Category: Education

My podcast with Thomas Burnett

Thomas is at the Templeton Foundation, here is the link (with transcript), here is one bit:

Tyler: Well, when I was very small, my favorite books were about animals and dinosaurs. A bit later, I liked books about codes and ciphers. I loved baseball books. I loved Jerry Kramer’s Instant Replay. Chess books, of course, when I was a chess player. Maybe when I was 11, I started reading science fiction. So, Isaac Asimov, Arthur C. Clarke, a little later, Robert Heinlein. Those were many of the first things I read.

And this:

Thomas: …if I’m very well informed about something? Why shouldn’t I go marching to Capitol Hill and shout from the top of my lungs that things must be this way to have a better future?

Tyler: Well, I’m not sure how much being well informed predicts you being right. That’s an interesting question, Now, clearly, society relies on the fact that many people will go out and march for things, even when they’re not well informed. So, I don’t want to talk everyone out of that. But it still seems to me the wisest people, or people who are trying to be the wisest people, should be much more careful, and do more to listen, and set an example toward humility. While recognizing you need a lot of dogmatists fighting for a bunch of things to keep society sustainable.

Many further topics are discussed, interesting throughout.

Marc Andreessen and I talk AI at an a16z American Dynamism event

a16z has issued the talks from that event, and we are issuing it too, as a bonus episode of CWT.  But note it is shorter than usual, and not the typical CWT format — this was done for an audience of actual DC human beings!

Excerpt:

COWEN: Why is open-source AI in particular important for national security?

ANDREESSEN: For a whole bunch of reasons. One is, it is really hard to do security without open source. There are actually two schools of thought on information security, computer security broadly, that have played out over the last 50 years. There was one school of security that says you want to basically hide the source code, and you want to hide the source code precisely. This seems intuitive because, presumably, you want to hide the source code so that bad guys can’t find the flaws in it, right? Presumably, that would be the safe way to do things.

Then over the course of the last 30 or 40 years, basically, what’s evolved is the realization in the field (and I think very broadly) that actually, that’s a mistake. In the software field, we call that “security through obscurity,” right? We hide the code. People can’t exploit it. The problem, of course, is: okay, but that means the flaws are still in there, right?

If anybody actually gets to the code, they just basically have a complete index of all the problems. There’s a whole bunch of ways for people to get the code. They hack in. It’s actually very easy to steal software code from a company. You hire the janitorial staff to stick a USB stick into a machine at 3:00 in the morning. Software companies are very easily penetrated. It turned out, security through obscurity was a very bad way to do it. The much more secure way to do it is actually open source.

Basically, put the code in public and then basically build the code in such a way that when it runs, it doesn’t matter whether somebody has access to the code. It’s still fully secure, and then you just have a lot more eyes on the code to discover the problems. In general, open source has turned out to be much more secure. I would start there. If we want secure systems, I think this is what we have to do.

Marc is always in top form.

My excellent Conversation with Marc Rowan

Here is the video, audio, and transcript, taped in his Apollo office in NYC.  Here is the episode summary:

Marc Rowan, co-founder and CEO of Apollo Global Management, joined Tyler to discuss why rising interest rates won’t hurt Apollo’s profitability, why liabilities have traditionally been the weak spot in insurance, why the concept of liquidity needs a rethink, the meaninglessness of the term “private credit”, what role crypto will play in American finance, why Marc bought a brutalist apartment, which country has beautiful new neighborhoods, what motivated Apollo’s office redesign, what he looks for in young hires, the different kind of decision-making required in debt versus private equity, the biggest obstacle to doing business in India, how university governance can be improved, what he’s learned from running restaurants, the next thing he’ll learn, and more.

And an excerpt:

COWEN: Now, how stable is all this as a political equilibrium? If you think about the four major banks, as you well know, there are very serious stress tests applied to them, capital requirements. The Fed is a major regulator. At least for insurance, it tends to be at the state level. One can reinsure through Bermuda. Capital requirements are very different. Competence of the state regulators arguably is lower than that of the Fed. Whether or not one wants more regulation — and generally, I don’t — but is this a stable situation? How’s it going to evolve?

ROWAN: First, I would have to correct almost everything you’ve said along the way to set the table for what I’m going to talk about. First, the difference between not so much the banking system and insurance, but the banking system and the investment marketplace. Let’s start with this — there are plenty of ways for investors to lose money. Investors can buy speculative stocks. They could buy the S&P. They can speculate in almost anything.

The making or losing of money is not, in and of itself, a systemically risky activity because, for good reason, we allow speculative investing every single day. Things go up, things go down. You can lose money in credit as well as in equity.

Now we come to mutual funds. If a mutual fund, which is daily liquid, owns credit, and investors want to get their money back, you’re right, price just adjusts. Mutual funds are not price guarantors. Are they regulated? Mutual funds are regulated. Are they disclosed and transparent? Yes, they’re disclosed and transparent. The holdings of a mutual fund are completely visible and they’re de-levered. Is that a risky activity because it moved out of the banking system and into a mutual fund? I don’t think so; I actually think it has de-risked. It’s made our economy and our financial system more resilient.

Now I’ll come to your question on political equilibrium. Insurance — if you just focus on insurance — has no federal guarantee, does not borrow short and lend long, has no access to the Fed, and does not do liquidity transformation or maturity mismatch, and they are forced to hold amounts of capital.

If you look — and I’ll give you a comparison just for us, not for the whole industry — who holds more capital, Athene our insurer as a percentage of assets or the typical bank? You would think the typical bank, but you would be wrong. We hold more capital per dollar of assets than anyone else. Who holds more investment-grade assets? Ninety percent of our book is investment-grade, the typical bank is two-thirds investment-grade.

COWEN: Sure, but that’s all time-sliced—

ROWAN: Let’s keep going.

COWEN: Money market funds have been a source of systemic risk, AIG has been —

ROWAN: I can’t tell you there’s not risks in the economy. We have a choice. We can have risk dispersed among lots of institutions, or we can have it concentrated in the government-backed, borrow-short, lend-long, government-guaranteed banking system.

Every time we disperse that risk, we make the system more resilient. If you want to focus on insurance, which is your question on political equilibrium, there’s more capital, there’s no ALM mismatch, there’s more investment-grade, and there is appropriate state-based regulation for institutions that do not have government guarantees or borrow from the Fed or do anything else.

Insurance is very slow-moving. We’re talking about, on average, 10-year assets. This is a very slow-moving process. Again, most of the issues that have happened in the insurance industry have not been asset issues. They’ve been liability issues, exactly the kind of thing that insurance-specialist regulation is designed to detect.

Recommended, and of course we talk about Marc’s higher ed campaign as well.

Public Choice Outreach 2024!

Please apply and send your students to the 2024 Public Choice Outreach Conference! The conference is a crash course in public choice. It’s entirely free. Indeed scholarships are available! More details in the poster. Please pass around. Applications are here!

Here is a pdf of the poster, please circulate. Outreach Conference Flyer 2024 – 2

The Ability to Concentrate is Increasing?!

Distraction is everywhere. As I write this post, I pause to check twitter. Phones are omnipresent and demand our attention. Dopamine hits rule. Yet, despite the potential for greater distraction, a large study finds that on a standardized test, the ability to concentrate is up (modestly) for adults.

In the present cross-temporal meta-analysis, we investigate potential test score changes for attention as assessed by the d2 Test of attention. Based on data from 287 independent samples (N = 21,291) from 32 countries over a timespan of 31 years (1990–2021) we found evidence for moderate generational test score gains in concentration performance in adults, but not [statistically significantly, AT] children.

And while I wouldn’t put much weight on these results, since they are correlational and by country only, do note:

Internet use predicted concentration performance positively, yielding small effects for children but no meaningful effects for adults. This seems to be in contrast with findings that indicate adverse effects of digitalization in general, and video games, media multitasking, as well as overall increased screen time on attention capabilities in particular….

Of course, this is measuring attention on a test where presumably the phones have been taken away! In other words, the environment may have made deep work more difficult but we still retain the ability to concentrate in a distraction-free environment. Or, perhaps in the past, people just daydreamed more instead of checking their phones.

Very good sentences

Yesterday, someone asked me to elaborate on talent picking and why “narrowing the subset” matters. It’s easier to pick the best talent from a subset of 10 versus 100 or 1000. You’d think seeing 1000 candidates would mean you have a greater chance of finding a unicorn genius but it takes longer and gives more choice and opportunities for error in judgment. Scale is one strategy to see the best, but it’s not the only strategy.

The hardest part about a narrow subset is ensuring you attract “the best” 50 candidates while repelling 450 candidates.

This is obvious in theory and hard to execute as a strategy. But the best talent pickers have figured out to repel the mediocre.

That is from Katherine Boyle.

My Conversation with the very excellent Masaaki Suzuki

Here is the audio, video, and transcript, we recorded in NYC.  Here is the episode summary:

A conductor, harpsichordist, and organist, Masaaki Suzuki stands as a towering figure in Baroque music, renowned for his comprehensive and top-tier recordings of Bach’s works, including all of Bach’s sacred and secular cantatas. Suzuki’s unparalleled dedication extends beyond Bach, with significant contributions to the works of Mozart, Handel, and other 18th-century composers. He is the founder of the Bach Collegium Japan, an artist in residence at Yale, and conducts orchestras and choruses around the world.

Tyler sat down with Suzuki to discuss the innovation and novelty in Bach’s St. John’s Passion, whether Suzuki’s Calvinist background influences his musical interpretation, his initial encounter with Bach through Karl Richter, whether older recordings of Bach have held up, why he trained in the Netherlands, what he looks for in young musicians, how Japanese players appreciate Bach differently, whether Christianity could have ever succeeded in Japan, why Bach’s larger vocal works were neglected for so long, how often Bach heard his masterworks performed, why Suzuki’s  favorite organ is in Groningen, what he thinks of Glenn Gould’s interpretations of Bach, what contemporary music he enjoys, what he’ll do next, and more.

Here is one excerpt:

COWEN: You’re from Kobe, right? That was originally a Christian center along with Nagasaki.

SUZUKI: Exactly.

COWEN: Because they were port cities. Is that why?

SUZUKI: Yes, Kobe is one of the most important after the reopening of Japan in 1868. There are probably two, Kobe and Yokohama, and even Sendai — the port places. This was very important to accept any kind of culture from the outside, but Christianity came in. For example, the oldest Protestant church is in Yokohama. That is the end of 19th century. That’s a really interesting history.

COWEN: How do Japanese audiences for classical music, say in Tokyo, differ from New York audiences?

SUZUKI: Hmmm, probably a little different. American audience are more friendly, I think.

[laughter]

More friendly and more easily excited by the performance, and they look more inspired directly from the music, and also musicians. In Japan, Japanese audiences — sometimes they know very well about the repertoire and they are very cooperative, but at the same time, they are a little bit, well, not so excited immediately. Probably on the inside, very excited, but we Japanese people don’t express directly from inside to outside. We were all told in school, for example, that is a rule. That is not the intellectual demeanor — something like that.

Of course most of the conversation is about Bach.  Self-recommending, and then some.

Dwarkesh Patel with Patrick Collison

Nixonian Politics and Student Debt Cancellations

In the political economy chapter of our textbook, Modern Principles of Economics, Tyler and I discuss how voters appear especially responsive to economic conditions in the year of an election. Politicians who want to be reelected, therefore, are wise to do whatever they can to increase personal disposable income and reduce inflation in the year of an election even if this means decreases in income and increases in inflation at other times.

One of the most brazen examples comes from President Richard Nixon. Just two weeks before the 1972 election, he sent a letter to more than 24 million recipients of Social Security benefits. President Nixon’s letter read:

Higher Social Security Payments

Your social security payment has been increased by 20 percent, starting with this month’s check, by a new statute enacted by Congress and signed into law by President Richard Nixon on July 1, 1972.

The President also signed into law a provision that will allow your social security benefits to increase automatically if the cost of living goes up. Automatic benefit increases will be added to your check in future years according to the conditions set out in the law.

In other news:

President Joe Biden on Wednesday will announce $1.2 billion of student debt relief for nearly 153,000 borrowers — and he’s sending emails to make sure they know whom to thank for it.

…“Congratulations—all or a portion of your federal student loans will be forgiven because you qualify for early loan forgiveness under my Administration’s SAVE Plan,” says the email message from Biden that the Education Department plans to send on Wednesday to the latest group of borrowers receiving loan forgiveness.

“I hope this relief gives you a little more breathing room,” Biden writes in the message.

Note also:

…The administration says that it has now approved loan discharges totaling nearly $138 billion for nearly 3.9 million borrowers through dozens of administrative actions since coming into office.

“Administrative actions,” in other words without Congress passing a law. You may recall that the Supreme Court ruled that the administration did not have the authority to cancel student debt under the HEROES Act (which it obviously didn’t). However:

Hours after the Court issued its decisions in Nebraska and Brown, the Biden Administration announced that it was beginning a regulatory process, called negotiated rulemaking, to consider providing loan cancellation under the HEA rather than the HEROES Act.

Addendum: Do also read my previous post where I noted “…the student loan program, as currently written, is looking to be one of the most costly, inefficient and unwise government programs of the 21st century.”

Random Admissions Above the Bar

Jon Klick, Professor of Law at the University of Pennsylvania Carey Law School (and a distinguished GMU econ grad), argues that Penn should “abandon the fiction that holistic evaluation is anything more than a way to hide discretion.”

Instead, Penn should set a standardized test score floor and then randomly choose its admittees from the pool of applicants meeting that requirement.  That’s it; that’s the application process.  Setting a floor helps make sure the matriculating class has the requisite cognitive ability to succeed but otherwise limits concerns about ideology being privileged over academic merit.  Random selection (as opposed to just taking the highest test scores) recognizes that standardized tests may be too blunt to make fine distinctions among students and generates a campus population that approximates the population of smart young adults along many more dimensions than we currently consider.

Faculty have largely abandoned the job of admitting students to a professional class of admissions officers. A standardized test floor would simplify the process for universities and reduce the rent-seeking scramble of high-school students to add yet more extra-curricular eye-candy to their highly-crafted personal statements.

Emergent Ventures winners, 32nd cohort

Anson Yu, Waterloo, telemetry devices that can detect compromised hardware devices to protect our electrical grid and other critical infrastructure.

Anshul Kashyap, Berkeley, neurotech and vision, to visit the Netherlands for work and research reasons.

Kieran Lucid, Dublin, Irish videos about YIMBY and aesthetics, at the site Polysee.

Matin Amiri, Antwerp, Afghanistan, and San Francisco (?), building digital clones.

Snowden Todd, USA and Honduras and South Korea, to write a book on South Korean fertility issues.

Anthony Jancso, Accelerate SF, San Francisco, for general career development.

Denisa Lepadatu, Romania and Bremen, trip to Prospera to pursue longevity research.

Jamie Rumbelow and Henry Dashwood, London, British company to ease land rights/permissions.

Anastasia Vorozhtsova, Columbia University, to study Russian education and the Russian state.

Rohan Selva-Radov, Oxford, general career development, and to develop a dating/matching service for young people.

Olga Yakimenko, Vienna, movie-making.

Rucha Benare, Dublin, Pune area, art and biology.

Brooke Bowman, San Francisco, Vibecamp.

Ruxandra Tesloianu, Cambridge/Romania, travel grant and career development, bio space, science, and meta-science.

Ukraine cohort:

Serhii Shadrin, to study at University of Chicago, and to study information manipulation and media.

Le Sallay Academy, school for Ukrainian refugees, including in France and Serbia, Sergey Kuznetsov and Aleka Molokova.

Here are previous winners of Emergent Ventures.  Here is Nabeel’s software for querying about EV winners.