Bryan Caplan - Labor Econ, Poverty, & Mental Illness

Key Takeaways

[Music] okay today i'm speaking with my good friend brian kaplan and this will actually be uh the second time we talk so the first uh the first time we talked was the first episode of this podcast so uh yeah i'm really excited about this or it's fantastic to be back here to our cash great to see how well you've been doing for yourself and now it is my privilege to get to speak to you excellent okay so uh today we're talking about your book labor econ versus the world and it's a collection of your essays throughout the years and i highly recommend it um okay so here's my first question what percentage of the working age population is zero or negative productivity hmm it's a good question so this is working age population not actual those not the ones that are in fact currently working yeah yeah yeah yeah hmm let's see well i i'd be kind to say probably something like three percent although of course it's much higher if you just make someone do a job that they're not suited for so again whenever people talk about zero productivity workers i often want to say the fact that someone has zero productivity or negative productivity at the job they're doing doesn't show that they are a zero negative productivity person could just be that they are mismatched to the job a common misunderstanding actually so yeah i think it is very low for the working age population for any job at all one of the things that labor markets do of course is fire you from jobs where you have really no productivity which encourages you to search around for something that you where you are actually productive so then what's the explanation for right labor force participation is like 60 or something so there's like a gap of about like uh you know like the 37 or something of people who who could be contributing but are not well i mean the biggest explanation is working or not working moms rather mom moms especially young kids who don't want a job because they are busy taking care of their kids so i say that is the first and foremost one is family responsibilities there's a small share of people that are rich enough and there isn't any job that they like doing so that's i think that's only maybe a couple percent of the population then you've got a larger percentage of the population where government retribution means that they really don't have that much of a gain from working at least in the short run so i think often it would still in fact be better for them in the long run just to get a job even if they don't make as much money when the then when there be when they're receiving retribution because you get training and connections so in the long run it is a better strategy there's another chunk of people's parents are just either really nice or suckers depending upon how you see it who will just take care of them there's of course spouses even when you don't have kids or romantic partners who will take care of you even though you are not working right and then you finally well this is not oh this category does overlap with with the others but then there are guys who just really don't want to go and conform most often what they're doing is they work sporadically and they have a job and then they're difficult they get fired and then they are unemployed for a while then they find another job you know they say like there's one of my favorite books on poverty which is a promises i can keep talks about the problems of single moms and one of the main things that it talks about is they're not happy with the fathers of their kids and then the question comes up was the problem they can't find jobs and they said no no he finds jobs all the time problems keeping jobs so i think that's another part of it so of course if you officially say that you're still looking for work but you just don't find a job then you'll be counted as unemployed but if sometimes just say screw it i'm not even looking and then they record that in the stats then that will come out as saying that you aren't even uh trying so yes i'm glad you brought up uh uh i'm glad you're out of poverty so you emphasize in the book uh the success sequence so this is the idea that you know if you get uh married before we have kids you get a high school diploma and you work full-time um then you're virtually guaranteed to not be in poverty um so now this raises in the united states anyway oh sorry yeah in the united states um so this raises a question if um if it's so easy to uh stay out of poverty or to not get into poverty in the first place and if so many people are still avoiding doing these steps like what is the explanation because clearly being out of poverty is like something that a lot of people you would think they would want so it is are these steps harder than we think like what is the explanation for why so so many people are still failing to comply by uh these basic uh these basic steps that's a great question so when people ask me about the meaning of the success sequence i say well look imagine there's some research saying that here's a simple recipe to avoid poverty first be first in your class at mit second of all win a nobel prize and third marry someone who won an academy award if that was the prescription then people might recently say well hardly anybody can do that so i'm not even gonna try this ridiculous it's hopeless and that's and then if that's what you have to do to avoid poverty then you could reasonably say well most people just couldn't possibly do it what's interesting about the six the success sequence is that it does sound quite easy right so american high school standards are very low basically if you just show up and try then you're very likely to get passed along so you'll graduate from high school uh getting a job for working full-time you know even when you go and ask people who are in poverty during all but very severe recessions normally they'll say yeah it's easy to get a job it's not actually very hard this is again talking to actual poor people this is not the opinion of economics professors and then finally waiting until marriage to have kids that sounds really easy it's like yeah we've got reliable contraception it's not like you need celibacy or anything just delay until you've got someone that you are comfortable raising the kids with so as to why these three things why people don't do them well there's a few possibilities so one is that people just don't know all right i'd say this is really hard not to know because you have so many people first of all you have a lot of people telling you every uh you know your parents are telling you teachers are telling you other authorities are telling you coaches are telling you furthermore is totally normal even in neighborhoods where people are not following this for parents to want you to follow it which i think is a telling piece of information because there is a critique saying that this the success sequence only works for people that are growing up in middle class neighborhood and it is just not realistic for is not actually a path to out of poverty for other people if that's so why is it that parents who themselves have not followed it push it so hard which again it appears to be totally normal it is really weird for a single mom to raise the kids saying you know what i want you to be a single mom it's the best it's the only good path in life right that's not normal instead the normal thing is to say look at how i messed up my life don't do what i did wait and then people still don't wait uh there's also a story saying well look even though it's people are telling you to do this you don't have any good examples that you can where you can see that anyone's followed it so there isn't really any real proof and here i say hmm well probably your teachers in school follow it so you can look at them and you can say right my teacher might not be the coolest person but they're not living in poverty right bare minimum but so my teacher seems to have a path out of this furthermore it's actually very normal even poor families for there to be successful members of the family who have escaped poverty and normally do it by following the success sequence so you'll have a relative who's in a family of single moms but this is the one that didn't do it and this is the one that waited and followed the path and you will see her at family events people may have some resentment although she thinks she's so much better than the rest of us but you can't say that they don't have any first-hand experience with it they've got that so i think the story that makes the most sense to me is it does require some impulse control right which is not fun for people right now so yeah finishing high school yeah requires that you go and sit there and be bored i remember high school it was really boring so i can especially when you're when you've got young people that are making decisions young people are famous for low impulse control same thing for working a job a lot of what you're doing at a job is humiliating yourself honestly right there's there's a customer who's mistreating you and yelling you you're being rude for no good reason and like to keep the job then you say yes sir terribly sorry sir your pride says to say hey don't talk to me that way like what do you know you're the one who you're the one that screwed up and you're not supposed to say that on a job and it requires impulse control to keep your mouth shut and then of course most notoriously avoiding avoiding kids that you're not ready to have requires impulse control right and indeed i would say that in all the work on poverty that i've read i would say that poor sexual impulse control is actually the root of almost all the other problems because it's one where a lapse in judgment actually leads to long-term responsibilities in a way you know so you like you can recover from yelling at a customer getting fired all right fine you burn some bridges but you just look around you get another job but you really can't easily recover for especially if you're the mom from having a child where the dad isn't going to help you or the other parents can help you it does mean that for 18 years you really are trying to at best juggle a lot of complicated uh responsibilities right and uh and so you see most crucially i see like one of the main critiques of the success sequence by the way is that full-time work does almost all the work um now my understanding from brad wilcox that's not true and there actually is a marginal effect of the other pieces besides full-time work but even if the full-time work critique were totally correct the question is well how easy easier is it for a single mom to do full-time work and yeah it's really hard all right now as to why people do it despite the fact it's like like just some minor impulse control and then you'll have a much better life [Music] i mean the answer for that is well hard to say i mean i would just if the person were asking for advice i would say look this is really easy do it and they don't do it anyway and i was like man it was so easy and you still didn't do it well you're like i told you what to do why didn't you listen to me and there's the classic response of the irresponsible young person like why do it i don't know i don't know it's it's one that's been that's timeless where young person does something where it seems like it was really easy to do the wise thing they were told what the wise thing was they didn't do it anyway and what more can you say that points uh other than gee uh you've really messed up and you're no longer a child and you're now gonna be paying for this for a long time sorry yeah so there's there you know there's charles murray's story in coming apart which is that actually um the culture isn't emphasizing these values or at least like the elites in the culture are not emphasizing these values either they live by right so in that way you can say like oh it's like you know it's the elite's fault for not emphasizing these values that uh these people don't know about anyways or um i'm sure you saw uh tyler's review of your book on marginal revolution where he said about this um i mean he was broadly praising your book but he said about this point that oh you're underestimating like the cultural factors uh that might get in the way of somebody achieving the success sequence um yes i wonder what your reactions are to those so charles murray i would say look there's probably a little truth to this but it's a pretty damn lame excuse you say yeah well gee why did you go and drop out of high school and fail to get a job and then then have kids before you got married well the elites didn't tell me enough that i should do these things like look there's a lot of people telling you this stuff teachers are not at the highest level of elite but relative to poor community teachers are elite you got parents you got ministers in a poor community a minister what's the minister telling you is he telling you to not do the success sequence no he's telling you the success sequence he might also be adding that this is an evil racist society that's screwing you over but if anything that's a reason to go and be careful with your behavior so that this the racist society has more trouble screwing you over to say look i don't have a lot of second chances so i better watch my behavior and be mindful uh right now i mean i think it is fair to say look you know leech could do a bit more but again to say uh well i wanted to do all these things but the elites just didn't tell me so blame them i it's a pretty lame excuse this is about at the level of saying that you went and put your hand in a blender because you saw it on a cartoon it's like come on like i'm i mean if you're 10 then it's literally tell the parents hey don't let the kid watch cartoons if they're just going to copy whatever horrible thing they see bugs bunny doing but if they are at the level where they know the difference between cartoons and reality there's like hey like exercise some responsibility there right and again for tyler saying i'm neglecting cultural factors i do talk a lot about cultural factors here i mean i'm well aware of the fact that people tend to imitate other people it's just the question of how good is a good of an excuse is that there's all my friends you'll say well if all your friends were jumping off the brooklyn bridge with you well i don't know maybe like well that's pretty foolish is it not do you really even need me to tell you not to jump off the brooklyn bridge just because all your friends are doing it so i have some other pieces where i just say look nobody really is willing to actually accept these kinds of lame excuses and as a rule because it would mean that you would be going and exonerating people for horrible behavior someone who says well yeah like i did go and commit a lot of war crimes but there are a lot of other soldiers doing war crimes too around me it's like well did they kill you if you didn't participate uh no but they would have laughed at me if i didn't go along with it yeah well yeah sometimes you need to be laughed at so you don't become a murderer and i don't think you really need me to tell you that it's obvious enough when you think about it it's a very lame excuse to say well but the other soldiers would have laughed at me if i said let's not burn this village down and i don't want to participate by the way this was also i believe the point of a pretty famous book hitler's willing executioners which asked the question what happened to germans who just said i'm not participating in the holocaust you might think it's a totalitarian despotism you're going to get shot yourself where you're like you're sent to the conservation gap yourself if you say i refuse to go along with this immoral plan that you have and what the book said is hardly any germans were ever punished for refusing to go along and they would just say yo yo okay well he's not very comfortable with this so i guess we won't make him it was like that's all that it took i mean it's one thing to say do you have the courage to go and die to avoid going and hurting an innocent person it's a very different thing to say do you have the courage to not be laughed at to avoid being a murderer like that's not that big of an ask actually and i will say and i think many of your listeners will remember are there times that you followed your conscience even though you had some peers laughing at you and you did it anyway is it really that hard come on yeah um but so i i guess putting aside the question of moral blame to the extent like the argument you're making there when you talk about the willingness of you know let's say germans and nazi germany you're you're making the argument like oh human nature is very um very perceptive to what the peers which are peers thing and they do want to disappoint the people you're working with and so on uh or you know within your community so that implies that costly speaking the community matters a lot or the culture matters a lot so like what could be i think uh hanson react robin hansen reacting to tyler cowan's review of your book he said you know um i guess he was kind of amusing so i don't know if he's like necessarily endorsing this or he said you know maybe this kind of justifies uh cultural imperialism uh where a culture that has better values when it comes to success sequence adjacent stuff they could kind of impose them on cultures that have worst values here um so like what what what do you think there anything can be done to improve the culture uh when it seems dysfunctional in these ways does greatly cutting back on redistribution or making it more conditional upon good behavior just something we can do i think that's really obvious thing is to just say look like these it was pretty easy for you to go and avoid these problems and so we're going to treat you differently because your problems were avoidable and you didn't avoid them so that could just be lower amounts of payments or cut people off sooner or to say look you're not eligible these are all possibilities so there's that in terms of other things to be done i mean you could actually go and teach the success sequence in schools i don't know that it's going to be all that persuasive because it really is just going repeating pretty much what you're already telling kids anyway i do have some thought that if you just ramp up the level of of preaching by factor of 10 or 50 then maybe it would work right so there is a lot of research saying that various things don't work and then the question is well they don't work because they have zero effect or they don't work because the dosage is too low and honestly i often think the problem is really low dosage it's just the question of is this an organization that is actually has the steel to give a very high dosage for example foreign language education right the kind of foreign language education that goes on in american high schools is essentially a zero effectiveness and yet people do learn foreign languages how do they learn foreign languages well you basically learn it when you take the intensity of a normal high school program and you ramp it up by a factor of 10 or 50. and then people learn right now given how much time schools are already spending on foreign language which is typically in say a place like california is three years out of high school you don't really have the time to ramp it up by a factor of 10 or 50. it would just absorb the entire program and that's where you say the amount of effort that would be required to go and actually get fluency in spanish is so high that we're better off not trying right for something like this where people really are messing up their lives at a pretty early age then maybe and especially if you're not currently giving them three years of advice you might only be giving them a few hours per year when you add it all up maybe you did go and multiply that by a lot then it would actually have the effectiveness you're looking for um definitely it's the kind of thing i say it's worth just trying and seeing what they're seeing whether it work if we just go and you make a much bigger effort here and you know like yeah like and also just consider a b testing where some people just get the lecture and some people you go and actually meet people who messed up their lives i mean honestly i don't think it would be at all a bad idea to go and recruit homeless people to go and talk to kindergartners and just you know you see you know like especially you're in a poor area so you see these guys that are just sitting on the side of the road well let's bring them in and talk to them find out what's going on ask them what they think they did wrong with their lives if anything right i mean i again i think i think people would just be so squeamish like you don't want to go and traumatize five-year-olds by having them meet a homeless person and have them talk about his crack problem or whatever but i would say why not like you know if there's if there's if you just convince one kid in the class not to become homeless whatever this experience or again if if one isn't enough do it 10 times do it like you know twice a year until you're out if i until you finish high school right it seems like it's at least worth a try it couldn't cost much yeah yeah um going slightly off topic uh does the fact that uh foreign remote workers are paid many multiples less than uh americans who are also remote workers does that suggest that uh you know foreigners are lower productivity than you think maybe there's like some cultural barriers that are preventing them from being as valuable as americans are maybe there's some other factor but in any case like why is the fact that you know programmers in india who are working remotely are paid much less than programmers in america who are working remotely does that does that suggest that actually you know the people in india are actually lower productivity than you think it definitely suggests it however we have tests to show the suggestion is wrong right because we actually all we know what happens when there you are a remote programmer in india but we also knows what happened we also know what happens when you move that remote worker to the us or another first world country and then we see their wages skyrocket so it seems like the the most you could say is there might be some interaction between being foreign and not and being remote at least we know that being foreign and being present in a first world economy in no way predicts slower pay and probably and also like no difference in job performance really uh so now as to why that is i mean one thing is that we've had the remote work took such a he there was such a huge increase during covid that right now we perhaps we're just not in equilibrium yet so right now it may be that it's taking time for first of all companies to say wait we know we could get better workers that are as good for all this money in the third world so maybe that's what's going on but you know i have to think that there is a reason why remote work first of all was rare before and second of all why most firms are eager to return to in-person work so you have to think that there are some serious problems with it that are a little maybe a little hard to articulate my best guess here is just that while it may be not that bad to go and switch remote work when you already have a well-functioning team that you have assembled for in-person work but it's probably a lot harder to get a well-functioning team that has never been in person so essentially you might think of in-person work as being an investment in being able to cooperate well whether or not you're in person or remote in the future and if you've never been anything other than remote then maybe the team building doesn't work so well but again the other possibility is that we're just not in equilibrium yet again the economic argument comes down to if you really can get someone just as good for a third of the price from uh from another country from work then why don't you do it right now again of course there is the answer of lower productivity which again i say is plausible until you actually see what happens when you move that same worker into the first world and you say no turns out he was just fine and the problem had had was probably remote work or maybe there's something about remote work and being in another country as well that might make it happen so by the way i do have a friend who's actually american living in spain and he's applying promote jobs and it doesn't work for him either right so it's not just it's not something about uh being spanish it seems to be that a u.s company isn't interested in because he's in spain even though he is a well credentialed american and that is a problem for him um now again like you might say why does he just claim to be in michigan the problem is he's been in spain for a long time and therefore his whole cd is spain oriented so it looks like yeah he basically looks like he is not well integrated into the u.s labor market at this point um so but yeah but it is a very good question is that um a potential explanation occurs to me i don't know if this makes any sense but could you apply the signaling explanation here so you know just like college going through the immigration process signals that you have high conscientiousness and high conformity and you know you're like you know it gives you like more information about their like background as a as far as like crime and other things are concerned and even hiring within america would give right so maybe it's like a signaling story uh like going through immigration just the same with colleges yeah the problem is the immigration system i just don't think is really very merocratic at all it's quite arbitrary i mean remember we even have the diversity lottery so you know like if you see that someone got into the u.s by winning the immigration lottery or inclined to say well if he's just a lottery where he just got lucky so i should think that he's not that good right that's not actually the normal reaction so i don't think and that's a case where you know there's an enormous amount of luck involved let's see and then again for other stuff it's just so obvious that it's mostly about family reunification really so it's like look this person was lucky enough to have relatives i mean there is some level of commitment to go and filling out paperwork and so on but yeah as to how much that makes you enthusiastic about hiring the person and then on top of all of this we actually have a whole separate body of evidence on illegal immigrants where employers definitely seem to be more reluctant to hire legal immigrants but almost all that appears to be just the problem of compliance and getting caught right and we know this because we actually have the experiment of when you regularly regularize illegal immigrants then very quickly they get a big raise or so again if you're an employer and you really thought that it's only the legal immigrants that have signaled something good about themselves then when you see that there's an illegal immigrant who was regularized then you should hold it against them and say well since you didn't go through the normal process then i have to think that he's low quality compared to other immigrants and this does not seem to be the normal reaction that employers have normal reaction is great now i don't now i can hire the guy i wanted to plus i don't have to worry about getting fined or shut down or rated or anything else yeah that makes sense um what what does the education system look like in equilibrium given there's no government cuts because if there's credential inflation like isn't it just like an escalating um escalating cycle so like eventually i mean it wouldn't make sense like eventually to get to a point where you need a phd to be a janitor but like what is the equilibrium look like yeah great question so i would say actually that if you keep the level of funding constant then i would think that you like we've reached equilibrium already uh there are other and there's actually periods when the share of americans with college degrees was actually quite flat so basically during late 80s early 90s i believe the share of like the likes would be what would be like share of like 25 to 29 year old americans who had finished bachelor's degrees was quite flat for about 15 years which then led many people to say okay we've reached equilibrium and now it's over then afterwards uh it resumed its upward increase and it went from like 20 20 and 5 percent now we're getting like 35 percent of people in age bracket have finished four-year degrees uh as to what were the shocks to the system yeah that's an interesting question and i don't have more than speculation here part of what's going on of course is that much of the rise is driven by women so william there is a growing disparity between male four-year college graduation and female four-year college graduation and so i think a lot of what's going on is that this is a period when it's becoming more and more normative for women to go and go to college and to get their four-year degrees and there's you know as i said people are conformists so once if you are a young woman you see this is what almost all the other other young women are doing then very inclined to go and do that uh there so in terms of sheer affordability this is you know this is overall a period when college was becoming less affordable it's uh it's easy to exaggerate that because there's also so much financial aid and then furthermore of course people are getting richer on top of that so it's that's by that is complicated but uh nevertheless uh you know at least i would say that's probably not driven by changes in affordability too much let's see um i mean like another story is just a rising inequality is another reason to go and get more education so when the gap between high school high school graduates and college graduates goes up this is a reason for more people to go so there's probably that too so you can get changes in just the structure of the economy higher return to quality that kind of thing uh also matters right but yeah but you know but like there i would say like you know the idea that there's just an actual tendency for education to rise no matter what i think that's wrong there's this old line attributed herb stein that anything that can't go on forever won't go on forever yeah a very reasonable point as to how far it can go though oh yeah there is something else that i don't think we have really good data on this but i'm very i strongly suspect it which is that schools are constantly slightly lowering their standards over time in order to make it easier to finish so that's something where it's very clear they lower their standards between 65 and today right it was like the like the curriculum was just much more intellectually demanding back then it is harder to say with great confidence the lower standards between 2000 and 2022 but that is definitely my suspicion it's one where if you are a college professor especially at a lower ranked school you can you'll appreciate what the pressure is which is every year you have a class of students most of them don't want to be there and really are not academically inclined and then the question is how many of them am i going to fail out now if you have any pride in your work at all you'll start by failing the people who never showed up and didn't even do the exam right so it's like okay well i can fire them with good conscience plus i don't even know what they look like so it doesn't hurt my feelings and i don't feel bad for them when i flunk them but then this then this question of what about the people that showed up and tried but no zero what do i do about them most professors pride still says no i can't pass that person is sad but i can't but when you do it for 30 years in a row probably there's a general tendency each time to go and fail maybe like 0.2 fewer people per year and then over time this happens and then there's also a culture of what so what what what is an acceptable share to fail and then as the standards fall you get weaker students there and then the process continues to uh to amplify where standards keep going down so i do think that there's been a low ring of standards which means that more people want to go to college because they can actually have a prayer of getting through and then when you do that that does spur further credential inflation because you've got too many people with low quality with the degrees in hand and so you need an additional degree on pilot on top to get much confidence and quality right so then why don't more employers care about the hardness of a curriculum for the college that they're interviewing students from uh and comparison to like what level of a degree they have so they'll care like does your masters or a bachelor's don't care less about like did he go to uchicago or harvard i mean like i've heard that you know chicago is much harder right like i don't but employers don't seem to care that much oh like you know that that's an even stronger signal of conscientiousness that he went to uchicago um as long as you know the incoming class had a similar gpa and sat score like shouldn't employers care about that good question right so here's what we know about the actual payoffs of different kinds of college degrees the single best predictor of payoff is your major and the majors that are thought by most people to be harder generally have much better payoffs that's right yeah so step one is employers are doing that they are much more eager to go on higher stem majors econ majors for your listeners who are trying to figure out what they want to do earn a lot more than business majors and you might think they're the same but the world treats econ majors almost as well as cs or or electrical engineers which when i discovered it i was kind of amazed and like wow what a deal i always tell my students economics is the highest paid of all the easy majors and when they start getting flustered and say easy it's a lot like look this is not cs we're not getting vitamin d deprivation from going and doing your work for 72 hours straight underground come on like like yeah so it's harder the business but it's not hard absolutely just put in a little bit of effort and you'll you'll get through as long as you can do pretty basic advanced math you know the only you can take a derivative of some of an easy function you can get through econ yes anyway so major is the single biggest one now there is a big literature on why is it that on the return to selectivity of colleges uh definitely different uh very subtle differences like harvard or chicago it's very hard to pick up a pick up much there but again i think you could just say yeah well employers don't distinguish because hardly anyone goes to those schools they are really close in fact in terms of their quality they are going to distinguish between harvard and say cal state northridge something like that uh there is a puzzle about why don't employers seem to care to see me care more than they do about the selectivity of college it seems like part of it it gets picked up in the major because harder colleges people are more likely to do harder majors and then another part of what's going on is people are looking at your overall background so when when we say that selectivity doesn't matter much this is adjusting for a lot of other facts about you so if we didn't then we would see that we do actually have a noticeable gain from the selectivity for college um so i guess my main answer would be that they already are are using a lot of information to distinguish it and then really comes down to for some further really fine grain differences why don't they pay more attention to those and i think the easy answer is the fine green differences just don't come up that often and then on top of all of it so much of worker quality really that really does have to be observed so it's enough to get you in the door but there's enough uncertainty remaining where you can say well look it's the difference between having say a 78 chance the person works out in a 76 chance the person works out that's almost a rounding error so if i have a little bit of other information about the seven on the person that would normally be 76 that can put me over the top and get me to go and give that person a chance so i think that what's going on is actually quite a bit more reasonable than you might think if you don't know a lot of the details right yeah um okay so you you another point you're making in the book is that a market discrimination is often caused actually by government interference and then um it it will solve itself in equilibrium um but i mean if you just look at uh like uh college discrimination innovations right so you know like the government is not requiring harvard to like discriminate against asians yes um but and in fact it like lowers the signal that harvard is able to send if you know that they do aggressive affirmative action but um and then yeah even like actual companies that are in the market proper like google or something they'll do affirmative action too right i mean you can say like a little bit of that is required by discrimination law but probably not to the magnitude they're doing it um uh so like what is the explanation for why that hasn't been solved out by just competition right so there's multiple things going on so for colleges the key thing is that they're non-profits and so i have this running argument by colleague alex tabarak there is a whole economics of discrimination based upon the idea that for example if it was really true that women earn 70 as much as equally qualified men that any has a quick as a get-rich-quick scheme just fire all the men at your firm replace the equally qualified women and save a massive amount on your labor costs so that's sort of the classic economic argument and i think it's basically sound but the key premise is precisely that that that you're dealing with for-profit organizations whether someone that is willing to do something that sounds ugly in order to get rich and so i mean i'm always telling them look this does not apply to non-profits like academic departments or universities so that's the first thing that i would say is that non-profits at minimum the pressure on them to not discriminate as much weaker than for for-profit so i would distinguish those two uh quite strongly actually yeah and i'd say actually non-profits you know you should definitely expect them to do more discrimination than the question just is what kind of discrimination are they inclined to do right now so this is one where in the old days when there was a lot of anti-semitism at top schools then the top schools would be engaged in discrimination discrimination against jews right well how could they afford to do that easy they're sitting on a mountain of money that isn't theirs right they're no they're not going to go bankrupt if they go and have a tight jewish quota it's not like that like if there's any is any skin off the nose of the admissions department and therefore they can engage in whatever discriminatory preferences they have precisely because they are a non-profit so then what explains the discrimination at google for example yes so i was just about to get to that now in the case of for-profit businesses again there there is a certain kind of superstar company like google where they are so rich that at least you might say huh they could probably afford to discriminate for a hundred years too and still survive uh so like you know there are a few companies like that where they have just been so incredibly successful that now they have they're sitting on a mountain of money and then like they are no long they're not up against the wall saying oh my god if we don't do everything great then we're gonna we're going out of business so now it's important remember there's there's all there's very few companies like that they're they're famous also we're pointing out the companies that think they're in that position forever it's not like harvard there are a whole bunch of companies that were in the same position as google that are now bankrupt so uh even there i think the people at google do have some sense that there are limits to this now in terms of when you will what the actual role of discrimination law is i think that in the case of colleges they are definitely going further than the law requires because they're true believers there and the true believers are especially concentrated in the admissions departments so that's where i'd say the main thing is the non-profits although even there they do have the threat to hang over the heads of other people in the administration which is well we don't want to be perceived as doing clearly less than all than other comparable schools like that is an important thing that you want that you that that you want to that you don't want to do if you want to avoid lawsuits is to be obviously the the group or the organization that cares less than everybody else and does less so for nonprofits i think that there is a bit of that in the case of for-profit companies i think actually that discrimination law is a major part of the reason why they actually are supportive affirmative action because they don't want to be less supportive than any comparable company at least in an obvious way for fear then they will they will paint a target on their own backs right so i have a couple pieces that i wrote on this i don't i think they're they're going to be in a different book if i remember correctly is actually this is the first in a series of eight books of my best blog posts from on econ log from 2005 to 2022. right but anyway uh what i say in another piece is that just imagine what would happen if you were a well-known firm and you just officially announced we strongly oppose any kind of witch hunt about discrimination this firm is very fair and we are and we scrutinize all accusations of racism and sexism very carefully to make sure that you are not making false accusations against an innocent person now imagine that you very loudly say this right now of course there's protests and boycotts and so on you might get but on top of all this if you ever get sued that is going to be discovered and they are going to introduce it and say this is a firm where they actively punish people for going and trying to and trying to insist upon their rights and you say hey we didn't we were in compliance with the letter of the law well how is a jury likely to see it when they say this is what a normal firm looks like where you have a bunch of propaganda about how we are doing everything in our power to go and help oppress groups and then there's another for an end you and then we showed and what what do we have at this firm this firm is used where you say at our firm the battle against racism and sexism has long since won has long been since won we consider it an extremely minor problem and our presumption is that accusations will be false uh we'll listen but we are firmly convinced that mo that we are the in the fairness of our own system and so we are we are going to carefully scrutinize and discipline people who level false accusations but i think if you were that firm you really would be painting a giant target on your back it would not be safe right so um right and this again is how there has been an expansion of discrimination law over time right so i mean say like sex harassment law like at the federal level the first thing there is no law against sexual harassment rather this is just a judicial extension of the original 64 discrimination act because it started with saying all right well look obviously it's illegal to discriminate that's what the law says well what if that you're just treated badly right well hmm well yeah i guess that could be discrimination too right yes well i like his discrimination because of your sex yes well what if you like women get paid the same amount they get promoted the same amount but there's a bunch of calendars with women and bikinis around the firm could that be discrimination and then this is the origin of the law for the hostile workplace now sometime in the 70s there was one of my very favorite all-time court cases where there was a bisexual employer who was accused of sexual harassment and he said it's not discrimination i harass men and women alike totally like i am totally within the letter of the law and if ever a person who was totally legally in the right was that guy that guy like i said like unquestionably he had the law on the side but he lost anyway so the court basically said look we're not going to let bisexuals get away with sexual harassment when other people can't do it like no no we're not gonna allow that no and so it continued and then expanded to what we have now where people can get sued because some employees told jokes or graffiti to bathroom so that is at the level where we're at now again this doesn't mean that most firms have much to worry about but it's hanging over your head and it's a reason at least for prominent firms to avoid doing anything because prominent firms are like piggy banks right they're full of money and someone is people just waiting there hey elon musk has a lot of money what if we could go and sue him now he could pay right so let's look let's go after him if it's just some guy's paint store then probably not much is going to happen to you although even there you're just a little bit worried right i guess now the other thing remember is that a lawsuit is not just a loss of money it's also enormously stressful so there's don't underestimate just the worry of that and just think about what is it like if you've been sued once how do you feel about getting sued twice i think almost anyone's been sued once they're like that was a terrible experience for them and they will be trying to think of ways to avoid having it again or having it happen again one thing of course is to be super cautious but there's a lot of ways of being super conscious there's also the one where like well i profile people who might sue me and i don't hire them something else you can do okay so i want to ask you about uh mental illness so you're aware of hernan's book um uh where he explains that the uh you know unitary actor model can't explain american foreign policy it's not one rational actor it's you know these diverse interest groups that are within the establishment uh where this is going huh i think i see where this is going right right so yeah i was just about to say um can't you treat individual personalities this way so you know there's different ways to think about this maybe you can think of like modules within the brain that have like uh that are trying to entice you this way or that and they temporarily get ahold of you maybe i don't know personality parts you know idigo whatever there's there's different ways you can talk about this but could you apply a similar model to individuals where you say um just as you wouldn't say like the average american is responsible for the you know for the mistakes of american following policy like uh the uh the individual is not responsible for the weird things that parts of their personality makes them do right right so i guess my first reaction this is just introspection and say look i don't experience my mind as being like a bunch of interest groups that are pushing and shoving but you're not mentally ill right yes uh well so well here's the thing there's two versions of it one is just to say that everybody's like this and then the mentally ill basically have worse interest groups and then the other one is to say that normal people are unitary and then the mentally ill are and are outliers who are not unitary right so these are two different stories the main thing that i would say is like there is actually a whole literature on hyperbolic discounting that right now or self-control problems in general that tries to think of the mentally ill as being people that just fail to go and do the best long-run plan and instead focus on short-run plans what i say is this is actually just a deeply wrong story about what's going on with at least the severely mentally ill because here's the thing the difference between people that get diagnoses severely mentally ill and people who just have some moderate problems is precisely that the severely mentally ill are stubbornly convinced that they want to do the objectionable stuff they want to do so basically if you're someone that says gee i have these violent urges i need to go to a psychiatrist i'm trying to control my violent urges what can i do all right you'll get classified as a moderately mentally ill person but on the other hand the person who is a full-blown serial killer every second of their day they're stalking prey that person seems very unitary more unitary than most people actually and yet we'll call that person severely mentally ill and that's the person who probably if they're ever caught will get will go to a will will be found not guilty by reason of insanity why because they were so organized and determined and focused ways but i would say um like somebody like ted bundy like uh maybe this isn't how the legal system works i know ted bundy actually the story at least i watched a documentary that i read the wikipedia article so or i mean i watched a fictionalization and then written wikipedia yeah yeah it was i believe it was the zac efron version anyway i think that the fictionalization wa