Garett Jones - Immigration, National IQ, & Less Democracy
How migrants bring their values to their new countries, Why national IQ matters, How the Chinese people are an unstoppable global force for free markets, Why we should have less democracy
This episode was fun and interesting throughout!
Why national IQ matters
How migrants bring their values to their new countries
Why we should have less democracy
How the Chinese are an unstoppable global force for free markets
(00:00:00) - Intro
(00:01:08) - Migrants Change Countries with Culture or Votes?
(00:09:15) - Impact of Immigrants on Markets & Corruption
(00:12:02) - 50% Open Borders?
(00:16:54) - Chinese are Unstoppable Capitalists
(00:21:39) - Innovation & Immigrants
(00:24:53) - Open Borders for Migrants Equivalent to Americans?
(00:28:54) - Let's Ignore Side Effects?
(00:30:25) - Are Poor Countries Stuck?
(00:32:26) - How Can Effective Altruists Increase National IQ
(00:39:13) - Clone a million John von Neumann?
(00:44:39) - Genetic Selection for IQ
(00:47:02) - Democracy, Fed, FDA, & Presidential Power
(00:49:42) - EU is a force for good?
(00:55:12) - Why is America More Libertarian Than Median Voter?
(00:56:19) - Is Ethnic Conflict a Short Run Problem?
(00:59:38) - Bond Holder Democracy
(01:04:57) - Mormonism
(01:08:52) - Garett Jones's Immigration System
(01:10:12) - Interviewing SBF
[00:00:41] Dwarkesh Patel: Today I have the pleasure of speaking with Garrett Jones who is an economist at George Mason University. He's most recently the author of The Culture Transplant: How Migrants Make the Economies They Move To a Lot Like the Ones They Left and also the author of 10% Less Democracy and Hive Mind. We'll get into all three of those books.
Garrett, welcome to the podcast.
[00:01:06] Garett Jones: Glad to be here. Thanks for having me.
[00:01:08] Migrants Change Countries with Culture or Votes?
[00:01:09] Dwarkesh Patel: First question. Isn't the cultural transplant a continuation of your argument against democracy? Because isn’t one of the reasons we care about the values of migrants, the fact that we eliminate democracy. Should we view this book as part of your critique against democracy rather than against migration specifically?
[00:01:27] Garett Jones: I do think that governments and productivity are shaped by the citizens in a nation in almost any event. As we've seen recently in China, even in a very strong authoritarian dictatorship, which some would call totalitarian, even there the government has to listen to the masses. So the government can only get so far away from the masses on average even in an autocracy.
[00:01:57] Dwarkesh Patel: If you had to split apart the contribution, the impact of migrants on the culture versus the impact that migrants have on a country by voting in their political system, how would you split that apart?
Is the cultural impact we see for migration mainly due to the ability of migrants to vote or because they're just influencing the culture just by being there?
[00:02:19] Garett Jones: I'll cheat a little bit because we don't get to run experiments on this, so I just have to make an informed guess.
I'm gonna call it 50-50. The way citizens influence a country through formal democracy is important but citizens end up placing some kind of limits on the government anyway. And the people in the country are folks who are gonna work in the firms and be able to either establish or not establish those complicated networks of exchange that are crucial to high productivity.
Mean vs Elite IQ
[00:02:52] Dwarkesh Patel: I wanna linger on Hive Mind a little bit before we talk about The Cultural Transplant. If you had to guess, do the benefits of National IQ come from having a right tail of elites that is smarter? Or is it from not having that strong of a left tail of people who are lower productivity, more likely to commit crimes and things like that?
[00:03:14] Garett Jones: Yeah. I think the upper tail is gonna matter more than the lower tail in the normal range of variation. Part of that is because nations, particularly moderately prosperous nations, have found tools for basically reducing the influence of the least informed voters and being able to keep productivity up even when there are folks who are disrupting the whole process. The risks of crime from the lower end is a probabilistic risk. It's not like some zero to one switch. We're talking about something probabilistic.
The median versus the elite is the contrast that I find more interesting. Median voter theorem, the way we often think about democracy, says that the median should matter more for determining productivity and for shaping institutions. I tend to think that's more important in democracies for sure.
If you just look at the raw data of a scatter plot, if you look at the few countries that are exceptions to the rule, where the mean IQ is the best predictor of productivity compared to elite IQ. The exceptions are non democracies and South Africa.
You see a few places in the Gulf where there are large migrant communities who are exceptionally well educated, exceptionally cognitively talented and that's associated with high productivity. Those are a couple of Gulf states. It's probably Qatar, the UAE, maybe Bahrain, and then you've got South Africa. Those are the countries where the average test score is higher. It doesn't have to be IQ, it could be just PISA, TIMSS type stuff. Those are the exceptions to the rule that the mean IQ is the best predictor of national productivity.
[00:05:14] Dwarkesh Patel: Hmm. Interesting.
Does that imply the fact that, at least in certain contexts, that elite IQ matters more than the left tail? Does that imply that we should want a greater deviation of IQ in a country? If you could just push a button and increase that deviation, would that be good?
[00:05:33] Garett Jones: If you could just increase the deviation holding the mean constant?
Yeah, I think so. In the normal range of variation, yeah. It's the people at the top who tend to be coming up with the big scientific breakthroughs, the big intellectual breakthroughs that end up spilling over to the whole world. Basically the positive externalities of innovation. This is a very, almost Pollyanna-ish Paul Romer new endogenous, new growth theory kind of thing. The innovations of the elite just swamp the negatives of the low skilled among us.
[00:06:14] Dwarkesh Patel: Can we just apply this line of reasoning to low skilled immigration as well then? Maybe the average IQ of your country goes down if you just let in millions of low skilled immigration immigrants, and maybe there's some cultural effects to that too. But the elite IQ will still be preserved and more elites will come in through the borders, along with the low skilled migrants.
So then since we're caring about the deviation anyways, more immigration might increase the deviation and that's a good thing?
[00:06:46] Garett Jones: Notice what you did there. You didn’t just increase the variance, you simultaneously increased the variance and lowered the mean and median, right?
I think hurting the mean and median is actually a big cost, especially in democracies. That is very likely to swamp the benefits of the small probability of getting higher elite folks in as part of a low-skilled immigration policy. Pulling down the mean or the median swamps the benefits of increasing variance there.
[00:07:26] Dwarkesh Patel: Yes but if you get rid of their migrant's ability to vote, let’s assume you could do that, what is the exact mechanism by which the, the, the cultural values or the lower median is impacting the elite's ability to produce these valuable externalities?
You know, like there's a standard comparative advantage story that they'll do the housework and the cooking for the elites so that they can do the more productive work.
[00:07:52] Garett Jones: Taking all the institutions and cultural norms as given, which is what a lot of open borders optimists do, all that micro stuff works out just fine. I'm totally on board with all that sort of Adam Smith division of labor. Blah, blah, blah. But institutions are downstream of culture and cultural norms will change partly because of what I call spaghetti theory.
We meet in the middle when new folks come to a country, there's some kind of convergence, some part where people meet in the middle between the values that were previously existing and the values that migrants have brought with them. I call it spaghetti theory because when Italians moved to America, that got Americans eating more spaghetti. And if you just did a simple assimilation analysis, you'd say, “Wow, everybody in America eats the same now. The burgers and spaghetti. So look, the Italians assimilated.” But migrants assimilate us.
Native Americans certainly changed in response to the movement of Europeans. English Americans certainly changed in response to the migration of German and Irish Americans. So this meeting in the middle is something that happens all the time, and not just through Democratic channels. It happens just through the sort of soft contact of cultural norms that sociologists and social psychologists would understand.
[00:09:15] Impact of Immigrants on Markets & Corruption
[00:09:15] Dwarkesh Patel: I'm sure you saw the book that was released in 2020 titled Wretched Refuse? where they showed a slight positive relationship between immigration and free-market laws. I guess the idea behind that is there's selection effects in terms of who would come to a country like America in the first place.
[00:09:32] Garett Jones: Well, they never ran the statistical analysis that would be most useful. Powell and Nowrasteh ran a statistical analysis and they said, “In all of the statistical analysis we've ever run, we've never found a negative relationship between any measure of low-skilled migration and changes in economic freedom.” I actually borrowed another one of Powell's data sets and I thought, “Well, how would I check this theory out?” The idea that changes in migration have an effect on economic freedom. I just used the normal economist tool. I thought about how economists check to see if changes in the money supply change the price level?
That's what we call the quantity theory. The way you do that is on the x-axis you show the change in the money supply. On the y axis you show the change in prices. This is Milton Friedman's idea. Money's always everywhere. Inflation is a monetary phenomenon. So that's what I did. I did this with a student. We co-authored a paper doing this. And the very first statistical analysis we ran, we looked at migrants who came from countries that were substantially more corrupt than the country's average and we looked at the relationship between an increase in migrants from corrupt countries, and subsequent changes in economic freedom.
Every single statistical analysis we found had a negative relationship. We ran the simplest estimate you could run. Change on change. Change in one thing predicts change in another. They somehow never got around to running that very simple statistical analysis. One change predicts another change. We found negative relationships every time. Sometimes statistically significant, sometimes not. Always negative. Somehow they never found that. I just don't know how
[00:11:21] Dwarkesh Patel: But what about the anecdotal evidence that in the US for example, in the periods of the greatest expansion of the welfare state or of governed power, during the New Deal or great society, the levels of foreign-born people were at historical lows? Is that just a coincidence? What do you think of it?
[00:11:38] Garett Jones: I'm not really interested in migration per se. My story is never that migration does this bad thing or that migrants are bad. My story is that migrants bring cultural values from their old country to their new country. Sometimes those cultural norms are better than what you've got, and sometimes they're worse than what you've got. And sometimes it's just up for debate.
[00:12:02] 50% Open Borders?
[00:12:02] Dwarkesh Patel: So if you had to guess what percentage of the world has cultural values that are equivalent to or better than the average of America’s?
[00:12:11] Garett Jones: Equivalent to or better then? Just off the top of my head, maybe 20%? I dunno, 30%? I'll just throw something out there like that. For country averages, right?
[00:12:25] Dwarkesh Patel: Yeah. Currently it would probably be hard for like 20% of the rest of the world to get into the U.S. Would you support some possible policy that would make it easy for people from those countries specifically to get to the us? Just have radical immigration liberalization from those places?
[00:12:44] Garett Jones: That's really not my comparative advantage to have opinions about that, but substantial increases of people who pass multiple tests. Let’s take the low hanging fruit and then move down from there.
So people from countries that on average have higher savings rates, higher education levels, higher deep root S A T scores, and countries that are half a standard deviation above the US level on all three.
[00:13:18] Dwarkesh Patel: Why do they have to be higher? Why not just equivalent?
[00:13:27] Garett Jones: Part of the reason is because the entire world depends on US innovation. So we should make America as good as possible, not just slightly better than it is. Very few firms would find that their optimal hiring policy would be to hire anyone who's better than your current stock of employees. Would you agree with that?
[00:13:42] Dwarkesh Patel: Yeah. But you have to pay them a salary. If somebody just comes to the US, you don't have to pay them a salary. If somebody's producing more value for a firm than the salary you would pay them, I think they should.
[00:13:52] Garett Jones: Is it a firm's job to maximize its profits or to just make a little bit more than it's making right now?
[00:13:58] Dwarkesh Patel: Maximize profits.
[00:14:00] Garett Jones: There you go. So you find the best people you can. Sports teams that are hiring don't just say, “We wanna hire people who are better than what we got.” They say, “let's get the best people we can get.” Why not get the best? That was Jimmy Carter's biography, Why Not the Best?
[00:14:16] Dwarkesh Patel: You can do that along with getting people who are on expected terms as good as the existing Americans.
[00:14:24] Garett Jones: I don’t get why you want this. This seems crazy, right? What are you talking about? But
[00:14:29] Dwarkesh Patel: What’s the tradeoff there?
[00:14:30] Garett Jones: Why not the best?
[00:14:31] Dwarkesh Patel: No, I'm not saying you don't get the best. I'm saying once you've gotten the best, what is the harm in getting the people who have equivalent S A T scores and the rest of the things you mentioned.
[00:14:41] Garett Jones: I think part of the reason would be, if you really wanna do something super hardcore, you'd have to find out what's best for the planet as a whole. What's the trade-off between having the very best, most innovative, talented, frugal people in America doing innovating that has benefits for the whole world, versus having an America that's 40% better but the median is a little bit lower. Because the median's shaping the productivity of the whole team. This is what it means when you believe in externalities.
[00:15:14] Dwarkesh Patel: But if you have somebody who's equivalent, they're not moving the median down by definition.
[00:15:19] Garett Jones: You're totally right about that. But why wouldn't I want the best thing possible? I'm still trying to figure out why you wouldn't want the best thing possible.
[00:15:31] Dwarkesh Patel: I'm not disagreeing with you. I'm just a little bit confused about why that precludes you from also getting the second best thing possible at the same time. You're not limited to just the best.
[00:15:42] Garett Jones: Because the second best is going to have a negative externality on the first best. Everything's externalities. This is my worldview. Everything's externalities. You bring in the second best, that person's gonna make things on average a little worse for the first best person.
[00:16:00] Dwarkesh Patel: But it seems like you were explaining earlier that the negative externalities are coming from people from countries with low S A T scores. And by the way, you can explain what S A T means for the audience who's not familiar with how you're using that term.
[00:16:11] Garett Jones: Oh yeah. So there are three prominent measures in what's known as the deep roots literature that are widely used.
Two are S and A. That is State History and Agricultural History. That's how many thousands of years your ancestors have had experience living under organized states or living unsettled agriculture. And then the T-score is the Tech history score. I use the measure from 1500. Basically what fraction of the world's technology were your ancestors using in 1500 before Columbus and his expansive conquest ended up upending the entire world map. So S, A and T are all predictors of modern prosperity, but especially when you adjust for migration.
[00:16:54] Chinese are Unstoppable Capitalists
[00:16:54] Dwarkesh Patel: Gotcha. We can come back to this later, but one of the interesting things I think from the book was — you have this chapter on China and the Chinese people as a sort of unstoppable force for free market capitalism.
And it's interesting, as you mentioned in the book, that China is a poorest majority Chinese country. What do you think explains why China is the poorest majority Chinese country?
Are there non-linear dynamics here where if you go from 40 to 90% Chinese, there's positive effects, but if you go from 90 to 95% Chinese, there's negative effects?
[00:17:26] Garett Jones: No, I think it’s just that communism is dumb and it has terrible decades-long effects on institutional quality I don't really quite understand. If we had good data on North Korea, North Korea would be even a bigger sort of deep roots outlier than China is.
‘Don't have a communist dictatorship in your country’ seems to be a pretty robust lesson for national prosperity. China's still stuck with a sort of crummy version of that mistake still. North Korea, of course, is stuck with an even worse version.
My hunch is that's the overwhelming issue there. China is stuck in an institutional cul-de-sac and they just don't quite know how to get out of it. And it's for the people who live there. If the other side had won the Chinese Civil War, things would probably be a lot, lot better off in China today.
[00:18:22] Dwarkesh Patel: What does it suggest about the deep roots literature if in the case of China and India, two biggest countries of the world, it over predicts their performance? And in the case of America, it under predicts its performance. How reliable is this if the three biggest countries in the world are not adequately accounted for?
[00:18:45] Garett Jones: Communism's a really big mistake. I think that's totally accounted for right there. I think India's underperformance isn't that huge. The US is a miracle along many ways. We should draw our lessons from the typical country, and population weighted estimates.
Basically I don't think that one third of the knowledge about the wealth of nations comes from the current GDP per capita of China, India, and the US. I think much less than one third of the store of the wealth of nations comes from those three.
Again, in all three cases though, if you look at the economic trajectories of all three of those countries, China and India are growing faster than you'd expect. And also, I wanna point out. This is the most important point actually.
When Brian Kaplan made the claim that the ancestry scores, the deep root scores don't predict the low performance of India and China he only checked the S and the A in the S A T scores. Which letter did he not predict? Which letter did he never test out? He never tested the T. What do you think happens when he tests the T?
[00:20:02] Dwarkesh Patel: Does it predict China and India and America?
[00:20:03] Garett Jones: T goes back to being statistically significant again. So with T, which we've always known as the best of the deep root scores, somehow Kaplan never managed to measure that one. Just as Powell and Nowrasteh never managed to run the simplest test, change in migrant corruption versus change in economic institutions. Somehow the simplest tests just never get run.
[00:20:26] Dwarkesh Patel: Okay. And then what is the impact if you include T?
[00:20:29] Garett Jones: If you look at T, then contrary to what Kaplan said, that deep roots measure is statistically significant.
[00:20:38] Dwarkesh Patel: Okay, interesting.
[00:20:40] Garett Jones: The puzzle goes away. Somehow these guys just never seem to run the simple things, the transparent things. I don’t know.
[00:20:49] Dwarkesh Patel: The one you mentioned, what was it? Nowrasteh? The name of the guy who wrote the Wretched Refuse
[00:20:57] Garett Jones: Powell and Nowrasteh.
[00:20:59] Dwarkesh Patel: You said you did the regression on institutional corruption from the countries they come from?
[00:21:06] Garett Jones: It was the measure they use, I just took Powell's dataset from another study. It was basically the percentage increase in your nation's population from relatively poor or corrupt countries. They had multiple measures.
[00:21:25] Dwarkesh Patel:
And what is on the Y axis there?
[00:21:27] Garett Jones: Y axis is change in economic freedom. That's my preferred one. There's also change in corruption which is a noisier indicator. You get much clearer results with change in economic freedom.
[00:21:38] Dwarkesh Patel: Gotcha.
[00:21:39] Innovation & Immigrants
[00:21:39] Dwarkesh Patel: Does the ideas getting harder to find stuff and great stagnation, does that imply we should be less worried about impinging on the innovation engine in these countries that people might wanna migrate to? Because worse comes to worst. It's not like there are a whole bunch of great new theories that are gonna come out anyways.
[00:21:58] Garett Jones: No. I think that it's always good to have great things and new ideas. Yes, new ideas are getting harder to find but the awesome ideas that we're still getting are still worth so much. If we're still increasing lifespan a month for every year of research we're doing, that just seems great. A decade that adds a year to life, so just to use a rough ballpark measure there.
[00:22:25] Dwarkesh Patel: So we have a lot of these countries where a lot of innovation is happening. Let's say we kept one or two of them as havens from any potential downsides from radical changes. We already have this in the case of Japan or South Korea, there's not that much migration there. What is, what is a harm in then using the other ones to decrease global poverty by immigration or something like that?
[00:22:48] Garett Jones: that?
It's obviously better to create a couple of innovation powerhouses rather than none. So obviously that's nice. But instead, I would prefer to have open borders for Iceland. If the Open borders advocates are right and we'll have no noticeable effect on institutional quality, then it's great to have our open borders experiment run in a country that's lightly populated, has a lot of open land, and has good institutional quality. And Iceland fits the bill perfectly for that.
So we could preserve the institutional innovation skill and the institutional quality of what I call the I7. That's China, Japan, South Korea, the US, Germany, UK, France, and choose any country out of the couple of dozen countries that have good institutional quality. Just pick one of the others that aren't one of those seven. Pick one that's not an innovation powerhouse and turn that into your open borders country.
If you wanted to get Singapore levels of population density in Iceland, that'd be about 300 million people. I think that's about what the numbers end up looking like.
[00:24:00] Dwarkesh Patel: But the value of open borders comes from the fact that you're coming to a country with high agglomerations of talent and capital and other things, which is not true of Iceland. Right?
[00:24:13] Garett Jones: No, no. I thought the whole point of open borders is that there's institutional quality and there's some exogenous institutions that make that place more productive than other places.
My version of what I've been exposed to as open borders, is that institutions exogenously exist. Some places have moderately laissez-faire institutions in their country and moving a lot more people there will not reduce the productivity of the people who are currently there, and they'll become much more productive.
Institutional quality is crucial. If you're a real geography guy, you'd be excited about the fact that Iceland is so close to the north pole because latitude is a predictor of prosperity.
[00:24:53] Open Borders for Migrants Equivalent to Americans?
[00:24:53] Dwarkesh Patel: I want to go back to the thing about, should we have an open border for that 20% of the world's population that comes from an equivalent S, A, T and other sort of cultural traits as America because I feel like this is important enough to dwell on it.
It seems similar to saying that once you pick up a hundred dollar bill on the floor, you wouldn't pick up a $20 bill on the floor because you only want the best bill. The $20 bill is right there. Why not pick it up?
[00:25:18] Garett Jones: What if the $20 bill turns your hundred dollar bill into an $80 bill? What if it turns all of your hundred dollar bills into $80 bills?
[00:25:27] Dwarkesh Patel: But aren't you controlling for that by saying that they have equivalent scores along all those cultural tests that you're considering.
[00:25:34] Garett Jones: No. Take the simple version of my story, which is the median of the population ends up shaping the productivity of everybody in the country. The mean skill level ends up shaping the productivity of the entire population.
I try not to Math this up for a popular book, but it means we face a trade off between being a small country with super awesome positive externalities for all the workers by just selecting the best people. And every time we lower the average skill level in the country, we're lowering the average productivity of everyone else we're creating.
[00:26:11] Dwarkesh Patel: What if we didn't lower it? So you have to have skills that are higher compared to the median American.
[00:26:18] Garett Jones: This is a ceteris paribus story, right? Suppose the US is at 80 now on a zero to a hundred scale and you have a choice between being hundred and being 99. If you're at 99, compared to the world with an average of a hundred, the world of an average 99 is reducing the productivity of all those hundreds. If we chose 90, we're reducing the productivity of all those hundreds.
[00:26:48] Dwarkesh Patel: Okay so let's say we admit all the smartest people in the world, and that gets us from 80 to 85. That's the new median in America. But this is because we've admitted a whole bunch of 99s that have increased our average. Then at that point, open borders for everybody who's over 85?
[00:27:08] Garett Jones: This ends up being a math problem that’s a little hard to solve on a podcast. It's a question of do I want a smaller country with super high average productivity or a bigger country with lower average productivity. And by average productivity, I don't just mean a compositional effect I mean relatively fewer positive externalities. I'll use the term relatively fewer positive externalities rather than negative externalities. I don't exactly know where this trade off is gonna pan out.
When people talk about a Manhattan project they're talking about putting a small number of the smartest people in a room. And part of the reason you don't want the 20th smartest person in the room is because that person's gonna ruin stuff for the other smart people. It's amazing how your worldview changes when you see everybody as an externality.
[00:28:02] Dwarkesh Patel: I'm kind of confused about this because at some point you're gonna run out of the remainder of the smartest people in the world. And given how big the US population is to begin with, you're not gonna change the median that much by doing that, right?
It’s almost equivalent to just having more births from the average American. If the average American just had more kids, the population would still grow and the relative effect of the brightest people might dilute a little bit.
[00:28:33] Garett Jones: Maybe that's a huge tragedy, we don't know. Without a bunch of extra math and a bunch of weird assumptions, we don't know. There's a point at which I have to say I don't know.
Is diluting the power of the smartest person in America keeping us from having wondrous miracles all around us all the time? Probably not but I don't know.
[00:28:54] Let's Ignore Side Effects?
[00:28:54] Dwarkesh Patel: I guess the sort of the meta question you can ask about this entire debate is, there's so much literature here and it's hard to tell what exactly will happen. It's possible that culture will become worse. It's possible it'll become better. It's possible to stay the same.
Given the fact that there's this ambiguity, why not just do the thing that on the first order of effect seems good? And moving somebody who's in a poor country to a rich country. I don't know how the third and fourth order effect shapes out but the first order effect seems good. So let's just do the simple obvious thing?
[00:29:22] Garett Jones: I thought that one of the great ideas of economics is that we have to worry about secondary and tertiary consequences.
[00:29:28] Dwarkesh Patel: But if we can't even figure out what they are exactly, why not just do the thing that seems good at the first order?
[00:29:35] Garett Jones: Because if you have a compelling reason to think that the direction of strength of the second and third and fourth order things are negative and the variance is really wide, then you're just adding a lot more uncertainty to your outcomes.
And adding uncertainty to outcomes that have a sizable negative tail, especially for the whole planet, isn't that great.
Go ahead and run your experiments in Iceland. Let's run that for 50 years and see what happens. It's weird how everybody's obsessed with running the experiment in America. Why not run it in Iceland first?
[00:30:05] Dwarkesh Patel: Because America's got a lot of great institutions right there.
[00:30:08] Garett Jones: Iceland's a great place too. We can check and see what happens in Iceland. And I use Iceland as a metaphor, right? People are obsessed with running it in America like there's some kind of need. I don't know why. Let's try it in France. Let's try Northern Ireland.
[00:30:25] Are Poor Countries Stuck?
[00:30:25] Dwarkesh Patel: Are places with low S A T scores …. In case you're skipping to the timestamp, we're not talking about the college test. We’re talking about the deep roots S A T.
[00:30:35] Garett Jones: State history, Agricultural history, Tech history.
[00:30:38] Dwarkesh Patel: Are those places with low scores on that test stuck there forever? Or is there something that can be done if you are a country that has had a short or not significant history of technology or agriculture?
[00:30:56] Garett Jones: I start off the book with this. One thing they could do is create a welcoming environment for large numbers of Chinese migrants to move there persistently. I don't think that's of course the only thing that could ever work, but I think it's something that's within the range of policy for at least some poor countries. I don't know which ones but some poor countries could follow the approach that many countries in Southeast Asia followed, which is to create an environment that's welcoming enough to Chinese migrants. It's the one country in the world with large numbers of high S A T score, a large population and it's enough of an economic failure for at least a little longer that folks might be interested in moving to a poor country with lower s a t scores.
In a better world, you can do this with North Korea too, but the population of North Korea isn't big enough to make a big dent in the world, right? China's population is big enough.
[00:31:54] Dwarkesh Patel: Another thing you have to worry about in those cases though is the risk that if you do become successful in that country, there's just gonna be a huge backlash and your resources will get expropriated.
[00:32:05] Garett Jones: Famously so in Indonesia. There have been many times across Southeast Asia where anti-Chinese pogroms have unfortunately been a fact of life.
[00:32:15] Dwarkesh Patel: Or Indians in Uganda under Idi Amin.
[00:32:26] How Can Effective Altruists Increase National IQ
[00:32:26] Dwarkesh Patel: I'm curious how you would think about this. Given the impact of national IQ if you're an effective altruist, are you just handing out iodine tablets across, across the world? What are you doing to increase national IQ?
[00:32:34] Garett Jones: Yeah. This is what I call a Flynn cycle. I'm hoping for a world where there are enough public health interventions and probably K-6 education interventions to boost test scores in the world's poorest countries.
And I think that ends up having a virtuous cycle to it, right? As people get more productive, then they can afford more public health, which makes them more productive, which means they can afford more public health. I think brain health is an important and neglected part of child development.
Fortunately we've done a fair amount to reduce the amount of environmental lead in a lot of poor countries. That's probably having a good effect right now as we speak in a lot of the world's poorest countries.
Iodine, basic childhood nutrition, reliable healthcare to prevent the worst kinds of mild childhood infections that are probably creating what the economists sometimes call health insults.
Things that end up just hurting you in a way that causes an ill-defined long-term cost. A lot of that's gonna have to show up in the brain.
I'm a big fan of the view that part of the Flynn Effect is basically nutrition and health. Flynn wasn't a huge believer in that, but I think that's certainly important in the poorest countries.
[00:33:57] Dwarkesh Patel: I think Brian showed an open borders if you look at IQ of adoptees from poor countries, Sweden is the only country that collects data, but if you get adopted by a parent in Sweden, half the gap between the averages of two countries goes away.
Is one of the ways we can increase global IQ just by moving kids to countries with good health outcomes that will nourish their intelligence.
[00:34:27] Garett Jones: Well, that's a classic short run versus long run effect. Libertarians and open borders advocates tend to be focused on the short run, static effects.
You're right, moving kids from poor countries to richer countries is probably gonna raise their test scores quite a lot. And then the question is, over the longer run, are those lower skilled folks, the folks with lower test scores, going to degrade the institutional quality of the places they move to.
If you close half the gap between the poor country and the rich country, half the gap is still there. And if I'm right, that IQ has big externalities, then moving people from a lower scoring country to a richer scoring country and closing half the IQ gap still means on net you're creating a negative externality in the country the kids are moving to.
Basically just look at the question, is this lowering the mean test scores in your country? And if it's lowering the mean test scores in the long run, it's on average gonna lower institutional quality, productivity, and savings rates. It's hard to avoid that outcome.
[00:35:38] Dwarkesh Patel: I don't remember the exact figures, but didn't Bryan address this in his Open Borders book as well, that even if the national IQ lowers on average, if you're still raising the global IQ, that still nets out positive, or am I remembering that wrong?
[00:35:54] Garett Jones: What he does is he says there's some productivity that's just in the land, that's just geographic factors. Moving people away from the equator boosts productivity substantially. And again, that's a static result. The reason I mention that is because it ignores all the I-7 stuff that I'm talking about where anything that lowers the level of innovation in the world's most innovative countries has negative costs for the entire planet in the long run, but that's something you'd only see over the course of 20, 30, 50 years. And libertarians and open border advocates are very rarely interested in that kind of timeframe.
[00:36:33] Dwarkesh Patel: Is there any evidence about the impact of migration on innovation specifically? So not on the average institutional quality or the corruption or whatever, but just directly the amount of innovation that happens or maybe Nobel Prizes won or things like that?
[00:36:48] Garett Jones: Um, no. I think a lot of us would presume that the European invasion of North America ended up having positive effects for global innovation. It's not an invasion that I'm in favor of, but if you wanna talk crudely about whether migrations had an effect on innovation, you'd probably have to include that in any kind of analysis.
[00:37:07] Dwarkesh Patel: Yep. Do you think that the people who are currently Americans, but their ancestry, traces back to countries with low S A T scores? Is it possible that US GDP per capita would be higher without that contribution? How do you think about that?
[00:37:21] Garett Jones: It follows from thinking through the fact that we are all externalities, positive or negative. Any one particular country could turn out to be some exciting exception to the rules, some interesting anomaly. But on average, we should presume that the average skill level of voters, the average traits that we're bringing from the nations of our ancestors is having an effect on our current productivity.
So just following through the reasoning, I'd have to say on average, that's most likely. But there could always be exceptions to the rule.
[00:37:56] Dwarkesh Patel: We see large disparities in income between different ethnic groups across the world, not just in the United States. Doesn't that suggest that some of the gains can be privatized from whatever the cultural or other traits there are? Because these sorts of gaps continue over decades and centuries.
[00:38:18] Garett Jones: I don't see why that would follow.
[00:38:21] Dwarkesh Patel: If all the externalities are just being averaged out over time, wouldn’t you expect that these gains gaps would narrow?
[00:38:29] Garett Jones: I'm being a little rhetorical when I'm saying everything is literally an externality. I don't literally believe that's true. For instance, people with higher education levels do actually earn more than people with lower education levels. That's literally not an externality.
So some of these other cultural traits that people are bringing with them from their ancestors’ nations of origin could likely be one source of these income differences.
If you think about differences in frugality, differences in personal responsibility, which show up in the surveys, that are persistent across generations, those are likely to have an effect on long run productivity for yourself and your family. Let alone the hive mind stuff, where you find that there's a positive relationship between test scores and productivity.
[00:39:13] Clone a million John von Neumann?
[00:39:14] Dwarkesh Patel: There was a blogger who took a look at your 2004 paper about the impact of National IQ on GDP. They were just speculating, let's say you cloned a million John Von Neumann’s and assume that John Von Neumann had an IQ of 180, then you could raise the average IQ of the United States by 0.21 points and if it's true that one IQ point contributes 6% to increasing GDP, then this proposal would increase US GDP by 1.266%. Do you buy these kinds of extrapolations?
[00:39:58] Garett Jones: 1.26%?
[00:39:58] Dwarkesh Patel: Yeah, because you're only cloning a million John Von Neumann’s.
[00:39:58] Garett Jones: Yeah, yeah. Okay. So this is about 1 million John Von Neumann’s. Yeah, that sounds about right. I mean, that's the kind of thing where I wouldn't expect it to happen overnight. I tend to think of the IQ externalities as being two, three generations. I lump it in with what economists call organizational capital. That sounds about right.
I can't remember where I saw this. I think I stumbled across it myself at some point too.
[00:40:19] Dwarkesh Patel: His name is Alvaro De Menard, if you wanna find it.
[00:40:22] Garett Jones: Oh, okay. It’s in that ballpark, right? And more importantly, a million John Von Neumanns would be a gift to the entire planet.
If you had a choice of which country to have the million John Von Neumanns, it's probably gonna be one of the I-7. Maybe Switzerland would be a good alternative.
[00:40:46] Dwarkesh Patel: What is the optimal allocation of intelligence across the country?
Because one answer, and I guess this is the default answer in our society, is you just send them where they can get paid the most because that's a good enough proxy for how much they're contributing. And so you have these high agglomeration of talent and intelligence in places like Silicon Valley or New York because their contributions there can scale to the rest of the world. This is actually where they're producing the most value. Another is that you should disperse them throughout the country so that they're helping out communities. They're teachers in their local community.
There was an interesting anecdotal evidence that during the Great Depression, the crime in New York went down a ton, and that was because the cops in New York had a hundred applications for every cop they hired and so they were able to hire the best and the brightest, and there were just a whole bunch of new police tactics that were pioneered at the time anyways.
So, is the market allocation of intelligence correct? Or do you think there should be more distribution of intelligence across the country? How do you think about that?
[00:41:50] Garett Jones: The market signals aren't terrible. My inner Paul Romer kicks in and says innovation is all about externalities and there's market failures everywhere when it comes to the field of innovation.
I like the idea of finding ways to allocate them to STEM style technical fields. We do a fair amount of that and maybe the US does a pretty good job of that. I don't have any huge complaints at the crudest 50,000 foot level.
The fact that people know that there's status games they can play within academia that are perhaps more satisfying or at least as satisfying as the sort of corporate hierarchy stuff.
I wouldn't encourage them to solely follow market signals. I'd encourage them to be more Hansonian and play a variety of status games because the academic and intellectual status game is worth a lot, both personally and then it leads to positive spillovers for society..
[00:42:58] Dwarkesh Patel: But how about the geographic distribution? Do you think that it's fine that smart people leave Kentucky and go to San Francisco?
[00:43:08] Garett Jones: I'm a big agglomeration guy. The internet makes it easier but being in the room is still important.
There's something both Hansonian and Girardian here. We need to find role models to imitate and that's probably important for productivity.
[00:43:30] Dwarkesh Patel: Are there increasing or decreasing returns to National IQ?
[00:43:38] Garett Jones: My findings were that it was all basically log linear. And log linear looks crudely like increasing returns. It looks exponential. So yeah, there's increasing returns to National IQ.
But this is a commonplace finding in a sense because all the human capital relationships I'm familiar with end up having something like a log linear form, which is exponential.
[00:44:09] Dwarkesh Patel: Why is that?
[00:44:11] Garett Jones: There's something multiplicative. That's all I have to say. Somehow this all taps into Adam Smith's pin factory, and we have multiplicative not additive effects when we are increasing brain power. I suspect it does have something to do with a better organization of the division of labor between people, which ends up happening something close to exponential effects on productivity.
[00:44:39] Genetic Selection for IQ
[00:44:39] Dwarkesh Patel: Are you a fan of genetic selection for intelligence as a means of increasing national IQ or do you think that's too much playing at the margins?
[00:44:49] Garett Jones: If it's voluntary, people should be able to do what they want and after a couple decades of experimentation, I think people would end up finding a path to government subsidies or tax credits or something like that. I think people voluntarily deciding what kind of kids they want to have is a good thing.
By genetic selection, I assume you're meaning at the most elementary level people testing their embryos the way they do now, right?
We already do a lot of genetic selection for intelligence. Anybody you know who's in their mid thirties or beyond who's had amniocentesis, they've been doing a form of genetic selection for intelligence.
So it's a widespread practice already in our culture. Welcoming that in a voluntary way is probably going to have good effects for our future.
[00:45:40] Dwarkesh Patel: What do you make of the fact that Chat GPT had a measured IQ of 85?
[00:45:47] Garett Jones: Yeah, I've seen a few different measures of this. You might have seen multiple measures too. When you see people using non IQ tests to sort of assess the outputs of GPT on long essays, it does seem to fit into that sort of, not quite a hundred but not off by a lot. Yeah, I think it's a sign that a lot of mundane, even fairly complex, moderately complex human interactions can be simulated by a large language learning model.
And I think that's gonna be rough news for a lot of people whose life was in the realm of words and dispensing simple advice and solving simple problems. That's pretty bad news for their careers. I'm disappointed to hear that. At least for the transition. I dunno what's gonna happen after the transition.
[00:46:41] Dwarkesh Patel: I'm hoping that's not true of programmers or economists. I like you.
[00:46:46] Garett Jones: It might be, right? If that's the way it is. The car put a lot of people who took care of horses right out of outta work too.
[00:46:55] Dwarkesh Patel: So let's talk about democracy. I thought this was also one of your really interesting books.
[00:47:02] Democracy, Fed, FDA, & Presidential Power
[00:47:02] Dwarkesh Patel: Even controlling for how much democratic oversight there is of institutions in the government there seems to be a wide discrepancy of how well they work. The Fed seems to work reasonably well. I don't know enough about macroeconomics to know the object level decisions they make, but it seems to be a non-corrupt technocratic organization. If you look at something like the FDA, it's also somewhat insulated from democratic processes but it seems to not work as well. Controlling food democracy, what determines how well an institution in the government works?
[00:47:38] Garett Jones: In the case of the Fed, it really does matter that the people who run it have guaranteed long terms and they print their own money to spend. So that means that Congress has to really make an effort to change anything about the Fed. They really have the kind of independence that matters. They have a room of their own.
And the FDA has to come to Congress for money more or less every year. And the FDA heads do not have any kind of security of appointment. They serve at the pleasure of the president. So I do think that they don't have real independence. I do think that they're basically living in this area of slack to use this sort of <unclear> PolySci jargon. They're living in this realm of slack between the fact that the president doesn't wanna meddle with them and the fact that Congress doesn't really wanna meddle with them.
But on the other hand I really think that the FDA and the CDC are doing what Congress more or less wanted them to do. They reflect the muddled disarray that Congress was in over the period of say, COVID. I think that's of first order importance.
I do think that FDA and CDC don't seem to have that culture of raw technocracy the way the Fed does that, I think that has to be important on its own. But I think behind that, some of that is just that the FDA and CDC are creatures of Congress much more than the Fed is.
[00:49:17] Dwarkesh Patel: Should the power of the president be increased?
[00:49:20] Garett Jones: No. The power of independent committees should be increased. More Congress should be like the Fed. My plan for FDA or CDC reorganization would be to make them more like the Fed, where they have appointed experts who have long terms and they have enough of a long term that they can basically feel like they can blow off Congress and build their own culture.
[00:49:42] EU is a force for good?
[00:49:42] Dwarkesh Patel: Mm-hmm. The European Union is an interesting example here because they also have these appointed technocrats, but they seem more interested in creating annoying popups on your websites than with dealing with the end of economic growth on the continent.
Is this a story where more democracy would've helped? Or how do you think about the European Union in this context?
[00:50:04] Garett Jones: No. European voters just aren't that excited about markets overall and the EU is gonna reflect that. What little evidence we have suggests that countries that are getting ready to join the EU improve their economic freedom scores, their laissez faire-ness, on the path to getting ready to join the EU. And then they may increase it a little bit afterwards once they join.
When you're deciding to join the EU, it's like you decided to have your Rocky training montage and get more laissez-faire. And so on net the EU pulls in the direction of markets compared to where Europe would be otherwise. Just look at the nations that are in the EU now. A lot of them are east of Germany and those are countries that don't have this great history of being market friendly and a lot of parties aren't that market friendly, and yet the EU sort of nags them into their version.
[00:51:05] Dwarkesh Patel: What do you think explains the fact that Europe as a whole and the voters there are less market friendly than Americans?
[00:51:23] Garett Jones: Compared to the planet as a whole, they're pretty good. I never get that excited about the small little distinctions between the US and Europe, like these 30% GDP differences, which are very exciting to pundits and bloggers. I'm like, “30% doesn't matter very much.” That's not really my bailiwick. What I'm really interested in is the 3000% between the poorest countries and the richest countries.
I can speculate about Europe but I don't really have a great answer. I think there's something to the naive view that the Europeans with the most, what my dad would call gumption, are those who left and came to America. Some openness, some adventurousness.
So basically there's a lot of selection working on the migration side to make America more open to laissez faire than Europe would be.
[00:52:14] Dwarkesh Patel: Does that overall make you more optimistic about migration to the US from anywhere? The same story
[00:52:20] Garett Jones: Yeah, ceteris paribus. America gets people who are really great. I’m with you there.
[00:52:26] Dwarkesh Patel: Does elite technocratic control work best only in high IQ countries? Because otherwise you don't have these high IQ elites who can make good policies for you, but you also don't get the democratic protections against famine and war and things like that.
[00:52:43] Garett Jones: Oh, I don't know. I think handing things over to elites is pretty strong in anything that's moderately democratic.
Anything that's substantially more democratic than the official measure of Singapore, for instance. That's why my book 10% Less Democracy is really targeted at the rich, rich democracies.
Once we get too far below the rich democracies, I figure once you put elites in charge, they really are just gonna be old-fashioned Gordon Tullock rent seekers and steer everything toward themselves and not give a darn about the masses at all.
A lot of elite control in any kind of democracy is gonna have a good effect if you're really looking at something that meets Amartya Sen’s definition of a democracy. Competitive parties. Free press.
[00:53:38] Dwarkesh Patel: Does Singapore meet that criteria?
[00:53:41] Garett Jones: No. Because their parties aren't really allowed to compete. That's pretty obvious. The People's Action Party really controls party competition there.
[00:53:52] Dwarkesh Patel: I guess Singapore is one of the great examples of technocratic control.
[00:53:59] Garett Jones: They're just an exception of the rule. Most countries that try to pull off that lower level democracy wind up much worse.
[00:54:03] Dwarkesh Patel: What is your opinion of Neoreactionaries? I guess they're not in favor of 10% less democracy. They're more in favor of a hundred percent less democracy.
[00:54:12] Garett Jones: I think they're LARPing too much and romanticizing too much about the Rohirrim.
[00:54:18] Dwarkesh Patel: What is Rohirrim?
[00:54:20] Garett Jones: These guys in the Lord of the Rings. Romanticizing monarchy is a mistake. As my colleague Gordon Tullock pointed out, as well as many others, in equilibrium kings are almost always king and council. It's worth thinking through why king and council is the equilibrium. Something more like a corporate board and less like either the libertarian ideal of the entrepreneur who owns the firm, or the monarch who has the long-term interest in being a stationary bandit. In real life, there's this sort of muddled thing in between that works out as the equilibrium, even in the successful so-called monarchies. So it's worth thinking through why it is that the successful so-called monarchies aren't really monarchies. They're really oligarchies.
[00:55:12] Dwarkesh Patel: Yep. If you look at the median voter in terms of their preferences on academic policies, it seems like they're probably more in favor of government involvement than the actual policies of the United States, for example. What explains this? Shouldn't the media voter theorem that we should be much less libertarian as a country than?
[00:55:35] Garett Jones: Yeah, that's a great point from Bryan Kaplan's excellent book on Myth of the Rational Voter. I think his stories are right, which is that politicians facing reelection have this tradeoff between giving voters what the voters say they want and giving the voters the economic growth that will help the politicians get reelected.
It's a version of saying, “I don't want you to pull off the bandaid, but I want my wound to get better.” It's the politician's job to handle the contradictory demands of the voters. And by delegating authority to the elected politicians you get some of the benefits of elitism even in a so-called democracy.
[00:56:19] Is Ethnic Conflict a Short Run Problem?
[00:56:19] Dwarkesh Patel: Over the long run, should we expect all of the tensions of ethnic diversity to fade away? Nobody today worries about the different Parisian tribes in France butting heads at the workplace.
[00:56:33] Garett Jones: Yeah, you’re right. And the anti-German ethnic sentiment in the US is totally gone, right?
[00:56:39] Dwarkesh Patel: So then this is another one of short run effects that you emphasize you could focus less on, right?
[00:56:46] Garett Jones: Yeah, that's a good point. The problem is that ethnic conflict has been a hardy perennial. It's not the only conflict that people can ever have. I don't know to what extent these things will fade away. As I emphasize in the Culture Transplant, the ethnic diversity channel is actually the least important of any of the channels I discuss. So I'm open to this thought that what you're saying will actually happen and maybe we'll just find something else to get mad at each other about like social media tribes or religious groups. I mean, it hasn't happened yet in all the documented human history we have. People seem to find some ethnic balance for conflict.
It is worth pointing out that the one study that I report, the real source of ethnic conflict happens when private values are correlated with ethnic groups.
So if cultural values are basically uncorrelated with ethnicity, then basically there's nothing to fight over. And that's really what's happened with a lot of old ethnic battles in the US. And so you're right, some of these things will fade with time. The problem with human beings, one of our great evils, is that we are always looking for a focal point.
People will use visible appearance as a horrifying focal point around which to peg their conflicts. It's an easy one because our brains are looking for visual patterns. I don't like that but it's something that will probably keep happening.
[00:58:22] Dwarkesh Patel: One of the interesting points you made in the chapter was that the benefits of diversity are greatest when search costs are lower and the cost of vetting are lower. How do we make sure that that is true of non-lead professions? So if you're looking for a plumber or if you're looking for a carpenter, how do we make sure that you can vet them easily?
[00:58:42] Garett Jones: I have to say that this has to be a case where sites like Yelp and Google and all these online ratings have given us tools for checking these things out. We know we have to be skeptical, of course, but for people who know that they're good at something, the cost of entry into a new field has to be much lower than it was a few decades ago because, 10-20 good Google reviews, and you can actually enter.
I'd say that not banning disclosure of data is the most important thing we can do. I haven't checked up on this in a long time, but apparently medical doctors often make it very risky to give bad reviews. Sometimes you get a lawsuit or something. So making that a lot harder is worth it. We know that some negative reviews are gonna be malicious and inaccurate, but the benefits of information flow seem really high.
[00:59:38] Bond Holder Democracy
[00:59:38] Dwarkesh Patel: I thought one of the really interesting chapters in 10% less democracy was the chapter on bond holder democracy.
I'm curious, corporations are obviously an example to use here where they do have bond holders who hold them accountable but the average lifespan of a corporation is 10 years, I believe. So do you think it would be even shorter if bond holders had an even lesser say on corporations or what does the transients of the corporation tell us about their controls?
[01:00:11] Garett Jones: Oh, that's a good point. We can suspect that the average person who's investing in a corporation makes money because otherwise people wouldn't be doing it. On average, it must work…
You actually have me stumped here. Can you rephrase the question again? I'm trying to think through what the question is.
[01:00:32] Dwarkesh Patel: If bond holders do extend the longevity and the long term thinking of the organizations whose bonds they hold, why don’t corporations that give out bonds tend to live longer than the average of 10 years? Would it be even shorter without bond holders?
[01:00:50] Garett Jones: A) I'd say it'd probably be shorter without bond holders or any kind of financial monitor, but second, most corporations just shouldn't live that long. Most corporations, they are ideas that you try out and then you find out that it doesn't work, or it should be bought up by somebody else, or the IP should be sold off.
And so having a lot of companies fade out is actually a good sign. I think this is really part of the <John Halter wearing> line of research , the sort of modern version of creative destruction research, which finds that low productivity firms exiting, just as naive laissez-faire predicts, means that those workers and that capital can get reallocated over to a more productive firm.
The alternative is stereotypically Japanese zombie firms. They're kept limping along by banks that are perhaps under political pressure to lend. And so a lot of human and physical capital gets tied up in low productivity projects. So yeah, a brutal bond market is a good way to send a market signal to move capital from low productivity to high productivity projects.
[01:01:56] Dwarkesh Patel: Why are yields on 30 year fixed treasuries so low? Because theoretically, investors should know that we have a lot of liabilities in the form of social security to baby boomers and that we've radically inflated the money supply very recently and may do so again. Do you think the investors are being irrational with the low yields or what's going on?
[01:02:18] Garett Jones: No, no. I'm a fan of the view that the bond holders are gonna win in the long run and that any kind of super, super high inflation is not gonna be the path of the future. And what's gonna happen is that, at least when you think about the US, the way the bond holders are gonna win is that there's gonna be a mixture of tax hikes and slower spending growth, especially hurting the poor. And that's how the US is gonna close its fiscal gap. I don't know particularly what paths other countries are gonna go through, but the US has this one superpower sitting in the room that it hasn't used yet, and it's a VAT. The US could dramatically increase its tax revenue through either an overt or disguised value added tax, and that would raise a ton of money just like it did in Europe. That's the easy way to close the US fiscal gap.
We probably won't even have to get to that. Just making Medicaid worse, slowly over the long run, maybe making Medicare worse over the long run? That by itself would close a lot of this fiscal gap. I think they'll balance the long run budget on the backs of the poor and the middle class. That's probably the most likely outcome. Hence no hyperinflation.
[01:03:38] Dwarkesh Patel: So are you expecting the welfare state to shrink either in quality or quantity over time?
[01:03:42] Garett Jones: In relative terms, compared to the trend. If America is still getting say 1%-1.5% richer each year then that by itself adds a certain level of quality to healthcare over time. If you could get healthcare spending in real terms to be 0% over time, that would end up closing the gap when you compound it out long enough.
[01:04:16] Dwarkesh Patel: When Liz Truss in the UK tried to implement tax reform, there was a bond holder revolt and she was ousted.
[01:04:28] Garett Jones: Bondholders won right there.
[01:04:29] Dwarkesh Patel: Do we already live in the Bondholder utopia?
[01:04:32] Garett Jones: Oh, yeah. That was a nice reminder that contrary to the MMT view and the pop keynesian view, the debt is no barrier at all. I think that showed that the bond holders are actually paying attention to long-term signals of fiscal policy credibility and they'll take action.
[01:04:57] Dwarkesh Patel: What are the deep roots of Mormonism? Why do they have such high trust and such tight-knit communities?
[01:04:57] Garett Jones: I think part of it is that they reflect a lot of this Western Pioneer culture, upstate New York, Pennsylvania, then Ohio. Those communities tended to be high trust communities necessarily because of the difficult environment that they were living in. And there was a lot of selection over the first few decades of Mormon history where those who were willing to sort of trust the group stayed in and those who weren't willing to trust the group ended up leaving. And not just trust, but trustworthiness. I think a lot of people probably got weed out because they weren't contributing to the common good.
So I think that basically by the time the Mormons got established in Utah, they had already selected for a strong culture of a kind of in-group prosociality. And I think that helped them, that helped them weather the storms of the 19th century. During the whole 19th century, the era of polygamy in Utah, people were only joining if they thought that they were willing to put up with this. You know that you are signing up for some kind of deep sociality with a mixture of a lot of unconventional stuff. And that foundation really helped.
And the fact that Mormons since then have stayed as a religion that requires a medium-high level of commitment, also weeds out people who just aren't willing to make that kind of commitment.
I was raised Mormon. I wasn't ultimately willing to make the commitment and maybe part of the reason is because I'm too much of a free rider, so the Mormons who are left are probably better than me.
[01:06:46] Dwarkesh Patel: I think the Mormon church has more than a hundred billion in assets. What is it planning on doing with all this money? That's a tremendous sum.
[01:06:56] Garett Jones: I don't know. Maybe they're planning to hand it to the savior when the second coming happens. There's gotta be a great argument for this option value of just having the wealth there. It must give them a kind of independence from the world when various cultural, political storms come along. I don't actually know what their plans are for what they would do with all the money, but I do know that normal economics tells us that being frugal is good for the economy overall.
Steven Landbserg has a great essay in the praise of Scrooge. It's especially appropriate for this time of year. And being frugal means you're building up the capital stock and you're giving a sort of invisible gift to future generations. So Mormon frugality is basically helping build up the US capital stock and indirectly the world's capital stock, helping make us all more productive, which I think is something that fits in with Mormon values.
[01:07:52] Dwarkesh Patel: Yeah. I think people have pointed out that people should be spending more money given the fact that they have so much left over by the time they die.
[01:08:00] Garett Jones: At an individual level, if you care about your own well being that's true.
[01:08:03] Dwarkesh Patel: It is interesting that leaving a large inheritance is socially valuable.
[01:08:10] Garett Jones: Yeah, leaving a large inheritance means you're producing a lot but you're not consuming very much. That means you're building up the capital stock
[01:08:16] Dwarkesh Patel: There's also a large amount of multi-level marketing schemes that proliferate in Utah. Is that one of the downsides of high social trust?
[01:08:31] Garett Jones: Yeah, because people predate upon it. It strikes me as a total rent seeker sort of thing. I have to say the knives are really good. Everybody I know who's ever had Cutco knives ends up using them for decades. That's one of the popular multi-level marketing schemes that actually gets to men. A lot of them are targeted at women through cosmetics, as you might know. But at least the men's one works out.
[01:08:52] Garett Jones's Immigration System
[01:08:52] Dwarkesh Patel: If you had to implement an immigration system from scratch, would you actually consider these S A T scores and these other deep roots scores as part of somebody's admittance? Or would you just consider the individual level, your personal skill, and education and things like
[01:09:07] Garett Jones: No, I'd wanna launch a 10 year, maybe 20 year research project of figuring how to turn the deep roots scores into something useful.
Right now with the deep roots literature, we're about where Milton Friedman's Monetarism theory was in the late sixties. Friedman said, “Hey, I figured out where inflation comes from, and we'd be a lot better off if we just grew the money supply 3% a year.” Ultimately, nobody thought he was right about the 3% a year thing, but they did think that he still had a lot of good advice. So Friedman ended up having a lot of good ideas, but they weren't policy ready. And I think that's about where we are with the deep roots literature right now, at most one would use it as a small plus factor in a point system, but I don't even know which points I'd use. But something along those lines is worth thinking about. I would never use any quotas or hard cutoffs. If you think about point space systems, 10-20 years of further research, and maybe you'd find a way to put the deep roots into a points based system.
[01:10:12] Interviewing SBF
[01:10:12] Garett Jones: How was the SBF thing? Did he just say “I'll fly you out?”
[01:10:20] Dwarkesh Patel: I was there for the EA Bahamas and then while I was there, I talked to somebody who knew him and I'm like, “Hey, I would love to interview him. Here are some things I would ask him.”
It was one of the ones where I actually feel like I would really want to redo that one because I was aware of some things back then that would have been worth asking about in retrospect. And of course, it's all in retrospect, but yeah. I should have focused harder on that rather than asking these sort of philosophical questions about effective altruism.
[01:10:51] Garett Jones: Do you think it is as simple as that he was commingling funds? He lent a bunch of FTX money over to a hedge fund and then they lost it?
[01:11:02] Dwarkesh Patel: I'm guessing.
[01:11:04] Garett Jones: First approximation?
[01:11:07] Dwarkesh Patel: Yeah
[01:11:09] Garett Jones: So it's old fashioned financial fraud partly driven by not having a really good board over them or a good oversight.
[01:11:14] Dwarkesh Patel: I'm really curious to ask you this, because in Hive Mind you're talking about the fact that higher IQ people on average are more cooperative in prisoner's dilemma type situations and I just interviewed Bethany McClean on the podcast. She wrote the Smartest Guys in the Room which is about Enron. There is this thing where maybe they are less likely to commit fraud on average, but when they do, they're really good at it. Maybe one of the downsides of having a high IQ society is that what people do commit in fraud, they're super successful at it.
[01:11:52] Garett Jones: Yeah, the evils of super smart people are obviously a huge risk to all of humanity. I don't have to worry about humanity being wiped out by a bunch of people with sticks and stones. I have to worry about humanity being wiped out by nuclear weapons, which could only be invented by smart people.
[01:12:07] Dwarkesh Patel: Are smart people more cooperative in a sort of very calculating sense? That game is gonna go on so I wanna make sure I preserve my relationships. Or they would cooperate even in the last turn of an iterated prisoner's dilemma game?
[01:12:28] Garett Jones: No, in the last turn they walk away. I think there is no correlation between intelligence and normal psychological agreeableness. Or psychological conscientiousness for that matter. And I think that's a broader principle.
I think Machiavellian intelligence is what's driving the link between IQ and cooperation. So in repeated games, that Machiavellian intelligence, which a lot of intelligence researchers will talk about, turns into cosean intelligence where people find a way to grow the pie, but it's a very cynical, self-interested form of growing the pie.
And so I don't think it's driven by inherent prosociality. I think it's endogenous prosociality, not exogenous prosociality. And that's a reason to worry about it.
[01:13:19] Dwarkesh Patel: What happens to these high IQ people if society goes into a sort of zero sum mode where there's not that much economic growth? And so the only way you can increase your share of the pie is just by cutting out bigger and bigger slices for yourself.
[01:13:32] Garett Jones: Then you gotta watch out, right? It's like the Middle Ages right there.
[01:13:38] Dwarkesh Patel: Yeah, interesting. Garrett, thanks so much for coming on the podcast. This was interesting.
[01:13:46] Garett Jones: Thanks for having me. This has been fantastic. Thanks for reading my books. Appreciate it.