We talked about how bad coronavirus hit countries with Tyler Cowen. He is Professor of Economics at George Mason University and Bloomberg Opinion Columnist.
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Hoshimov: Hi everyone. This is “Hoshimov’s Economics” or “Hoshimov Iqtisodiyoti”. Today our guest is Tyler Cowen. Welcome, Tyler Cowen!
Tyler Cowen: Hello. Thank you for having me!
Hoshimov: Tyler Cowen is a Professor of Economics at George Mason University. He is also a faculty director at Mercatus Center Tower. Tyler Cowen Cowen is a co-author of the most popular economic`s blog “Marginal Revolution”, the University's online teaching platform for economics. Tyler Cowen is an author of those and best-selling books, more recently he wrote a book called “Big Business. A Love Letter to Mark an American Anti-Hero.” Tyler Cowen writes regularly for the “Bloomberg opinion”. I really recommend you read him there too. Tyler Cowen, today, I invited you to talk about coronavirus and its effects on economics and especially the economic developing economy. So my first question is: What do you think, what will be the biggest consequence of coronavirus in the developing world?
Tyler Cowen: I think we need to disaggregate the developing world the several parts. So we see a number of countries have for whatever reasons handled coronavirus really quite well in some cases remarkably well. For instance, Vietnam claims zero deaths. I don't know if 0 is the right number there, but I think it's generally accepted. It has not been a major problem for them. Even though, they're right next to China. In Cambodia as far as we can tell things seem fine, again, very sketchy data there. If you compare that say to India if you look at Mumbai or Delhi, there's a fair amount of Carnage happening and there's not enough public health infrastructure. And I think a lockdown is both not feasible and people starve through the lockdown and the lockdown just means you push them into crowded spaces in very crowded cities. So what we're seeing so far is that you have a tier of countries such as India where it clearly will be very bad for both the economy and Public Health. A number of countries are often Asian. It seemed to have virtually avoided the problem altogether in a matter which I find puzzling and then if you take most of Africa they seem to inhabit an intermediate space where often we as Outsiders don't know yet which box they'll fall into. They made themselves Not now Latin America generally has been going in the wrong direction ordered why you being a notable exception today. So it's a big it depends and I wouldn't necessarily assume that those differential Fates are how the whole thing will end up either.
Hoshimov: Thank you. But what do you think whether do we have a correlation between a GDP per capita and how bad coronavirus hit the country.
Tyler Cowen: My understanding is if you adjust for the age that age does pretty well in predicting fatalities and a lot of were countries tend to be quite young of course, and then coronavirus is much less likely to be fatal. That once you adjust for age the influence of GDP really is not there. At least based on the data we have two dates. But again, we're in what's sometimes called the second inning of the pandemic, and don't assume that what we see so far is going to be the final story.
Hoshimov: Do you think we have any understanding of how climate affects coronavirus? Are warmer countries are having an easier time than colder countries?
Tyler Cowen: Well, there were some earlier papers around the time of April. some positive effect, being in a hotter country. and at that time those numbers seem to hold up but those numbers are looking worse over time. So the performance of Latin America much of which is quite hot has been fairly bad even within a country if you look say at Ecuador by Akhil has been the worst-hit city. That's one of the hottest parts of the country the much cooler Keto which has a higher altitude may or may not be a factor. It has been hit for less. So the advantage is from T seems to be disappearing and then within the United States right now that are being hotter at least anecdotally. It seems to be the states that are hot enough for you to seek out air-conditioned inside spaces. Inside spaces are worse than outside spaces. So at the very least, that's going to make the ones positive effects of heat not monotonic. Very hot temperatures might get a lot worse.
Hoshimov: Okay, thank you. Now, let's talk about the institutions in the developing world. Do you think given the pandemic institutions such as the United Nations or the World Bank will gain more prominence in the world or the opposite will happen? The anti-globalist rhetoric will prevail.
Tyler Cowen: I think the multilateral institutions will have far less impact and influence, for one thing, travel will be problematic for a quite while whether it's the legal restrictions or just the difficulty of the quarantine or just employees especially older employees not wanting to go. It'll be harder to do anything internationally for quite a while that will limit say the World Bank. But also if you look at their pandemic response or that of United Nations at WHO. I don't think it's been so overwhelmingly positive. I don't think they've been difference-makers. WHO early on made some big mistakes. I don't actually think President Trump would defund them. But obviously, that's a blow to their prestige and the most likely heroes at the end of the song will be the bio-medical establishment and the scientists, which is International Community to be sure, that they're not multilateral institutions and right now their ability to operate has badly bruised. And perhaps permanently so we're for a long time.
Hoshimov: But in the Developing World a lot of governments are looking at the World Bank and IMF to help them. And in that notion, I was thinking whether IMF and World Bank, and the UN will gain more prominence in very poor countries, or do you think that's not the case?
Tyler Cowen: Well, I think you have to look at it institution by institution. So if you take the WHO, for many poor countries, that is their public health authority de facto, even though it's not de jure. I think we'll see better performance from the WHO than we saw earlier on in the crisis when we were told that the masks were not very important and there was no person-to-person transmission in China. There's enough negative publicity thrown their way. They're afraid of losing American money. I do think they'll do better that will help developing nations. If you look at the IMF to me, that's really the big question mark. So the IMF was designed that quotas of the resources in the IMF under the presupposition that at any point in time the number of developing country crises would be fairly limited, and even in 2008-2009 stretching through 2011. That number was capital enough and you had enough positive Chinese growth that the whole thing held together. But I suspect now. You have so many countries that will have physical problems balance-of-payments problems credit problems. It's a real test of the IMF and frankly, I don't think anyone knows how well they will do in this new environment. They can without really having positive Chinese growth to be a Difference Maker. The World Bank, I just think at the margins, will help a bit, but it's just not going to matter and the poorer countries that have done well such as Vietnam Cambodia. They did at all do well because Because of the World Bank, so I think they will find their own models and you will find a number of developing countries that will use cheap labor to develop low-tech but effective means of tests and Trace noting those societies often have low levels of privacy anyway, so they can do things Western countries can't - cheap labor little privacy to begin with low Tech test and Trace. I think we're going to see over time a lot of four countries that do it pretty well.
Hoshimov: Okay. Thank you. But overall what I was observing is that in many parts of the developing World, especially say in Central Asia countries and governments were helping each other in this trying time for it. You know, Uzbekistan was sending masks to Afghanistan or Tajikistan and stuff like that and Belarus is helping us with some medical equipment and so on and what I thought is that the fact that countries are helping each other in these trying times. Would you think this will change the world order in a way that we didn't anticipate because I think that the weakest link in this pandemic is as strong as the strongest one?
Tyler Cowen: I see more cases of countries not cooperating very well. So if you look at the European Union, it has not been very effective in the current crisis. Now some of the member nations have done fairly well. It's not that it's all been terrible but not to the credit of the EU. If you look at America's relationships with its allies, no matter, which party is to blame but I don't feel any of those relationships have gone very well. Will you see a number of very specific local cases where new friendships are built as you mentioned? I think we will but in the GDP weighted sense, I think we'll find just overall lower levels of cooperation across most of the world. A lot of good local partnerships at lower GDP levels of all for that. But I feel more at the spare than hope on all of those issues.
Hoshimov: I see let's say hypothetically.
Tyler Cowen: Not meaning to get you down, but you asked. So I'm going to tell you.
Hoshimov: I mean, you know, you could be right in terms of advanced economies, but my question was primarily about poor countries in which I observed a lot of cooperation, especially in Central Asia because you know, I didn't expect that much of cooperation among those countries. I mean ex-ante, but now I see there's a lot good.
Tyler Cowen: Just to be clear Central Asia's the part of the world I probably know least about. If you look at say India- China cooperation has gotten much worse. India- Pakistan is I think hard for me to judge but I don't see obviously cooperative groups there. So the population waited. Those are highly significant cases. If you look at Nigeria, possibly they are being hit someone hard. I'm not aware of meaningful cooperation on a large scale that they're doing with their neighbors the 50 things happening, I don't know about. Latin America again, most of that record. I don't mean to necessarily blame these countries. They just have a hard enough time dealing with their own problems and very binding budget constraints and travel is difficult.
Hoshimov: Okay. I mean,I think I think you're right. But let's talk about specific case. Let's say you are in charge of economics in middle-sized developing country. Let's say like was Uzbekistan with 30 million of population because of the lockdown has everybody lost their sustenance. Most of your work force doesn't work in the, you know are not legally employed and remittances from the from the migrants right up, so What kind of things that you have in your toolbox that they can ease the difficulty right now?
Tyler Cowen : Well, I think there's good evidence that masks work and masks are very cheap and virtually every country can do a lot of masks fairly quickly. If only through home production, so I would start with fat again and I've never been in UZBEKISTAN. I'm reluctant to speak to the details of Uzbekistan, but it would seem to me from what I know. Oh, there's enough traditional structure in hierarchical relationships that your ability to do tests and trace on a very local level and in villages and through Village and small-town authorities is there's a chance it's really quite good. So I would at least look into it. And then some of the treatments were found like the cheap steroid treatment that seems to lower fatality. He's for extreme coronavirus patients. That's something you can afford and can do and it's fairly easy to administer. So I'm by no means totally pessimistic about you know, a lot of these lower to middle-income countries.
Hoshimov: So you're talking about the effect of pendant and how to reduce it. I think Central Asia, Eastern Europe that particularly well on that. My question was more about economics like they because of the strict lockdowns and masculine policy and so on people are losing their sustenance, but basically can't feed their families right now and so on what our economic tools that they can use to get out of It should they borrow more from the IMF or should they, you know increase taxes like how should they think about developing in this situation?
Tyler Cowen: Well, those poor countries cannot afford extended lockdown, You might win initial lockdown at first just to figure out what's going on or develop a cough creep policy response, but it's not possible or feasible or desirable to have the lockdown for a long period of time because you will kill more people through starvation and poverty than you will save. Beyond that, I think having been public health measures is the best thing you can do economically. The demand for your exports likely he's going to fall can't do much about that. I don't assume that whoever has had a good response. So far is not in any trouble. So right now cases are rising in Japan, cases have been rising in parts of China that did not have problems previously. From the evidence we have, it seems one rational Daisy and update is that the thing can be dormant for really quite a while, and then it can hit you hard. So you're never in the clear. You shouldn't say well, we solved the public health problem. Now, we've got to fix the economy. The best thing you can do for your economy needs to keep on solving the public health problem. And that's very very very hard. It's even possible and this is more speculative. It's possible there are different strains of the virus and that some countries have had the less contagious trains and that over time the more contagious trains might come to them and is it again? that's possible. The really quite great dangers ahead and getting the Public Health crisis again for me the top priority.
Hoshimov: All right, let's talk about advanced economies.
Tyler Cowen: Which economy?
Hoshimov: advanced economies, rich countries.Advanced economies of these countries? Yeah. Do you think as a result of this virus people in advanced economies, voters will become more nationalistic. Like would they
Tyler Cowen: They already have?
Tyler Cowen : They were already becoming more nationalistic anyway, so this is speeding up that tendency, in my view, this is quite unfortunate. It's very bad for Central Asia. I might add and immigration across most of the world is completely shut down and even the virus were to go away fairly soon. What we will need to do legally. It's Duchenne Ali in terms of backlogs, in a civil service capabilities to reboot it at its previous level. Could take really many years and the ability of someone say from Central Asia as you have done just come study in the United States. It's a normal matter. Of course, I would say…………
Hoshimov: I lost you. Hello, Tyler Cowen. How are you here? Oh God, I lost you. I think I lost you. Did you hear me?
Tyler Cowen: No, I heard my own answer and then I heard nothing more.
Hoshimov: Okay, I lost you at some point and you know it which one when you said the ability of somebody from Central Asia to come to study in the US will be severely affected by this and the rest I didn't hear
Tyler Cowen Yes. There is not much more. I just made the point that even if Joseph, I'd beats Donald Trump kind of backlog affect untangling The Nest to take at least five years and if Donald Trump is re-elected. The immigration situation could be much worse yet. And this will be bad for pretty much all developing nations.
Hoshimov: But what do you think about travel in general and if you read reports people are yearning for getting out and hanging out together or going somewhere and there are a lot of surveys that show that you think that once the vaccine or cure will be invented, people will start traveling at a. Higher than they used to or it just it's already kind of gone.
Tyler Cowen Well, they're already traveling at much higher rates than a few week AGO . Quite startling how high the rate of growth is within Europe within the United States not yet much across borders, but within Europe will be an opening in July how dangerous this turns out to be. I don't know but I think we'll also see a number of backlashes. So it's countries highly tourism-dependent countries such as Spain and Greece parts of Italy reopened for July and August. It's not really the travel. That's the problem. It's the drinking that people do during the travel and then the ways they get together in bars or indoors and it could be there's a big backlash and country's Retreat from this so I don't know the whole situation makes me very nervous and my ability as an American to get almost anywhere is close to non-existent right now, so I'm not sure when that will change.
Hoshimov: But what do you think about voters in advanced countries and their beliefs about government intervention? Do you think that they will be more willing to tolerate a government resource allocation price control rationing and so on as a result of this pandemic and you know Health Care crisis?
Tyler Cowen: Well, I don't think most advanced economies will need price controls for rationing but they will be much poorer. Imagining The number of countries say 5% were moving forward. And right now we're all playing a game of denial. We're not willing to specify who has to Bear those costs and it's just all borrowed money, but it's end of the day if there are fewer resources fewer people working effectively. You can borrow all the money you want, but the world can't just conjure up the resources. And in essence prices will go up either directly or indirectly and someone will get the short end of the stick and politics will try to make up for those losses and very destructive ways with a lot of rent-seeking higher levels of deception on the voters. Thing to me is ugly and disturbing and will not be done in accord with even halfway decent economics.
Hoshimov: Okay, interesting, but I want to ask you about one thing you wrote for Blumberg on March 9th in your column you wrote that and I quote here. It is common for the U.S. to flounder at first then respond much later with energetic and effective outburst and it's too early to write off the U.S response as pathetic being a lion guard is an old and dangerous American tradition. Do you think that was the right prediction?
Tyler Cowen: Well, I've somewhat repudiated that column in the meantime when I gave my own country grades for its coronavirus response. And most of those grades were quite negative. But I'll say this: I am on the biomedical front of the response of the United States and other countries to be clear has been fairly tremendous and rapid and constructive and that may be the most important front so we can make a long list of all the stupid things Americans have done including our Leaders, I would agree with those criticisms. But if we come through on the biomedical front, you still have to say our response has been a pretty good one. So too early to tell when it comes to coronavirus most of all I see people engaged in premature moralizing. It's very dangerous. The criticisms of America are correct. But if we hit a home run in the one big area, well, we'll see.
Hoshimov:Okay, but what do you think is happening here, you know, do you think that the current generation of Americans are different than those that you talked about in your Bloomberg column like your main example was World War 2 and another crisis when you're saying you Americans are slow at first and then they kind of make up for their lags (LACKS). You think that the current generation of Americans are. Then the old ones.
Tyler Cowen: We're more complacent. We're more spoiled. We're less willing to sacrifice. If you look at World War Two. It's a person maybe you don't know his name but Ted Williams. He was a baseball player. Maybe you know the best in all of professional baseball and he took off several years to fight in World War Two. We maybe he didn't have to and then in 1953-54. He took off two more years to fight in the Korean War. He lost five years of his career serving his country. He didn't even try to get out of it.
Today you don't have to have large numbers of Americans not willing to put on the mask not willing to postpone visits not really giving a damn how many people died in nursing homes? And I think it's been 43 percent of our personalities have come in nursing homes. Like it's a story you'll find it in the newspaper. But a lot of those deaths were it's just unnecessary and it is not actually a major national Scandal and that shows a kind of moral-spiritual and energetic EK of the American psyche my view forgive my premature moralizing but that's what I have to say.
Hoshimov: But do you think it's an American-only phenomenon or do you think that other parts of the world are suffering from the same problem? There are more individualistic in some sense and , I think this virus as a as an example of public goods and Common Goods problem where everybody benefits from everybody staying at home, but nobody Does it. Somebody on Twitter said it's like working on a group project,, you can do all the work and Nobody Does it so what's happening to the world?
Tyler Cowen: Like well so far I've City America as the worst wealthy Nation. Brazil might be the worst nation of all, Mexico has done very poorly. It seems to me a nation such as Denmark amongst wealthy Nations as had one of the best records for actually doing what they're supposed to have been doing. So, it's not that every wealthy nation has failed at least so far. You have Sweden taking an unusual course, of course, that might be mistaken, but I think their people have obeyed the instructions for the most part. So that would be a different kind of mistake than the Americans at stake. It seems to me Americans are saying back to their government. No, we don't want you to solve the problem this way by opposing privation on us. We're demanding you solve the problem son. No other way and in a pandemic, that's a huge gamble to be taking right now. That's what I've seen my countrymen doing
Hoshimov: I'm on if you restrict your sample to only wealthy countries. What do you think would be the single most important variable that would explain most of the variance and rate of coronavirus infection?
Tyler Cowen: Putting aside issues of age I think social capital and how strong your weakest link is so a country such as Denmark what you might call the weakest link in Denmark is still relatively strong in the United States or for that matter of Brazil. The weakest links in terms of Social Capital are really very weak. Germany is performed. I would say in between America Denmark but overall closer to Denmark Social capital and the weakest link test I think have a lot of
If you look at England and I use the word England not UK England is like the United States in this regard the social capital of their weakest links again, please leave before coronavirus was really quite who are and we're seeing the problems with that manifest itself in England as well. So, when do you say weakest link do you mean the Economic and social inequality meaning the most vulnerable people are somehow more disadvantaged in the U.S. Compared to say than Denmark or that's not what you meant.
Tyler Cowen: I think. It is Close to it, but it's not exactly the right way to define. So if you look at the data say for my County Fairfax County, I think about 11 percent or 15 percent of my county is Latino, but at times 2/3 of the cases coronavirus have been Latino . and much of that because those are the for workers who are more exposed so many of tey come from these individuals have grown up with high levels of risk, whether it be because of tags or malaria or Dengue. So if they come here and are confronted with the risk, which for their age groups does not sound nominally high. I think they're not scared or apprehensive in the same way and there are communal norms and high numbers of people living together and close family connections with may be higher than average levels of hugging and kissing and you combine that with having these Frontline jobs and you've had serious problems the fact that they are on average poorer adds to that. I think if you start with income, you may be missing the main issue. If you take African Americans in the US where also fatality rates have been much higher per capita income for African-Americans is about the same as for white French people, right? So it's not just Come in terms of factor, but the something about relationships Social Capital hypertension, obesity, diabetes that's interacting in a way. That's very toxic and America doesn't care about it in the right way. The elites have the luxury of telecommuting and being at home and isolating not that they don't care at all but it's not urgent priority in the way that it should be for the it's something happening to other people.
Hoshimov: Traditional when the teach you what strategy of Commons right where there's overgrazing and communal property or something what the main kind of idea of that of their problem is that in an individualistic cultures where people's utility depends only on their own then there will be the overgrazing. Let's say of the public grazing Fields, but if culture is more as a collectivistic in which in a way that they kind of maximize the Communal utility. Then the problem of overgrazing can be solved because people care about their you know, fellow Shoppers and so on what I find surprising and tell me if I'm wrong is that southern Europe to me was more kind of collectivistic where people live together where people hang out together and they, you know are more social and Northern Europe was less of that and it's more individualistic but the death rates and you know infection rates are much worse. In the South and in the north and how would you explain that? You know, if it's a tragedy of Commons kind of follower people don't care about others. The Denmark should be the worst country that we would we would say and the best country would probably be some somewhere in the Middle East, but that's not what's happening
Tyler Cowen: I think there are many puzzles about the cross-sectional distribution of both fatalities and even just cases that we don't understand. So Kosovo seems to have been pretty well. They have such great governance. I don't know North Macedonia seems to have done pretty well greased within the European Union is one of the better performers. The Netherlands is one of the worst performers. And you would not have predicted any of those in any obvious way up front. Could it be the Eastern Nations have this tradition of a certain kind of obedience still in the culture or could it be they're kind of vaguely weird paranoid planning for pandemics communist.
Is it just timing that they got the virus from Italy at a later date? And we're more prepared. Is it just that we're in the second inning and after the whole history is over maybe what appears to be the current winners won't have done so great. Anyway for how long you know, can Kosovo keep up such a good record? I genuinely don't know I would just say this to me is a very significant social science puzzle and I've asked many people in epidemiology about it and also in the biomedical area and I don’t feel they have good answers. I don't feel they claim to have good answers. We will see we will learn more from me. This is gruesome. But fascinating
Hoshimov, let's talk about economic recovery. Imagine in 2021. We have a vaccine How do you think the recovery will happen do you think the rate of the recovery will be faster than in say after 2009 prices? I mean, I'm just talking about the rate, not the level, or do you think we have fundamentally crushed the economy? So that will be a long, you know depression coming next five years.
Tyler Cowen: Well, I'm the economic side if the virus were magically gone. I absolutely think we could still have a v-shaped recovery in virtually every country. There's no logical reason why we can but of course the problem is that the virus is gone. My view is that vaccines will help less than people think you present, you know, if we have one in 2021, but that's a certainty we have vaccines now the Chinese are vaccinating some if their troops now. Will be not a very effective vaccine. It's a good chance that helps some number of people but imagine a vaccine that gives say 40% of the people forty percent protection and the older people who are most vulnerable arguably will be the ones who are protected least because vaccines in general don't work as well on old people because it's harder to stimulate that immune system response. So a vaccine might just be another part of the toolbox that lowers deaths a bit of course world. For that the odds of there being a fix-all cure-all. Now this thing is done vaccine anytime soon. Possibly ever. They're really not that high. But any vaccine at all, it's not just coming really in a rudimentary way here and there will be something this winter. It just probably won't be that good.
Hoshimov: So you're saying the vaccine is not a magic pill that can solve all these chronic problems. I guess my question was more stylized being what if we had this magic pill what if we had this magic do you think there is some damage to the economy that is irreplaceable, you know, like managerial capital or something that it really takes time to recover, you know, being six months at home might have some Irreplaceable damage to the economy. And if you think there is something like that, can you share that?
Tyler Cowen: Well World War II was pretty terrible and Nations did bounce back. They had any kind of sensible policies. I do think moving forward what you would call the the built-in psychological risk premium will be much higher people will always be wondering when is the next pandemic that will limit investment. It will limit particular kinds of commitment. Probably the single biggest problem would be the fiscal holes for governments, especially state and local which typically cannot borrow so easily.
Today will be under-investing in public goods for quite a few years to come. A lot of kids will have lost a year depending on how things run so you have a Year's Worth of schooling. That's a permanent loss. Not the end of the world, but you will see significant longer-term losses from these fiscal holes at the state and local levels.
Hoshimov: Okay, but you know, do you think like entrepreneurship generally is procyclical or counter-cyclical when I ask you this question first and then I'll ask you something later.
Tyler Cowen: This is the big debate over this in the literature. Some people have argued Innovation is counter-cyclical that one unemployment decide. There's more tinkering more experimentation. I don't dismiss that.
I think the numbers are not clear. I suppose my intuition. Is there some truth to it, but I think it's overrated by the people who promote it and the fact that when you look at the data, it's hard to find an unambiguous story. There are pluses and minuses. A lot of people are human capital deteriorates Rising incidence of mental health problems parents who have to look after their children, so it cuts both ways. I wouldn't be optimistic about it except in a few areas like telework. We are going to do better already the case. Online education we are going to do better and anything biomedical they're going to see phenomenal advances and that particular part of the economy, but it will cure other people of other things later on.
Hoshimov: Okay. I also agree with you that I think high-growth entrepreneurship is more of a pro-cyclical as far as I understand the data right now. It's really hard to make a case that high growth and high tech technology business entrepreneurship is actually not a counter-cyclical. Overall with exceptions of what you have said? Yes. My question is about the kind of longer-term effect of the time that we're living if you re literature, you know that people who grew up in the Great Depression War less likely to take risks or start a business when they become adults. What do you think will happen to the kids right now or people in their formative years were people in college would they be less willing to take risks in the future and therefore the rate of technological advancement of the US and the world will slow down.
Tyler Cowen: That is possibly the case but I think this is a unique data point and our past does not apply in a simple way. So if you simply have a big recession or depression that makes people more cautious in the future and clearly to some extent we're having that right now, that's a terrible event. But we're also seeing a higher level of background risk. So people getting used to the idea. Well, this thing can kill me and I'm not sure what the effect of that is your might think. Well, the effect is Is everyone becomes super risk-averse right and just for Treats but even in the data right back with the risk is pretty high, but it could kill you within say three weeks. We're not seeing people treat as much as had been expected. So what could be that have a higher level of background risk your recalibrate your relationship to risk? I think these other marginal risks are not such a big deal and that could encourage more risk-taking. So I don't know which is the net effect, but I wouldn't assume that the effects of previous depressions. What do you like about the effect of this one?
Hoshimov: Okay, I'll let us look at the effect of this depression to the thing that you tel want this concrete. So in your book is someone that once you argue that we should care about future Generations a lot. How would you think people's conference with respect to the discount rates and less into the future will change. Let's say non-controversial generally in terms of tax and fiscal policy.
Tyler Cowen: Although borrowing rates are quite a low negative often in real terms. I think socially discount rates have gone up rapidly people want to have fun. Now This is related to the increase in mental health problems. People want to do something somehow with heard to feel an alleviation of their anxiety. And this will get them both to take more risks and to think less about the future is in some ways. They feel more desperate or lesson for all so that to me is a big negative and it's the reason why I am so many places. We see individuals behaving in these foolhardy manners and not producing these local public beta mask-wearing compliance and other safety preserving measurements.
Hoshimov: Okay, let's talk about Healthcare and education. I think this the things that you write a lot about and the first question that I have is that what do you think are the strengths and weaknesses of the U.S. Educational System. I mean higher education not the primary education with the rest of the world and how those strengths and weaknesses would affect the way that education will be shaped in the future.
Tyler Cowen: Well, I think the US for a long time has had by far the best system of higher education in the world where right now seeing what I think will be hundreds of schools go out of business. We typically not the famous places you've heard of we're seeing a lot of consolidation. We're going to see shrinkage schools in remote areas that rely on out-of-state students or foreign students will be hit very hard and they will not come back in their previous for many times. It's too so higher education to me is one of the big losers, but I think cheaply priced State schools near population centers will be pretty robust.
But it will be much harder for them to operate for at least a year possibly more. They will be less effective. They're not going to go away at all ever, but it became a big hit for them as well. So these are Big negatives Germany in the sense is more protected because Germany never relied as much on its higher education system, to begin with.
Hoshimov: Okay, interesting, but you know the way we think about creative destruction or the way that things will change after the crisis. Do you think that education will be the main source of creative Destruction for the future and the economy or not?
Tyler Cowen: the way we performing arts will be hit very hard tourism will be hit very hard already the case. Of course, I guess I don't see higher as the single biggest loser. But in the top half dozen as a loser and again, it depends when is it possible to recreate a reasonably safe classroom experience. I don't have a prediction. I don't think anyone has a good prediction but it will depend on that if we can do it by January that's very different than if all this run, Offer yet another year.
Hoshimov: But what's your take on education overall? Do you think education is? Like I mean higher education in college is more of a suspension type of signal of capability or it's a human capital improving exercise or it's a combination of both
Tyler Cowen: It's a combination in the to reinforce each other and even if it's signaling if your economy has less efficient signaling that's bad for your longer-term growth as well. But people learn things they form bonds they develop Social networks. Just the fact that for young people their ability to build a social network right now. It's close to completely Frozen that is an underreported catastrophe and higher ed is only part of that picture, but just how you can meet people at a cocktail party or whatever. You may do it's gone and again there could be an okay vaccine Say by end of winter. Let's just say I'm not sure that the older people you want to meet or just all going to die. Suddenly flock out these cocktail parties and the young people they have other things we'll want to catch up with our who knows. Well, they wouldn't just think everything will bounce back. So the ability of say you to meet older people you want to meet will be much harder. I think for really quite a lot.
Talk with her who knows but I wouldn't just think everything will bounce back. So the ability of say you to meet older people you want to meet will be much harder. I think for really quite Broad.
Hoshimov: I see. So I guess I was asking this question If part of the education higher education the u.s. Is say human capital and if we stop investing it and people stop, you know investing in their human capital for a while. Let's say for a year in a worst-case scenario where people stop going to college or invest in college. I was wondering how that would affect the future because you know the quality of human capital is really important. And my opinion so on their investment,
Tyler Cowen: it's just a year lost. But my tears are moderate. But if it's this drags on for two or three years before I uncertainty and young people not building up their networks, then I think it's terrible. But if it's truly over in a year and then by May everything's fixed and the next fall universities will be just as they were and at Auburn in Nebraska. They have football and whatever a year lost of learning we will make up. It's really the danger of persistence and ongoing risk and never quite being sure when things will snap back to normal and that's probably a likely or scenario that thinking it'll all be done and over, you know by next day.
Hoshimov: Let's talk about online education. You launched Marginal Revolution University. What do you think its effects? What do you think? Its effect has been so far. Do you think it changed the way people think about economics in the world or it's really hard to measure it?
Tyler Cowen: It's hard to measure it's the number one economics education site in economics. It had been getting six million or more unique visits a year. That's now gone up radically. Since the lockdown, I don't know exactly the current numbers. I think that will be permanently much higher. It's used in hundreds of classes around the country and around the world George Mason now has some online classes fully automated based on those videos. It's done very well. I thought this spring it was scheduled for covid-19 a lot more schools will do that. I'm scheduled to teach principles again in the fall fully online videos make that possible. So I think a revolution will come to education. We're maybe 20% of classes Move online to me. That's a good thing. I fully believe in face-to-face and it's important but I think you'll get a better face-to-face experience. If you can cut out the worst V and do it online with flexible time better material avoid the worst professors pay less money because I believe in face-to-face that I also believe in online.
Hoshimov: So it's sort of a specialization argument. We're face-to-face will be specialized in a very narrow set of things and other boilerplate things that you can teach online will be online. Is that how you think about it? Yes, but in my ideal Vision face-to-face still 80% so it's not that narrow. It's still most stuff. But if you could cut out the worst fifth of your education and replace it by the best online material, isn't that just too obvious a win for you? And you'd also have more flexibility with your time and could use that to do networking made it people take trips and it could cost you less if we do it, right? It just seems to me fully win-win. The only question is when we get there.
Hoshimov: Okay, let's talk about health care. I seen the data that a lot of Health Care procedures are being delayed and people are not getting their you know, Dental appointments on time or somesurgeries are being you know appointed for the later time and I and there's some data that some people in the medical field are being laid off. What do you think with this crisis also be partially explained the through the under consumption of medical services and how we should think about that.
Tyler Cowen: Well for a typical Hospital elective surgery is a profit Center. So many people have postponed elective surgery and treating covid patients. They do at a loss or it best break even so they're far less profitable but actually elected surgery has gone up very rapidly the last few weeks and it seems hospitals that managed to do that safely. So it's possible that trend is not quite over is being reversed, but I do think in the longer run.
We'll see from the data like how bad was this for people, you know, which valid he's killed them. They couldn't get you know these back and knee operations, but that even matter maybe in some cases that will be a good thing. So it will help us rethink everything in healthcare. We might just screw it up worse I get that but I'm somewhat hopeful that we will in America at least go on a bit of a health care diet and use health care when Health Care is appropriate. It's not just over consumed across all margins. We'll see.
Hoshimov: I think it's a great instrument than a lot of papers will be written on that, you know and just yeah hurry to stop on consumption. But what's your take on the future of healthcare? I have something which one theory that I think sorry. I want the area and I want to hear your opinion. I think that people will be more tolerant towards government-provided health care and will be more prone to support ideas of say single-payer and On because of the pandemic. What do you think?
Tyler Cowen: Well, I think it depends a lot on the country. So if you're in the United States and you have private insurance, I'm not sure you're more likely to support single-payer because you will lose your privileged place in line and that now feels more important than it used to be because of covid-19 in general do I think that effect will be true in the world probably do I think it will be true in the United States? I'm not so sure you see Elite now has stronger reason not to want single bear
Hoshimov: it is interesting. Yeah, I guess that's one take because now have being first in line that was much more than it used to.
Tyler Cowen: It could be the real Lobby now is to improve long-term care including nursing homes, as you know, 43 percent of American covid-19 deaths in nursing homes. That's just awful when I think it has to mean
Nursing homes for doing other things wrong to older people vote. They don't necessarily vote for India logically. So I may be more inclined to think America will address long-term care and the major way that would have happened. Otherwise that's not easy to do. Right?
Hoshimov: What do you think of regulation in healthcare FDA and others have been criticized recently. And do you think that we'll see less regulation in health care and pharmaceutical Fields?
Tyler Cowen; I think we will very selectively deregulate the FDA will speed up approval processes for drugs. The FDA is scandalously held up a lot of testing procedures for no good reason I thinking
Scaredy regulation but not general deregulation. I just think new biomedical advances will come much more quickly than they used to this will be a good thing. It's one of the changes we should be most optimistic about and I think our understanding of Immunology virology. So many areas will be so vastly improved from this weird experiment of everyone rushing to fix covid-19 so quickly, I think they'll be phenomenal payoffs at the end of that.
Hoshimov: What about the cost of Health Care with the cost of healthcare overall and insurance will go up and the proportion of Healthcare in GDP will go up in the US.
Tyler Cowen: Sorry to say is you probably know this year. It's gone down as people are postponing elected surgery. So to the extent hospitals remain truly strain counter-intuitively that could limit health care costs, but also by living in health care, if you just think we should have less Health Care, even though of course that will be good for everyone. This may help us get there, but it's a very painful way. He gets the where we should have been all along.
Hoshimov: Okay. Now I want to talk a very little bit about you. And how do you consume and produce information? So the first question, can you share a little bit about how in the time of pandemic where people are overwhelmed with data with news with information? How do you keep your information hygiene? I'm overwhelmed like everyone else so many of my days. There are two things I do one is exercise and the other is sit on the couch and absorb information and really nothing else.
So what you would call social life for me? It was always kind of the same as my professional life that has mostly vanished. I live with my wife obviously still see her daughter and her husband but socializing is almost completely God travel is completely gone. So I have more time to absorb information. The information is tracing me but every day I do my best to keep up with the flow.
And many fewer books read but never does as much reading so I'm doing right now reality has become too interesting. I would say I do not prefer it this way.
But how could it be that 2020 is more interesting than Thucydides. It should not be the case some extent it is and this is the tragedy of our time and my information diet reflects that
Hoshimov: How do you decide what to think about? Like, there's a lot of rabbit holes. You can go on in terms of epidemiology for example or macroeconomics or you know World traveler. There's a lot of ways you can you can spend your entire life. Thinking about but how do you decide on that in margins? what do you stop?
Tyler Cowen: I'm not sure I decide so I don't have this brand glorified few of my own free will after the question. We mentioned earlier like why is the Netherlands done worse than Greece North Macedonia. I just struck me and the puzzle didn't go away. So I keep thinking about it. I think in a sense on the victim of the flow directed at me and maybe I'm not good at deciding what think about.
Okay, interest and whoa crashing that collar that I really like is that your be enthusiastic food and you wrote about how to you know, look for a restaurant and so on. How has been your gastronomic experience so far in the time of walked out you can't possibly go to the strip mall restaurants anymore. So what do you do how do you decide what to order? you told us how to choose a restaurant, but you never told us how to order food.
Tyler Cowen: I've been very well though. I've also lost weight, which is been a good thing. I have ten favorite restaurants local that are open where you can dine outside and it's wonderful and if you show up early the best chapters cooking only for you. So my variety over all choices is way down but the quality of my median meal is not down. I might even be up a slight amount of also a very good cook. I've cooked a great deal. It's hard to get a lot of scarce ingredients are hard to get them with certainty the maybe I've been cooking a lot of comfy food I've gotten even better at cooking and that's been fun to rediscover that so my food life has remained rich and rewarding albeit much narrower than it used to be.
Hoshimov: Actually speaking of comfort food. I talked to one person who manages food delivery. You know what service he told me that they had a many-fold increase in orders of comfort food, not exotic food. And also I read some articles that the same thing happens in the U.S. Like people are cooking more comfort food and ordering more confident with what is the deal with eating comfort food at the times like this.
Tyler Cowen: It could be this mental health issue, but for me personally, I thought felt you know so stress if I want a Coke like an exotic South Indian dish and I need exactly these seven ingredients. if I try to order them for tomorrow, maybe only six of them will come and that disturbs me. I don't want to make the dish. Whereas if I become for Dish and the ingredients are onions garlic, you know butter particular kind of Curry, or I know Sichuan peppercorns. I know I have it in the house.
They go ahead and plan on that confidence. So I end up with more comfort food, but I believe me I'd gladly have the Exotic learn new dishes just harder to do right now because if you're missing one ingredient sort of eating perfectionist in you as pissed off as I go. Without you know the right kind of messy, by the way, one of the best outside restaurants right now is our Uzbekistan restaurant in Arlington, Virginia Bruce.uz who's favored wonderful outdoor dining patio. So for those who Uzbekistan’s fans on the podcast, it's a great place to go with the moment. All right. I can finally be at home. By the way my pill Nene your excellent better than my wife's and she was born in Moscow,
Hoshimov: but I think you know Uzbeks have the type of thing And called chuchvara and there is a difference between Russian type of cell many and say Central Asian type of felony. We have a thinner dough than there and for us like Siberian for many looks very very big. So there's quite a big of a difference.
Tyler Cowen: I go to the Russian grocery store and I get beef dumplings and then I have a particular kind of Indian yogurt and then Frozen but God blueberries. It's super simple dish. It's phenomenally good. I recommend if you all make sure you use the Frozen about the fresh blueberries and the right kind of yogurt high-quality plain yogurt. None of this month's bad stuff real yogurt, please okay in here Tennyson's we have any ambient food because I think North Virginia organic using is the best. I'm going to Zina 8 in the United States, or maybe it's false. But how do you think about it?
Tyler Cowen:I agree with your assessment. I actually haven't tried my favorite Afghan places yet. See if they have outside dining. It is on my to-do list. I haven't had any in a while. I've heard one of them is open outside Erico should Bistro and I plan on going this year.
Hoshimov: All right, this was Tyler Cowen Cowen. Thank you for your time and see you soon, Tyler Cowen.
Tyler Cowen: Thank you, My pleasure.
Hoshimov Thank you. So I'm stoppin