Podcast Summary
Balancing progress and creation: Progressivism should focus on both affordability and innovation, addressing the lack of investment in new infrastructure, public goods, and inventions to prevent societal stagnation.
While progressive policies have been crucial in helping people access necessary goods and services, there's a need for more focus on building and creating new things. Progressivism should not only be about affordability but also about innovation and creation. The lack of investment in building new infrastructure, public goods, and inventions is a significant issue. Societies become weighed down by their own success, leading to complex bureaucracies and interest groups that hinder progress. To counteract this, it's essential for governments to strike a balance between helping and hurting, allowing for the creation of new social and public goods while minimizing obstacles.
Government's self-interest can hinder problem solving: Public choice theory reveals that government's self-interest can lead to inefficiencies and ineffective problem solving, illustrated by the sugar quota example.
While government can and should tackle big problems, it may not be the most effective solution for every issue due to its limited resources and the self-interested motivations of those in power. Public choice theory, an area of economics, sheds light on this by suggesting that people in government, like everyone else, act in their own self-interest. This self-interest can manifest in various ways, from a desire for power or wealth to a drive to do good. As a result, passing laws and implementing them effectively may not always be straightforward. A simple example of this is the sugar quota, where a few sugar producers in the United States, through campaign donations, influence politicians to maintain higher sugar prices, despite sugar being produced more cheaply elsewhere. This self-interest can lead to inefficiencies and the failure to address problems effectively. Therefore, it's crucial to consider the incentives of those in power when evaluating government's role in solving societal issues.
Special interest groups can harm society: Small, powerful interest groups can hinder societal progress by causing harm for a small gain, leading to societal stagnation and a build-up of power. Balancing their needs with the greater good and disruptive change can help address negative effects.
Special interest groups, whether they are sugar producers or politicians, can negatively impact society by acting in their own self-interest at the expense of the public. Mancur Olson's theory of factions argues that small, powerful interest groups can be detrimental as they are willing to cause harm to society to gain a small benefit for themselves. Additionally, these groups are easier to organize, leading to a build-up of power and a slowing down of society's ability to adapt to change. Olson's analysis, written in a post-World War 2 context, suggests that continuity and stability in a country can lead to an increase in these groups, creating a "demisclerosis" effect. However, he also argues that disruptive events, such as wars or revolutions, can sweep away this crust of society and unlock pre-demisclerosis dynamism. Therefore, the discussion highlights the importance of balancing the needs of special interest groups with the greater good of society and the potential role of disruptive change in addressing the negative effects of too much bureaucracy and vested interests.
The Unintended Consequences of Policy Implementation: Policymaking to address social issues can unintentionally create more bureaucracy and hinder progress, requiring careful consideration of unintended consequences.
The process of implementing policies to address social issues, such as increasing diversity, can unintentionally lead to more bureaucracy, regulation, and legalism, which can hinder progress rather than help it. This is a complex issue that was explored by Herbert A. Olson in his book "The Logic of Collective Action." Olson argued that as societies become more complex and have more groups, the incentive to produce and innovate can decrease, while the incentive to evade regulations and assert rights through bargaining increases. The hiring process at George Mason University, as an example, has become more complex and rule-bound in the name of increasing diversity, but this complexity may actually reduce diversity and make people more risk-averse. The key takeaway is that it's important to consider the unintended consequences of policies and the ways in which they can create new problems or obstacles to progress.
The tension between safety, fairness, and innovation: Societal focus on safety, fairness, and equality can lead to increased bureaucracy and decreased innovation, but finding a balance is crucial for progress.
As societies and individuals become more focused on regulations, safety, fairness, and equality, there can be a tendency towards increased bureaucracy and decreased innovation. This shift can make it more difficult for daring inventors, engineers, and risk-takers to thrive. At the societal level, this can lead to more lawyers, management consultants, and bureaucrats. At the individual level, people may frame their self-interest in terms of these values, leading to a society that prioritizes safety, fairness, and equality over heroic virtues like building and innovation. While this can have positive aspects, such as a greater focus on children, hearing from diverse voices, and promoting equality, it can also make it more difficult to implement shovel-ready projects and government stimulus programs in a timely manner. Finding a balance between these opposing values is essential.
Representation without action in society: The collectivization of decisions through HOAs and zoning boards hinders progress in building homes, particularly in urban areas, and the difficulty in making significant changes in society reduces the impact of these groups' power to effect change.
The increasing complexity of processes and regulations in society, driven by the rising power of marginalized groups, has led to a situation where representation of changing values is prevalent, but actual action and progress are hindered. Using the example of housing, the collectivization of decisions through HOAs and zoning boards has made it harder to build homes, especially in urban areas. This issue is compounded by the fact that it has become increasingly difficult to make significant changes in society, making the power of these groups to effect change less impactful. The result is a representation without action, which is detrimental to addressing issues like racial inequality and creating equitable and sustainable infrastructure.
NIMBY tendencies in collective decision-making: Despite the assumption of self-interest, individuals and groups can exhibit strong NIMBY tendencies in collective decision-making processes, challenging the assumption and emphasizing the importance of societal and ideological factors.
Collective decision-making processes in seemingly private matters, such as housing and neighborhood regulations, are not always driven by naked self-interest. Contrary to what one might expect, developers are not always the most powerful players, and homeowners and renters alike can exhibit strong NIMBY (Not In My Backyard) tendencies. The ideology that everyone has succumbed to often results in widespread support for redistributions, such as farm subsidies, which may not be in their economic best interest. This phenomenon challenges the assumption that individuals will always act solely in their self-interest and highlights the importance of understanding the complex societal and ideological factors at play.
Understanding Self-Interest in Affluent Societies: As societies become more affluent, self-interest evolves beyond material needs, leading to coordination problems and negative outcomes. A nuanced understanding of self-interest and its complex interactions is necessary to address these issues.
As societies become more affluent, people begin to prioritize values beyond material needs, leading to a more complex understanding of self-interest. This multidimensional self-interest can result in a coordination problem or prisoner's dilemma, where everyone acting in their self-interest leads to negative outcomes for all. This is exemplified in the accumulation of regulations, where each regulation on its own may pass a cost-benefit test but the cumulative effect fails. The left and right have both responded to this critique of government in detrimental ways. The left believes that government is always captured by rich interests and responds by building processes to slow them down, leading to bureaucracy and inefficiency. The right, on the other hand, fears government overreach and responds by limiting its power, leading to a lack of regulation and potential harm to the public. Ultimately, breaking out of these coordination problems requires a nuanced understanding of self-interest and the complex interactions between different interests.
The need for a smaller, more effective government: To improve the current systems for making federal regulations and decisions, the speaker suggests a smaller, more effective government that can act quickly and minimize involvement in areas where it should do less, while maintaining trust in both government and markets.
The current systems for making federal regulations and decisions in government are complex and can be manipulated by powerful interests, leading to gridlock and inaction. This issue is compounded by the decline of trust in government and the belief that institutions, including the market, are unfair. The solution, according to the speaker, is to have a strong but smaller government, allowing it to act quickly and effectively when needed, while minimizing its involvement in areas where it should do less. However, achieving this balance is a complex issue and the speaker admits that he does not have a clear answer. The speaker also emphasizes the importance of trust in both government and markets, as societies with high levels of trust in both tend to have stronger economies.
Investing in innovation and agreement: Focusing on innovation and agreement can lead to significant progress, reducing healthcare costs and improving access to new technologies for all.
Focusing on innovation and agreement between the right and left can lead to significant progress, rather than solely relying on redistribution. The speaker believes that there's a core in the American public that values innovation and scientific progress, and that investing in these areas can benefit everyone at a lower cost. An example given was healthcare, where instead of debating distribution, focusing on innovation in medicine and reducing mortality rates could make a significant impact. The speaker also emphasized the importance of government stepping in to ensure that new technologies are accessible to all, and not just the wealthy. He believes that high trust in government and markets go hand in hand when people feel that the government has their back and that new technologies will be distributed fairly. The speaker's main concern is regulation and preventing monopolies, rather than helping those at the bottom.
Reducing bureaucracy and promoting direct cash payments: Promoting direct cash payments and reducing bureaucracy could lead to fewer disagreements and more active market participation, but addressing inequality is crucial to prevent focus on pie-carving rather than growth. Pushing decision-making up to a higher level and separating money from politics could help create a more equitable and efficient society.
Reducing bureaucracy and promoting more direct cash payments in the welfare system could lead to fewer disagreements, as people would become more active participants in the market. However, rising levels of inequality could lead groups to focus on carving up the economic pie rather than increasing it. To address this concern, it's crucial to ensure that people believe they will benefit from economic growth. A potential solution could be to push decision-making up to a higher level, such as the state, to encourage a greater incentive for growth. Additionally, separating money from politics could be an effective strategy to reduce the influence of money in politics. Overall, a combination of these approaches could lead to a more equitable and efficient society.
Balancing growth and inequality: Reducing inequality and enabling individual decision-making could lead to more trust, cooperation, and overall growth. High levels of inequality can hinder progress and create toxic politics.
Addressing the issue of growth versus inequality requires a nuanced approach. While some argue that expanding decision-making power to larger groups or levels of government can lead to more comprehensive thinking and growth, others believe that empowering individual landowners and reducing inequality are key to fostering a more adaptive and evolving system. The speaker emphasizes that high levels of inequality can lead to mistrust and toxic politics, particularly in housing issues, and that creating a more similar society might not be the solution in a diverse and increasingly immigrant society like the United States. Instead, focusing on reducing inequality and enabling individual decision-making could lead to more trust, cooperation, and overall growth. The speaker also touches on the digital realm, suggesting that the crypto space, while not web 3.0 in its entirety, could offer interesting solutions to these challenges.
Crypto's Decentralized Promise vs. Effective Governance: While crypto offers decentralization and reduced intermediary power, its consensus-oriented nature raises concerns for public choice theorists. Blockchain's potential lies in efficient transactions and decentralized finance, but managing mistakes and social needs may necessitate traditional governance structures.
The crypto world is experiencing a surge in interest and investment, driven by a desire to decentralize decision-making and reduce the power of intermediaries. However, as a public choice theorist, I have reservations about the consensus-oriented nature of crypto mechanisms and their ability to avoid hierarchy and inequality of voice. Instead, I see potential in the use of blockchain technology for more efficient and cost-effective financial transactions and decentralized finance. However, as these initiatives scale up, they will face challenges in managing mistakes and adapting to social needs, which may require more traditional governance structures to emerge. The tension between the decentralized nature of crypto and the need for effective governance will be a significant challenge to navigate.
Decentralization vs Effectiveness: A Complex Tension in Crypto: The vision of a fully decentralized world may not be practical, as some level of trust and centralization is needed for effective and efficient systems.
The tension between decentralization and taking over complicated parts of the economy in the crypto world is more complex than it seems. While the public may want decentralized systems for lower costs, they also want these systems to work effectively and efficiently, which may require some level of trust and centralization. The vision of a fully decentralized world where people vote to run corporations is not likely to work. Instead, we are likely to see more decentralized but not perfectly decentralized systems emerge. This will be a messy process, but it's important to experiment with different governance models and see what works best. As for the ongoing plague, despite its profound impact on our lives and the failures of certain institutions, there has been little disruption or rethinking of our systems. It's a depressing reality, but it's important to acknowledge and address these challenges if we want to build a more resilient and effective society.
Lack of Unity in Response to COVID-19: The intangible nature of a virus as an enemy and lack of a clear face to unite against hinders a unified public response to COVID-19, but we have the tools to defeat it through vaccines and treatments, and must prepare for future pandemics.
Despite the devastating impact of the COVID-19 pandemic, which has taken over a million lives and continues to divide society, the public response has not matched the unity and anger seen after events like 9/11. The speaker suggests this may be due to the intangible nature of a virus as an enemy, and the lack of a clear face to unite against. However, we have the tools to defeat the virus through vaccines and treatments, yet we have not used them to their full potential. The speaker also laments the lack of preparation for future pandemics, despite warnings from scientists. As for book recommendations, the speaker suggests "The Anarchy" by William Dalrymple for insights into India's history, "India: A Story in 100 Objects" for a visual journey through Indian culture, and "The Splendid and the Vile" by Erik Larson for a compelling account of Churchill's leadership during the Blitz, which offers parallels to the current pandemic response.
Government response to coronavirus pandemic differs from wartime mobilizations: The government's response to the coronavirus pandemic lacks the vigor and specific goals seen in wartime mobilizations, such as World War 2 and World War 1.
During the coronavirus pandemic, unlike in wartime mobilizations of the past, the government did not suspend many rules to organize production across the economy with specific goals in mind. While this is not necessarily a bad thing, it is a notable difference when compared to historical examples like World War 2 and World War 1. Despite the fact that more people have died due to the coronavirus than during the German bombing during the Blitz, the vigor and action of the response have not been the same as in wartime situations. Alex Tabarrok, an economist, agreed with this assessment during a recent interview on The Ezra Klein Show. The podcast is a production of The New York Times and is available on various platforms. Listeners can help shape the next episode by rating the podcast, sharing it with others, or suggesting potential guests by emailing [ezra.klein@nytimes.com](mailto:ezra.klein@nytimes.com).
