My Conversation with Patrick Collison

by on April 12, 2017 at 7:27 am in Current Affairs, Economics, Food and Drink, History, Philosophy, Political Science, Religion, The Arts, Travel, Uncategorized, Web/Tech, Weblogs | Permalink

Patrick is co-founder and CEO of Stripe, based in San Francisco.  I recently told a reporter he was one of the five smartest people I have known; he is so smart, in fact, that he asked to interview me rather than vice versa, and so he and I created a new episode of Conversations with Tyler (transcript and podcast at that link, alas no video, and note that was recorded in January so on a few points the timeline may feel off).

We discuss whether macro is underrated, what makes Silicon Valley special, optimal immigration policy, whether Facebook is beneficial for society, whether I might ever vote for Donald Trump, how to start a new religion, Peter Thiel, Brian Eno, where I differ from Thomas Schelling, Michel Houllebecq, how to maintain your composure in an age of Trump, the origins of this blog, how I read so much, why Twitter is underrated, and the benefits of having a diverse monoculture, among many other topics.

Here is one bit:

COLLISON: …You’ve written a lot about how the study of economics has influenced your appreciation for the arts, and for literature, and for food, and all of the rest. You haven’t written as much about the influence in the reverse direction. How has your appreciation for and study of the arts influenced your study of economics? And is this a version of that?

COWEN: This is a version of that. Here would be a simple example: If you think about Renaissance Florence, at its peak, its population, arguably, was between 60,000 and 80,000 people. And there were surrounding areas; you could debate the number. But they had some really quite remarkable achievements that have stood the test of time and lasted, and today have very high market value. Now, in very naive theories of economics, that shouldn’t be possible. People in Renaissance Florence, they didn’t produce a refrigerator that we’re still using or a tech company that we still consult.

But there’s something different about, say, the visual arts, where that was possible, and it was done with small numbers. So there’s something about the inputs to some kinds of production we don’t understand. I would suggest if we’re trying to figure out, like what makes Silicon Valley work, actually, by studying how they did what they did in the Florentine Renaissance is highly important. You learn what are the missing inputs that make for other kinds of miracles.

Ireland and writing would be another example.

…COWEN: And I worry now that people in Ireland hear too much American English, too much English English, and that style of writing, talking, joking, limericks, is becoming somewhat less distinct. Still many wonderful writers from Ireland, but again, it’s like an optimal stock depletion problem, and maybe we’ve pressed on the button a little too hard.

COLLISON: The transaction costs should be higher?

And here is another:

COLLISON: Do we just need a sufficiently obfuscated version of the UBI and then we’re fine?

COWEN: We call it “disability insurance.”

And:

COWEN: Well, I voted on each of these hires. I voted for them. For a lot of them, I was on the hiring committee. Robin Hanson’s a good example. When we hired Robin, he was much older than a typical assistant professor would be. And of course, we don’t practice age discrimination, and neither does anyone else, but . . .

[laughter]

COWEN: Robin was going to have a tough time being hired. And I gave Robin some of my papers to read. He came in. He was a little, actually, obnoxious to me. Though he’s one of the nicest people you’d ever want to meet. He sent me back comments on my papers, that they were all wrong.

[laughter]

COWEN: There was no preliminary politeness: ‘I thought this was interesting, but…’ I thought this was great. So I thought, “We need to hire Robin. Robin is different.” And Robin wrote papers I thought were crazy, but he clearly also was a genius. I pushed very hard to hire Robin, and he made a good impression on a lot of other people. He’s been with us ever since.

COLLISON: Were the papers in fact all wrong?

COWEN: Robin’s criticisms were all good points.

[laughter]

COWEN: But they weren’t entirely wrong.

Self-recommending!

1 prior_test2 April 12, 2017 at 7:44 am

‘Self-recommending!’

Excellent!

2 dearieme April 12, 2017 at 9:43 am

‘Self-recommending!’ Or at least self-obsessed.

3 middle aged vet April 12, 2017 at 11:35 pm

dearieme – You are better than that. T.C., whether you agree with him or not, at least has the energy to discuss things. So do you, I hope ! What do you think of von Balthasar’s explanation of the conflict between Voltaire’s selfish impulses and the heart-felt desire in his loving heart to be just to others? Tyler would answer that in an instant if I asked – would you?

4 Lawrence Gough April 12, 2017 at 7:50 am

“English English”…I suppose it is marginally better than the usual Americanism “British English”…
With regards to Irish writers hearing too much non Irish accents, what is your recommendation, some sort of Gallic cultural protectionism? Surprised that you’re not in favour of miscegenation.

5 Affe April 12, 2017 at 8:41 am

Judging by how many Poles have spent time in Ireland, I look forward to a rich Gaelic-Polish literature that approximately three people will understand.

6 msgkings April 12, 2017 at 12:17 pm

“Finnewicz’s Wake”

7 So Much For Subtlety April 12, 2017 at 6:04 pm

Yeah but you don’t want to ask what is involved in a Polish Bloom’s Day

8 The Anti-Gnostic April 12, 2017 at 9:21 am

But there’s something different about, say, the visual arts, where that was possible, and it was done with small numbers. So there’s something about the inputs to some kinds of production we don’t understand. I would suggest if we’re trying to figure out, like what makes Silicon Valley work, actually, by studying how they did what they did in the Florentine Renaissance is highly important. You learn what are the missing inputs that make for other kinds of miracles.

Ireland and writing would be another example.

…COWEN: And I worry now that people in Ireland hear too much American English, too much English English, and that style of writing, talking, joking, limericks, is becoming somewhat less distinct. Still many wonderful writers from Ireland, but again, it’s like an optimal stock depletion problem, and maybe we’ve pressed on the button a little too hard.

COLLISON: The transaction costs should be higher?

Whoa, whoa, whoa! Let’s not do anything rash like dial back on the Globalism MagLev Train!

9 Tom T. April 12, 2017 at 9:33 am

The Trump effect on public discourse: “Renaissance Florence was really something. Great people. Really had something going with those paintings. Don’t know what it was, but Silicon Valley ought to do it too. You know, with computers.”

10 derek April 12, 2017 at 10:43 am

I find it refreshing. Obama would drone on for 20 minutes and not say anything. Trump splutters and blurts out the same nothing in 30 seconds and we all have 19:30 minutes of our lives back.

I wonder if that is the source of flat productivity growth over the last half decade?

11 dan1111 April 12, 2017 at 12:58 pm

Heh. Great comment.

12 gab April 12, 2017 at 5:15 pm

“… the same nothing…(?)” Like, “our dollar is getting too strong” or “I do like a low interest-rate policy” ?

One only wishes it was “the same nothing.”

13 well-golly April 12, 2017 at 9:56 am

They go over Tyler’s idea of an obfuscated UBI, which is more politically viable.

I think a gray area, where suspicion of “freeloaders” getting away with something, would be just as much an obstacle.

14 JWatts April 12, 2017 at 10:38 am

“COWEN: We call it “disability insurance.””

Using disability insurance as a UBI will naturally ensure suspicions of freeloaders. The EITC makes a better case for being an obfuscated UBI. Granted, neither is “universal” but the EITC is certainly closer to claiming that status.

15 ChrisA April 12, 2017 at 3:47 pm

Disability insurance will stopped being paid if the person goes back to work, so it is not a substitute for UBI. A true UBI would be paid regardless of the employment status of the recipient.

16 Harun April 12, 2017 at 5:32 pm

The bigger problem is when you know you’re landlord is on disability, but he’s able to personally re-roof and do the electrical on the rental.

You start to realize you’re paying for his early retirement.

He also had 3 mortgages on the rental.

17 CMOT April 12, 2017 at 11:22 am

Meritocrats interviewed by nomneclatura is getting old. “Knows how to sit quietly and was good at taking tests and doing things the establishment values” on both sides of the interview table has run its course for me.

Stripe isn’t doing anything that’s not obvious, although they may be doing it better than rivals. But no matter what there will be a big winner in this space and very little will happen that wouldn’t have if Collison had never been born.

How about interviewing some frackers? They actually changed the world.

Find some real mavericks, the kind who have never been good at sitting quietly.

18 AJ April 12, 2017 at 6:10 pm

But by definition, you can’t get those kinds of people to sit down for an hour and a half of intellectual masturbation.

19 Todd Kreider April 12, 2017 at 11:26 am

1) So the Great Stagnation may be about over (30% chance) and not go on until the 2040s as previously predicted?

2) TC: “I wrote a book in 2011 where I said A.I. will improve faster than we think.” That is, faster than “we _economists_ think.”

20 Dain April 12, 2017 at 12:07 pm

An ice road trucker, a fracker, a structural engineer, a bounty hunter, a Chinook helicopter pilot, a container ship captain…

You see where we’re going with this.

21 rayward April 12, 2017 at 11:31 am

I’m not convinced that on-line shopping isn’t a passing fad. My reason: my ex and Walmart. My ex loves to shop. No, not buy but shopping. Indeed, she seldom bought anything. Yet, she’d spend many hours in stores shopping. I’m sure she is not alone. Walmart knows how to sell stuff, and I wouldn’t sell them short. I was more than curious when Walmart started promoting its on-line website (to compete with Amazon, among others). Why would a customer shop on Walmart’s website rather than Amazon’s? Now I know. Walmart is offering a discount for customers who buy on-line and pick up at the Walmart store. Getting the customer to Walmart serves two purposes: it reduces shipping costs and it gets the customer in the store to, perhaps, buy something else. I’ve never quite understood the economics of Amazon. Like a brick and mortar retailer, Amazon needs a big box to store inventory. I suppose the rent is cheaper for Amazon, but think about the much higher shipping costs for Amazon. My ex particularly liked a bargain. Now she can order something from Walmart on-line, save a bundle by picking it up at the local Walmart, and spend some quality time shopping in the Walmart store. It’s win, win, win. My point here is that Stripe and all the other platforms that facilitate on-line buying and selling but don’t actually make anything may see their comeuppance. Hope springs eternal.

22 msgkings April 12, 2017 at 12:20 pm

LOL at you thinking you have a point here.

23 JWatts April 12, 2017 at 12:31 pm

Oh come on msgkings, we all know this whole internet thing is a passing fad. {sarcasm}

24 msgkings April 12, 2017 at 12:36 pm

Not only that, it’s not even technology! It’s just advertising.

25 rayward April 12, 2017 at 12:37 pm

Of course, I’m being ironic, but Cowen friend and Stripe investor Peter Thiel once quipped: “We wanted flying cars, instead we got 140 characters.” Wouldn’t it be nice if “one of the five smartest people I have known” did something besides design internet shopping platforms.

26 Todd Kreider April 12, 2017 at 1:23 pm

Tyler gushed when introducing Thiel: “Peter Thiel is one of the greatest and most important public intellectuals of our entire time.”

That seems to put him up there in the top five smartest people that Tyler has known. If Collison and Thiel are in, then Thomas Schelling also has to be in top five.

Who are the other two? Cowen would never say Hanson because he has to eat with him…

27 msgkings April 12, 2017 at 1:27 pm

Ray Lopez and Art Deco

28 Alex Hillis April 12, 2017 at 12:09 pm

I was able to attend this talk in person, and very happy to now have the audio to reference! Glad it is now being shared.

29 Some Guy April 12, 2017 at 12:13 pm

Neat! Who are the other four?

30 Floccina April 12, 2017 at 12:39 pm

I find it interesting how little the fraud of our Government systems bothers you. I tend to think that it would good for people to understand the how progressive SS is and how much taxes that they pay, and even a little about tax incidence, but you talk about hiding welfare from the recipients. You seems to think similarly about religion. Interesting.

31 Harun April 12, 2017 at 5:37 pm

+1

32 A Definite Beta Guy April 12, 2017 at 1:05 pm

Not sure how you reconcile the following beliefs:
1. GDP Growth is the most under-studied and least-understood part of Macro.
2. GDP Growth is heavily moderated by cultural institutions.
3. Culture and its effects on economics is therefore under-studied.
4. Immigrants change the local culture.
5. Most of the world is still quite poor and catching up.
5. We need lots and lots of immigrants.

The Straussian Reading is that Third World is populated heavily by dysfunctional cultures and effectively need to be depopulated in order to be allowed to grow, which is why you aren’t at all concerned about the coming Global MonoCulture: Monoculture vastly outperforms existing cultures that under-utilize the Bali artists you mention (along with all the other Bali workers). Maybe you have some concern about the lack of Irish writers, but Celtic Tiger hands-down outperforms early 20th Century Ireland, both pre- and post-independence.

You clearly acknowledge some possible impact on the US culture/economy….you’re swearing off Open Borders. But still calling for dramatically increased immigration, specifically calling for increased Third World immigration (you suggest Aussie/Canadian systems won’t work for the US). Very odd.

Interesting discussion, I enjoyed listening to it.

33 The Anti-Gnostic April 12, 2017 at 2:43 pm

you’re swearing off Open Borders. But still calling for dramatically increased immigration, specifically calling for increased Third World immigration (you suggest Aussie/Canadian systems won’t work for the US). Very odd.

Indeed. We increasingly do not need their labor, and they get old and sick too. What’s the point?

34 ChrisA April 12, 2017 at 3:53 pm

I guess the argument is that the US institutions are strong enough to survive immigration on a large scale, sort of proved when there was very large immigration in the 19C from countries that did not have good institutions but the U.S. only got wealthier.

35 JWatts April 12, 2017 at 5:19 pm

“I guess the argument is that the US institutions are strong enough to survive immigration on a large scale, sort of proved when there was very large immigration in the 19C ”

That was largely pre-welfare state. Before the welfare state, nearly every family was a net contributor to the US government. It’s not clear that a welfare state can handle very large immigration without either, drastically reducing the size of the state or create a two class society whereby only a certain privileged set get the full benefits of the welfare system.

Currently the US has been following the second path, by allowing a lot of illegal immigrants in to work, but denying them most of the benefits of the welfare system. This has the benefit of keeping the costs of welfare down and keeping low skilled wages low, However, the two class aspect is corrosive to the American ideal and the native population of low skilled workers is angry at having the additional downward pressure on their wages.

36 Barkley Rosser April 12, 2017 at 1:08 pm

Regarding Florence, there are at least two major economic innovations that happened prior to the efflorescence of the Renaissance fully in the early 1400s, quite aside from a gradual development for over a century of proto-Renaissance methods in painting starting wtih Giotto. One was that around 1200 a dye for purple color in clothing was invented that made Florence the top producer of fine clothing in the area and probably in the world. Those original firms did not go all the way through, but half a block from where I am now is Gucci’s original production site here now 96 years old. They have maintained a high position in luxury clothing for 800 years now.

The other was in banking with the Medicis, who would later fund a lot of the finest Renaissance art. That was less focused on Florence and more throughout Tuscany, with both Pisa and Siena playing roles in inventing double balance sheet accounting as well as modern banking, period. The oldest bank in the world, now greatly troubled, is Monte dei Paschei di Siena, founded in the 1400s, with the work “bank” coming from “banca” for bench were guild leaders met in Siena.

Anyway, there was a strong economic foundation and backup for the artistic developments that came later, oh, not to mention the formalization of the modern Italian language as well around 1300 with Dante.

37 Harun April 12, 2017 at 5:39 pm

I believe another was a method of making “bad” wool into a better grade.

38 Amigo April 12, 2017 at 1:14 pm

“one of the five smartest people I have known”

Tyler, I’d be interested more in your thoughts on identifying smart people. I recall a previous blog entry where you say IQ doesn’t captures it properly, but I’m wondering if you think “smarts” are simply too ill-defined, not quantifiable, or reveal themselves in unpredictable ways? Whether it’s too difficult to devise a proper test, whether “smarts” are too variable, etc? I’m reading _The Bell Curve_ now and am trying to better understand primary objections smart people have to smartness quantification. If the answer is “I know it when I see it” that’s OK – I think there’s probably something to that observation regardless of what the tests may say – but I still wonder if whatever “that” is can be better quantified.

39 msgkings April 12, 2017 at 1:29 pm

One of my primary heuristics is that funny people, people with a sharp sense of humor, those are often the smart ones. The wisecracking C+ student is usually smarter than the boring A student grinder.

40 Alistair April 13, 2017 at 6:57 am

+1 for that. Me too.

41 Mark Brown April 12, 2017 at 3:36 pm

Cowen: …But politically, it proved impossible. People didn’t hate all of the bailouts as much as they claimed, but they hated the idea of the person next door getting a break that they didn’t get, when they had, in their own mind, worked harder and paid all their bills. And that proved impossible. …

The word doing all of the work in that sentence is “people”. It wasn’t any of the people who actually lived that situation. It wasn’t any of the people who lived next door who would have been happy their neighbor was no longer in daily misery. Especially when the banks wouldn’t even foreclose leaving them in personal financial hell. Being clear, people here means a bunch of Washington Economic Snots. Who were all for setting up their golden parachutes bailing out banks and letting Jon Corzine get away, but the man next door? No way! Moral Hazard! Impossible!

42 Chris Mosera April 12, 2017 at 6:51 pm

The last straw … I will now delete your site’s bookmark. Neither will miss the other.

43 msgkings April 12, 2017 at 7:23 pm

LOL at the people who feel the need to advertise their departure.

44 Jason Bayz April 12, 2017 at 7:01 pm

COWEN: I think the symbolic values of society rewards matter a great deal, more than I thought. If you have a universal basic income, it’s like you’re putting up a sign for immigrants, “This is the kind of country we are.” For me, selection of immigrants is very important. We don’t think about it enough. By having a lot of inequality, you’re putting up another kind of sign for immigrants: “Life here is tough. And if you live here, well, tough is tough.”

But on the other hand, you’re building a stronger cluster of creativity and a stronger group. And it might be better to have the signs without UBI, less transparency about how you help people, and a variety of ethics that on the face are not entirely defensible. But when you view them as an advertising campaign for your immigrant-rich country, with more to come, you’re getting more productive people who will also help the rest of the world more.

Keep in mind, US generates public goods for the whole world, just like Stripe and Atlas do, so you’re never optimizing for “What’s best for this country?” You want to optimize for “What makes this country the most creative?” And that’s different than just making us happy. We’re doomed to be the somewhat screwed up, unjust, not-quite-happy-maybe-more-mentally-ill country. And we’re the Atlas, in some other sense, partly carrying some of the world on our shoulders.

Well, if immigrant selection is so important, maybe Tyler would advocate changing America’s immigration rules to select for more highly skilled immigrants. Something like Australia? Nah. That wouldn’t signal well. We can’t have those deplorables getting the idea that they have a say in America’s immigration policy. No, immigration is just something that happens, entirely immune to the will of the voters. I think Tyler meant this as satire, but surely many in the audience will see “we’re doomed to be the somewhat screwed up, unjust, not-quite-happy-maybe-more-mentally-ill country,” as entirely right, a distillation of the globalist, White-man’s burden ideals they’ve been taught from birth; ideals the origin of which it has never occurred to them to question.

45 Jason Bayz April 12, 2017 at 9:04 pm

I feel like a dullard now, as right after that Tyler addresses the issue of the Australian system. But his point is pretty stupid:

“Having more advanced-degree professionals isn’t what we want. We want people who produce public goods in the United States, and that’s not really what dentists are. Maybe Australia wants more dentists. We want more engineers, creators, dreamers, artists, eccentrics. Our immigration policy should reflect that, and in some ways, maybe be more random or appear more nonsensical. ”

Does he really believe that the American system gets America more engineers, percentage wise, than the Australian?

46 Ryan T April 12, 2017 at 8:26 pm

Great pod, and as good as the recent one with Ezra Klein. I really enjoyed it.

At some point in the CWT series, TC, I recommend getting one or more members of your department together, either for interviews or else for a panel discussion. If the series were to come to an end, for example, I think it should end either with AT or else with the entire group.

The only downside is that if the pod were later restarted, you’d of course have to get the band back together for one more go.

47 Chip April 12, 2017 at 9:28 pm

Asked the odds of voting Trump in 2020, Cowen said zero. Asked why, he said he doesn’t like bullies.

Can Trump, for all his faults, really be described as a bigger bully than Clinton?

On a personal level,Clinton was known for abusive behavior, and on a system level Clinton’s preference for taxes, regulations and coercive state control over the individual, compare unfavourably with Trump’s push to lower taxes, reduce regulations and appoint justices who support constitutional restraints on executive power.

Cowen almost concedes this point immediately when he says Trump’s appointments have been excellent.

If Trump and Clinton were anonymous widgets rather than explosive cultural touchstones, I suspect people like Cowen and Sam Harris would have different things to say.

48 Edgar April 13, 2017 at 5:16 pm

+1

Bryan Caplan: 1 Rational Voting: 0

49 Chip April 12, 2017 at 9:39 pm

Another thing that struck me in this podcast, and others, is that two intelligent people will discuss climate within the same musty framework established decades ago, and with apparently no realization that the GCM predictions have failed, the IPCC has downgraded temperature sensitivity to CO2, and growing evidence that current moderate warming is both well within natural parameters and a net benefit to life on the planet.

Particularly for economists, to ignore the colossal costs being imposed on society (see Ontario) with a complete absense of credible cost-benefit analysis, well, its jarring.

50 anonymous Reply to Chip April 12, 2017 at 11:30 pm

Chip – serious question – have you ever visualized what a volcano would look like if said volcano spewed into the atmosphere every day the particulate matter of each and every fossil-fuel engine in this world, but concentrated at one spot on the earth, and spewing forth into one specific area of the atmosphere? I am all on board with those who say most climate change “scientists” are dishonest, but I also am familiar with numbers, big and small. Remember what that one small hotel bathroom sized room deficiency in the bottom of the Gulf of Mexico did in just a few months. I have read – no exaggeration – upwards of 10,000 comments saying one thing or another about fossil fuels and climate change. About one in two hundred of the comments were from people who are numerically literate. Every single other comment was worthless. And – believe me or not, take my word or not – the atmosphere, big as it is, is a finite thing — and although it is almost literally an astronomically bigger finite thing than the global conglomeration of badly designed fossil fuel engines, taken in their conglomeration as a ‘thing’ compared to that bigger ‘thing’ that we call the atmosphere – it is not both infinitely and astronomically larger, and hence there are numbers that can be discussed. Right?

51 Chip April 13, 2017 at 1:45 am

Current CO2 in the atmosphere is 400ppm, which in geological time is very low. The Jurassic had 2000, the Devonian 4000 and the Cambrian 7000. All three were marked by an explosion of species diversity due to conditions favourable to living things.

Current temperatures are also very low in geological time, because the earth has been laid waste by ice ages for the last two million years. The warming in the last 10,000 has played a significant part in the development of human civilization. And yet, contrary to popular belief, it is actually cooler today than it was for most of these 10,000 years, leading some to speculate that another ice age is approaching.

It’s possible that more human-CO2 may in fact be necessary to stave off colder temperatures in the centuries ahead.

52 Alistair April 13, 2017 at 7:15 am

I love to discuss numbers, and the models they feed.

I assign a CO2 forcing value of 1.6, with 95% confidence limits between 1 and 3. I note these are wide limits
I assign a 85% confidence that the planet is warming on a multi-decadal/century span.
If true, I assign a 90% confidence that human activity is responsible for >10% of this warming.
If true, I assign a 50% confidence that human activity is responsible for >50% of this warming.
I assign a 30% confidence that current warming trends will be mildly to moderately unpleasant in the long term.
I assign a 10% confidence that current warming trends will be mildly to moderately unpleasant in the short term
I assign a 5% confidence that current warming trends will be catastrophic in the long term
I assign a <5% confidence that any given Green proposal makes economic sense in cost-benefit terms and a 90% confidence that it is outright destructive of human welfare and liberty.

I am reasonable and change (have changed) the weight on these beliefs as evidence changes.

53 Alistair April 13, 2017 at 7:16 am

And, the comments section just brutalised my punctuation. Apologies.

54 Sandia April 12, 2017 at 11:44 pm

It’s interesting to hear macro described as a branch of economic history, or maybe a simply the recording of possibly unerlated chaotic events which then create sort of an Astrology-quality scientific endeavor.

Would be curious from someone there at the interview if the Bay Area types can see their cultural mono-theism or just chuckled uncomfortably at that representation. They are definitely all different in the same way.

55 Dan Lavatan-Jeltz April 13, 2017 at 12:12 am

Stripe is a con, they tried to steal my friends money. I’d wager 10 grand more than five posters on here can beat Patrick in a fair IQ test. Tyler is not being forthright.

Comments on this entry are closed.

Previous post:

Next post: