This episode of Hub Dialogues features host Sean Speer in conversation with economist, blogger, columnist, and public intellectual Tyler Cowen about his fascinating new book (co-authored with Daniel Gross), Talent: How to Identify Energizers, Creatives, and Winners Around the World.
This conversation covers a range of diverse topics, including how to identify and empower talent, the problem of over-credentialization, the current risk of nuclear war, and more.
Transcripts of our podcast episodes are not fully edited for grammar or spelling.
SEAN SPEER: Welcome to Hub Dialogues. I’m your host Sean Speer, editor-at-large at The Hub. I’m honoured to be joined today by Tyler Cowen, who among other things, is a professor at George Mason University, a columnist from Bloomberg, the co-founder of the popular website Marginal Revolution, and the host of my favorite podcast Conversations with Tyler. He’s also the co-author, along with entrepreneur and investor Daniel Gross, of the fascinating new book Talent: How to Identify Energizers, Creatives, and Winners Around the World.
Tyler, thank you for joining us at Hub Dialogues, and congratulations on the book.
TYLER COWEN: Thank you and happy to be here.
SEAN SPEER: Why does talent matter? And how has it come to matter more, as the economy has shifted from goods to services and tangible assets to intangible assets?
TYLER COWEN: Most of the wealth in an advanced economy is held in the form of people and their talents. And there’s a very real question of how well we mobilize those talents. So, if you want to be an entrepreneur, are you able to start a business or a small business? What are the obstacles in front of you? Will other people spot your talents? In general, I think the American economy has not done as good a job allocating talent as it might have, and that holds all the more true for the rest of the world.
SEAN SPEER: Tyler, I’ve taught in a graduate program for the past five years, and while the students are highly credentialed and impressive, I’m struck at times at how similar they are in their educational trajectories, backgrounds, and experiences. In a highly-tracked world that seems to produce a lot of convergence, how can universities, businesses, and entrepreneurs cultivate room for weirdness?
TYLER COWEN: Daniel and I try to teach hirers and interviewers how to avoid the problems of tracking. So, I think in today’s world, there’s far too much homework, for instance. Individuals who are very smart, but may be rebellious or maybe they have ADHD, they have a much harder time jumping through all the hoops. But if you engage with people, converse with them, give them a chance to write and read their writing—there are many ways you can spot their talents. And you see, for instance, through YouTube—which is not really a regulated medium, there’s a fair amount of freedom of entry—how many super talented people, like MrBeast, have done incredibly well; who in the earlier world their talents, they might have just ended up in some kind of normal job and earned a normal income.
SEAN SPEER: Let me pick up something you mentioned in your answer. As you say, Tyler, the book puts forward tools to spot talent. Some are straightforward, like asking what are the open tabs on your browser right now? Others are more institutional. Do you want to talk a bit about these tools and which ones may pay the highest returns in terms of identifying, cultivating, and retaining talent?
TYLER COWEN: Well, if you’re a business, your first tool is just to make sure that talented people want to come to you. So, a lot of institutions underinvest in what I would call their soft network of social contacts: who knows about them? Who is recommending them? Who is out there on their behalf looking for talent because they would like to help a friend get a good job or maybe win the right fellowship? So, so much of talent is about the talent in people searching for you. You need to mobilize as much knowledge centralized in society as possible. So, you’re asking what’s advice for business.
Now, if you’re asking what’s policy advice, this is not what the book covers. But my personal view is simply the American economy is far too regulated. We have way too much occupational licensing. We are far too credentialist. So many state government jobs that just are ordinary jobs require a four-year college degree; no good reason for that. Our government is doing so much to thwart upward mobility, and we can improve matters and have a freer society and more talent being allocated in a better way.
SEAN SPEER: I’ll come back to some of those issues including the trend toward over-credentialization in a minute. But before I do, Tyler, why do you focus on perseverance as a key indicator of talent? What does it tell you about someone that other aptitudes or credentials may not?
TYLER COWEN: I’m a big fan of compounding returns. So, people who learn something, and then the next year what they learn is built on top of that, and then on top of that, and on top of that. If you have compounding returns for several decades, even if you start out at only a so-so level, your total returns will be quite high, just as would be the case in finance if you can invest successfully every year. So, perseverance in learning. And one of my favorite interview questions is to ask people, “What is it you do to practice the way a professional pianist might practice scales?” And that’s getting it are they trying to get better every year or not? And if they’re not working on getting better every year, they’re only going to improve a bit.
SEAN SPEER: Let me ask a related question. What are the limits of relying on empirical tools such as IQ or personality tests?
TYLER COWEN: Those measurement tools are useful in some cases. But for the most part, they’re overrated. So, if you look, for instance, at intelligence, there are plenty of jobs where to do them, you have to be at a certain level of intelligence. And that really is quite important. But above that level, achievement and IQ just don’t seem to correlate very strongly. And smart people, in particular, tend to overestimate the importance of smarts. I would say, you know, look also at energy, look at charisma, look at perseverance. It will depend on the job in question, of course. But don’t think that just because you’re smart that the world revolves around that.
Personality testing, I would say it gives you a useful framework. It just points your attention at a bunch of concepts to think about like neuroticism, or disagreeableness, or openness. But if you’re looking for some kind of numerical formula, where you test people, and you figure out their, you know, whatever you think they are, the really top performers have multiple personality skills, which they can draw upon, depending upon context. And that’s what you’re looking for for the very best people you’re trying to hire, not how they score on the test.
SEAN SPEER: How should employers think about the issue of fit? Should the goal be to simply hire the best candidates and figure out how to piece the fit together later, or should considerations of one’s fit be embedded in the hiring process?
TYLER COWEN: That to me is all-important if only to make sure it’s a person you can keep. So, you could hire the most brilliant individual in the world to be a Starbucks cashier and odds are, they’re going to leave that job pretty soon. In that sense, you know, it could be a bad hire, rather than a good hire. So, when I’m hiring or making awards, I like to ask the question, “What is wrong with this person?” And typically, that’s viewed as a negative, but very often I view it as a positive because it gives me a sense of why they might be the right fit for what it is I’m doing. And if I can’t answer the question, “What’s wrong with this person?” I start getting nervous. Maybe there’s nothing wrong with them, but how many people is that? When I have an answer, and the answer mashes into my understanding of fit, I start thinking, “You know, this is a hire maybe to pull the trigger on.”
SEAN SPEER: What’s the role of a clear institutional mission for drawing on the best of talented people? Do you have views on how employers should think about and communicate their missions in order to inspire and then leverage talented people?
TYLER COWEN: Most workers, especially upper levels, want a real sense of mission in their organizations. They want to be doing right by the world in some way. Companies as a whole, their missions, I think, have become too politically correct, too much excluding people on one particular side of the political spectrum if you’re not on board a particular agenda. I think CEOs actually are realizing that and they’re backing away from this in very quiet ways. So, you know, the mission should not be political. It should be about building a sustainable company, but part of sustainability is values. And it should reflect those values in a way that’s inspiring to the people who will work there.
SEAN SPEER: Tyler, do you think “Ban the Box” initiatives designed to mitigate bias against those with criminal records are a good idea? Is that something that more jurisdictions and firms should be adopting?
TYLER COWEN: I’m not an expert on this topic, but I have read some papers that indicate when you institute “Ban the Box,” employers actually discriminate more on the basis of race, and that it harms opportunity rather than helping it. I would say ask an expert, but from a distance that is my impression.
SEAN SPEER: This now comes back to something you raised earlier. Do you think we’ve reached peak credentialization, and that we’ll start to see a trend towards employers using other means to evaluate candidates rather than filtering based on credentials? And if so, what will be the implications for the labour market?
TYLER COWEN: I think it depends on the sector. But if you think of tech as becoming more and more important for the economy over time, tech has been non-credentialized for a long time, you could say from the beginning. Now a GitHub page is a credential of sorts, but I think it’s the kind of credential actually we want, just like can you do this job? So, also as work from a distance is now feasible using Zoom calls, or hiring more people in India, Nigeria, and the Philippines, their credentials won’t be so easily interpreted. And that in turn will break down credentialism because those places have enormous numbers of incredibly talented people.
So, I think we’re winning this fight against credentialism. But it’s still the case that very significant parts of the American economy, they used to want an undergrad degree, now they want an MBA. Maybe they used to want a high school degree, now they want a college degree. So, it doesn’t feel like we’re winning. I think the cracks in the facade are there, and it will work out for the best, but it’s gonna take decades and it will be a long, tough slog.
SEAN SPEER: Boris Johnson has this line where he says, “Talent and genius are uniformly distributed throughout the country. Opportunity is not.” Is he right or wrong? And either way, is there an opportunity to better tap talent outside of major centres?
TYLER COWEN: Depends on what he meant by that remark. So, if you look at where people are born, I think talent is distributed quite evenly. But really talented people, you know, move to where it’s at. So, right now, there’s much more talent in the southern part of England than in the northern part of England. Not that those are somehow superior people. But if you’re ambitious and born in the north, there’s a very good chance you’ll move to the south.
So, I’ve been amazed at just how much clustering of talent there is, and there’s a relatively small number of parts of the world where the talented people want to go. It can be New York, the Bay Area, Southern England, and sometimes Israel. But you don’t see people moving from say a talent hotspot to a very quiet place and then being successful.
SEAN SPEER: Just to follow up on that question, Tyler. Do you think that the pandemic and the rise of remote work will lead to something of a deagglomeration? Or are those claims ultimately likely to be proven wrong?
TYLER COWEN: I think it will lead to new kinds of agglomerations. So, for instance, there’ll be much more talent employed in India than had been the case. But within India, those people will move to some common cities, some common states—a new kind of agglomeration. Overall, it will be much more opportunity, more decentralization, but I don’t think it will be some kind of smooth, even distribution, where the well-paid people can just live anywhere. They’ll still want those personal contacts that get them access to the really good jobs. But globally, it will be more decentralized, yes.
SEAN SPEER: In a podcast episode with Ezra Klein, you talked about the rise of family breakdown and its socio-economic consequences. How much is family breakdown in the U.S. and elsewhere a threat to the development and cultivation of talent? In other words, to what extent is pro family policy effectively pro talent policy?
TYLER COWEN: It may be the single biggest threat to the development of opportunity and talent, because children born into truly one-parent families have much worse opportunities economically, but also in terms of how they’re brought up. It’s correlated with them being treated not as well. I don’t have a magic wand to wave to make all those men worthy of having a nice family, but we could do much more than what we’re doing now. Now, it’s a mix of not quite a priority, and for many people, it’s a subject you’re not even really allowed to bring up. That’s terrible, I think.
SEAN SPEER: Talking about different subjects, Tyler, if you permit me, I just have some questions that I’d like to put to you that go beyond the focus of your book.
TYLER COWEN: Great.
SEAN SPEER: In a March 2020 episode of Conversations with Tyler with Ross Douthat, you asked him if Peter Thiel is the most influential public intellectual on the right today. What do you think? Is he? And if so, why?
TYLER COWEN: Well, I think he may be the most influential public intellectual flat out, not just on the right. So yes, people hang on Peter’s every word. They listen to his YouTubes. He’s put technology on the agenda; he’s put the China issue on the agenda; different ways in which America is failing. I’m not saying whether or not you agree with him, but simply who has had actual influence.
Now I think today he has a rival and that would be Elon Musk, earlier his partner in PayPal. Raises the question well, who exactly is a public intellectual, right? But Elon like Peter is super, super smart, has opinions, expresses the opinions, has an enormous audience. I would say Elon and Peter are the two most influential communicators at the moment, as far as I can see. Now you have Jeff Bezos spanking the president on Twitter. Maybe Jeff wants to, you know, join some kind of new triumvirate.
SEAN SPEER: I think there’s a strong case that you deserve the title as the leading public intellectual today. As a public intellectual, you communicate via various channels, including the Marginal Revolutions blog, the Conversations with Tyler podcast, as a podcast guest yourself, and as a Bloomberg columnist. Which is the most effective in your view in terms of reaching people and communicating your ideas?
TYLER COWEN: I don’t know. I think a lot of the ways I’m effective, they work when they mesh with me meeting the same people as well. I would say meeting people might be the most effective way, and that’s hard to scale. That’s one reason why it’s hard to be influential. But I’m not at the top. I can say I persevere and always tried to work harder at it, however.
SEAN SPEER: To that point, one thing that stands out about you is your willingness to change your mind based on a process of continuous learning, what you might describe as perseverance. What are the two or three biggest changes that you’ve made in your thinking over the years?
TYLER COWEN: Over the years covers a lot of ground. I would say in 2007, I did not think we were headed for a financial crisis. Obviously, I was completely wrong about that. I recognized pretty early on in 2008 that something quite major was going to hit. But I think what I thought at the time, I’ve changed my mind about again. So, in 2008, I thought, “Well, the main problem is really about this housing bubble.” Sitting here in 2022 with housing prices having roared back and then some, I think those high home prices, like in 2006-2007, mostly were justified. Maybe not in every area, but overall, were justified. And the real problems were quite complex, intricate matters involving the shadow banking system, and that we didn’t have a housing bubble much after all. So, that’s a case where I’ve changed my mind twice. I’m still open to learning more, of course.
SEAN SPEER: You’ve been frequently asked over the course of the pandemic if you believe that a combination of developments, including progress with the mRNA vaccines, may signal an end to the great stagnation. You’ve been somewhat optimistic at different points on this question. At this stage, roughly 26 months since the first known case of COVID in North America, what’s your perspective?
TYLER COWEN: Even with the new variants, the vaccines work quite well. I think just the vaccines on their own you can count as an end to the great stagnation. They’ve saved hundreds of thousands of lives, and many billions of GDP. Now will the end of the great stagnation continue is the less certain question. But I think we’ve had this one development big enough, where we have to say like, “You know, what, what is it been? Is it only Twitter that we got? No, we got Twitter and mRNA vaccines, that has to count.” I’m hoping we can build upon that and do things like fix malaria, fix sickle cell anemia. Genomics will advance; I see a lot of evidence there will be more and that the vaccines were not this random accident. And it’s perfectly fair to say the rest hasn’t quite happened yet, and it’s still up for grabs. But I’m optimistic definitely.
SEAN SPEER: Are you surprised that there have been few mainstream calls for China to pay reparations to the U.S. and others for the government’s failure to inform the world of the Coronavirus? If so, why do you think this idea hasn’t gotten much mainstream traction?
TYLER COWEN: Well, we can’t enforce it and China won’t pay, right? So, what are we really going to do? If you piss off China too much, often they behave worse. So, there just aren’t that many good levers when it comes to a lot of issues with China. So, I think that’s the main reason why. And you know, the money, what we need now is not the money. Sure, everyone likes having more money. What we actually want now is for China to clean up, whether you think it’s the wet markets, the labs, some mix of both. Clean up its persistent problems that could induce this to happen again. That’s what we actually want.
SEAN SPEER: As policymakers think of their innovation policy frameworks, what, Tyler, should be the relative balance between supporting incremental innovation and prioritizing breakthroughs?
TYLER COWEN: I don’t like the idea of policymakers as this one group of people in a room, you know, writing down the priorities for incremental versus breakthroughs. I think in science in general, including science policy, we need far more experimentation. Too much is run through a small number of funnels, like the NIH or the NSF. Those institutions have done some good, but I’d like to see us conduct experiments outside of those institutions, and actually de-empower the establishment somewhat. So, I don’t want all those people in one room making a big plan. Doesn’t matter how smart they are. I do think the government should support science including through the military. But we want to live a lot of different visions all at the same time competing against each other.
SEAN SPEER: Why do you think we underestimate the risk of nuclear weapons? And what should we be doing that we’re not presently doing to mitigate that risk?
TYLER COWEN: Well, finally, we’re starting not to underestimate it. When you have Russian state TV talking about it almost every day, saying, “Hey, who are we going to nuke? Well, who? You know, what’s next? When’s this gonna happen?” I don’t think they mean it, but of course, people start noticing and get worried. But I just think we’re short-sighted creatures, and nuclear weapons have not been used against humans since Nagasaki in 1945. That is a long time. The Cuban Missile Crisis is now very distant in our memories, right? That’s sixty years ago. And we forget about it as we forgot about the possibility of pandemics. So, we’re stupid and foolish, and we need a kick in the pants.
SEAN SPEER: Why do you think so-called wokeism has peaked in the United States? What signs or evidence leads you to that conclusion?
TYLER COWEN: That most Americans hate wokeism and are willing to rebel against it. And if I look at my own state, Virginia, which was a strongly Democratic state, it elected a Republican governor who ran against wokeism and ran against shutting the schools, and that’s what voters wanted. I’m not under this illusion that we’re seeing this huge swing toward some other thing. I just think people are fed up. They don’t like cancel culture, they don’t like the self-righteousness, the self-preening hypocrisy, and Americans still have a lot of common sense.
SEAN SPEER: What surprised you the most about becoming a grandfather?
TYLER COWEN: The baby is very cute, and how focused she eats her food. She really enjoys eating and is so focused on that act of consumption. That has surprised me.
SEAN SPEER: That must be the Cowen genes. What’s your favourite place to visit in the United States, for a Canadian audience? Where are we missing out by traveling to the common centres?
TYLER COWEN: Well, I’m not sure I know where you all go. I know about the Florida thing. But I think the best part of this country to visit is often southern Utah, especially in the summer, and to see the natural wonders, northern Arizona, the northern rim of the Grand Canyon. That to me is just a peak, even globally, not just in the U.S. Now it may well be Canada already knows about this. Not for me to say. But that’s what I enthusiastically recommend to just about anyone.
SEAN SPEER: You’ve described, previously described Canada as a small number of city-states lined up along the Canada-U.S. border. Do you want to just talk about your views or perceptions about Canadian political culture and how it may or may not differ from the United States?
TYLER COWEN: Well, that’s a great thing to be, right? A small number of city states lined up on the U.S. border. I’ve been to just about all the major Canadian cities. I haven’t been to Saskatchewan. They’re all great. They’re wonderful to live in. They have incredible food, nice to walk around. Typically, they’re interesting buildings. Vancouver is quite spectacular. Montreal, multicultural in this fascinating way. Toronto has become clearly the number three city in North America, just full of talent, and so many tech and AI areas. Ottawa is way underrated, so, what’s not to like? It seems to me the formula is working. There’s plenty in Canada, like in the United States, I might disagree with. But man, you lineup the countries in the world, you have to pick like what are the five successes? Canada makes that list every time.
SEAN SPEER: In fact, I think in the episode with Douthat, you argue that we may be the least decadent country in the world.
TYLER COWEN: You may be losing that designation. Well, pandemic, I worry Canada was too risk-averse, and it seems to me Canada’s changing. And I haven’t been lately and I want to get back. But I worry a bit about Canada, actually.
SEAN SPEER: Well, we would love to host you. Let me ask a final question about the U.S. and it relates to the book. You know, there’s a lot of negativity about the United States. The rise of China, of course, has led to claims that the end of American hegemony is near and that we’re entering into a bipolar world or multipolar world and so on. Because of American talent and ingenuity, do you think that the 21st century will be an American century?
TYLER COWEN: A North American century, please. Look at how badly China’s screwing up with the zero-COVID policy. It’s a simple question. If you’re a talented immigrant, you want to go to North America or do you want to go to China? You don’t even have to think, the answer is obvious. That’s why we’re gonna do just great.
SEAN SPEER: Well, if people want to learn more about why we’ll do just great, then you want to read Tyler’s new book with Daniel Gross entitled Talent: How to Identify Energizers, Creatives, and Winners Around the World. Tyler, thank you so much for joining us at Hub Dialogues. It’s been an honour and a pleasure.
TYLER COWEN: Thank you, Sean.