage. Yes. Right?

And like that's the thing, like, if anything, like new immigrants have no leverage, and there's good and bad to that. But the upside is the mobility, whereas if you have somebody that's leveraged five to one, which is the average homeowner. Like that's a weapon of mass destruction that is keeping them in a certain state. Earlier we were talking about this tension between the printing press

and the internet. And one of the themes in your book you talk about is how fewer Americans are directly involved in innovation. Yes. We talk a lot about how the tools of creation in many ways are becoming democratized in a way that they never were before.

Previously, you had to have a printing press or access to a printing press. Now you can literally, anybody can write a medium post or post online or do certain things. We talk about code, which is not materially limited in any way. Instagram. I mean, I think of that as a democratizing tool for creators who are not fancy photographers.

So tell me what you mean when you say fewer Americans are directly involved in innovation. Here, clearly, more and more people are involved in innovation. But if you think of the economy as a whole, most jobs are service sector jobs. And as best we can tell, again, it's hard to measure. But productivity growth in those sectors is about zero. So most people are working in sectors where they're used to zero productivity growth, high inefficiency, large parts of education in health care and government. Afflicted by Bommel's disease.

Yes, and they can have very backward information technology, or they'll invest in a lot of IT, but maybe not really use it for very much. And again, I do think eventually that will change, but not tomorrow and not next year. And a lot of the real productivity historically always has been in manufacturing. Right. And that's 7 to 8% of the workforce now. It used to be over 30%. So most people are used to a life where in their sector, they see new software coming in, but they don't actually see huge productivity gains. And that contributes to this static sense of the world that, again, you just don't see in India or China where the whole country changes every five years. Tyler, thank you for joining the A6 and Z podcast. My pleasure.

It's been an honor.