Michael Eisenberg: Do economists know what makes people happy actually?
Russ Roberts: Economists tend to view people as happiness machines. And there's a part of us that that's an apt description, but it's a small part. It's not the central part. And I think economists actually, through training and teaching, and the research actually start to believe that their model of human behavior is actually how humans behave. That's not supposed to be the case. It's supposed to be the case that a model helps you simplify something complicated. But after a while, you start forgetting that, I think, and if you're not careful, you start to think it's the same.
So economists treat human beings as people trying to be as happy as possible. And this huge part of life, of course, we want to be happy, we want to have a good time. We don't pick the thing to - the movie to go to on Saturday night that makes us the least happy. Although I did watch The Banshees of Inisherin, it's a deeply disturbing movie, and I'm glad I saw it.
And the economists say that's because you got pleasure from being depressed or being thought provoked, or whatever. So economists can always explain things but I think the parts of life I've got more interested in as I get older, our desire to belong, our yearning to be respected, our yearning to matter.
Michael Eisenberg: I’m so happy to welcome Russ Roberts to Invested, the first trained academic on the show. Russ is the President of Shalem College in Jerusalem and the John and Jean De Nault Research Fellow at Stanford University’s Hoover Institution.
Roberts hosts the weekly podcast EconTalk which he started in 2006—hour-long conversations with interesting thinkers. He’s hosted over 875 episodes with guests including Marc Andreessen, Milton Friedman, Angela Duckworth, and Nassim Nicholas Taleb.
His two rap videos on the ideas of John Maynard Keynes and F.A. Hayek, created with filmmaker John Papola, have more than 13 million views on YouTube, have been subtitled in eleven languages, and are used in high school and college classrooms around the world.
His latest book is Wild Problems: A Guide to the Decisions That Define Us. The book looks at the challenge of making big life decisions–whether to marry, whether to have children, what career path to follow–when there is little analytical evidence to help us.
Past books include Gambling With Other People’s Money: How Perverse Incentives Caused the Financial Crisis, How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness and three economic novels teaching economic lessons and ideas through fiction.
You can find everything Russ Roberts at his website at RussRoberts.info and on Twitter at EconTalker. That’s spelled E-C-O-N-T-A-L-K-E-R. Russ, such a pleasure to have you on the show with us. Let’s get started.
Russ Roberts: Great. Great to be here.
Michael Eisenberg: Okay. So you and I met for coffee a few times. I come out of every meeting with you edified where you'll accomplish a lot, and have very little time. But when I listened to you on podcasts, you say you create free time and free space with which to think, how do you do that and compress it all into this very busy life of yours.
Russ Roberts: I think we have an obsession with productivity, often in the modern era. People are looking for life hacks, how they can multitask. I think it's often a mistake, it leads to a sense of franticness. That's bad for thought. And it's something we use to create prestige for ourselves. I'm busier than you are. I can't talk too long right now I got too much to do. How about you, you're busy? And I think that's a very common illness of our modern age. And thinking is really important. Whether it's in the shower, whether it's walking around town. I walk to work, occasionally, I have about a 35 minute walk to work. Sometimes I listen to podcasts or other audio material, but sometimes I just let my mind go. And I think that's very powerful. Very helpful.
Michael Eisenberg: You know, when you say that, what comes to mind is this distinction between urgent and important.
Russ Roberts: Yeah.
Michael Eisenberg: It feels like particularly in the world of social media, there's a lot more focus on urgent because, for example, you may lose a narrative or you gotta respond.
Russ Roberts: Yeah
Michael Eisenberg: Rather than important. How do you train people to think about what's important versus what's urgent? And actually, are there things that are in dialogue that are actually urgent?
Russ Roberts: Well, my personal practice is to do the things I love. It's not good advice. I don't necessarily recommend that to other people. But I try to find things that make my heart sing, and spend my passion on those things and get involved in those, immersed in them. I think as human beings, urgent is our natural response. We're scared. We're worried about the future. The future is always uncertain. We're the only animal that has anxiety about the future. So the urgent is one way we cope with that. And I think that comes at the expense of the important. There are many different ways to become more focused on the important. Take a time management class, you can go to therapy, you can meditate, you can have religious practice, all these things, I think are ways to transcend ourselves. Our selves are very focused on the rat race, get things done. Hurry, hurry, hurry. And a lot of the best moments in life are when we slow down.
Michael Eisenberg: So I have this pet peeve where I guess I don't believe in work life balance. And I gave this talk at Georgetown that afterwards seemed to pick up some steam where I told the students that this promise that many of their professors made to them about work life balance, and their parents maybe, or their therapist is false. What do you think about work life balance?
Russ Roberts: Well, I think I don't know what exactly the nature of your pet peeve is. I keep Shabbat. I do think thoughts on Shabbat that are not related to the Divine and to the holiday.
Michael Eisenberg: You mean you're human?
Russ Roberts: Yeah, exactly. But I try to focus on other things on Shabbat, and I don't use my devices. And I think that's a very healthy thing. So I don't I don't think it's irrelevant. Again, I think there's a temptation in modern times to be available 24/7 as opposed to 24/6. I think we - I'll speak for myself - I think it's very hard to realize how degrading some of our cultural practices are, one of those is our phones. I'm on my phone way too much. I wish I were on it less. You know, it tells me sometimes at the end of the day or the end of the week: “you were, you had 4.7 hours of screen time this week, And I'm thinking it's down 12%,” I'm thinking yeah, that's because I was on my computer more. But I really think that the key, the single most important aspect of work life balance, is having a human conversation like the one we're having now.
Now, we could have, we could imagine a world and it's not very far away, where AI would answer these questions for you, you'd ask these questions of the Russ Roberts Chatbot. And it would be pretty good. And maybe I'd edit them, maybe it wouldn't be perfect, it would make mistakes. In the early versions, I’d say, you know, this is, it's pretty good, you've got your content, now publish it, you can even get an avatar to look a little younger than I am a little better, a little bit less, whatever. And it'll be entertaining for your listeners. But this sitting across from another human being looking them in the eyes, and knowing that you're not a chatbot, you're not an avatar, you're not a 3D hologram, you're a human being, and there's blood coursing through you, and you have a heart that's pumping away, and you have kidneys and all that other stuff that goes with it, and you've got some kind of ability, if you're lucky, to react to another human being. That is what I think is a huge part of life. And that part needs- , I want to preserve that in my life. And it's hard, right? It's hard with my wife, my wife, you know, my phone's notifications are going off, and I gotta, I gotta respond to that right now. And so many of our conversations are erratic. That reason, one of the advantages of what we're doing right now, is that we're going to talk for an hour or more, as two human beings across from one another, about things we care about. And that's incredibly special. So I don't know what your pet peeve is exactly. But mine is we don't do enough of this. I know, it's hard for me to do enough of it. And I want to make more room for it in my life.
Michael Eisenberg: My pet peeve is that life is always out of balance, which is, when you seek balance, you just become frustrated. And things are always out of balance. You know, sometimes you cut off for Shabbat. Yeah, there's a balance there that's cut off. And, you know, we need to have this conversation now. There's no, there's no balance in this conversation. We've prioritized it.
And that is the notion of balance. And I think in general, we try to balance society, make it balanced and equal, it is just a false pursuit, because real human beings are always out of balance. Computers can be in balance. But people are never in balance, different societies are never in balance, and time is never in balance. Because, you know, if God forbid, you know, a family member passes away, I have real human feelings of bereavement. I take time out to grieve, and for Shiva, there's no balance there.
Russ Roberts: That's a good point.
Other: And so we're actually always on some level of extremise. We've just prioritized - I tell my children all the time, there can only be one thing at the top of your priority list at any given time. There can't be two actually. That's kind of my pet peeve.
Russ Roberts: Yeah. I like that.
Other: Funny question based on when you said - when the phone rings in your house, is it always answered?
Russ Roberts: No, of course not..
Other: And God bless you.
Russ Roberts: No, I think, when did I get a call recently,
Other: By the way I have like 700 unread chats on my phone, and my kids make fun of me about it, I don't care.
Russ Roberts: We spent the night last night here in Tel Aviv. And I had a couple of things to do today. This is one of them. And in our hotel, there is a telephone in the bathroom.
It used to be a common thing in a nice hotel, there’d be a telephone. Now, start thinking about that. Talking about balance, and it's totally out of date, there is zero reason to have a corded telephone in the bathroom. It's like - it should have a dial, it should have a thing for your finger to put in it.
Michael Eisenberg: Just make sure you don't drop your device in the toilet.
Russ Roberts: Exactly. Yeah, that's what's good about it. But I think in my generation, the idea of not answering the phone is weird. But I think for young people, they don't, they don't make phone calls. In fact, the whole idea of calling somebody and expecting them to pick it up would be weird. My mom calls me sometimes. And I try to answer it every time. One because it's my mom and two because I know she thinks that I would answer if I could. And she doesn't understand that in the modern world. That's against the rules. So I just cut her some slack.
Michael Eisenberg: Mom
Russ Roberts: What can you do anyway? No, we don't, we try not to answer the phone during meals. We don't get many calls.
Michael Eisenberg: You don’t get many calls? God bless you. So five years ago, you wrote a compelling list called your own 12 rules for life, roughly modeled in Jordan Peterson's book with that name, a book, which I read. Here's your 12 rules. “Learn to enjoy saying I don't know. Find something healthy to worship. Make Shabbat. Eat dinner with your family as often as possible and always without devices. Read, read, read. Tithe wisely to help create community and care for others. Don't take the job that pays the most money. Give up a lot to be at a funeral. That's from Ecclesiastes. It says better to go to the house of the mourners rather than to the party house. Number nine, if your child offers your hand to hold, take it. Number 10, know yourself. Number 11, hold your anger for the day. Number 12, be kind - everyone is in a battle.” Which is the hardest of these to practice?
Russ Roberts: Let me see that list again. I gotta cheat.
I'd say two things. When I was younger I was saying, I don't know, I'm gonna give this back to you in a minute. So don't worry. But I want to keep it.
Michael Eisenberg: I memorized it.
Russ Roberts: It took me a long time, right? I'm an academic. We are rewarded and lauded and celebrated for our achievements intellectually. So “I don't know” is like a failure. Once you get to the point where you can say it without shame, it's exhilarating. And it's a game changer, because it takes people aback. What do you mean, you don’t know, you're a trained economist say, putting on the question. Somebody once asked me how many jobs were lost by NAFTA? I said I don't know.
He says what do you mean, you don’t know, and I said, well, a lot of jobs were created because people had more money to spend, they were able to import things - I’m talking about the North American Free Trade Agreement between the US Canada, Mexico, I said a lot of people had more money to spend because there had more imports that push prices down. So they were ready to spend, and that probably expanded some sectors of the economy, we can't necessarily see it tied to this, but it probably led to more employment there. And there were other things, jobs that were lost, where factories went, say to Mexico, but it's really hard to know for sure how many. And he got really mad as a journalist, he got really mad at me and said, “You're a trained economist. How can you say you don't know?” I said because I don't know. And people who tell you that they do know are liars or charlatans, it's a scam. He was very upset about that.
Michael Eisenberg: I actually have a recent story that is very similar to that, which is - I got a call from a journalist who said to me, everyone's laying off people in the Israeli tech economy, because you know, there's a big downturn going on. And how many layoffs are there? I said, I didn't know. But I said, you know, I might be able to know the approximate answer to that question from my own portfolio. And I went and did the work. And we had layoffs like everybody in the portfolio, but we had net job ads in 2022 of 1600 people. So I call him back. I said it was I think 1622. And like I said, we had over 1600 jobs in the portfolio. And he said, “it can't be - everyone's reporting layoffs.”And I said I don't know. I went and checked the numbers. He said, “but what about the general economy?” So I said, Well, I don't know. But I decided to pick up the phone. I called the finance ministry. And I said, you must know how many - and this is in Israel, you can call the finance ministry directly.
Russ Roberts: I was gonna say we live in Israel, don’t we-
Michael Eisenberg: In America I’d like to call the Treasury. So I called up and I said, How many people in the cluster you call high tech are employed today versus how many were employed 12 months ago? They said the same number! And I said, What about the layoffs? He said you see, people are getting recycled. Many people get laid off here and hired there and new people come into the system. But the absolute number is basically the same.
I just kind of discovered that most people think they know these answers. And you know, our intuitive senses throw us off. But “I don't know” is actually a powerful way to learn something. I love that.
Russ Roberts: Yeah.I love saying it.
Michael Eisenberg: What's the second one?
Russ Roberts: So the second one was hard, “know yourself.” I'm 68. I've known myself for 68 years, not fully in the early years very well, obviously. But more and more as you get older, and it still shocks me how hard it is to know what, who you really are. What do you have trouble dealing with? What makes you feel shame? When you're too prideful. What pushes your buttons?
I mean, come on. I'm 68. Haven't I figured it out yet? And I like to say growing up is learning how to transcend yourself. And it's a long process. It takes a long time.
Michael Eisenberg: I think people when they hear that we're talking, they hear an investor and an economist. And they read this list of 12 things. They say, where's the Economist? Yeah, where’d he go? What about being a world famous economist turns up in this list? Is it because economics isn't important?
Russ Roberts: No, I think economics is important. And what I've learned from economics is important. But as I get older, I find that the things that I know from economics that apply in my personal life are smaller, not bigger. There's some that still matter. There are things I see around me. There's ways I interact with people that economics helps me understand. Certainly in public policy, economics is very important. But I think about my - I don't, economists tend to view people as happiness machines. And there's a part of us that that's an apt description, but it's a small part. It's not the central part. And I think economists actually, through training and teaching, and the research actually start to believe that their model of human behavior is actually how humans behave. That's not supposed to be the case. It's supposed to be the case that a model helps you simplify something complicated. But after a while, you start forgetting that, I think, and if you're not careful, you start to think it's the same.
So economists treat human beings as people trying to be as happy as possible. And this huge part of life, of course, we want to be happy, we want to have a good time. We don't pick the thing to - the movie to go to on Saturday night that makes us the least happy. Although I did watch the Banshees of Inisherin, it's a deeply disturbing movie, and I'm glad I saw it.
And the economists say that's because you got pleasure from being depressed or being thought provoked, or whatever. So economists can always explain things but I think the parts of life I've got more interested in as I get older, our desire to belong, our yearning to be respected, our yearning to matter. Things that Adam Smith identified in his book, the Theory of Moral Sentiments that, you know, I learned a lot from.
Michael Eisenberg: Did you read Sebastian Younger's book, Tribe?
Russ Roberts: I did. It's a fabulous book.
Michael Eisenberg: Fabulous book.
Russ Roberts: Which is another example of just the power of that primal impulse to belong. In the book I wrote in Hebrew on Leviticus, one of the things I suggested there is that the biblical economy is an economy of brotherhood and belonging. That's kind of the nature of it. And so the incentive system is structured as such, to bring out - not tribalism - but actually respectfulism. And, I like to think about it in the context of what you said a second ago about economists what makes people happy. Do economists know what makes people happy actually?
Russ Roberts: No, they don't pretend to either. They're very agnostic. I guess they're not very agnostic. They're agnostic, I don’t think you can be very agnostic. They don't pretend to know, they say, you know, de gustibus, non as dispute tandem, which is Latin for, there's no disputing tastes, I don't know what makes you happy. I don't know what makes her happier, I don’t know what makes him happy. But, you know, whatever it is, you will try to achieve that in sort of the most effective way as possible, given that you don't have an infinite amount of money and time.
That's really the economist worldview. It's not a - it's a great starting place, it basically recognizes that or, incomes are finite, our lives are finite, and they're precious, and we should use them, those resources carefully. And that part's wonderful. The hard part is what about the things that are harder to quantify? Dignity, pride, a sense of meaning, purpose, belonging to it, whether it's a tribe, a community, a nation, these are things that in the last five years, eight years, around the world have become central, things like fiscal policy, not so central, now. You ignore fiscal policy, you ignore it at your peril, it will bite you. You will regret it deeply.
Michael Eisenberg: We’re feeling those bites.
Russ Roberts: Yeah, we're starting to and we'll see. But I think for a long time, we ignored that other part of the human experience. It's not all about the material well being that we strive for. We do care about it, but it's not always central. And I think economists don't have much to say about that other part.
Michael Eisenberg: Interesting, you should say that, so, during COVID, I had an ongoing argument with economists and the president of one university, it turns out a lot of economists that work in the Finance and Treasury ministry here.which I said to him, the model broke. I mean, you had a model, it broke, but people are behaving very differently during these COVID times, and therefore I think you need people of real world experience rather than academic experience, kind of trying to model what's going on today. And I think it's leading to bad policy decisions. He did not like that comment, to say the least. How do you think about that, like, where do you need, in policy, economists versus people who are, for argument's sake, invested in or with skin in the game, to - I know, you've interviewed Nassim Taleb - to kind of get at these problems and make better decisions.
Russ Roberts: Well, I think economists have a lot to add to the conversation. I just don't think they're good at either giving a definitive answer, because we don't. It’s not what we're made to do, we're not made to say, what should be our policy in the face of let's say technology, eliminating jobs? Like it's a concern. It's been a concern forever. It's turned out pretty well overall, for human beings. Any one human being could pay a tough price if technology takes away your job. So what economists could tell you they could tell you something about the trade off, you know, when driverless cars and trucks were three years away. Remember that?
Michael Eisenberg: I mean, I remember people saying, and unfortunately, I've been at the camp that says it's 25 years away for forever. So yeah.
Russ Roberts: So. So for a while there was this feeling that it was imminent.
Michael Eisenberg: Yeah. In the newspapers it was imminent, because excuse me, a few economists and some technologists who are way out there said it was imminent. And that's a good meme.
Russ Roberts: Yeah. And it draws clicks, and yeah, I got it. So, but I actually was thinking it might be true, I have a lot of faith in human creativity. You know, I've spent a lot of time in Silicon Valley, when I've been out at Stanford - a lot of really smart people there. And they make a lot of progress on a lot of things very quickly. So the trend was looking good. And the question was then raised. There's X million cab drivers, there's X million truck drivers. If they get put out of work by this technology, what are they going to do? That's a really good question. Now, we faced it many different ways, various forms. This particular question, I think, is, was particularly relevant, because it wasn't obvious that they had a lot of other transferable skills. Driving does not help you that much in other fields than driving. So it was a really serious question. Now, an economist can't tell you what to do about that. Right?
Should we stop that technology from being developed? Should we ban that technology in our country? Here in Israel they banned Uber, which I thought was a mistake. But they did, partly to preserve the jobs of the people who drive cabs. We make it hard for people to import cheese, that's to protect the livelihood of people who are farmers. And whether that's a good idea or not, is not a question for an economist to answer. What economists are good at telling you is, here are the likely impacts of this policy, or that policy. And then we have to decide what our values are, and whether we like that or not. But economists tend to become a little more confident than that. And that I think is a little bit scary. We're not good at answering that question. Should we? We're really good at making the point: there are no solutions, only trade offs. But come on. That guy's annoying. The guy who says “wait, you don't have a solution?” You know, it's like the I don't know question. Someone would say to me, I noticed the dollar went down today. Financial reporter calls me, “dollar went down today. Why?” I have no idea. Well what are you good for? Well, nothing, I’m not good for your story. I'm not good for anything. Call someone else who will give you a story that is totally not true.
But enjoy yourself. It'll make good copy. Because no one knows exactly. Because there's about 1000 things happening today. We don't know which one, I'll pick one if you want. I'll tell you a story. I got maybe 10. I can tell a reasonable story.
So economists, if you want to be important, you have to have answers. And nobody wants an economist who doesn't have an answer. So I think that's the seductive aspect of our field. That's, I think, dangerous.
Michael Eisenberg: I read your book Wild Problems, which I loved.
Russ Roberts: Thank you.
Michael Eisenberg: And I suggested to my children to read it, too. I'm curious about the title. Because I walked away from the book saying it should be called not Wild Problems, but Real Human Problems. Why’d you call it Wild Problems?
Russ Roberts: I don't remember, there is a term in the literature of decision making and wisdom called wicked problems, and wicked problems, as I understand it, and I don’t remember so well now. But when I was writing that book, wicked problems are problems that are complex. They have lots of moving parts, where there's going to be a lot of unintended consequences, along the lines of what we're just talking about that by the time you should go to fix something and you think you've solved it. But actually, you've caused a different problem over here. And to realize that it's a hugely important thing, by the way, it's not unimportant, it is hugely important to be aware of the complexity of the world.
I thought that was a strange, nomenclature, wicked. Wicked, to me, has a moral component. And I grew up in Boston and wicked, there means “really,” you know, it's wicked good. And so I always thought, somebody called that wicked problems, because they're really, really problems. Yeah. And so I thought, that's a very good nomenclature, I'm gonna pick a different term for a problem that's not easily solved. And I love that wild versus tame. So a tame problem I defined in the book as a problem where you either have an algorithm or a mathematical computation that will get you to a good answer.Certainly data will get you closer to a good answer, certainly arguably closer. While other problems where data algorithms are not so helpful, and in fact, could lead you astray. And, you know, a big part of the book is that recognizing that as a human being, your ability to consume data and analysis in an objective, so-called rational way, highly limited. That's hard to recognize.
Michael Eisenberg: You know, when you phrase it that way, I think of a dichotomy that I use a lot. And I've been using this since the beginning of COVID. I've probably given 50 lectures on the topic on the difference between risk management and uncertainty.
Russ Roberts: Yeah
Michael Eisenberg: Data is really good at risk management, and actually turns out to be really poor at uncertainty.
Russ Roberts: Good. Good point. Fantastic point.
Michael Eisenberg: But most of these, what you call wild problems are actually uncertainty problems. I don't know when I get married, how it's going to impact my life, exactly. I don't know when I have children, how it's gonna impact my being, my life. And where I thought my life trajectory was. Why did the economist Russ Roberts , write this book about the inability to kind of use data to inform these problems?And when you get to the end of the book, by the way I prefer, but I think a lot of people were probably scratching their head at the end of the book saying, “Okay, now what do I do?”
Russ Roberts: Yeah.
Michael Eisenberg: I love that. I had a rabbi, who was deeply influential on me, who said, I have more questions than answers. And that's the way I go through life. And that's the way I go through life, too. But I think most people read books today not to get to the end of the book and say, Oh, now what?
Russ Roberts: Yeah.
Michael Eisenberg: Well, so that's the book you wrote-
Russ Roberts: Yeah, that’s the book I wrote. It's not a cookbook. It's not a guide, like, a manual, it's not a manual.
Michael Eisenberg: There's no self help in there.
Russ Roberts: No. Well, there is self help, I would argue, but it's not the kind: So what's the seven minute workout that's going to change my life? So I don't give that workout.I try to give people a framework for thinking about their questions, not, I don't give the answers. That would be absurd, and presumptuous.
But, I think the reason I wrote the book I could give you - I could tell you a reason, but if I look a little deeper, and try to think about, what was the actual process that got me to start thinking about these problems? I interviewed a lot of people on EconTalk, who I thought had a lot thoughtful things to say about decision making. And I started to - those start to marinate and cook in my head, and that was part of it. The other part is how I opened the book, friend of mine comes to me and says, you know, my wife and I are thinking of having children, we made a list of the costs and benefits. And we just can't - they're so close. We just can't make a decision. And I said, I don't think this is a cost benefit decision.
And I realized, somewhere along the way, that the moment we're in, which is a big data, power of data moment, and data, is extraordinary. It can answer a lot of questions. But that means we need to be careful about where it can't answer questions. And I thought, I think there's something to say here, as an economist, about the limits of what I would call cost benefit analysis. What in economics is called utility analysis, which is an optimization under constraints. Referred to that earlier. It's a great starting point often, and in these kinds of decisions, I think it's the wrong way to think about it.
Michael Eisenberg: Do you think, not just because of data, or maybe because of data, young people today, young couples today, young 20-somethings today, have a harder time making wild problem decisions.
Russ Roberts: Yeah, at some point in the book-
Michael Eisenberg: Because you talk about Darwin.
Russ Roberts: Yeah. Well, yeah, it's an old problem, but to some extent, but you know, I think he's an unusual person. I don't think we want to generalize to Darwin too much. I use Darwin's example, because he's one of the greatest scientists of all time, and yet he struggled with decision making as his journal and diary reveal. And that's why I used him as an example. But, somewhere in the book, somewhere early on, I'd make the point that a lot of the decisions that weigh heavily on young people today, whether to marry, who to marry, whether or not to have children, how many children, these were not decisions 100 years ago. They weren't even barely decisions 50 years ago,
You were gonna get married. You got married, I think the average age of marriage in 1960 was something like 22 for men and 20 for women, it's now closer to - in America - I think it's now 30 for men and 28 for women. That is a seismic change. That's not like, it's changed a little bit. No. It's a seismic cultural phenomenon. The number of people never marry or yet to marry is a sizable phenomenon. The shrinking size of the American family, and the Western family is, outside of Israel, it's an incredibly important phenomenon.
So something has happened, right? And I think a lot of people are unmoored by it. They're not quite sure how to proceed. 500 years ago, you didn't have a choice for your career. You either did what your parents did, or you didn't have a job. I mean, there was no, you didn't like choose a career. So as modernity proceeds, things that used to be off the table are now on the table. I mean, obviously I didn't write about it in the book, but you know, gender. Can you imagine 50 years ago telling people so what are you, man or woman?
Michael Eisenberg: I'll be honest, I have a hard time talking about it - Bill Maher on a skit last night that now we debate biology.
Russ Roberts: Yeah. So we're in a very unusual cultural moment. It's not a moment, it's, you know, it's an era that we're in. And part of the reason I wrote the book was to give people help in thinking about these problems. So you know, when your kids are done with it, will you tell them to write a note to my kids, because maybe they'll read it if your kids tell him. Because if I tell them they’re not gonna read it.
Michael Eisenberg: No, no, my kids don't read my books, and I've written a bunch of books also. They have a million reasons. One of them by the way - is I have a daughter who said to me on Saturday night - I don't read your book, because I feel like you're talking to me and I hear your voice for 250 pages. It's just too much.
Russ Roberts: I've heard it a lot already. I've had plenty. Yeah, I get it. I get it. It makes me feel good. I'm glad I'm not the only one.
Michael Eisenberg: So I'm an investor, you're an economist, we have to make wild problems decisions. What's better: an investor framework or an economist framework? And, or maybe none of them are valuable for any of these wild problem decisions? And by the way, for full disclosure, I have eight children.
Russ Roberts: Yeah. Well, I'd be interested in your thoughts on this, because I'm gonna maybe turn the tables on you. I've interviewed and talked to a lot of successful people, obviously, in my life. A lot of them tell me that they make decisions using intuition. I'm not sure what that is. I recently interviewed Patrick House, the neuroscientist, on consciousness. He said something incredibly profound. He said, you don't make decisions with your gut. Your gut is used for digesting things that you eat. But your intuition is something very different. Your intuition is a part of your brain back here, I forget the name of it, that doesn't forget anything.
You don't always have conscious access to that part of your brain. But it's sitting back there. And it's actually doing more than just storing stuff. It's actually analyzing against, looking for cause and effect often, because that's a very powerful and useful thing. Evolution-wise, and it's processing data that you've absorbed and understanding that you've absorbed that you can't actually necessarily consciously identify. That doesn't mean it's irrational. It doesn't mean flipping a coin, or just going, quote going with your gut, it's actually drawing on some deep things.
He tells an extraordinary story. The young - I think he's a young person in the US Army who's taking a senior person across a very dangerous stretch of road in Iraq. I think it was Iraq. And he’s going very fast, because things happen on this road. And he's trying to get this big wig to this important - to this next place. And in the middle of the trip, he suddenly slams on the brakes, does a U turn and heads back to the home base. And the guy says, what are you doing? He says, I don't know. I just don't have a good feeling.
Okay, we had some fun. Then went back. Two hours later, he said, have you thought any more about why you turned around?
He said, Yeah, he said, you know, I'm guessing, he said, I don't know exactly why. But usually on that road, there's a lot of kids playing by the side of the road. And I think I realized, I didn't hear them, I didn't see them. And it just, it scared me. It was different. So I just turned around, I said, rationally now thinking about it, you know, I probably was, you know, if the moms know, there's something coming down, they probably don't let the kids play on the side of the road that day. So he goes, I'm just guessing. You know, I'm trying to recreate what happened in my head. So I have a feeling that some investment decisions. I'm sure if you've been an investor long as you have, you certainly, you have a feel for what to do.
I think economists, academic economists, are really bad at decision making. Because they’re more likely to be paralyzed, they're more likely to have a bunch of pros and cons. They can't quantify them. So they're not sure what to do. And then they’re just more likely to freeze, procrastinate. I read about this in the book, look for more data. I just need more information. I want to make a good decision. So I need more information. That's really actually often going to not help you, you're just finding an excuse. I saw a thing on Twitter this morning I found fascinating. So I want to get your reaction to all this. But I use this as the jumping off point. Somebody says I was about to make a deal, I was about to say yes, and invest with a CEO, and he was rude to the waitress. And I said, nope, not gonna do it.
Michael Eisenberg: I’ve heard that before.
Russ Roberts: And, you know, a lot of people would say, well, that's irrational, what, because he's a little bit rude. I mean, it's a great business concept. You're not going to invest just because he was rude to a waitress? But I think for an investor who's seen human beings in all their shame and glory, it probably resonates with you.
Michael Eisenberg: It's why I can't invest on Zoom. I couldn't invest over Zoom during the pandemic. I had to meet people, and I had to spend time with them. And so I totally resonate. I've often described intuition, I've been trying to formulate it better to put it into real copy. But it’s, “intuition is rational to me and unexplainable to you.”
Russ Roberts: Yeah. Well, that's consistent with the story I just told.
Michael Eisenberg: Yeah. And, you know, it's built up over time that I actually rationally, make a rational decision. It may seem irrational to you, but it’s totally rational. And I think that's kind of the core point- I want to ask you an economics question. So I have this thesis that values create value, values create economic value. Do values, personal values, humanist values, religious values, actually create economic value?
Russ Roberts: Oh, for sure. And that's a luxury.
Michael Eisenberg: What does that mean?
Russ Roberts: I’ll tell you, for most of human history, we just tried to stay alive, right? Most of human history, until the last 300-400 years, were about subsistence for almost all of human beings, you know, typically agricultural community, struggling near the poverty line, struggling near to life or death. And, the industrial revolution comes along, innovation and technology come along. And suddenly living and dying is not what's at stake, economically, but you can afford to consume other things.
Michael Eisenberg: Let me push back on that for a second. Because you wrote tithing as one of your values.
Russ Roberts: Yeah.
Michael Eisenberg: I mean, tithing doesn't conform to the survival matrix. I would give away 10% of my income to be a part of something or to support some guy over there. Like, why would I tithe then? I should keep everything to myself.
Russ Roberts: I'm not sure how you want me to answer that Michael. Answer that as an economist, as a human being? So let's- I'll give you a couple of answers to that. Oh, as you know, in Judaism, you're obligated to give 10% but you're discouraged from giving more than 20. Because 10 is- you can manage. But 20 you might be putting yourself at risk.
But certainly there is a kind of economist who would say, and there's a kind of human being who would say, well keep it all. I mean, why wouldn’t you, are you a sucker? Why would you give any of it away?
I use the example in my book of the person who finds a wall on the street and no one sees you, should you keep it or not? It’s a true story. I tell the story in the book, but it's a true story. I’m teaching on Zoom a bunch of high school students, I'm doing a guest lecturer for 100-something AP students at an elite high school somewhere in America. And they said “economics tells you it's rational to keep the money, keep the wallet”. I said, really?
So sad! Economics doesn't tell you that, economics tells you that you should do what is best for you, but what that could include, going back to our happiness machine conversation, you could be happy from knowing you did the right thing. You could be happy knowing that you made someone else happy.
Economics doesn't rule that out. But there is a type of viewpoint that says, look after yourself. Put yourself first. But I think that's a terrible way to live.
Michael Eisenberg: Ayn Randism.
Russ Roberts: Yeah. I've met generous people who subscribed to Ayn Rand. So, I'm not - I don't know if that's 100% fair. Maybe they're not. I don't know. She does talk about the virtue of selfishness. I read that book when I was 17 I think, so I don't remember the exact details. But, to be clear, and to be a little bit of a contrarian. It's very hard to help people. And so charity is not a simple problem, giving away money is not simple, to be helpful. It's easy to give away the money. It's hard to be helpful. So I think there’s something to be learned from that challenge. But it's not, it shouldn't be an excuse for not trying. And it's an enormously - I don’t know, I'm going to change gears here for a second. I saw this on Twitter where a kid commits a crime. He goes to jail. His lawyer says you're gonna go to jail, but I'll do the best I can to keep it down, keep the sentence down.
Kid goes to jail, he comes out, a few years later he commits another crime, worse, He’s 25 now. The lawyer - he gets the same lawyer - the lawyer says, you know, I got you out before, in decent time, he said this time, you might spend your life in prison. He said, but maybe it'll only be 10 years or so. But even if it's only 10 years, he says, look around, this is your house. This is where you're gonna live for the next long while. You're a talented person, you have no excuse to not come out of here better. So make a plan now, not a plan, but use your time here wisely, become someone different. Don't get stuck in this narrative. And three days later, or so that lawyer died of a heart attack. And the criminal, the prisoner, because of that, it kind of grabs his attention, that he'd gotten his deathbed advice, what effectively was deathbed advice. And he changed his life. Okay, he used his time in prison differently.And, I bring it up, because there's different charity, there's different things we give away. We give away money. And we give away advice. We give away time. And advice is hard to give well, right. A lot of times we give people advice that would ruin their life. Now, that was good advice. But he could have argued, give somebody that advice. And I think, who's he to talk to me that way, I'm going to be what I want to be. And I just think it's incredibly hard to influence people for the better using anything, money, time and advice. And it's an unappreciated problem, actually,
Michael Eisenberg: You know that on Yom Kippur when you stand there, they do what's called in Hebrew, the Vidui, or the admitting your sins. So the 10th one is in Hebrew,“Yaatsnu Ra,” right, or “I gave bad advice.” And we hit our hearts for giving bad advice. And I've thought about that like a lot. Because people come for advice. I'm sure to you all the time. I'm covering Shalem College in a second,and probably a large percentage of the advice we give people is not good.
Because you don’t understand their circumstance, because they have circumstances you can't understand, because your own framework is so poor, and it's a really unresolved problem because people seek out advice.
And so what do you do when somebody comes to you for financial advice, economic advice, wild problems, advice to not do more damage. I bang my heart, I probably did more damage this year than I did good when people came to me for advice. It's daunting, by the way, it's like, it's overwhelming. How many people did I damage through a bad piece of advice?
Russ Roberts: Yeah.
Michael Eisenberg: What do you do when someone comes to you? How do you handle that?
Russ Roberts: So you know, I wrote this book called Wild Problems, a guide to the decisions that define us. And I get unsolicited emails from readers who say I have my own wild problem. What should I do? And I guess-
Michael Eisenberg: That was an invitation when you wrote the book on some level.
Russ Roberts: I guess, but, you know, a part of me wants to say, how would I know? Right? How can I answer your question? I don't know you. On the other hand, but it's, I think, the challenge that you're referencing, we want to help other people. Someone calls out for help, are you going to say, “Ah, I can't help you, I don’t have any idea.”? That's the case where “I don't know” might be the honest answer. But I’m not sure it's the best answer. So I do think when someone calls out, I think it's, you should answer. I'd like to think, I don't know if it's true. I like to think that if you give it, that advice, with care, kindness and love that actually has the potential to be helpful.
As you know, we're told in the Bible not to put a stumbling block in front of the blind. And that's actually a statement about giving people advice, where you have skin in the game. Yeah, you have a stake in the outcome. And you're, you're told what the text is saying is, you should not, you should recuse yourself. And so when somebody who writes me out of the blue who I don't have a stake in it, you know, I try to say something that's helpful. Now. I don't give up again, I don't have an answer for them. I try not to answer their questions. I try to give them things that will help them answer their questions. I don't know if I can. That's what I try.
Michael Eisenberg: I want to shift gears for a second. You just took up the presidency. It’s now, a year I think already-
Russ Roberts: A half year and a half.
Michael Eisenberg: A year and a half of Shalem College, which is a liberal arts college, in Jerusalem. I think it's fair to say that that's a contrarian move. I'm a liberal arts major myself, but the world has gone STEM. And the world has gotten away from very broad liberal arts education. This is an absolute contrarian move. We'll get to the Israel move in a second. But taking the Presidency at Shalem College, a stated liberal arts college, says something about you. What are you trying to accomplish there? Why did you do this? And what does it say about the moment we're living in?
Russ Roberts: Well, it's hard. There’s a lot there. I don't call Shalem a liberal arts college. It's a decent shorthand, but most people don't know what it means. They think liberal means politically on the left. We're not weary of ideology,
Michael Eisenberg: Classics, Western literature, religious texts, extensively Christianity, Islam.
Russ Roberts: Yep. Yeah, we read some great books. It's not a great books program either. But for a year and a bit. Our students delve deeply in small seminars into Plato, Aristotle, the Bible, the Koran, Homer, Shakespeare, etc. And I believe we are distinctive for two reasons. One is what we teach which, what you're asking me about, we'll come back to that. But the second is how we teach it. I think that's equally if not more important.
Most college experiences in the world, not just in Israel, but certainly in Israel and elsewhere. You’re lectured out, and a lecture is a cool thing. You can watch them on YouTube, there's a bunch, you can learn a ton from YouTube. You can learn a ton of abstract knowledge, not just how to carve a turkey, which is really useful. And I'm sure there's a dozen useful Turkey carving videos on YouTube.
Michael Eisenberg: Don't forget sourdough bread.
Russ Roberts: There you go. My wife has profited greatly, as has her family, in the non financial sense from the sourdough bread videos.
So one thing that is powerful about being a human being is absorbing knowledge, information would be a better way to say it. And college has increasingly become a place where you acquire knowledge which is nonsensical given that knowledge is free in all kinds of ways on YouTube and Google and everywhere else. That's not what we should be doing what we should be doing is giving people the tools to transform themselves, which is what we try to do at Shalem, in hopes that they'll transform their country. Once they become more thoughtful, once they learn how to listen, once they learn how to speak respectfully to people who might not necessarily agree with them.
How to ask good questions. These are the things that are the basis for a great society. And Israel needs them desperately. So when I was offered the chance to come here to be part of that, even though I did not have a Zionist dream, I liked Israel. I came here often. I couldn't say no, it just was. It just seemed like to think as long as my wife was willing to come with me. It just seemed like something I had to do. And so that's what that's about. I don't, STEM is great. I'm a big fan of STEM, I have children in STEM, I have children and in art, I have children in education, I have a son in rabbinical school. I like the whole pack. I like the whole spectrum of human creativity and the quest for understanding and knowledge. But STEM without thoughtfulness is dangerous. It's just it's kind of, it's kind of obvious. I don't.
Michael Eisenberg: So that's, yeah, sorry.
Russ Roberts: I mean, it's a great country. I mean, I've been here a year and a half, this is an amazing place. But I can't, you know, a lot of people in America and and here I think, who are trained in STEM, who've never taken a course of philosophy, who never read a novel, who've never had to write a, an essay on, on the implications of a novel on their life are thirsty for it. And so we don't draw students who are interested in the liberal arts, we draw up people who are, at Shalem,, we draw people who are interested in ideas, books and questions that often don't have an answer. And I think, for every thinking person, that's appealing. Now, some people are so gifted and say, biochemistry or physics or computer science, they should focus on those things. But most people can't focus on those things. They have other skills and gifts. And so we're trying to create those in a way that will help this country have leadership in lots of different ways.
Michael Eisenberg: So I really want to dig down here because you made the case now that tech people need to have shorthand, liberal arts education, know the classics, etc. What is the value, you've had to pitch, the value, the economic value, but also the societal value
for tech people, for people in high tech in innovation to have a liberal arts education, shorthand again for the great texts and hard problems, etc. What is it?
Russ Roberts: So I think there's a couple of things there that – You asked the question in an interesting way. You said economic value. It fascinates me. A lot of people think the education we give at Shalem isn't practical. It's incredibly practical to be able to think deeply and ask good questions. And our students are beloved by their employers. Our students are different. And the skills they acquire are called superpowers.So it is practical, but you don't have a barcode on your forehead when you come out of Shalem that says accountant, or computer scientist or chemist. So it's a little scary. But I think it's incredibly important. And it certainly is economically valuable in the sense that our students thrive materially, if they, as materially as they want. You know, they go into high tech there, they're valued there.
Michael Eisenberg: Why is this important?
Russ Roberts: Why is it important because, I think, it's one of a- we have a grad- we’ve only been around for 10 years, so we have a limited alumni base. But we have a grad, he’s the manager at a high level in a startup. I said, has Shalem been helpful to you? He said, Well, yeah, because I had to learn, it's a cancer, they're fighting cancer, he said, I had to teach myself biology and physics. So I could do that. Because I'd gone to Shalem. No book scares me.
And he said, I work with marketing people, doctors, engineers, and scientists, and have to create a narrative that they can all fit in and be part of, I couldn’t have done that without Shalem. So I think that's why it's practical on a personal level. But I think it's practical on a national level. The reason? I mean, it's a nice college, it's a great place to go to, to get an education. I think a lot of people. When I tell them about it in America, say I wish I could study there. You know, they don't speak Hebrew, and they're too old. But to get a degree anyway, they can come study, but
I think it's important for this country or else I wouldn't be doing it. I make the joke in my book, if it was Hungary, or, you know, Peru, I wouldn't have gone. But I care about Israel. And I think Israel desperately needs leadership that is thoughtful, that can talk to different people respectfully. Here's an amazing thing. I don't know if you know this, Michael. But there's a judicial reform on the table here in Israel.
Michael Eisenberg: It's hard to miss it right. Hard to miss it.
Russ Roberts: Right? Yeah it’s hard to miss it,, it's kind of like, on the front page of paper every single day, is this going to destroy the country forever or save it? And last week at lunch, were 25 students, at Shalem sitting around on the ground totally, informally. And having a conversation about was this a good idea or not? And there are people on the left, and there are people on the right, and nobody was yelling. So that's a win for me. That's a future of the country I want to live in and I think probably you want to live in.
Michael Eisenberg: Yeah I’ll tell you, I often talk to candidates who are joining Israeli companies and executive management positions. So what's the one thing I need to know culturally? I said, well, in America, if somebody's yelling at you it means it's really bad. But in Israel, if they're not yelling at you, that's when you really need to be worried because it means they don't care. So there's something cultural about yelling here, as well. How’s the move been? I mean, you moved here, you took this role, you want to help the country, you want to create a great society.
Russ Roberts: Yeah. Small “g” small “s,” by the way, not not nothing related to Lyndon Johnson in the 60s in America
Michael Eisenberg: Fair.
What surprised you most about the move? Other than you have this great thing, by the way, about how dinner tables are seated for longer, you know what you want you to tell that that's the first surprise and then you tell me what else surprised you.
Russ Roberts: So I'm, you know, when I, when I came here, Israel doesn't have the best reputation for service in the restaurant business or elsewhere. And when I got here, I was an obnoxious American. And I thought, yeah, the service is terrible. You know, you sit down, they bring you the food, and then they never come back. It's terrible. And they don’t ask how you’re doing, and they don't bring your water, they don't ask you anything else, they don't and then time to pay. They disappear. You can't find where to pay the check. It's horrible. And then I talked to some Israelis. They come to America and they say like, it's horrible. The waitresses, waiters all over you, “can I get anything else? “Have a nice day!” “How's it going? How's the chicken?” I'm trying to have a conversation with my friend and you're interrupting me and pouring my water and leave me alone. And in Israel, what happens? Well they don't usually don't refresh your water. It's weird to an American. They put a pitcher on the table and they say Help yourself. It's like, Oh, crap, I gotta fill my own water here. Yeah, you do. But I've come to love it. And I've come to understand it. And the reason it works the way it does, and it also means by the way that I was trying to explain why the bark up here’s a little bit higher, perhaps and people are used to elsewhere in other cultures, but in this culture, which is a Middle Eastern culture, which is probably true in lots of places near and far from here, but that have this culture. People come to eat, not to eat the food they come to have an experience with a friend could talk for a long time, and they don't want to be interrupted. And it's great once you embrace that and understand the cause. It's wonderful. A great thing happened last night. Perfect example. We're having dinner. The waitress comes over toward the end. And as she's clearing, and a lot of times here by the way they don't clear here either, which is also jarring to an American. It just sits there for a while because you're talking, and I don’t want to interrupt you. Anyway she clears and she says, Do you guys want dessert? And you know, we looked at the menu, we decided no, she said so you want anything else. I said no. She said, Okay. She said, let me know when you want the check and walked away. So we're done. We're not getting dessert. We're not having coffee, we're done.
Michael Eisenberg: In America, you're now an expense.
Russ Roberts: Exactly. I'm taking up a table that could turn over. That's why the markups are higher here, just because the table doesn't turn over as often if you eat for two and a half hours. So she didn't say, Oh, you're done? Well, here's your check. No, she just said, when you're ready, just let me know. And it's just an amazing thing. So that cultural, that's just one small example, you know, I tell my wife all the time, we're living in the Middle East, you know, we think because it's a Jewish country. And we know, more or less, and we know what it's like to be Jewish. We know lots of Jews that we know it's like to live in Israel. It's not true. Israel is different. And I'd say the single most important thing, and I find it almost endlessly fascinating as an economist, negotiation and material transactions. Financial transactions are a combination of theater and connection. In America, it's a transaction, get it over with get it done, as opposed to price you're done, out. And it's great. By the way, there's a lot of advantages to that. It's not true here. No, always sometimes true. There's some places where it's true. You go to the grocery most times as opposed to price, they ring it up and you pay. But any kind of renovation, any kind of handyman. Any kind of purchase in in the shuk, in a place where, in the market,
Michael Eisenberg: Even the tax authority here is a negotiation.
Russ Roberts: Oh, Don’t tell me,
Michael Eisenberg: Maybe not for you but it’s because you’re new, you know
Russ Roberts: The rules are sometimes enforced relentlessly and sometimes ignored.
Michael Eisenberg: By the way here, you tell the story. And I think you could never have written the book Wild Problems unless you moved to Israel, because there are so many more of those here where this data can help you.
Russ Roberts: Yeah, I've gotten like many, many difficult things after a while those things recede into the distance. They pass. It does help you appreciate what it's like to move to a foreign country in a way you can’t before you do it. It's an amazing thing.
Michael Eisenberg: If you weren't an economist, what would you be?
Russ Roberts: I know what I want to be.
Michael Eisenberg: Yeah.
Russ Roberts: I'd want to be a novelist. I wrote three novels, they’re not very good novels, they teach economic principles. But I'd love, I wish, I wish I'd been a novelist. I'd like to write musicals. I wish I had some musical talent.
Michael Eisenberg: You did! You wrote some rap videos.
Russ Roberts: Yeah, I did some rap videos. Yeah.
Michael Eisenberg: Why did you do the rap videos like what caused you to make the rap videos?
Russ Roberts: There was a filmmaker who approached me who liked my podcast This is in 2008. And he said, “We should do something together”. And I said, that's nice. I said, Yeah, great. What do you want? You know, I would get these occasionally, someone to do a project. Mostly it’s never come to anything. I don't have time to do it. He said, I said, if you'll do the work to get it started. Yeah, maybe. Let's get started. So we tried, and we came up with an idea for a sitcom. Where Hayek and Keynes are roommates. And Hayek would always be worried about money and Keynes would want to spend it all the time. We got that far. And I said, you know, we had a good time. It's fun talking to him. His name was JohnPapola, an amazing person, great film, or great filmmaker, now a good friend. But at the time, we just were just fooling around having fun. And I sat down. We talked a lot about this. It's time to really do something or not just I said, so why don't we create the
theme song for the sitcom?
And I had in mind, and this dates me horribly, The Mary Tyler Moore Show. The Mary Tyler Moore Show those who-
Michael Eisenberg: I watched the reruns when I was a kid.
Russ Roberts: And you can see them now online. So yeah, and that that theme song is catchy. And it ends with a wonderful moment where Mary throws her hat in the air, or beret, or whatever it is. And it's full of possibility. And I thought, if we could just write something, a three minute song, four minute song, capture that kind of emotional resonance, it can be funny. And so we started writing a song and that's the next thing you know, let's make it a rap song. Because young people like that and we should make this of interest to young people. And next thing you know, that's it.
Michael Eisenberg: You know, I have a hard question to ask you.
Producer: We can actually play the chorus from one of those songs.
Russ Roberts: Oh, how exciting.
Song: For a century. I want them set free. There's a boom and bust cycle and good reason to fear it label interest rates. It's the animal spirits. You see, it's all about spending here. They're registered cha-ching, circular flow. The joke is every it, doesn't matter the reason we need more government,
Michael Eisenberg: I'm totally tone deaf, you know that?
Russ Roberts: I have a cameo in one of them.
Michael Eisenberg: I watched it, I had to prep for the show, I watched.
Russ Roberts: I can tell you one funny thing about that, may I,
Michael Eisenberg: Please.
Russ Roberts: When they came out, a journalist told me he said, he said, I now know your epitaph. I said, what? He said, it's gonna say he wrote the Keynes and Hayek rap videos. I thought, that's my, I mean, it was the most appalling thought I had ever heard. And over the years, I've kind of come to embrace it. There are worse things for an epitaph.
I hope there are other things on the stone. But those videos are fun. And people learn something from them.
Michael Eisenberg: I have to ask the question, because we're kind of on the topic after the lyrics there. Inflation today. Printing money, anything else?
Russ Roberts: I was trained at the University of Chicago. I'm a big fan of Milton Friedman. He said money is inflation excuse me, Milton Friedman said inflation is always and everywhere a monetary phenomenon. I don't think it can be otherwise. And yet there are times when that connection is a little bit veiled. So I do think that's the problem.
Michael Eisenberg: Or exacerbated. Right?
Russ Roberts: Yeah, it can be leveraged into much bigger things are smaller things that may take a while there may be a lag. But if you print money, and it gets and I add, this is important, and it gets into the economy, because there were periods of time, where we've printed money and it sat on the books of banks, and I think did not stimulate inflation.
I don't think it's a lot more complicated than that, other than to point out that, in our particular case, now sitting in Israel, we're a small country in a very large world. And things can affect us, besides our own monetary policy, that has to be taken into account.
Michael Eisenberg: Actually, that's part of the question I want to ask, which is not just Israel, but like, US has stopped printing as much money at least right now. And it's quantitative tightening, and but in Japan, they're still printing a lot of money. And we live in a global world. And so is it kind of false to think that we can control inflation on a national level, when you've got all of these kind of economic phenomenon going on in other countries and less borders to economic trade and, and money? Ya know and Japanese buying American bonds, and you get the point.
Russ Roberts:, Now I don’t know if my graduate school roommate is listening to this conversation. But we took a course together on this, he was better than I was. So I asked for his help. And I got an A and he didn't. So usually, when I ask him, these kinds of questions, you just asked me, because I know he's smarter than I am and understands it better. He just looks at me and gives me the sign language for “A”, which is a fist like this and says, you know, like, you got the A, you should be able to answer it. But the truth is, I don't fully understand it. It obviously is related to not just the monetary policy of a domestic country, but also the openness of the country to foreign capital flowing in and out also to whether exchange rates are floating or fixed. So it's a very complicated problem in any one country situation, you'd have to take into account those things. And I've forgotten most of that. Even though I did get the A,
Michael Eisenberg: What was his name?
Russ Roberts: I'm not going to tell you.
Michael Eisenberg: How am I going to target him on Twitter, make sure he listens to the episode?
Russ Roberts: I'll send it to him, he'll get a kick out of it. It's a long standing source of amusement and irksomeness for him.
So, but take your question a little more seriously. You know, I think we do live in a global world. And I think if we've learned anything from the European Union, it's that it's very difficult to have independent control over your own fiscal and monetary policy, and still be part of a larger group.
In the case of the United States, Texas doesn't have a monetary policy. Its fiscal policy matters a little bit, obviously, for its own citizens, but they're part of the United States; they're all using the dollar. So it kind of therefore limits what any one member can do. And if Israel is open to the world, and Japan is open to the world, there are constraints on monetary policy because of that.
Michael Eisenberg: I have to ask the question, you just raised it, does the EU last?
Russ Roberts: So it's such an interesting question, you know, when it was started, Milton Friedman wisely said I think this is not gonna last, because of this challenge I just talked about countries want their own control over their over their monetary policy, and it's an illusion to think they can do so under the current situation, of course, the current situation that the way the EU constructed is loose, you know, they don't enforce the rules necessarily that they expect, you know, countries to enforce on, say balanced budgets and other things.
Michael Eisenberg: Is there an EU?
Russ Roberts: What?
Michael Eisenberg: In 50 years, is there an EU?
Russ Roberts: Well, I doubt it, don't you?
Michael Eisenberg: Yeah.
Russ Roberts: Yeah. Nothing Lasts 50 years. Most things don't last 50 years?
Michael Eisenberg: Yeah. I put the demarcation line at 20.
Russ Roberts: Let me ask a different question. Do you think in the next 50 years, there'll be a serious military confrontation between current members of the EU? Think Germany will ever go to war with France again? Or something like it?
Michael Eisenberg: It's a good question. I think there will be a serious military confrontation in Europe. Anybody who remembers it will be dead by that point. And so deterrence is down.
Russ Roberts: Yeah. It's a great insight.
Michael Eisenberg: And the demographics of Europe have changed vastly, and are shrinking and dying.
Russ Roberts: Yeah.
Michael Eisenberg: And so I expect Europe in 30 years already not to be Europe. The way we've known it, probably since the mid to late Middle Ages, when the Muslims invaded Europe at the time, Spain in particular. And so I don't expect the Europe that we know today to be the Europe we know in 30 years. If I'm around to see it.
Russ Roberts: We’ll see.
Michael Eisenberg: It’ll still have beautiful buildings, maybe
Russ Roberts: Yeah, maybe
Michael Eisenberg: Places you go to visit. SoI want to ask you a few more rapid questions. How do you choose who to interview? Such a wide variety of guests. If you haven't listened to EconTalk, it's fabulous. I have a favorite episode. But I’d love to know how you choose who to interview. And what's your favorite episode?
Russ Roberts: So when I started 2006, people said, Well, this won't last very long. Because you'll run out of gas. I mean, how many interesting economists are there? And some were in the early days, I realized I could interview some economists more than once. So I've interviewed Mike Munger 30 plus times I totally forgot might be 40 now, a lot. He's, he's roughly twice a year.
I realized I still did.
Michael Eisenberg: Should I be insulted that I didn't get a second invitation back?
Russ Roberts: It's yeah.The day is young. Who knows? You may get a second invitation. You play your cards, right, Michael. Actually, the truth is, you just have to write another interesting book I know you have. So there's hope for you.
So I realized one, some economists have more than one thing to say,so you can interview them more than once. But the second thing is I got interested in other things. So you know, for the last seven or so years, econ talk is much less about economics, it's about other things, things that I think are more interesting to me and interesting to the world. I still interview economists. We're doing our current survey of favorite episodes of 2022. And there'll be some economists of the top 10 that I interviewed. But they'll also be some crazy episodes I did with I mean, I interview poets and I interview filmmakers that I interview business people and I interview people, philosophers. I interview people, I think I can learn something from or I learned something from their, from their essay or book, I don't interview people, I pretty much interview people who've written things I find interesting. So that's how I pick them. I find something that intrigues me, I think it'd be fun to go deeper, or I think it's something my listeners would enjoy hearing. And that's how I pick my guests.
Michael Eisenberg: You write in the book that parenting is a unique, unique human experience. I think you said this on Tim Ferris’s podcast as well, and that you recommend it. I'm on the record, as I think everyone should have kids, the more the merrier, in my view. I think it makes you a better person. And so how do you think about the kind of modern tendency to think really hard before having kids, not to have kids, limiting family size, has almost become like a, you know, a sign of being noble not to have kids in some places.
Russ Roberts: Sure.
Michael Eisenberg: And what would you tell young couples as they're getting ready to build a family or thinking about it?
Russ Roberts: Well, having a child is not for everybody. It comes with great costs. And people I think tend to think of those costs as financial and can’t go on as good a vacation as you might like. Are you can't have the car that you want. Those are not the costs of parenting. Not the most important costs, the most important costs are tying yourself to people you can't after while control and, and the emotional journey is so profound, as you said, it teaches you things that changes you. I write in the book it teaches you to understand your parents. I mean, it's an amazing gift, that’s part of it.
But I don't, I'm not a big as I don't think I'm as big an advocate for for parenting as you are. I just think it's underappreciated. So. So, the reason part of the reason I quote, advocate for it to the extent I do in the book is that I think the case against it is so obvious. Everyone knows the case against it. They also know the case against marriage. It cramps your style, you know, parenting and marriage, it limits your freedom. And it limits it in profound ways. And for a lot of people, I think, looking at it from the outside, it's like, why would I do that to myself? Why would I limit myself in that way, why would I limit what I can do, who I can be? And part of the reason I wrote this book was to help people, maybe imagine what's the upside. The downside is very clear. You know, I write in the book that ya know Darwin, when he's trying to struggle in his journal over whether to get married or not, he makes his pro con list. And he has no idea what the what the pros are, the cons are pretty obvious, he knows, his wife might not want to live in London, her relatives might annoy him, and he's not gonna be able to do great science anymore. He might have kids who are going to die, and it's gonna be sad, and why put yourself through that. And so my claim is, is a single person in the 19th century, but not much different today. The benefits of marriage of tying yourself to a single person for decades, and that's what I would argue is interesting about marriage, not a formal ceremony, but make a commitment somewhat for a long time. The upside of that is unseeable, unknown, it's veiled from you. And you have to experience it to appreciate it. And so I'm trying to mean your mileage may vary. So I don't want to tell every listener, you gotta get married. You gotta have kids. It's the greatest, it's challenging. It’s really hard..
Michael Eisenberg: I find interesting, the words use freedom, ties me down, etc. Towards the end of my book, The Tree of Life and Prosperity on a totally different topic. I quote Andy Warhol,
who says that, I think it’s Warhol, who says that constraints drive the greatest creativity.
I'd argue that the constraints of marriage and parenting actually drive the greatest human initiative, creativity, and not just that, but long term thinking, which particularly in economics, or in Buffett-isms, long term greed or longer term greed, is super valuable, because you think in terms of generations, my grandmother just passed away three weeks ago, she left hundreds of descendants, and she lived forever, basically, and thought forever. Because of that, and I think, economically, societally and I even say creatively, but to use a rational argument would be better off. And it's not. We have this notion that being a free bird is actually positive for our development. And I'll argue that it's actually not necessarily positive for development.
Russ Roberts: I was reading Michael Wyschogrod over Shabbat, his book The Body of Faith, which is, for me, the single greatest book that is least appreciated. It's an unbelievably thought provoking book and one of the things he says in there is that it's really not that much about immortality in Chumash, in the Five Books of Moses, the closest thing we get to immortality is God telling Abraham the promise that his ancestors will I mean, his children and offspring will be numerous. Be a great nation, that you'll help me out what else was promised him.
Michael Eisenberg: We'd be like the stars in the heavens and the sand of the Earth.
Russ Roberts: That’s the numerous purposes, there’s something else he says something, something else important.
Michael Eisenberg: That I know that he will command his children in the pathways of righteousness and justice. I can't resist looking for
Russ Roberts: I can't remember, doesn't matter
Michael Eisenberg: I can help you with the verses if you frame it.
Russ Roberts: It doesn't matter. But God makes a promise to Abraham. And Wyschogrod makes the observation and this is radical, but we don't appreciate it because it's a long time ago is that nobody thought about the future. They thought about the past. You know who your parents were, you know who your grandparents were, maybe you might appreciate that you are the descendant of someone, but the idea that you would have descendants and that they might represent you in the world and carry on a legacy is a radical idea it was a new idea. And I do think you're right. I do think having children that causes you to look to the future. It's not unimportant. It's quite important. And I think politics in a world where many people don't have children is very different than politics in a world where people are parts of families.
Michael Eisenberg: Our rapid fire questions to finish.
Russ Roberts: Yeah.
Michael Eisenberg: Is there economic growth without demographic growth?
Russ Roberts: Sure. Sure. Yeah. Absolutely. Technology Innovation. Yeah.
Michael Eisenberg: Okay. That leads me to the second question, which is, you mentioned before AI, you want to be in this conversation, not not in an AI conversation? When you think about how artificial intelligence is going to impact productivity, not jobs, but productivity. Where do you think that puts us in a decade or two?
Russ Roberts: Well, it's kind of young. In its current format, if you think about chat GPT a lot of people it's amazing how I get a Twitter thread a day, from someone saying, This is how you use it. By the way. Follow me. Banter going into the future.
Michael Eisenberg: Why do you use Twitter?
Russ Roberts: Say it again?
Michael Eisenberg: Why do you use Twitter?
Russ Roberts: Why do I use it?
Michael Eisenberg: Yeah, you're like, prolific on Twitter. That's your…
Russ Roberts: I spent a lot of time on it. Looking at it, I wish I were more prolific. I don't have time anymore. But I've learned a lot. I get exposed to interesting things, interesting ideas, articles. That's what I read it for. I think people get different things out of it.
Michael Eisenberg: Sorry I cut you off on AI and productivity
Russ Roberts: yeah, so Chat GPT, which is embryonic in its form and I think I think it's gonna be phenomenal. I think it's gonna make us a lot more productive. It's gonna save a ton of time. And it's just the first tiniest step in a user-friendly tool that can make life better.
Michael Eisenberg: The function of productivity?
Russ Roberts: I don't know. It feels that way. I don't know. It's too early to tell. I think we'll know in I mean it is just gonna get a little bit better and better and better, or is it gonna be like right now It's, it's pretty mediocre
Michael Eisenberg: Yeah,
Russ Roberts: But it's cool. It's really cool.
Michael Eisenberg: It pushes me on to creativity. Yeah, gotta do better.
Russ Roberts: But yeah, sure. Yeah.
Michael Eisenberg: So in 100 years, when they write the biography of Russ Roberts, what's the title gonna be? I can't be kind of Keynes and Hayek. It's gotta be something better than that.
Russ Roberts: You know, my dad's, my dad's tombstone, it's my dad told me what he went on his tombstone 25 years before he died. And it was “his heart was full of stories.” I wouldn't mind that being on my tombstone. I don't know. It's not a good title for an autobiography. But I think
what I increasingly coming back to what we talked about before, what I'm increasingly interested in is conversation, stories. I think it's as human beings, how we are wired to learn how we're wired to connect to each other.
Michael Eisenberg: You want to be remembered as a storyteller?
Russ Roberts: Yeah, no, no, that'd be good. I'd love to be remembered as a storyteller.
Michael Eisenberg: I think you're an amazing storyteller.
Russ Roberts: Thank you.
Michael Eisenberg: Thank you so much for doing this.
Russ Roberts: Thank you. Great. So much fun. Yeah, it was a blast.
Michael Eisenberg: And I just want to add one thing in closing the first time I met you at a coffee shop. In Jerusalem, I kind of came to the meeting hesitantly. Everyone told me that you're this very nice guy, but very brilliant. At the conversation, and I was intimidated. I have no education. And I came, I came out of the meeting. And I came home. And I told my wife because we were in Jerusalem. I didn't go to the office. I just met this fascinating, interesting guy who at 65 decided to come and move to Israel to build a country. And that inspires me to think that we all got years to go to keep building a better country. And so thank you for that inspiration.
Russ Roberts: That touches me. Thanks, Michael..
Michael Eisenberg: He's really amazing. And at the end of the day, if you enjoyed this podcast with Russ Roberts, I will invite him back. Please rate us five stars on Spotify or Apple podcasts or wherever you listen to podcasts, and also go listen to econ talker. It's amazing. And buy the book wild problems, you will not regret it. I literally went to read it in one Sabbath, one sitting on one Sabbath. So thank you, Russ.
Russ Roberts: It's short.
Michael Eisenberg: Thank you.
Russ Roberts: Thank you.
Michael Eisenberg: You can find everything Russ Roberts at his website @Russ RobertsRoberts.info and on Twitter @EconTalker, that's spelled E-C-O-N-T-A-L-K-E-R.
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