Tyler Cowen is one of the greatest minds of our times, and one of the economists who have influenced Bryan Caplan—my favorite living thinker.
Excerpts from the interview I did for Business Standard when he was in Delhi:
“Q. You think that an artist is as much a trader as a businessman, and that the making of a Bollywood movie demands as much talent as that of a Satyajit Ray movie. Many would disagree with that.
A. They should try making a good Bollywood movie. When you make a Bollywood movie, a lot of co-ordination is required. In my view, it is not less of an art than a Satyajit Ray movie. It is harder to make a commercial movie, because the audience has less patience with you. You really have to grab their attention somehow.
Q. Why do you think that Amartya Sen has done good work in economics, despite the fact that he underestimates the importance of corporations and capitalism in eradicating poverty?
A. I think that he grossly underestimates the importance of corporations and capitalism, but, he has done a lot of good work. His work on missing women is important. His work on development and capabilities is very important. But, when it comes to policy, I think he is often wrong.”
Read the whole interview here: Wal-Mart will help improve agricultural productivity in India: Tyler Cowen
Post Script: When I asked about his colleague Robin Hanson’s position that the overall effect of medicine on the well being of mankind is very close to zero, Tyler cited Robin’s actions as evidence: “Robin has a point, but he likes to exaggerate. Robin goes to doctors. One day I saw Robin arguing with people saying that doctors are useless. But, the same evening, while Robin was having his dinner–He was having fish–a bone stuck in his throat. He quickly went to see a doctor to take it out.”But, I just read this on Tyler Cowen’s blog: “It’s funny how Bryan thinks he can cite my actions as evidence against the correct belief. That’s absurd; for instance I also don’t act as if determinism is true, but citing that doesn’t settle the matter.”
“Tyler has an astronomical IQ (perhaps even higher than Robin Hanson), overflowing creativity, an obsessive work ethic, an almost perfectly even temperament, and an unbroken record of fair, honest dealing.
The paradoxes: Tyler is…
- an introvert who’s a natural leader
- the most meritocratic guy I know, though he doesn’t believe in merit
- one of the most intellectually stubborn people I know, despite (because of?) his often promiscuous open-mindedness
- the giver of the best and worst career advice I’ve ever gotten (fortunately I know when to listen!)
- obsessed with the future, despite his lack of interest in reproducing
- a pragmatist and consequentialist who practices a largely deontological ethic; and
- my intellectual conscience, despite our ceaseless disagreements.
Oh, did I mention that if I hadn’t met Tyler fourteen years ago, it’s fairly likely that I wouldn’t even be a professor?”
“Q. You said that people themselves should take initiative instead of waiting for the Maa Baap Sarkar to do something about corruption. But, when a government official asks me a bribe, isn’t it true that I am better off if I simply pay the bribe?
A. Exactly. Individuals cannot fight corruption. But, the Indian business community can do something about it. If no one is going to give a bribe, what is the government official going to do? You need collective action, and the businessmen who refuse to co-operate should face the threat of ostracism. They have to know that if your fellow businessmen find out, you will be out of business. The cost of being found out is much bigger than the benefit from a single contract.
Q. The present day Somalia has a similar system to enforce contracts, and there were similar societies in the past. What is the likelihood of India having such a system to fight corruption?
A. There were many places where there were institutions which were exactly of this nature, under the threat of sanctions by fellow businessmen. Indian businessmen and business school professors should see that this deserves more serious study. It makes little sense to argue that such a system will never work in India. Why not look into it and see what the chances are? I am not offering this as a ready solution or as a ready package.”
“Q. If the public sector has to spend money, it has to be taken from the private sector. It has to be taxed. If the private sector does not have enough funds to make the necessary investment, where does the money come from?
A. In a way, the governments can take a long-term view when compared to the private sector. How much can the government actually spend? It depends on the country’s medium term fiscal sustainability. Unlike the private sector, the public sector can think of tomorrow, and spend today. But, that spending should not be wasted. That will be bad governance. You have to actually have a very strong governance system. The public should be able to ensure good governance.
Q. It almost never happens. The common people in India are not sophisticated policy analysts. A large number of people can barely read.
A. You have to have good fiscal principles. There should be transparency. A lot of countries do have a better model of governance, and a better macroeconomic framework. Even in Asia, the more advanced economies like Singapore, Hongkong, have clear fiscal rules. The way the public money is being spent can be monitored by the public. A lot many countries in South Asia have more chronic fiscal problems. It is important that a country has a long term fiscal plan to achieve sustainability. If you lose that, if you deviate from that track, then the market loses confidence. There is definitely a trade-off.”