Intro. [Recording date: October 30, 2023.]
Russ Roberts: Today is October 30th, 2023 and my guest is Tyler Cowen. This is Tyler's 18th appearance on the program. He was last here in May of 2023, talking about artificial intelligence. Our topic for today is his latest book, GOAT: Who is the Greatest Economist of all Time, and Why Does it Matter?
I want to let listeners listening with children know that this may contain adult themes.
Tyler, welcome back to EconTalk.
Tyler Cowen: Happy to be here, Russ. Thank you.
Russ Roberts: Your book is available online without charge. It is stunningly unlike anything I've read by you before. It is wide-ranging in a way that is different from your other books. All of your books are wide-ranging; you're a wide-ranging person. But this is different. It is a tour to force in its breadth and depth. It's quite an achievement. And, on top of that, it's embedded inside a ChatGPT-4 [Chat Generative Pre-trained Transformer] option online with other options to come, so you can query the book in a different way than, say, searching it if you had the text. Tyler, how long did it take you to write this book and how did you come to write it?
Tyler Cowen: I would say it took me 61 years to write the book, being 61 years old, but its genesis--
Russ Roberts: felt that way--
Tyler Cowen: its genesis is during the time of the pandemic. At the beginning of the pandemic, I felt I needed a project to keep me busy and have something to do. And most book projects or other projects, you just couldn't do. You couldn't travel; you may not have access to the library. So I thought, 'What's something I can write based on my own library, many things I already know, things I can access online?' And, I thought, 'Ah, a book on the History of Economic Thought.'
So, I had two initial models. One was Heilbroner's The Worldly Economists, and the other was that big Bill Simmons' book about NBA [National Basketball Association] players, Book of Basketball. And this is a book about appreciation. So, the goal is to teach people how to appreciate other people. And we're doing this with economists. And that's how it all started.
Russ Roberts: Well, I loved almost every page of it. And it's not a short book. My first thought, though, when you told me about it or when I got to it was: 'History of Economic Thought? Nobody cares about that.'
Now, I enjoyed every page. But, why did you think to write a book about the History of Economic Thought? Nobody cares about it.
Tyler Cowen: Well, also during the pandemic--and this was early on--I didn't know when things would reopen, when one could hope to get a publishing contract, what the world would be looking like. So I also thought, 'What's a topic that really can never go obsolete?' And then, I thought, 'Well, it has to be about dead people. It has to be about the past.' That, again, led me to History of Economic Thought, which I have loved my whole life.
But, I think people do care about it.
If you look at the fairly recent Zachary Carter book about Keynes, that sold quite well.
So, I'm not sure the world is so indifferent. The new Jennifer Burns book about Milton Friedman is excellent. I think that will do very well. I know you chatted with her. I think there's a future for the past.
Russ Roberts: And, you bring it to life in a way that is unlike anyone else has ever done. It is full of economics. It is full of judgments, pro and con, of the people you write about. And, it's also highly entertaining because it's about Tyler. There's a lot of you running through the book in all kinds of ways.
You have six finalists, three from the 20th century. That would be Milton Friedman, John Maynard Keynes, and F.A. Hayek--the three people I think many people would list as the greatest economists of the 20th century. There might be one or two more.
And, then, you have three from long ago. Two of them quite surprising, I would say: Malthus and Mill. One, not surprising, that's Adam Smith.
And then you have five semi-finalists who did not make the final cut, who you write about briefly in a single chapter: Alfred Marshall, Paul Samuelson, Kenneth Arrow, Gary Becker, and Joseph Schumpeter.
So, let's start with the criteria, which are inherently subjective. What were your criteria for determining the greatest of all time?
Tyler Cowen: To be GOAT [Greatest Of All Time] for Economics, you have to have breadth and depth; you have to have been not too wrong; you have to have been of historical import. Ideally, you should have done both Micro and Macro [Microeconomics and Macroeconomics] and have done both theory and some form of empirical work. Those are the core standards.
Now, those are pretty tough. If someone doesn't meet one of them, I'm inclined to think, 'Well, they might be one of the very greatest economists, but they can't actually be GOAT.' So, I'm setting out and seeing who are the individuals who might fit into that box. And I'm doing this as a fan. Right? I'm not writing as an academic. That's one of the innovations of the book, to do a history of economic thought book as an actual fan.
Russ Roberts: Yeah, I love that part. And that may explain why Marx is not on the list. Many people would call Marx the greatest economist of all time. I wouldn't. I wouldn't think you would, but he doesn't even make the semifinals. What's wrong with Marx? Why is he not on the list?
Tyler Cowen: Well, for one thing, I think he fails on the 'you can't be wrong about too many things' standard. But there's also another story behind this. It had been my plan--and maybe I'll still do this--to write a separate smaller monograph about Marx only. So, if I'm going to do that, I shouldn't put him in this book. But I think he's too wrong on some of the biggest issues to really hold a candle to Adam Smith. I just can't see, at the end of the day, Marx beating Smith when Smith himself, not to mention Schumpeter and others, had in fact a quite dynamic understanding of how capitalism worked and was perceptive on imperialism.
Russ Roberts: He might make the Round of 64 on a play end game, but he's not going to get to the Monday night dance.
Tyler Cowen: He deserves some other reward. Probably you know this recent Phil Magness piece in the JPE [Journal of Political Economy]: it showed that until 1917 and the Bolshevik Revolution, Marx was not that widely cited. So, on his own steam, he didn't make it onto the short short-list.
Russ Roberts: Now, we could spend, of course, an entire program on any one of these 11 people. They're all interesting. You have interesting things to say about them personally and about their work. I want to take a couple of the semi-finalists, dispose of them fairly quickly, and then we'll move on to the finalists.
Paul Samuelson doesn't make the finalist list? How is that possible? Here's a man--his academic oevres--his academic articles--are extraordinary. He wrote in enormously wide ranging areas of the field. He was a public communicator in Newsweek. He spawned in many ways, almost single handedly. He built the MIT [Massachusetts Institute of Technology] graduate program. Why does he not make the cut?
Tyler Cowen: Well, he's in the Top 10. Right? That is no shame. I think two of Samuelson's pieces--the one on basically random walk in securities prices and his overlapping generations model--those are two of the very best articles ever written. That counts for a great deal.
But, that said, if you ask the question, 'How well did he understand actual economies?' I'm very much put off by the various editions of his textbook that basically claimed, 'Soviet economic growth was fine. They were converging on American standards of living. This kind of system can work.' For me, that's a big black mark.
But, also, if you look at Samuelson writing on, say, wage and price controls or the Phillips Curve, I think it's mostly just wrong; and it's wrong on some pretty basic metrics that, say, Adam Smith or John Stuart Mill would have understood. So, if on such straightforward, fairly simple issues like price controls, central planning and economic growth--if Samuelson is getting it wrong, in my view, he can't be GOAT.
Russ Roberts: Is that your personal eclectic view, given your own views of, say, price controls or the Soviet system? Surely, other people would just call those either blind spots or a small error. Do your own views here come into play, you think?
Tyler Cowen: Oh, of course, but my own views are what I bring to the book. And there is a history since Samuelson wrote those different comments. I think most economists--they don't like to admit or emphasize that Samuelson was quite wrong, but essentially they've arrived at that conclusion.
Samuelson also--again, this is bringing in my subjective judgments--but there is a lot of evidence he wasn't nice to other people. This book has only been out--I don't know, what, less than two weeks? But, two different historians of thought have written me--without my prompting them--and saying, 'Oh, well, things I've seen in the archives, they really support what you're saying.' Samuelson just wasn't very nice to a lot of other people or economists and, frankly, I'm going to count that. So, Top 10, yes.
Was he in some ways the sharpest mind of all the economists? I think he and Friedman would vie for that contention. Samuelson would be in the running there. In terms of both breadth and depth, he's not making contributions to broader social theory and, again, he's just not going to win.
Russ Roberts: The other thing to mention, of course: He is a pivotal person in the evolution of the discipline. The 1948 Foundations of Economic Analysis had a big impact on the field or maybe it was inevitable, but that doesn't float your boat.
Tyler Cowen: I don't think it's close to Samuelson's greatest achievement. I would look more at, say, the articles on public goods; again, what he did in finance. I think the Foundations book has gone actually ignored over time. The kind of mathematics he put forward is not what people do. For a long time, that was an overrated book. Now, it's more or less actually forgotten. Which is not to take away from his other contributions.
Russ Roberts: I want to just say one thing in general that you don't speculate much on. Which is, when you read a book like this, you're forced to consider the fleeting nature of fame. I think about Chuck Klosterman's book, who was interviewed here, But What If We're Wrong? And, one of the things he talks about in there is how few people of any one era are remembered. It's very possible that none--none--of the five semifinalists here will be remembered in 150 or 200 years. And of the six finalists, Adam Smith, I feel pretty confident about, but it could be that even people we think of as highly influential and important--Keynes, Friedman--they may not be remembered, either. Any thoughts?
Tyler Cowen: My six finalists, I think, will all be remembered and that's one reason why I chose them.
So, Malthus, whatever you think of the doctrine, is connected to one key idea that I feel will never go away. Environmental economics will continue to be an issue of population; whether it's growing too fast or shrinking too rapidly will be an issue. We have the adjective 'Malthusian,' which shows up in Google searches a lot. People misuse it all the time.
Mill is connected with liberalism, ideas of liberty, utilitarianism. He may lose ground the most over time. But Friedman will be connected with the fall of Communism in reforms of the 1980s and 1990s. Keynes has the word 'Keynesian'--fiscal policy macro. Adam Smith is Adam Smith. Hayek, the most preeminent Austrian economist.
So those, I think, are six--for the most part, they'll survive. I'm not sure anyone else will, including, say, Gary Becker and Kenneth Arrow.
Russ Roberts: I just want to say one thing in defense of Becker. Of course, I have a personal connection to Gary. It clouds my vision. You're very tough on him. You suggest his work is not going to stand the test of time. I think you're a little unfair to the subtlety that he brings in books like The Economics of Discrimination and A Treatise on the Family. Your critique of his obsession with maximization, which I accept--and I have issues with it, too, as I've gotten older--but Treatise on the Family is really rich, to me, in institutional detail. Maybe it hasn't had much of an effect outside the profession. It doesn't make him the GOAT. You're just critical of that whole economic imperialism as not so important. You want to defend that?
Tyler Cowen: Well, I think I'm more positive on him than you're portraying. I do say he deserves five Nobel Prizes and that now he's underrated; and he's going to become a lot more underrated over time. But, if you're just asking me to predict the trajectory of his influence, I already see people don't read him anymore. They don't talk about him anymore. In person, he was about the sharpest micro-theorist you could hope for. Maybe he's GOAT of that along with Kevin Murphy. And he just brought to everything this incredible energy and never-say-die and keep on going, this relentless notion of being a kind of micro machine. And I admire that. I think it's great. But, he's very much out of favor and I don't really see that reversing. I don't find him that readable myself. I think the ideas and method are important. People never recommend his books to me, is one way I would put it.
Russ Roberts: Interesting.
Russ Roberts: You have an interesting quote at the beginning of the book:
I wish to present economics as a vehicle for caring ideas about the world.
Close quote. What do you mean by that? Explain that.
Tyler Cowen: The six main economists I consider, they all viewed economics fundamentally as about ideas--ideas of progress, ideas of economic growth, ideas of liberty, ideas of, 'Can central planning work? Do we need to move to socialism?' Keynes himself was very much a man of ideas more than a technician. Now, that's changed. Economics today, 2023, it's mostly about hypothesis-testing. It's not true in the blogosphere, it's not true on podcasts, right? But formal economics as is rewarded in, say, the top 10 schools is mostly not about ideas. It's about hypotheses.
Now, one may like or dislike that, but it's a fundamental break in what economics is. And I'm not sure that break has quite been identified as such, but to me that's fundamental. I am now living in a different profession than what I grew up in; and I grew up during the transition. I didn't grow up in the time when it was mainly about economists as carriers of ideas.
Russ Roberts: Yeah. When we were in graduate school--I'm a little older than you--but when we were in graduate school, I felt like we were on the dying end of the economics as a way to carry ideas and moving toward the Samuelsonian revolution that I alluded to earlier: an emphasis on economic theory, mathematical tools. And that, as you mentioned earlier, has definitely fallen out of favor. Can you imagine a world where the focus on statistical analysis that is the current state of academic economic work could die out and a different world could be reborn that's closer to the world that you are referring to, of ideas?
Tyler Cowen: No, I can't imagine it. I mean, just look at the tenure system. You have people at fairly young ages tenured at top schools. They're not going away anytime soon.
I also think there's something inevitable to this change. So, I wouldn't say I prefer it, but I don't feel I have any way of usefully turning back the clock. Maybe some of the low-hanging fruit in the world of ideas has been picked. We do now have very powerful empirical methods. People are going to use those. This is the age of working through that.
And in fact, what's happened is parallel institutions have evolved--again, such as blogs and podcasts, but online writing more generally. So, ideas haven't vanished. It's now the Internet that is the vehicle for carrying ideas rather than the economics profession at the research level per se.
Russ Roberts: I want to take one more criterion that you don't talk about directly and that's the question of: Of the six people that are in the finals, which of them are worth reading today? That is--you said no one recommends Gary Becker's books to you or very often. A lot of people in many fields would say, 'Oh, well, sure Newton was a great physicist, but it's all subsumed into our current understanding of physics.' And, economics tends not to work that way, in my view. I'm curious if you think it does. I don't think it does.
And, of these six people, if you were talking to an intellectually curious person--the kind of person I like to think listens to EconTalk, and they're thinking, 'Well, these are interesting thinkers'--who is worth reading today and what would that be? So, answer that question. Let's go down the list one by one and see if you can find one thing for each of these authors that's worth reading. I would mention that many of them have much of their work available online at the Library of Economics and Liberty--at Econlib--and we'll put links up to whatever is easily available.
Tyler Cowen: They're all worth reading, but I would say they're worth rereading is the more important point. So, when I wrote this book, of course, I reread all the different works I'm covering; and I was amazed how much more I got out of them having had more years behind me of reading other things.
So, who is worth rereading? All of them. I mean, I would also add Schumpeter to that mix. He does not make my final six, but in terms of value of reading, rereading, he is up there with the others.
One of my reservations on Schumpeter is I think a lot of his greatest contributions simply weren't economics. But, as a thinker more generally, again, he's very much top tier and fairly readable. So, reread them all. Even Keynes' General Theory--if you don't want to read the whole book, just read Chapter 12. You don't have to be a technically-minded economist. It will utterly captivate and charm you.
Russ Roberts: And Smith?
Tyler Cowen: Wealth of Nations, most of all. And I don't think you have to read all of it. In my chapter on Smith, you can see which I think are the most important parts: Of course, on the grain trade, on division of labor. But, in particular, I emphasize Smith as a theorist of national defense--highly important topic nowadays--and Smith as a theorist of education. So, those are near the end of the book. They're not that frequently read because Wealth of Nations is so long, but I would say skip ahead and also read those sections. For me, they're the most interesting part of Wealth of Nations.
Russ Roberts: Friedman?
Tyler Cowen: The book, Essays in Positive Economics, if you had to start one place. If you want purely popular takes, there's Free to Choose. There's Capitalism and Freedom. Those are highly influential books. I don't think they've aged well in the sense that a lot of their topics are not the topics of today. Maybe they've aged well in the sense of being correct about a lot of things, but I don't think they're the best place to start to get a sense of Milton Friedman and the overall brilliance, sharpness, flexibility of his mind. I would just say some of his early journal articles. Also his Presidential Address on inflation and unemployment is a great place to start for Friedman.
Russ Roberts: Yeah, I think actually Capitalism and Freedom bears rereading today for its intellectual content, not so much for the policy issues. I went back and reread it in 2006 when I interviewed him--and we'll put a link up to that, of course. I was stunned with how thoughtful it was. I was surprised, so I might disagree with you a little bit.
Hayek? What should a person read of Hayek?
Tyler Cowen: Hayek has the five best articles ever, as I say in the book. So, start with "Use of Knowledge in Society." That's the single greatest economics article ever written. It has no math, it's highly readable, and it will change how you view everything in the world if it hasn't already. If you listen to EconTalk, you may already know those ideas, whether directly from Hayek or indirectly through Russ. But of course, that's a must read. That wins GOAT for best article ever. Also, Road to Serfdom is a wonderful book, and much maligned.
Russ Roberts: Yeah, I agree with that.
Russ Roberts: Who am I missing?
Russ Roberts: Oh, Mill. Mill and Malthus, yeah.
Tyler Cowen: John Stuart Mill, the single best thing to read is actually Subjection of Women, which is thought of as a feminist tract. It is also that, but it's mostly a book about how to reason from what you see in history, what can you infer from evidence, how do invisible hand mechanisms work, secondary consequences. It's one of the best writings on economics of all time. I think it holds up remarkably well. It's the best book on feminism that I know of.
It's fairly short. It's completely non-technical. It's online, it's free. So of course there's "On Liberty," there's "Utilitarianism," many, many wonderful essays. Mills' essay called "Civilization" is a particular favorite of mine. He was, in a way, the first person to discover what later was called the Great Stagnation, but most of all, Subjection of Women.
Russ Roberts: Malthus?
Tyler Cowen: The third edition, and I do stress the import of this, not the first edition--the third edition of Essay on Population. The first--I don't know, is it 200 pages where he lays out the basic model? You don't have to go through his discussion of every episode in Chinese or ancient history, but when you read the actual Malthus, you see what a smart person he was. He was not some kind of crude pessimist. He was gravely worried about the state of morals in society, and he very well understood that there were ways to get around the Malthusian dilemma. He just thought we would end up hopelessly addled with vice and depravity, and he understood the trade-offs. Now, I think he still was wrong, but again, much deeper, much less pessimistic in the economic sense than people usually believe.
Russ Roberts: The one thing I didn't mention that runs through this book implicitly, which I thought was extremely innovative and special, is your attempt to get into the heads of these economists and understand their, what we might call their research agenda, is what we'd call it in today's world. What was their real focus? What were they really caring about?
In today's world, a lot of times you just say, 'I'm going to specialize in wages of minorities,' or 'I'm going to specialize in interest rate theory,' and you try to write as many articles as you can. Even in our lifetime there have been economists who had broader goals than that. But, you get--when you write about Mill and Keynes and others, you actually try to impose a overarching view of what their work is trying to achieve. Even perhaps subconsciously. How'd you come to write that way? What were you thinking? When did that come to you?
Tyler Cowen: Well, I also think of this new book, GOAT as a sequel to my book on Talent with Daniel Gross. So, Daniel and I wrote a book on how do you identify talent, and a lot of the book is fairly general. It varies across contexts, but it's not case studies. And then, I thought: Well, I also should do a book of case studies. And I wasn't going to do it about living people I knew--which is tricky for a number of reasons.
And I thought: Well, let's do it about economists. So, these are also case studies on talent; and people like Mill, Keynes, Malthus, I find them very sympathetic figures. They worked so hard on trying to improve their world and understand it. You look at Keynes going to the meetings for the Treaty on Versailles, caring very deeply about what was going on, writing about it, carrying those messages forward. Some of what he said was wrong, to be clear--building the Bretton Woods architecture after the end of World War II, probably it was about the best we could have done at the time. He devoted the end of his life to that. I think he did a pretty good job.
It's unclear to me what, if anything he was paid, or maybe he didn't need the money, but he was remarkably civic-minded. And when circumstances required that he put aside some of his other ideas and actually solve the problem, he was always able to do that. Whether or not you agree with everything he said and did.
Russ Roberts: In the case of Mill, you talk about his interest in character development. I would maybe characterize it a little differently: as human flourishing and understanding that who we become and how a society prepares people for becoming and then for living with one another was his real focus. That's a very beautiful idea.
Tyler Cowen: Yes, and I think for Mill, he well understands that liberty and utility do not always move together. There were real trade-offs. And, he didn't feel you can always adjudicate those trade-offs, but by promoting what you're calling human flourishing or I'm calling character development, you bring liberty and utility closer and closer together, and that's the world in which you can operate and make rationally-grounded decisions. And that, for Mill, was so important; and that, to me, is the key theme running throughout his work--what you're calling human flourishing.
Russ Roberts: Now, you said this book was 61 years in the writing, and I felt that as I read it. It clearly goes back to your earliest intellectual interests and threads that run through your life very, very early on. But, it's also a book that's based on an extraordinary amount of reading. And, you and I kind of had a conversation about reading. It was a wonderful episode. I don't remember your particular habits in this area, but when you went back, in writing this book, to read things that you had read as a teenager or as a graduate student, were you consulting editions and volumes of these writers with handwritten notes from those days? Or did you effectively start from scratch, reread them, and build on your insights that you've acquired in those 61 years?
Tyler Cowen: I don't do handwritten notes and I also don't have many physical book copies left from that period. But, keep in mind, these are all people I've reread, say in my 30s and 40s, maybe not in my 50s. So, it's not just a reread from when I was young: these would be my fourth or fifth rereads of these thinkers and some of their works. But even on say a fifth reread, I was just amazed how much more I found, how rich it was, how high the quality was of the ideas, but also how the people themselves come to life in their writings.
Russ Roberts: Do you think our profession today attracts the best and the brightest?
Tyler Cowen: Well, I think they're the best and the brightest along particular dimensions. I think they're extremely impressive as empirical economists. Research of the kind that is done has never been more reliable. But I do feel something is missing. And, in part I wanted to write this book to present what is missing and show people how appealing it can be, how we can appreciate it.
Russ Roberts: Well, you and I have had some personal contact with the more modern people, and you write about it a little bit in the book. A lot of these folks, they're exceptionally bright people. They may not be as bright as say other people we've met in other fields. But it's striking when you think back to, say, the older three--Malthus, Mill, and Smith--how different they were in their intellectual landscape. The scope of things they were trying to deal with. Now the three moderns--Keynes, Hayek, and Friedman--all have a little bit of that, but none of them have it, I don't think, in the breadth of the more classical three. Do you agree with that? And, if so, is there an answer as to why?
Tyler Cowen: Well, especially Smith and Mill have that breadth. Malthus, it's less clear. Malthus is very much underrated, but other than economics, I don't know that he did that much. It may have implications for social theory or maybe environmentalism.
Breadth is just very costly and it's hard to be both broad and deep. But it is striking to me, and maybe this will sound rude, but there's really quite a few of today's top, top economists--people who deserve their designations and awards--but, if you ask them about the kinds of general questions that are discussed in Mill or Smith, I don't think those people are really better than a mid-tier newspaper columnist or something you might hear on one of the better radio stations. They're not worse than it, but they're at that level.
And, I just see that again and again and to me that's stunning and a little sad, and I don't even think they necessarily know that's the level they're at. So, I would just encourage people to go back and reread Smith, Mill, and many others and try to reach for higher levels in your public commentary.
Russ Roberts: Well, I think you may be the broadest living economist Tyler. It doesn't make you the GOAT, by your own criteria. I wondered as I was reading this, how many of these criteria you put yourself up against and either found yourself wanting or meeting the criterion. Do you want to say anything about that?
Tyler Cowen: Well, as you mentioned, this book is embedded in GPT-4. So, there's a version of the book, you can open up an app--and again, this is free open access. The site is econgoat.ai and at econgoat.ai just go to the app and ask it how I fit into the picture. It'll give you a good answer, a better answer than I can give. So, that would be how I recommend you address this question. I'm not objective. I'm clearly very far from GOAT and the app GPT-4 will set you straight.
Russ Roberts: Although you do say, and I will try to avoid too many--I don't want to have too many spoilers. But, you do suggest at the end of the book that it's very unlikely that any living economist will meet the criteria that you've set for the standard of GOAT. Some of that is, or maybe all of it, is the narrowness of modern academic life, and there may be some people we're not thinking about or that you don't write about that you may be quite aware of actually, but I haven't thought about it, who, like Malthus or Mill--Mill is a better example--we wouldn't think of as quote, "economists" in the traditional sense, but may have an impact down the road and be recognized as great. Maybe not GOAT, but great.
But, you don't think that even the best of today's academic economists reach the standards or levels of the six that we're talking about.
Tyler Cowen: No, I don't think it's close. It's like asking: Is Adam Smith a top figure in time series econometrics? Right? It's not even a question.
I've also thought of doing a successor volume on people who are not thought of as economists, but who actually are brilliant economists--that would be someone like Max Weber or even Homer or Tocqueville--and arguing that they, too, are great economists. No one of them is quite GOAT contender, but I feel their economic insights are still underrated and they're certainly read by plenty of people. I'm not sure how many economists are reading them now.
Russ Roberts: I think that's true.
Russ Roberts: Let's move on to the specifics of some of our finalists. At the beginning of your discussion of Friedman, you make a claim that I've found somewhat shocking: that some of his most respected intellectual achievements--his academic work--is unoriginal. In particular, the quantity theory of money, which of course goes back to Irving Fisher; Friedman didn't pretend otherwise. It seems like a very tough assessment. You want to defend it?
Tyler Cowen: I'm a big fan of the quantity theory of money. I feel one of Friedman's great strengths was to track truth when truth was in some ways fairly obvious. Maybe that's a lot of what economics should do. But if that's your great strength, you will end up being less original.
So, Keynes, in my view, is much more original than Friedman, but a lot of the originality goes askew and ends up being wrong, like exaggerated claims about the liquidity trap. But, that was a highly original idea.
So, Irving Fisher on the quantity theory is extremely sophisticated as is Hawtrey [Ralph Hawtrey--Econlib Ed.], Clark Warburton, and many others. Friedman would be the first, not only to admit this, but to emphasize it in his writings. He gave full credit. And, it doesn't take away from Friedman, but it's a different way of framing him. He was wonderful at seeing the obvious at a time when people were often covering up the obvious.
And Samuelson would be one of the culprits there. Samuelson was pushing theories of wage-push and cost-push inflation, which clearly were quite wrong. They become obviously wrong by the mid- to late-1970s. Friedman had been correct all along. But, again, in retrospect it is a fairly obvious point.
Russ Roberts: You can make the same claim about much of--maybe 'much of' is a bit strong--but you can make the claim, I think, about many economists. Certainly Adam Smith, who we think of, incorrectly as, quote, "the first economist"--many people think of him that way. Many of his ideas are found in different forms in other thinkers that preceded him, not with the clarity, not with the richness, and certainly not written as well as his work for our ears. That's a tough standard though, don't you think--originality?
Tyler Cowen: Absolutely. Friedman is in the very top tier. He's even in the top tier of the final six. So, I hardly feel I'm dumping on him. He gets to be the first chapter. He did an enormous amount of good for the world. Could have won multiple Noel Prizes, like Gary Becker, built up University of Chicago, which was an incredible achievement; led to many other Nobel Prizes. So, he doesn't need praise from me, is one way to put it.
Russ Roberts: Shame on you, Tyler!
There's a critique you have of him that I think is increasingly appealing to me as I get older. And, I want to read a quote from the book. You say--you're talking about the times that you interacted with him--you say:
The second time I spent time with Friedman was at a conference in Dallas, and he was older by then. He was extremely pleasant to everyone, although again it was clear at the table that "he was Milton Friedman," so to speak. I asked him a series of questions about school vouchers, and the indifferent results that were being obtained by much of the empirical literature on vouchers. His answers, while entirely polite, struck me as a bit glib and dismissive, as if vouchers simply had to make sense, in the same manner that say competitive supermarkets were superior to a centrally planned commissar for food distribution
And you add:
(to be clear, I am a supporter of the school choice idea, but I had genuine, non-hostile questions about the empirical results).
I thought that's a very deep insight--as a Chicago grad who was trained in that mindset. I certainly had it when I was younger and it's one of the things I feel I've shed. It has great value, that dogmatic belief in, say, the power of competition because it pushes you to consider things you might not have thought of before.
But when evidence comes along that doesn't agree with it, you're much more likely if you're in that mindset to dismiss the evidence rather than try to learn something from it. To, say, understand the role of culture or parental involvement in schooling. And blindly--blindly--overemphasize how teachers with better incentives or administrators with better incentives might make a difference even when those incentives are imperfectly implemented in that particular school voucher plan. So, I thought that was a superb insight.
Tyler Cowen: Thank you. The good news is there's some very recent papers showing more positive results for school choice, including in Los Angeles.
Now, how big those effects are, it's all still complicated. But I do worry with school choice that if the main determinant of quality is the quality of the kids you have, remixing them can bring you some gains. But, competition isn't as beneficial on that as we might like. I'm still not sure. I do favor--
Russ Roberts: So, we've mentioned some--
Tyler Cowen: as a general principle, giving the parents sovereignty or control over that decision. But I'm not sure how much good it will do us.
Russ Roberts: Yeah, I've become a little more skeptical about that. And, some of that has come out in episodes here.
We've talked about some of the Friedman positives. Why is he not the GOAT? Just hands down, besides the fact that it would make the rest of the book less interesting, what are some of his negatives besides some of that unoriginality you refer to?
Tyler Cowen: Well, what became his main idea was the notion of obsessing over control of the money supply and that the money supply drove so much at the macroeconomic level. And, I think that's mostly been shown to have been wrong.
Now interestingly, up until the 1980s in the data, it looks pretty good, and there's a reason why Friedman persuaded so many people. But starting in the 1980s, the importance of monetary aggregates breaks down. It becomes more important a question: which money supply measure do you mean? They diverge increasingly more.
And then, come 2008, 2009, we have this episode where at least one measure of the money supply went up by trillions. We didn't see price inflation really over 2% or much over 2%. Many people were puzzled by this. I wasn't puzzled. I saw corresponding deflationary pressures. But, I think the notion of obsessing over the money supply mostly has been discarded.
Now oddly, it's made a comeback in the last two, three years when monetarist predictions have turned out to be very much on the mark, in fact. So, it may be a theory that's true in some circumstances and not others. But it's less general than we had thought.
Russ Roberts: Well, I'm pretty sure Milton would have had something to say about why, in 2008 and 2009, it didn't have the impact he might've expected--not that he was always right--the fact that money was in the banks but not being lent out. You can debate whether it invalidates the theory or not.
I would give him credit, though, for something I thought you inadequately promoted, which was the power of Central Banks. Before Milton, it was just not focused on--and Milton created Alan Greenspan, he created Ben Bernanke, he created all the central bankers around the world as being important. Even if you disagree with the ideas that led to that, that impact is enormous. And, I don't think you emphasize that enough. Do you agree?
Tyler Cowen: That's probably true. Scott Sumner puts it in a very useful way. He said Milton Friedman was the first person to truly intellectually internalize that we live in a world of fiat money. So, we had had gold standards, Bretton Woods; but Friedman was writing about a world of fiat money. And it took the rest of the profession actually quite a long time to come around to that. And, he was way ahead of the curve there.
Russ Roberts: Yeah, fair enough. Describe what fiat money is, for listeners, actually.
Tyler Cowen: Well, paper money not backed by any commodity. In this case usually it would be gold, or gold and silver. But, even the Bretton Woods tie to gold, which was only for foreign holders of dollars at the institutional level. Politically, there was a lot of pressure on people not to redeem. We have somewhat of a fiat money system before Bretton Woods breaks down in 1971 and after that a complete fiat system.
Russ Roberts:Okay, let's turn to Keynes. Many would name him immediately as the greatest economist of all time. You have a much more nuanced view. Give us some of his pluses and minuses.
Tyler Cowen: Well, first, again, starting with the subjective, he's the one I'd most want to hang out with and be friends with. He seems to me a fascinating person, very broad, interested in the arts, music, ballet, deeply involved in real world policy most of his life. Very willing to change his mind--maybe too willing. But that is still for me, ultimately a net plus. The General Theory, of course, is his best-known work. I actually prefer his Tract on Monetary Reform from the 1920s, which is an early version of Milton Friedman, at least as clear as anything Friedman ever wrote. That's a wonderful book.
The General Theory forced us to rethink macro in many important ways. But, I feel it goes too far. It's too modeled; and a lot of the microeconomics in the book, it's either not coherent or it doesn't hang together. And, Keynes, in my view was never a great microeconomist. Someone like Jacob Viner was just a much better micro thinker than Keynes ever was. So, Keynes was so big-picture, he somehow never got down the details of a lot of his arguments. So, not being a truly great micro-economist for me is a big strike against Keynes.
For a while in his life, his key idea was we need to socialize most investment. I feel that's very wrong.
He was systematically naive about political power, most of his career. He was President of the Eugenics Society for quite a while. Now, I don't wish to cancel Keynes for that, but I think it shows that he didn't have a great understanding of public choice and political economy. He maybe did when he was in the room with the negotiators, but he didn't so much in his writings.
Russ Roberts: I was very surprised. I have not read The Economic Consequences of the Peace, but the Twitter version of that book is that Keynes predicted World War II and the rise of the Nazis because he understood that the burden of Versailles--the peace treaty that ended World War I--was so burdensome on Germany that they would never be able to recover. And, that would fuel the death of their democracy. Which is what happened. You've read that book, I think, actually, and your view is that that's not what the book says. Is that correct?
Tyler Cowen: Correct. And I think it's an overrated book. Keynes is not predicting World War II. He's saying the settlement is too harsh.
The payments made by Germany overseas never amounted to more than a few percent of GDP [Gross Domestic Product]. Now, a few percent of GDP is a lot, as you and I know, but nonetheless, it's often been taken out of perspective, that book; and the notion that a losing country should have to pay some reparations for the damage it did, it just isn't that crazy.
And, Germans were later on quite willing to pay more than that--say, 3%--re-arming their own country. That was a sacrifice of consumption.
So, I don't feel Keynes quite got that one right. It's an important book. It has a very strong positive reputation. I don't feel it was so much totally on the mark.
Russ Roberts: Let's--I should mention, you do talk about some of the personal quirks of many of these people. Fascinating discussion of Keynes' anti-Semitism and his general view that human beings are too greedy and money-centric. And his discomfort with the Jews may have been driven by that. I often wonder whether it goes--causation ran--in the other direction: that his dislike of the Jews and the stereotype of the Jews is grasping. And, I've written a little about the fact that Keynes saw the Jewish idea of building for the future--of saving, of postponing consumption--he viewed that with horror.
Many of us, of course, Jewish and non-Jewish don't view it that way. And, I often wondered whether it was his antisemitism that drove his economics rather than the other way around.
He definitely was not a fan of savings, not just in depressions but in general. And, you really do a nice job of getting at the way he looked at our acquisitiveness. Do you want to react to any of that?
Tyler Cowen: In general, Keynes is by far the most cancelable of all the people on the short list for GOAT. Most of the others have pretty good records overall. Maybe Hayek doesn't.
He was in a very special time where there's a particular elite point of view about a sort of good life that you could live. You would hang out somewhere like Cambridge or maybe Oxford or Bloomsbury section of London, be involved with the arts, speak with your friends. And that was, for Keynes, an ideal for all people to strive for. And, I think that's his most fundamental view. So, being greedy, or wanting to earn too much money, or being too capitalistic is an obstacle for Keynes; and it's something he sees might be necessary or unavoidable, but it's not what he loves. And, I think he didn't understand the power of economic growth as well as he might've in a way that Friedman or Hayek or even Adam Smith would have. So, I just think that's another big issue where he was wrong.
Russ Roberts: I just want to add, as a Jew, I have no desire to cancel Keynes either. His antisemitism was quite genteel for his era and certainly in line with his circles, and so I'm just fascinated by this question of whether it affected his economics or not.
Russ Roberts: Let's turn to Hayek. You come out guns blazing in his favor, arguing that his top three articles, maybe--I think you say--are maybe the three greatest articles ever written, you can make the argument. Talk briefly about why you think they're so special. You already mentioned one of them, "The Use of Knowledge in Society." Talk about the other two, and then I'd be curious what other two or three might make your top five, outside of Hayek's? I'm sandbagging you here a little bit. We didn't talk about this in advance, so you can pause if you want.
Tyler Cowen: No, podcasts should be all sandbagging, right? That's certainly my philosophy.
"Competition As a Discovery Procedure" would be the second Hayek article you should read. Maybe it's even top two rather than top three, but there's some modest amount of repetition in Hayek, so you could say top three, top five, but "Use of Knowledge in Society" and "Competition As a Discovery Procedure." The idea of how decentralized systems work and mobilize knowledge, which can sometimes be inarticulable, and how exactly it is that people, 'as if led by an invisible hand,' to use Smith's phrase, act so as to increase the amount of total product, coordinate with each other, innovate, generate a workable capitalist economy. Hayek is just the big star there. He got it completely right. It's brilliant. It's remarkably deep. It's held up well. Bravo to him. Never been touched since, before or after. But, for me, he's not GOAT. I can tell you that.
Russ Roberts: Yeah, I know. But, before we talk about that, what other articles might make your top five or seven in the history of economics? Not books, which are different, but say academic journal articles since 1940, which is you said "The Use of Knowledge in Society" is 1945. What else would you put up there? You don't have to number them, but--
Tyler Cowen: Sure. Paul Samuelson on the random walk hypothesis would be in my top tier. Kenneth Arrow, I think it's 1964, his article on securities being kind of state prices for different world states and how that can allow you to price any asset. Those would be my next two on the list would be Arrow and Samuelson, both in finance, noting that finance is arguably the most successful part of economics. I don't talk about it in this book much. That's a gap. It probably needs a book of its own. But if you ask where are economists paid the most, it's clearly in the world of finance. As economists that ought to tell us something, right? Financial economics has worked pretty well. And then maybe some of the early CAPM [capital asset pricing model] articles and portfolio theory, those would for me be the next best set of articles, noting that the marginal revolution itself is not so closely connected to articles: it's more connected to books. But--
Russ Roberts: Fair enough--
Tyler Cowen: that deserves to be recognized in some manner. Right?
Russ Roberts: So, what are Hayek's shortcomings as GOAT?
Tyler Cowen: Well, again, he does very well, but I think after those five articles--I wouldn't say it's thin. So, his trade cycle theory I think is quite good and considerably underrated. It's not as general as he thought it was, but it's often true or relevant. It applied to the collapse of Silicon Valley Bank quite recently, for instance.
I don't love Constitution of Liberty. To me it's far inferior to John Stuart Mill. I don't think he sees the relevant trade-offs. It's a big fat book that gets praised a lot. I think it collapses under the weight of its own contradictions and it's not that well-written. The Road to Serfdom, I much prefer.
And then, he has a number of decades of writing a lot of different articles about method--against scientism. Maybe I sympathize with those, but basically scientism has won. It was always going to win. If people are designing, say, an FCC [Federal Communications Commission] auction of licenses for the spectrum, you want scientism. And I think Hayek just didn't see that. He was too anti-scientistic and he didn't see the upside of scientism.
But again: Hayek very clearly in the top tier, highly deserving of all sorts of accolades.
Russ Roberts: You did not mention "The Pretense of Knowledge," which is one of my favorite articles, his Nobel Prize address.
Tyler Cowen: That's very good.
Russ Roberts: I want to defend--what?
Tyler Cowen: It's very good. Right? It's a summary of some of the other works.
Russ Roberts: Yep.
I want to just raise one caveat about your comment on scientism. Scientism--the idea that the application of scientific methods relentlessly can lead you astray--and "Pretense of Knowledge" actually is very much in that spirit. And, my view of Hayek as a macroeconomist is that he tried to match Keynes in the 1940s, failed miserably. Those books are unreadable--his books on the business cycle--for me. And, the later Hayek is saying, 'Well, actually it's really hard and maybe we'll never quite figure it out,' rather than the typical modern view, which is: Just give us enough time and data, we'll eventually solve this. And, to go along with my positive view of Hayek and his disdain for scientism, I think the replication crisis and perhaps the over-romance with big data will redeem some of his views. What do you think?
Tyler Cowen: I think Hayek wasn't selective enough. So, look, you're in Israel right now. You're fighting a war. Israel is using scientistic techniques, whether it's operations research, advanced statistics, encryption, breaking encryption--who knows what's all going on. But, they're using plenty of scientism and you ought to be glad they're doing that. And, it's true, yes, most of social psychology you can't believe. I just feel Hayek was way too hard on scientism. It has passed some kind of market test, even if you think, as I do and I think you do, that it's considerably overrated.
Russ Roberts: Fair enough. That was very well said.
Russ Roberts: Before we go on, I want to take a little interregnum here--I think that's the right word--and I want to give you a different criterion for judging the GOATs and get your reaction to it. And, I was thinking about it partly when you were talking about his books. I'm considered a fan of Hayek and I have not read nearly all of Hayek or even close. And like you, I think his individual articles are his greatness, but I read Law, Legislation, and Liberty and I don't think it totally makes sense.
Russ Roberts: It's interesting, but it's a bunch of claims that I don't find compelling even though I want to.
Having said that, I'm going to give him credit for something profound in that book, multi-volume work, which is the distinction between law and legislation--something we've talked about often on the program--that legislation is what is legislated by formal bodies of governance. But that law, he wanted to reserve that term for norms and expectations of behavior.
And that distinction and the understanding that not all legislation is enforced or even enforceable, and that law, the norms that he talked about, would often dominate, is I think an incredibly deep idea. He doesn't do it very well in justifying it, I think, in that book, but that's something I've learned from him that's rather extraordinary. Comment on that, and then I want to come back to my little interregnum.
Tyler Cowen: Well, I agree with that, strongly, and it's the main reason why I think Law, Legislation, and Liberty is much superior to Constitution of Liberty, even though the Constitution book gets a lot more play. And, there's three volumes to Law, Legislation, and Liberty</em. Volume One to me is by far the best. Volume Three is incoherent and poorly thought out. Volume Two is okay. But Volume One is a gem for that reason.
Russ Roberts: He argues in there that judges should take into account the norms and expectations of people when they decide law--when they decide, excuse me, cases. And, I love that idea. It's a beautiful idea and it has a certain moral foundation to it. But he makes no effort, as far as I could tell, to justify it as a positive theory of what judges do. And, yet he claims that it is what judges do. And, I thought--you indict him at one point, I think quite fairly for not being very empirical--that would be just one example where he was not very empirical.
Tyler Cowen: But also, the rest of the literature. He could have done a lot more to build on Lon Fuller, The Principles of Social Order. What Hayek was saying was embedded in a number of other legal theorists who came before him. And he might cite them, but he's just living in his own mind and putting this stuff forward. And, there's pluses and minuses to that, but that could have been a better book for all its virtues.
Russ Roberts: Okay, we're halfway through the Big Three. We'll take a little break here, not in time, but in content. Before we go on, I want to propose this other criterion, which is: The best slogan. That sounds kind of cheap, so I'm going to think about it as a thumbnail lesson that we've learned from the person.
I'm going to reel off a few of them and get your reaction. So, Schumpeter, who is in the semifinals, he gets 'Creative Destruction'. That's pretty spectacular. Right?--
Tyler Cowen: Absolutely--
Russ Roberts: It helps us understand things. It is an amazing idea. You could argue it's just common sense. But it's not. And, his talking of it is quite helpful.
For Hayek, we get 'Emergent Order'--or 'Spontaneous Order' is a phrase he used more often. You could argue he should get credit for a Milton Friedman line, 'No one can make a pencil,' which is just Leonard Read's version of "The Use of Knowledge in Society."
When I think about--you know, Keynes would be: Government spending is critical in the times of Depression. These are just sort of one-line summaries of things that I have learned from these people. Don't agree with all of them. But it tells you something that they've stuck.
For Friedman, it's unbelievable--for me--and I reeled these off in the Jennifer Burns conversation--that we spend other people's money more carefully--excuse me--we spend other people's money less carefully than we spend our own. That we need the right incentives and not the right people to get good legislation. That inflation is everywhere and always a monetary phenomenon. That an increase in spending is a tax increase even if the money is borrowed. That being pro-business is not the same as being pro-market. Distinctions between nominal and real. Businesses should try to maximize profits without fraud. That the economic system called capitalism is a profit-and-loss system, not merely a profit system.
These are partly due to his incredible ability to communicate and write well. And, for Friedman, we have the benevolence of the butcher, baker and--butcher, baker [?wasn't that Adam Smith's phrase? "the butcher, the brewer, and the baker"--Econlib Ed.]. What's the third one?
Tyler Cowen: Candlestick maker?
Russ Roberts: Yeah. I'm not sure even, I don't know. Embarrassing. But it doesn't matter.
You can start--again, and for the invisible hand, even though he didn't quite say it that way. "The curious task of economics," would be another Hayekian one.
For me, it's not GOAT, but it should be important for GOAT. How many things did they teach us and capture in these pithy phrases that guide our thinking of how we see the world?
Tyler Cowen: Plenty, but compare them to Malthus, who had fewer ideas, but he stressed the notion--'moral restraint' were the two words he used. That, he was worried that societies did not have enough moral restraint to proceed on a virtuous and orderly basis. And there's some chance that's the most important idea. I'm not sure, and I'm not sure he was right, but Malthus understood that very deeply.
Friedman gets at it in different ways, like, 'Oh, people are too inclined to vote for too much government spending.' He has a simple version of the idea. But if you're looking for check marks of short slogans that really matter, I think that's also going to help Malthus.
Russ Roberts: We'll turn to Malthus in a second. I do want to confess that I've probably read more Friedman than any of the other people on the list. So, I've got more of his pithy insights at my fingertips. But, I also think part of it comes from the quality of his microeconomics, his understanding of economics as a form of applied incentives. But, anyway.
Russ Roberts: Let's turn to Mill. Now, one of the clever parts of this book and delightful parts is that most people--he did write a book called The Principles of Political Economy, that has 'economy' in the title--but a lot of people would not have considered him for top--for the GOAT. Make the case for Mill and talk about what his shortcomings are.
Tyler Cowen: If you just look at narrow economics, Mill is not a credible contender for GOAT. But if you ask, 'Who is the best and deepest thinker?' Mill is arguably the strongest figure on the board. So, you need to then ask, 'Well, what counts as economics? What counts as simply being a great thinker? How do we weigh those two things off against each other?' Mill did see economics everywhere. It was a very different kind of economic imperialism than what you get from Gary Becker. He understood the economics of liberty. He wrote about virtually every issue of his time.
On macroeconomics, he was excellent. He understood the truth of Say's law, also its limitations; how changes in the demand for money fit into macro. He understood credit bubbly theories of the trade cycle, demand-based theories, real theories based on negative agricultural shocks. He understood the risks of technological stagnation and what that world would be like. His analysis of taxation is very strong, not just for its time. I would say it's better than what most people might give you today.
So, if you just work through Mill, issue by issue by issue, and you look at breadth and depth, the case for Mill is much stronger than it might seem at first. And, most of that you do not find in Mill's Principles, which is a perfectly fine book, but again, would not put him in serious contention.
Russ Roberts: I think you said he had--there's 33 volumes of his collected works?
Tyler Cowen: That's correct. University of Toronto Press. Some of those are online by the Library of Liberty [Econlib], from Liberty Fund. Not all of them.
Russ Roberts: How about Voltaire?
Tyler Cowen: I think he has quite a bit more, but I couldn't tell you the number.
Russ Roberts: I think you said it. Maybe I read it today in somewhere else, but it's quite a bit more.
I have to ask: how did they do it? They didn't have a word processor. They wrote with a fountain pen. How did they produce--I mean, you're prolific. I guess if you put all your blog posts into volumes, you'd get a pretty fat opus, a set of opie, but probably wrong, opuses--I don't even know what it is. But: 33 volumes? My gosh. Did these people--they didn't live to 200. How did they do it?
Tyler Cowen: Well, there's less to do back then. Right? But the biggest miracle is the composer, Johann Sebastian Bach, who had to write out all the music for different pieces. And he produced far more than any author. And he had to compose. Even if you take Bach's output as a mere problem in transcription, it's hard to see how he could have done it. So, I don't know. And, Bach had many children--was it 12? And, there was a three or four year period in his life when his first wife had passed away and he was responsible for all the kids, and he still kept on composing. And, they were young children, some of them. So, it is a miracle.
But, I would say this: Having lived through pandemic and lockdown, if you keep your wits about you--I mean, my productivity went up a great deal. Partly it's what led to this book. So maybe that's related. There's less to do.
Russ Roberts: Yeah, I'm in the middle of a war here and my college is not teaching classes, because over half of our students are called back into the army on reserves. And, for a few days I went around in a daze, listening to air raid sirens and heading to bomb shelters and worrying about the future. And, then, the last week I've been more productive and able to write more than I have in a very, very long time. Started a substack: we'll put a link up to it if you're interested in what's going on here in wartime. It's my chronicles of that experience and my thoughts.
Tyler Cowen: Send that to me. I want to read it and I want to link to it.
Russ Roberts: Thank you.
Russ Roberts: But, it's a fascinating idea. Obviously there's less to do. There also wasn't electric light for a lot of these folks. They're writing by candlelight. It raises the question, and I know you'll have a thought on this, Tyler, and maybe it's Bach, but who's the most productive person of all time? Forget field, forget economics, forget music. Whose life's work is the most stunning in its, not just its amount obviously, but in its full richness?
Tyler Cowen: I wrote a blog post on exactly that question. I'm inclined to say Bach, quantity and quality. Michelangelo doesn't have the quantity, but for quality he would be in the running and he certainly did plenty. But, clearly to me it's Bach.
Russ Roberts: Yah, you know, Michelangelo is, like, the guy where they say--I have to get this joke, and Tyler you'll love this. I don't know if you know it, but when I got to Chicago, Harry Johnson was supposed to teach the--I think it was the micro class. Could have been macro, could have been either one. He could teach anything. And, he got sick. He died shortly thereafter. But we were all obsessed with him, because we thought he was going to be not only teaching us, but he was going to be writing the exam that was going to determine whether we went on or not after our first year. And, if he wasn't teaching the class, everybody panicked. I didn't panic, but a lot of people panicked. And we were very worried about it. And, we felt we[?] had to read a lot of his work. And then, they found out how many things he had written.
And, at the time he was well-known as the Babe Ruth--later the Henry Aaron and eventually the Barry Bonds--of economics, and that he had more refereed articles than any other economist.
And, the story was told, and I'm sure it's true--I'm pretty confident it's true--that a reporter once interviewed George Stigler. George Stigler did not make your semi-finals list. It would have been an interesting case, but I can see why he didn't. But, he was a fine economist, George. And, the reporter was talking to him. He was doing an article on the Business School of Chicago, and he said, 'How many articles have you written, Professor Stigler?' And, I think Stigler said something like 50 or 60. And, the reporter looked at him with disdain: 'Fifty or 60? You've got a colleague down the hall who has written over 500.' And, Stigler said, 'All of mine are different.'
Tyler Cowen: But, with people who are like Harry Johnson, I tend to think the way they work, there is not in fact a quality/quantity trade-off.
So, to say, 'Oh, if he had only written 50, they would be much better,' it's probably not true. They used the writing to propel them to the ideas that make the next one better. And they're more-or-less optimizing.
Russ Roberts: Yeah. I agree with that.
I don't think--if you talk about quality-weighted, it's hard to underrate--excuse me--it's hard to overrate Michelangelo. He's unbelievable. If you just said; 'Well, the Pieta, David, and the Ceiling of the Sistine Chapel, and then we'll throw in, he built--whatever church it is--with that blanket on it.
Tyler Cowen: The slaves[?]--
Russ Roberts: Yeah.
Tyler Cowen: There's so much. Yeah.
Russ Roberts: And that was just a few of his projects.
Anybody else you want to put up there, though, with Bach? Is that it?
Tyler Cowen: Well, Bach and Michelangelo.
Russ Roberts: So, head and shoulders?
Tyler Cowen: Are you counting people who did a lot in the physical world? A Winston Churchill, helped to win World War II?
Russ Roberts: No--
Tyler Cowen: I'm putting them aside--
Russ Roberts: No, I'm talking about P.G. Wodehouse.
Tyler Cowen: They're my two picks.
Russ Roberts: Anthony Trollope.
Tyler Cowen: No, Trollope's not good enough. He's a wonderful novelist, but he's not top, top tier. Right? Not as good as Dickens or Jane Austen, say.
So, it's a tough designation to even be in the running for. Beethoven actually would be in the top 10.
Russ Roberts: But, how about some authors?
Tyler Cowen: Some authors. Well, if I can count the various individuals who wrote the Bible, they would be in the running for something. Not quantity per se, and it's numerous people. What else for authors?
Russ Roberts: Tolstoy? Pretty good.
Tyler Cowen: Very good. But two novels and some amazing short fiction. So, on quantity, he's fine, but not dominant. Same with Proust. Dickens only has a few truly first-rate novels. So, I don't know that there are any authors that on both quantity and quality are so dominant. I'm trying to think, but I'll say no. Cervantes: one book. One of the greatest books. Edmund Spencer, one book, more or less. Homer, two books. I would say Homer. Bible, and Homer would be next. Even though the quantity is low, but the quality is so, so high and the originality is so high.
Russ Roberts: And, other than Homer, you want to pick a poet? There are many great poets that wrote--one, two, three--they're a little bit like Looking Glass and Brandy, they have a great hit, a one hit wonder, but it's immortal and so it lasts. But, to have multiple, Hayekian, first-rate pieces, are there any poets you would put in that group? Because I would pick--there are a couple for me.
Tyler Cowen: Well, Dante, Spencer, and if you're calling Shakespeare a poet, those would be the three, I think, who are clearly above all the others. James Joyce, I wouldn't call a poet, but he belongs on some list near the top.
Russ Roberts: Of something.
Russ Roberts: I think I put Frost up there. I'm always amazed at how even poems of his I've never heard of are spectacularly good. I don't know.
Tyler Cowen: Very, very good. Sure.
Russ Roberts: Okay. Enough interregnum. Let's turn to--we've talked a little bit--did you say anything negative about Mill? You talked about his positives. Do you want to say anything negative?
Tyler Cowen: It's always interesting to ask, 'Where did these people go wrong?' And, one thing I do in the book is for each of the top six figures--it turns out five of the six wrote on India. And, it's an interesting question: When they're faced with a new problem, how do they handle it? And who did best? Who did worst? I think Friedman probably did best on India. His recommendations for India, I think in retrospect, were mostly correct. And, he was not pessimistic about India, which also turns out to be correct.
Mill worked for the East India Company much of his life. And, when it came to British rule over India, he had many interesting and deep things to say, but he did not understand the political economy of British rule over India. The notion that the British would have to resort to local South Asian rulers, who would be oppressive and exact tribute and maintain India as a colony but do nothing for public goods or development, Mill missed that completely. And it's a very important point for really a large number of people. And, Mill worked on this his whole life.
And I think Mill did see the places the British actually ruled--which would be like Calcutta, what we now call Mumbai, what we now call Sri Lanka--they do better because they were actually ruled. But most of British imperialism was not actual rule. It was these intermediaries where you get the worst of both worlds, and Mill fell flat on his face there.
Now, was it self-interest? Was it delusion? Was it he had never traveled to India, historic India? I don't know, but that's my biggest gripe about Mill.
Russ Roberts: I think his IQ [intelligence quotient] was too high. And I'm semi-serious about that. I think it's hard to understand everything, even when you're really smart. It'sust too hard. He was not probably much of a man of the world, but maybe he was. Am I underrating him there?
Tyler Cowen: There's not much evidence that he was a man of the world. I would put it that way. But, what it means to be a man of the world--to what extent can you do that with your own interiority--I would say is an interesting question.
If you look at who traveled a lot, Milton Friedman clearly traveled the most. Hayek lived in a number of quite different places, and one presumes he learned from that. Keynes had plans to go to India when he was younger. It was to be a six-month trip. It never came off. He didn't have the time. But, it's an interesting alternate history where Keynes goes to India and sees what is going on there. This is now early 20th century, well before the General Theory. What does Keynes then work on? How do his views change? That question fascinates me, but of course, we'll never know.
Russ Roberts: What fascinates me is Hayek in Arkansas. You say he lived in a few places. Here's this Viennese sophisticate, and--was that in Fayetteville? I think it was in Fayetteville. I think it was at--I think University of Arkansas. I'd love to have the go-cam of his waiter at the cafe as he sat outside, comparing the coffee to the Viennese brew that he was used to. That must have been a culture shock extraordinaire. But I don't think we have a lot of evidence for how it changed him, or what he learned from it, or if at all.
Tyler Cowen: Hayek was the only one who fought in an actual war--World War I.
Russ Roberts: Yeah.
Russ Roberts: We briefly touched on Malthus. Let's give him a little more of his due. You talked about his contributions to the idea of environmental economics, the role of population. Anything else you want to say about him and his minuses before we turn to Adam Smith?
Tyler Cowen: Well, to say another plus on behalf of Malthus, the notion that you have different processes in a society and they may grow at systematically different rates, and that that puts a great deal of stress on your bottlenecks, again, may or may not be true, but I think that's a very important idea. We still haven't quite internalized it.
But my worry with Malthus is he just didn't see that you could have a society with economic growth and birth control, and it would be okay. He did consider those possibilities. He just thought it would be so depraved that it was somehow unacceptable, and that the moral restraint we would need to make that work was unlikely to hold.
Now, maybe the people who think our current mix of economic growth and birth control is too morally depraved. There's a chance they're correct. I take that very seriously. And if you're worried, say, about the fertility crisis, I think one needs to revisit Malthus. He was, in essence, the person who saw that a fertility crisis could be a problem as well.
But, when it comes to predicting the immediate future after his own book, he just didn't lay out clearly enough these different scenarios. And, if you read Malthus superficially, you'll just think, 'Oh, he was totally wrong,' and dismiss it, like, pessimism has been refuted. He was deeper than that. But still, I don't feel he really was able to outline where the actual world turned out to be headed.
He's very good on macro--
Russ Roberts: So, let's--
Tyler Cowen: by the way. He's a precursor of Keynes. His shorter writings for the Edinburgh Review are marvels of clarity, more than the Essay on Population is, to be sure.
Russ Roberts: Yeah. There's a whole aspect of your book we haven't talked about, which is--you call it, "Chips from the Workbench"--the little side-projects and things that spring up along the way, and the writings and thoughts of the authors. But, I encourage listeners to read the book and check those out.
I want to read a quote from Maria Edgeworth, who knew both Malthus and Ricardo, who later in their life had a extensive correspondence and friendship. And this is what she said about them, who she knew well. Quote:
They hunted together in search of Truth, and huzzaed when they found her, without caring who found her first; and indeed I have seen them both put their able hands to the windlass to drag her up from the bottom of that well in which she so strangely loves to dwell. [Reprinted in Essays in Biography, by John Maynard Keynes, Macmillan, 1933.]
And you write, "Are those not the kinds of qualities you would wish to see in the GOAT?" And, even though Ricardo doesn't make your list and Malthus does, I couldn't agree more.
Tyler Cowen: If you want to read an example of wonderful truth-seeking communication, read the letters back and forth, Malthus and Ricardo. I think they're online. They're incredible. They're a model for what we all should aspire to, and they're hardly discussed anymore.
Russ Roberts: So, let's turn to Adam Smith. I've heard of him. I have to say--
Tyler Cowen: You have a book on--I have to interrupt and mention--you have a book on him.
Russ Roberts: Yes. About his book, The Theory of Moral Sentiments, which you, I believe, underrate badly, Tyler. And, we're going to leave that for a whole separate podcast. We're not going to talk about it. We've gone on for a while. We'll leave that for another time.
But, I want to say something about our time and the times we live in.
In the old days--meaning early 1970s, 1960s, certainly before that--you could write an article, a journal article, a refereed, peer-reviewed journal article on your take--Tyler's--on Adam Smith. What you wrote in the opening few pages in assessing the importance of the Wealth of Nations would be a publishable article in the history of economic thought. It is novel. It is provocative. It is interesting; and it's to see Smith--as we discussed briefly earlier--a beginner, the father, not just of economics but of the economics of defense, the economics of education. And, as you correctly point out, most readers either never get to those pages or, if they do, they [?may?] enjoy his sarcastic dismissal of some of modern educators of his day, his contemporary educators, and they've missed the boat. So, start there, because it's really special.
Tyler Cowen: Smith makes a point of saying defense is more important than opulence. And, he discusses national defense--armies, militias--at great length in the Wealth of Nations, and also in some of his other works.
He viewed a standing army as an essential precondition for modernity. It's what allowed territories to expand--that you could reap increasing returns, that you would be relatively secure in your property rights. It was an example of division of labor. It's one big reason division of labor is such an important idea for Smith. You also specialize in how you defend yourselves.
So, he's rebelling against, among other things, the 17th-century English libertarian tradition where you should be terrified of a standing army because it's the oppression of the King.
Smith argues: It's either a standing army, which you hope does okay by you, or it's universal surveillance, where everyone's looking for a conspiracy or always under scrutiny, always under suspicion.
And, Smith saw having a standing army as the way forward with economic growth and an actual stable polity.
And, when it comes to trade policy, it's remarkable how much Smith concedes to the mercantilists. He says they're wrong, in many particular ways. But the notion that you should shape your trade policy to say, 'Build up your shipping industry and have a modern navy,' Smith is fully on board with some kind of mercantilist prescription.
Russ Roberts: So, where does he fall short? Many people would--many thoughtful people--would call him the greatest economist of all time. Many would say, 'What? He lived in 1776. He's not worth reading anymore. It's all been subsumed into the rest of the profession.' I think that is a misreading of Smith's contribution, but many people would say he was important. Why does he fall short? To what extent does he fall short in your book?
Tyler Cowen: There is an obvious and very strong, nearly automatic, case for Smith as GOAT. He was the first major economist to have tackled the whole discipline with a treatise that made sense and is still influential today. His depth and breadth is greatly underrated. Those are major factors.
But, to the extent I hold back, it's because if I ask the simple question of, say, the six finalists--who was the worst economist of the six?--I think you have to say it's Smith. Didn't really have marginalism. On macro, he's strong on growth; but cycles, I don't know. It's not so impressive. As a microeconomist, if you gave him a tax incidence problem, he wouldn't do nearly as well as Mill, much less Milton Friedman. So, the idea that you should nearly automatically pick the one who is the worst economist, a part of me rebels against that.
So, I'm not sure. Smith clearly has a very strong claim. If someone wants to give it to Smith, I don't object. It's entirely defensible. But, I do want to put a 'but' in the back of the reader's mind.
Russ Roberts: And, those listening on audio right now will not know that Tyler's screen has gone dark. And, those watching on YouTube--much smaller number--will wonder, 'Was that on purpose when Tyler started to call him the worst economist that I made sure that his screen went dark?' The answer is No. I had nothing to do with it. But, Tyler, you have gone dark. I don't know why.
Tyler Cowen: Let me--Sam, my screen has gone dark. Are you able to fix this?
Speaker 1 [Sam]: Yeah, coming.
Russ Roberts: He's coming back. There he is.
Tyler Cowen: Okay, great.
Russ Roberts: So, I want to challenge your critique of Smith as the, quote, "worst economist" of the six. I'm not sure who I'd put below him. But, I do think you underrate him in the following sense. His best insights, if you had to ask me what are his most important insights: increasing returns and the power of trade to respond through the division of labor being limited by the extent of the market; the power of competition; the phenomenon of public choice. Just those three are so embedded in you, Tyler, that you underrate that he came up with them first, and they're huge.
Tyler Cowen: Strong agree. Smith is huge. I love Smith. I've always loved Smith. He has a strong claim to be GOAT. But, you know, the book is too simple. I could start the first sentence. Adam Smith is obviously GOAT, and that's not quite good enough. We need some deeper understanding. I'm not going to tell you how I conclude, but I hand out both a lot of particular awards, and I come up with a final name at the end. So, Smith has a strong claim. I'll just say that.
Russ Roberts: Yeah: the ending is very nice. I encourage listeners to download the book and not look ahead, as I always suggest that books be read that way.
Tyler Cowen: The GPT-4 app for the book that you can query, it's quite accurate for the most part. But, if you repeatedly ask it, 'Who does Tyler say is GOAT?' It gives you different answers each time. And, I actually think that's a kind of accuracy, too, even though I do name a single name.
Russ Roberts: Yeah, that's awesome.
Russ Roberts: Let's close with the GPT-4 part of this book. You're trying to do something creative. Part of me wishes you hadn't. Part of me wishes you'd just published this book as a regular book. But, you've embedded it in a GPT-4 framework, and you're going to add a couple more, it looks like. Why did you do that, and what do we get from that that's important?
Tyler Cowen: It's the future of the book. So, if you don't want to read every chapter and you just want to ask, 'Please summarize the Malthus chapter for me,' it will do that for you. If what you want is 'Please give me three anecdotes from the Keynes chapter that I can take to a cocktail party,' it will do that for you. If you want to ask it, 'How might an Adam Smith scholar differ from Tyler's assessment of Smith?' or whomever, it will do that for you. That's a remarkable power, and it's now at our disposal, essentially for free. And, I think books in the future will have GPT-like versions of them--with varying services, of course--and over time, they'll get better.
So, it takes a few seconds right now to get an answer. I think in a year's time, it will take half a second. So, there's some clunkiness to the technology. But it's the future of writing and reading. And, I wanted it to be the first person to publish a book in GPT-4, and this is that. It has not been done before.
Russ Roberts: I'll just add that, among those three Keynes stories, those three Keynes anecdotes, would be his use of spreadsheets and lists, which is why I at least started this conversation by saying that some parents might want to listen to it before sharing it with their children just in case we got to it. We didn't. It's fine. Listeners, you can check it out. And, you can cheat and get there quickly if you want.
What kind of reactions are you getting, Tyler? What are people saying? Is it too early? Has it been out long enough?
Tyler Cowen: People like it very, very much. I've been very heartened by the reaction. People write me about it every day. A number of people, yourself included, whose opinions I greatly respect, seem to really like it. People you've heard of, people you know. And I always wrote this book for a small number of people. Mostly, I wrote it for myself. I think one reason it turned out better: I didn't write it for a trade publisher, so there's no obligatory Gladwell-like anecdote at the beginning of each chapter. I didn't write it for an academic publisher, which is, like, 'Oh my goodness.' I just wrote it for me. So, it's, like, 'Here's how I think a fan's appreciation should go,' and that's what the book actually is. And, I was able to see through that vision the way I wanted it to be done. So, thank you, GPT-4.
Russ Roberts: And, thank you for sharing it with us.
I had a question about its provenance. I hope that's the right word. I knew nothing about this book. You and I don't chitchat about the projects we're working on, but certainly, I had no idea that you were planning a--what?--100,000-word manuscript on the history of economic thought in this kind of style. And, there are no acknowledgements in the version of the book that I saw. Did you keep it a secret?
Tyler Cowen: The main version of the book has acknowledgements somewhere. I'm not sure exactly where they ended up turning up, but I received comments from 20 to 30 people. The book as a whole, I did keep as a secret, though.
Partly, I was working on it during Pandemic. I didn't see that many people. But then, as my plans evolved, I just thought, 'Well, this should be a secret.' So, many people saw individual chapters. Gave me great comments. Those were extremely useful, and I thank all of you. You're listed somewhere.
But yeah: I thought if it's going to be done in a unique way, the whole thing should be a surprise.
Russ Roberts: And, will the book itself change? If you discover that there's a manuscript of Malthus's that we didn't know about, will you add a few pages on that? Will you adjust the book and the text as you change your mind in five years about this, that, or the other?
Tyler Cowen: I'm not sure. I don't think so.
What I do want to do as, say, Claude 3 comes out, as GPT5 comes out, other new technologies and services--to embed the book in those that will make it really much more powerful and more of a true synthesis, a kind of Centaur book. And already, the GPT knows more than I do. And, I've worked on a lot of these issues my whole life. So, maybe it doesn't in every way have my judgment, for better or worse; but within two years, the AI component of this will be so much stronger. People will be shocked. And, I think we need to start small, see what works, and then just keep on building out from a core idea a book inside a large language model that really over time you'll have the option of getting an embedded version of most things you buy or read, including op-eds. You can ask, 'Oh, what would a critic say about this op-ed?' And so, on. And, it will be at your fingertips, at the margin, for free.
Russ Roberts: We'll close with this: I assume it's crossed your mind to have a series. This is called GOAT: Who is the Greatest Economist of All Time, and Why Does it Matter? GOAT: Who's the Greatest Tight End of All Time, and Why Does it Matter? That's a little narrow, but: greatest composer, greatest rockstar, greatest novelist, and so on. I think many people would be interested in your thoughts on those. And, you're one of the few people could write more than one. Most people couldn't write one. A few could, but very few could write two or three. You could. The greatest restaurant of all time, and so on. Have you thought about that?
Tyler Cowen: I have. I do plan to keep on going. I've also thought of a book--getting back to your earlier question--just profiling the greatest achievers like Bach, Michelangelo. Now, there's plenty written on them, to say the least. But, a book focusing on the nature of their talent: How was it they were able to produce so much at such a high quality level? That's quite under-discussed in these literatures.
So, I've thought about doing a book across genres, but it would also be about LeBron James, who has played basketball at an extremely high level now, for what? 20, 21 years? I've lost track, but it's amazing. And when he's on the court, the Lakers are +15 or +20, and when he's off the court, they're -10. With all the wear and tear on his body. So, how does he do that?
There's people in business. And, to have the common theme, again, be appreciation and talent, but perhaps across genres, focusing on individual productivity.
Russ Roberts: Well, I'd certainly like to read that book.
An economist in your semifinalist list was Gary Becker. One of his colleagues described him as somebody who died with his boots on, meaning he worked, as you mentioned earlier, quite fervently until the end. I'm pretty confident you will do the same, Tyler, and we are all grateful for that. So, thank you for that. And thank you for being part of EconTalk.
Tyler Cowen: And, you, too. And, I'll be there along for the ride.