Volume 23, Issue 2, September 2026

Here is the audio, video, and transcript.  Here is part of the episode summary:

Tyler and Luis start their conversation with Spain — housing, NIMBYism, and the productivity crisis; Spanish literature and why the Civil War still looms so large; and what Chicago taught Luis about party discipline in European politics. Then to the EU’s unanimity problem, capital markets, and Denmark’s flexicurity model; a round of overrated-versus-underrated on Rosalía, Penélope Cruz, and Sgt. Pepper’s; and finally into Messy Jobs — why retraining programs fail, whether AI’s leisure dividend has arrived, and whether Spain could ever achieve AI sovereignty.

Excerpt:

COWEN: Why is there a current productivity crisis in Spain?

GARICANO: Productivity indeed hasn’t grown for three decades, more or less. We’re currently having extensive growth. We’re having immigration, we’re having tourism, but we don’t really have productivity. A lot of it has to do with the political economy. I think if you want to explain the West, not just Spain, you have to understand who is voting and who is this being governed for. Spain is a particularly low-fertility, high life-expectancy country. We have the fifth-lowest fertility and the fifth-highest life expectancy in the world grosso modo, and very high pensions.

Essentially, all the GDP growth we’ve had has gone, 100 percent of the GDP growth we’ve had since 2008 has gone to pensions, to the pensioners. In terms of investment, there is very little in terms of productive investment. We have this fantastic highway network and this high-speed rail network. It’s not really getting the maintenance it needs. Just as one example, the country is basically being governed by and for the older retired people.

COWEN: What does the optimistic scenario look like? You don’t have to predict it’s going to happen, but lay out for me how it could all go well. You would get productivity growth of 1.5 percent a year, and economic growth a bit higher than that.

GARICANO: Spain has amazing fundamentals for the current situation, meaning we could easily be very electricity-energy rich due to solar, wind, and nuclear. We have all this empty space where you could put nuclear plants without much resistance. In fact, we are closing them for political reasons. The energy could be a big advantage. It’s a really amazing place to live. There is no more diverse geography and climate and nature anywhere in Europe, I think, or close to, and beautiful. You could easily see a situation where Spain becomes Florida, or Austin, Texas. Think of Texas. It attracts technology, attracts talent who wants to live there, attracts energy, builds the data centers, et cetera. That scenario is not impossible. The political economy is the tricky part.

COWEN: Doesn’t that mean you actually don’t have good fundamentals? You said you don’t even have a YIMBY movement. Life there really is quite good. I’ve been many times. It’s one of my favorite countries to visit. Isn’t that like a resource curse where there’s no sense of crisis? Old people live for a long time. It’s very comfortable. The weather’s great. The food is amazing. Aren’t those, in fact, liabilities in a time of very rapid change?

And another, on a very different topic:

COWEN: On Messy Jobs, your new and excellent book, you argue very persuasively, “In my view, AI will not lead to anything like mass unemployment, maybe not even to a rise in unemployment, because jobs will become messier and the AIs won’t be able to do them.” Is that a fair description of part of your argument?

GARICANO: I think that’s completely right. Yes.

COWEN: Now, I agree with you, but I think my worry is the opposite, that I know a lot of people, they want simple jobs, they’re okay with some measure of tedium, and that if most jobs become messy jobs, for them, that’s quite stressful, and they’re upset and disoriented. Do you worry about that?

GARICANO: I think that we will have to have a tolerance for human relations. Is that what your friends don’t want? We have a tolerance for relational work that is complex, that has politics in it, that has a big human component, and that’s the part that is going to stay. If people just want to be in their desk typing away, I think two good ways to think about it is work from home and outsourcing. If you think of which jobs were offshored, let me say offshored, in the big offshoring wave to India, those are jobs that are not messy. They’re clean. The company specifies the jobs. They say, “Okay, we can specify this job perfectly. Let’s ship you up.”

Those jobs are the same exact ones that are under complete threat of disruption. A lot of the work from home, when it doesn’t involve a lot of submittings, I guess, has the same feature. Those jobs are clean, single-task, and very often verifiable. You can just see how the performance is going and have your RL, your reinforcement learning loop work on those. I think those are gone.

The messy component that I want to emphasize, many people will say, “Oh, AI will tend to the messiness as well.” I think that there is some messiness that is contingent and that AI can streamline, but there is a lot of messiness that is both relational and has to do with a deeper aspect of the knowledge problem that doesn’t really go away. As AI advances, many aspects of Hayek, Polanyi, and all these knowledge problems are still there.

COWEN: How much retraining will be required and how frequent will that retraining have to be? If I think of me working with agents, I have to retrain myself every month or two. That’s difficult for me. It’s not stressful given my position, but I can imagine it would be stressful. Can we really just put a big chunk of the labor force through that?

Definitely recommended.