Eric Weinstein interviews Tyler Cowen, and the ‘Feminization of Society’

Tyler blames the ‘feminization of society’ for economic stagnation and aversion to risk taking, which is a surprisingly ‘based’ take by the otherwise anodyne professor. Tyler tends to equivocate a lot or take opposing/contradictory views on the same issue, so it is hard to peg down what he believes. He appears to blame the feminization of society for stagnation, but also says this is good for the economy, in approval of this trend. He challenges Pinker’s optimism, arguing how although war may be less frequent, the potential for casualties and destruction is much greater due to nuclear weapons, but also concedes that Pinker may be right due to various attenuating factors. Complicated issues tend to not have strait-forward explanations or solutions, so one’s overall understanding of an issue is improved by trying to entertain both sides.

I think what Tyler means by feminization is not in terms of masculinity but rather women assuming economic roles that otherwise would be performed by men, and men taking a less dominant role in the economy.

The graph below shows how real wages for women have risen whereas for men it has stayed stagnant. I think Tyler is correct that the economic benefits, both at the household and macro level, of double income households make it worthwhile, in spite of the increasing feminization.

There is possible feminization in terms of reversing gender roles, and also the possible over-diagnosis of attention deficit disorders and the overuse of drugs to force compliance and obedience among boys. However, as undesirable as such trends are, I don’t think it necessarily leads to stagnation or aversion to risk taking. Perhaps America is suffering from a sort of cultural or societal rot that cannot be described by economic data alone. There is a lot to not like about where society is going culturally, but the correlation between traditionalism and economic success is weak or negative. Tyler is probably right that women working is a ‘net positive’ for the economy even if it leads to undesirable social consequences, such as the outsourcing of parenting to daycare, delayed family formation, or delayed marriage.

In regard to stagnation, I disagree with Tyler there is stagnation, as discussed in series of articles in which I argue against the existence purported economic stagnation:

Can We Have Prosperity Without Growth? Yes
Disagreeing with Tyler Cowen about Stagnation and Innovation
Tyler Cowen: Stagnation and Complacency, Part 1
Additional arguments against economic stagnation

And even if there is stagnation in the US, other countries are in even worse shape, with the possible exception of China.

In blaming feminization for stagnation, this is possibly the wrong diagnosis. My hypothesis is low IQs are to blame, all else being equal. Brazil, Lebanon, Turkey, and Chile are less feminized culturally than the US but their economies are weak and are in way worse shape than the US, with high inflation, falling currencies, and negative inflation-adjusted per-capita wealth, and little to no tech innovation. Even though the aforementioned countries have entrepreneurship, free markets, and risk taking, due to low IQs they are unable to concentrate real wealth on a per-capita basis, because low-IQ businesses do not concentrate wealth as well as high-IQ ones.

Tyler mentions 1995-1998 as a period of expansion and risk taking, as opposed to stagnation, but is overlooking the tech innovation that exists today and also overlooks the high inflation rate of the ’90s. There was less real wealth creation in the ’90s compared to post-2010, because inflation and interest rates were so high.

Tyler and Eric are both right about inflation. Tyler is correct about the CPI, more or less, being correct in so far as being an agreed-upon benchmark for measuring inflation. But Eric is right about the CPI having major limitations in terms of what it ignores. In spite of low CPI-based inflation, inflation for healthcare, tuition, stock prices, rent, insurance, etc. have all exceeded the CPI by a large margin.

Neither of them seem to understand how short-selling and stock options work. Tyler says there is an actionable trade to profit from the inaccurate calculation of real rates of return. As someone who has studied this sort of stuff, there is no such trade. Interest rate trades typically require enormous amounts of leverage to magnify the returns from tiny differentials, but such leverage comes at a cost called the cost of carry, eroding the possible real returns and also incurring various tail risks (as the implosion of LTCM showed).

If the CPI is understating inflation ,as Eric argues, than the real rate of return from owning stocks would be higher, not lower, if we use the CPI as the benchmark. If the goal of investing or a hedge fund is to generate a real rate of return, then one should almost always own stocks, because stocks generate the highest real return of any asset class, regardless of the inflation rate. Stocks only become less attractive when interest rates are higher than CPI-based inflation, but this is a rare occurrence. Since 2008, the trend has been near-zero interest rates and CPI-based inflation in the 2% range.

Eric says markets are manipulated due to the ‘invisible hand’ of the fed and that this makes certain types of trades impossible, but the obvious retort from an efficient market standpoint is, if the majority of market participants believe with a high degree of certainly that there will be periodic intervention from the fed, then prices, both in the equity and option markets, will adjust accordingly to reflect this public knowledge.

In regard to purported lack of risk taking in the US, Tyler is wrong. There is tons of risk taking such as venture capital and entrepreneurism in the US, in spite of supposed feminization and stagnation. Look at Tesla for example. Or Netflix–two examples of massively successful American companies that just 20 years ago ago didn’t exist or were mere ideas. Or on popular subs such as /r/wallstreetbets, there at least a hundred posts in the past few weeks alone of young people risking and earning huge sums of money investing (but it’s more like gambling) in risky Tesla call options, so to say that there isn’t risk taking is demonstrably and empirically false.

Eric mentions ‘gauge theory’ numerous times. Gauge theory is a complicated math and physics concept regarding how symmetries and other properties of mathematical objects are preserved under certain transformations, but Eric believes the concept can also apply to economics. However, a Google search reveals scant progress, with just a single paper having been published since 2009, and not even by Eric himslef but by another physicist-turned-economist Lee Smolin instead. This does not give me much confidence in the idea. I have been hearing about gauge theory and economics for a long time, at least as far back as 2013 when Eric began talking about it and the media picked up on it, but it seems as though the idea never blossomed into any sort of concrete, testable theory.

They heap lavish praise on Peter Thiel, with Tyler and Eric calling him ‘the smartest person of our age, if not the smartest.’ It is hard to make a case that he is the smartest, as smart people in tech and VC are a dime a dozen. Being a founder of Paypal made him rich, but it was his 2005 seed investment in Facebook, turning just $500,000 of his own capital into billions, that made him the legend he is today. I think society would be made better off by having more people like Peter Thiel (and also Elon Musk) in positions of power in government, not just as advisers whose opinions are easily dismissed, but as policy makers and shot callers. The problem is public service typically does not attract the best and brightest or most creative.

Tyler is right that at an individual level, perhaps not talking risk is the rational choice even if society as a whole is made worse-off, but I disagree that Americans are risk averse (or at least more so than the rest of the world (Germany and Japan are way more risk averse, yet compared to low-IQ countries are way more successful economically on a per-capita inflation-adjusted basis anyway)).