i' i am pleased to introduce tyler cowen to politics and prose. he holds the chair and economic

and george mason university. he's a bloomberg opinion columnist and has written regularly for "the new york times" and contributes to a wide number of newspapers and periodicals. his previous books include the class and great stagnation. in his new book big business, he examines the tension between the lack of trust in big business snd big businesses in the american economy. he argues that corporations despite americans ambivalence towards them are inessential and balanced, productive and oppressive society by spurring innovation, rewarding talent and hard work and created the bounty on which americans have come to depend. the deputy editor of harvard business review writes tyler cowen mounts a defense of big business finance and the tech industry. both of their critics and defenders will benefit from b ts book. cowen will be joined in conversation tonight by edward,

u.s. national editor from financial times and author of the retreat of western liberalism. please join me in welcoming either cowen and edward. [applause] >> is a delight to be here. i am not a neutral personal observer. i met tyler a million times and we have been friends for many years. we don't always agree with each other but i think i can confidently say he is not just an example of disagreeing without being disagreeable but being far more knowledgeable than where he began and that is invariably the case. i'm going to get into productivity but with let me qy emphasize the productivity and they just count had the great

stagnation, wonderful book that came out in 2011. we have had your book about food economists, we've had. [inaudible] >> at speed >> it speeds up as we get older. >> that is a lot of books. most economists wait for the data and w then when it comes in they torture it sufficiently untold whatever case they are seeking to make. he reads just as much books on history as he does on economics and uses intuition which i know is quite rare, so i hope you are going to stick to the intuitive title this evening. let's start by imagining the

20th century pennsylvania or ohio they've gotten used to shopping at wal-mart out of town but now they are pretty thinly spread because everybody is beginning to shop at amazon. they have printed the friends of his work as associates and the thought did it co. are not happy campers. they have people that they know drive 50 miles to the fulfillment center. they don't give them much feedback. they have to get permission to eytake bathroom breaks. tell me why should the people in 20th century pennsylvania big business? >> i will start with some data

it's about the same as in sweden. that isn't quite true for the entirety of it. weswest germany never sought the meast germany problem. i'm all for better policies to encourage migration. i think people if they can be want to move to areas where there is a lot more m business d that's the case for big business for them. >> what would you say to those that are running stores on main street not just the people who visited them but the people that ran them. is there not another measure of

what makes the community? >> keep in mind most societies face choices they can do things and less costly ways and bear the transition costs or they can stay put. it's a more secure country. in california or new york to capital flows to those places. >> in your book you make a very strong case that even though

there is -- you make a good case -- it's working now. you make a very strong case although there's more market concentration, and you don't see signs of abusive behavior in terms of price gouging and so forth by these companies. but let m me just mention a few statistics that might not be exactly precise,, but roughly in the supply market, you have got office depot, staples, 80% of the market. you've got three quarters of the market in car rentals you think you have a lot of bram is.

you think you've got 50 brands that 70% of them are ranan by maytag. it's pretty much sector by sector and you do mention strongly health insurance, but the market, the american economy is getting more concentrated and what sort of severely concentrated. 86%. use the. concentration of power. why isn't that a marketn' power? y. isn't that a bad thing? >> if you look at the prices of quantities purchased by consumers, but defined in the individual market is more competition, not less. you have bigger national brands often than amazon and wal-mart are further examples of large brands in general or lower in prices, so it isn't like some of the other monopolies. prices have been somewhat out of control. basically it is healthcare and

the entire education, each of which is fairly business impoverished. i think we allowed too many hospital mergers that most of the things you buy you mention confectionary. those are the prices over time but have done anomaly well. there are just as many carriers as before. travel is going up, no output restriction. we could do better by allowing more airlines into the domestic markets and that is a government restriction on trade which i would gladly remove. more and more are able to fly each year so healthcare side i don't think it is a story of rising monopoly. we will get back to that in a moment. when i looked at your numbers about the trust in business in america, i was delighted to see

ifhe lower. wtalk a little bit about what u think it is about the big business of americans in the abstract. >> i think distrust of big business comes in waves. the business is a kind of collateral casualty, but i think also real events. they've had an income in the equality and the role of business and responsibility is often overstated but you certainly cannot say that it's

been zero and then the social media culture you see the vulnerabilities of everything that is talked about on every joke made at someone's expense and it's hard for the institutions to come out of that looking good and it's striking to me were military isn't in the news that much. most people don't have contact with it. it's an abstract thing out there and it's consequentially very easy to trust. ..

>> they may sell wonderful books as is the case here but with your advertisements your famil family, but at the end of the day we need to evaluate money in personal terms how good of a job are they doing to improve the economy and not if they act like my friend and i think resentment grows. >> you mention this to be more than the individual route but i'm sure everybody here can share and certainly this is

not competition and maybe that's because we as individuals because of technology in price and discovery that is what we're really after but in terms. >> there is a perfectly competitive market but airports do not have real markets for go and flying used to be relatively dangerous now for a long time it safer than driving. and what we don't quite appreciate anymore.

>> there are fewer people flying that does make training more possible and more connections. we could finally put in that high-speed rail in california through bakersfield. and then to have a whole burden removed from the system o but the american airport system is one of the greatest transportation networks. >> that romney said corporations are not people don't personalize them we are your friend frequent flyer or a frequent buyer those plans are often attempts at collusion and they are not that loyal to you.

>> so to be cold-blooded and ruthless ask yourself in different areas power the job or the corporations doing for-profit higher education and as those re- consume private companies is really quite excellent. >> so for-profit higher education wise and did a train wreck there and where markets go wrong where big business ask badly what was it about that market quick. >> we don't understand for-profit higher ed. and then have companies set up to capture that revenue.

so if you are learning a very concrete training like a hairdresser or a beautician but the attempts to use for-profit higher for the humanities to give these four-year degrees has not caught on. >> i would ask you but also stress for profit education is higher than high. and apple soso there are knowledge-based terms to be paid for but for a reason that we don't understand that seems to go much better not-for-profit. >> and those that is equally interesting and that silicon

valley is a culture of conformity and the big tech name and with that individualistic uniform and that is created with the millennial generation a conformity with the increasing entrepreneurialism. with american society. >> that effect is still strongly positive so in the bay area by far the most rapidly productive and innovative part of the economy is very easy to do that.

you can spend your whole day manipulating your facebook page that doesn't make you more innovative. that is a significant spillover. but also look at how it connects people with common interest the attributes of people doing research together and getting ideas to start companies for all of these technologies is a rough and bumpy patch at first. typically we learn to use them better that doesn't happen automatically but through the exercise of evolution with the printing press and the radio not all radio was wonderful but don't blame the technologies arese those companies to realize you cannot take for granted and lead a new set of communication technology come along make your case all over

again people dislike that. >> so the rate of small business creation quite markedly and the number of people that are roughly speaking that has gone down from one in 72 fewer than one in ten this century. so we haven't gotten older in that realm. so the reason i'm asking is big business with job creation and small business creation but that pipeline seems to be shriveling up due to market concentration. >> and was small business formation you are much more likely to buy your retailro from a brand and some of that is

because of data so companies like nordstrom's have very good data what people want or don't want so they can adjust relatively effectively where in the eighties it was a stab in then dark it was antiquated then why some dynamic a new company comes along and eats their lunch. so they have much better data keeping up with the market. it isn't necessarily bad for consumers with that erosion of true innovativeness amazon by far is the price so i'm not worried that retail has not progressed at all. is roughly three quarters of book sales.

on those used to be physical sales that were occurring in here so with that innovation i'm not complaining about that at all but it has touched a 1 trillion-dollar valuation over the last year or so and it is a very massive country noys matter what the president says and a search is equally powerful facebook and social mediaua and for the most part are not competing with each other but they are buying up smaller companies and absorbing whenever technology they could make but they are boa constrictors and they are a bulging.

>> and my question is with that innovation track no abuse of monopoly power going on. >> look at google it is fine it is there now. i actually prefer google i use google. if not i use being. it is fine there are many search engines google has not stopped innovating. google is a leading player of the e-mail service you get it for free it was a major innovator there. and then google upgraded and made the comment section believe it or not they used to

be worse now youtube is workable service the greatest institutional entity in the worldll that has not stopped innovating at all. >> there are many social networks actually first of all is knocking on your neighbor's door believe it or not. and you can write a blog i have been known to do the said network through people and on twitter we interact that his social networking. and the list of contacts of people you can pick so with those social networking is highlyly contestable it is

facebook i would not split them up. >> is a good for amazon good ford america quick. >> unconditionally no but today absolutely. i spend so much money on amazon and whole foods it is embarrassing but i could buy three books a day but i love browsing in bookstores but typically i buy in amazon because i'm on my sofa but keep in mind the independent bookstores o has been going up borders and barnes & noble now they are gone bar and barnes & noble is dwindling independent bookstores are making a comeback a very happy about that there are social spaces for that. so i understand independent bookstore but yes i am happy with amazon. >> and then spending taxpayers money to move here.

>> i don't think so but it would have done that anyway and in the broader calculus it is small relative to the benefit of the company like crony capitalism. but as amazon says what's the new name? to come to national landing. may be the benefit of getting amazon. >> so those impression of washington dc is a wholly-owned subsidiary. and as you push back against that there's only $3 million a

year. is that a measure that tries to influence washington or the influence of how they can be bought? [laughter] >> most of the budget is policies. keep that in mind some policy dominated by a business with defense procurement sometimes dominated in bad ways clearly numerous cases that most of the money spent and look at our man in the white house donald trump what he is doing on trade most american businesses disapprove but predictability and rule of law most businesses are against what he's trying to do most businesses are against so the

idea that they pull all the strings is he trying to appeal to his base? often against ceos to demonize them. so it is on mix complexity. >> the single biggest thing trump has done is the tax code there is a lot of money on that cut he has made a lot of noise that was massively beneficial. keep in mind the average 22 and 23 percent and then with 23 but the one thing major business did the mostly the

right direction and to put you at 21 percent of those advisors 21 percent is too low. so even then i'm not sure it was just business. >> that you mention the famous essay of milton friedman wrote in 1970 that they have one purpose to maximize shareholder value. so the profits are a bit like happiness. and youth have other pursuits and with a a long-term company.

and ed and those other values but i don't think there is any single right answer for our company. so really it should be profit maximization if you interact more with the environment and then to have a broader range of concessions but to make money to stay in business and then to overreacting to people who would not even admit that. and two more questions the other question to ask you getting back to trump fortune

500 companies strike me to be veryes different creatures to the organization or the coke brothers. are those that are not listed don't have the hr department concerned about the reaction of social media for the hr departments that they do but trump prefers that if you look at mar-a-lago carefully i don't think there are too many fortune 500 board members there very different creatures with business or corporation so should we be using different terms? to be subdividing what we mean by business quick.st >> and to be publicly traded some of that is for investors

or shareholders as more in percentage terms this is at the accelerating rate. and now with the diversity and hr departments the privately held companies grow larger they are nonetheless sounding like the publiclys traded companies with those real markets. near the stock exchange so in some ways we see emerging or differentiation to keep up that competitive framework but they have a chance to compete. >> those a listen to the

podcast with the rapid fire and that you mentioned something and then give an explanation as to why. comcast. >> i love comcast internet service and cable tv which i don't have the time to watch the nba finals are approaching. and they lobby local governments and with legal restrictions the future is five g and a much more active satellite supply and in some ways and with that cable

company internet company is a very short list.p how many people don't have cable tv and turned out okay. >> it is underrated or overrated. so maybe it is actually underrated. but the pioneer and everything that elon musk has done with throcket launches that is remarkable. it's very impressive. >> ali baba spirit the chinese internet company have greater urban density they have a longer standing history to integrate and it is quite remarkable what they have

done. so americans underrate them i'm not sure the chinese do. >> i like what i have seen of him and the mayor be presiden president, teethree to realize it's not just the parties they are working for. i would just like to see him be rated. there's a lot of him i don't know but i have seen some encouraging signs from mayor outtigieg. >> stranger things. >> we just tried one episode fantastic production value it struck me as too complicated , i didn't care super contemporary little bit retro.

i didn't love it i could see how somebody could get into it but overrated. [laughter] now let's go to questions. >> talking about people as consumers they have to have income. so at the fulfillment center they get ten dollars an hour $12 an hour with limited benefit benefits, they are supervised with all the cameras down to how many boxes they feel if they don't fill enough two hours in a row they are fired.

and if the filament center comes to an area sometimes it lowers the wages. >> most of the people still get better from where they were. they have hired a lot of people some are high wage some are low-wage but for the most part higher than what was there before and with a greater chance of promotion that's why people go to work there. rk but a lot of people don't it's a contract. >> but you're still taking a job that's better than the other job you had. >> it is a behemoth comprised of a large portion of the s&p 500 market cap.

and then index funds that are virtually(k every 401(k). but those products are using artificial intelligence and to increase division and they are all running on devices that are electric and fueling a demand for coal-fired electricity. so i am wondering about the tension between betting our retirement income on theut future profitability of these industries and the other risk they present and of solving those risks will be slowed down as a consequence.

>> there are many issues behind your question with or without big tech they allow a lot of things to happen with those physical resources being consumed it is considered to be a genuine concern with the notion of regulating but i haven't actually see a good plan that most users don't seem to give a damn about their online privacy that people also have the common sense view that the greatest threat to their privacy are their colleagues and rivals and n not big tech. maybe that common sense is correct.si i would recommend banning that facial recognition on a widespread basis but what are the threats to me it's low

it's actual concrete people that i work with there's a lot more to say on those issues. >> what about the generational chain changes of that perception a big business? >> young people are especially skeptical now that they have come of age at a time when growth was lower than another earlier. young people today they also care more. you're more easily alienated and have that neurotic opinion of the institution.

but just to get carried away with the negative there is a lotes of social injustices but it doesn't mean that you'll have those targets so it is a trade-off and then to become too powerful and eroding. >> this is a question. >> one of the names floating around for candidate is stephen moore and said something he believes capitalism is a more important system thann democracy. is that something you agree

with and if so why capitalism and democracy go to gather. their statistical evidence democracies grow at higher wtrates with economic growth. we are a capitalist nation and others have wealthy nations with a lot off oil but maybe it's too high and not so stable. [laughter] so democracies work much better than those that are democratic. >> even with george mason it is a virginia state law.

>> not trying to be mischievous and this is that whats he thinks about democracy to be put in charge of the federal reserve the institution is independent and you better make sure that they are very qualified and competent i suspect he is not a good economist. >> freelance journalist you mention trade when you see these huge massive enterprises

supported by very well resourced and founded technology espionage and anti- competitive nature we have a genuine national security concern would you say that free trade approach? that would not be doing much would be appropriate to deal with the challenges and they tell us that we should be doing something. >> it is a national security issue i agree with president trump we should not be using huawei. i'm greatly disappointed that much of europe is not supporting that move they are making an enormous mistake you have to reason one - - wonder why they are uprooting the western a lot - - alliance i

would entertain exceptions those are remarkably few but absolutely we should not have huawei to be a part of those segments of discussion. >> is there a way to explain the lack of trust for those that spend a lot of energy protecting his place in society?y? then they think i have to provide that so far but now they are in a position to create something good for themselves? they just can't keep doing what they are doing.

>> but i still find it striking small businesses unpopular smaller benefits is more likely to be biased it cannot accommodate them which is so much more popular than big business. >> my name is claire i'm a college student in dc but the ceo of blackrock wrote how it's more necessary for companies to have a purpose and to be socially him conscious that the purpose is now tied down to the bottom profit margin so now i am

thinking these see these corporations are socially conscious businesses as a way to combat what you describe as the anti- capitalist sentiment growing especially for people my age? >> maybe in the old days they did not work very well but i would caution often it is a con for kyle but the investment funds of huawei they are based on money from fossil fuels that then they want to be more green. bewarecr of hypocrisy so businesses genuinely do care from the ones that say they do

to the ones that they do. >> hello professor working here in the federal government to make that comment how cheap it is in the metrics of lobbying of dollars spent to see how successful that is and to push back on the idea that most of what is done is mostly unknown or go look at all the various financial services bills coming to congress every year it doesn't take much money for the wall street lobby to compete against consumer groups that shouldn't be surprising the dollars are low. so the senate banking bill

that rolled back some of those protections from dodddd frank that was somewhat known passed overwhelmingly. >> they might to boost economic growth but they also have a preference that things go well's and other politicians are doing something unpopular. so far more money to congress and congressional staff with the scarcity of resources in congress with the expertise and that is a very bad system and those they give much more money to staff and economists and i'm a very strong advocate of that and has a influence

that we do have. [laughter] >> good evening professor. i am curious those with high tech r&d early-stage to protect those datas, rates is it worthwhile to make that push to get small business to have the market speak for itself quick. >> i don't have the expertise to address that question much less answerr it it does seem alsomething is fundamentally broke and procurement take so long for the technology cycle two or three years. and i have looked into this a anbit it's news to me but one of the most important problems but that ratio of small versus large but have to look at the

recipe to fix that i would just have to figure that out. >> i have a question about the symmetry of information that businesses as a whole know how much people are paid then other small businesses or employees themselves. it is something like collusion when they set wages with the idea to pay a market price to negotiate having norms in place to stay at a company for shorter than a year. do you have a thought if that represents real collusion with that contributes to a slowdown quick. >> it should be looked into

i'm not sure what the final correct answer is but they pay much more than other companies you quickly could be earning three or $400,000 per year so there is an element of collusion but but in terms of where that is on the list of problems somebody getting 300,000 in the third or fourth year is just not that tragic. >> is that true across a wider range with a few tech companies quick. >> most is in rural area. but that policy to make it cheaper for more people to move into big cities into retail like northern virginia

or maryland those policies will do more to fight monopoly. >> thank you. >> i am an employment lawyer i represent victims of big business. i've always been bothered by the ethics of big business. i don't see a black and white but if government didn't stop business from colluding would they collude away because of the money? if you refuse to stop and left to their own devices with a take into account those factors? who say they pretend to be your friends but not really. are they more socially conscious than they were or is it maximization?

>> there is a number of different issues in the act of 1970 which is a good thing. by orders of magnitude first it is a carbon issue which we should address with the tighter standards pass that cross benefit test you should always let big business do what it wants but if you look empirically at the performance in many areas so on and so forth then it is much more positive. >> is that because they are forced quick. >> that is partnt of the system you want institutions that are smart enough to help us clean up the air. like toyota has done with the

previous and so on but in so far they have policy goals to be directly liable or easy to spot that is a better way to go. >> i am a retired labor lawyer. if corporations are more productive than everk than i'm not talking about a small percentage of the population that earns upwards of 300,000 per a year. >> it is glowing at on - - growing at a slower rate than it used to. the greatestgr criticism is too bureaucratic innovation has slowed down in this country and then with some regards liberty and business and to

have more scientific breakthroughs. greater competition, progress is slowing down. i don't view that as the main villain. you are partly correct. >> i have comments on income inequality generally that it doesn't really have a responsibility so if there are opportunities for business to work on that problem or should that solution be income transfers? >> that's a huge question one

is a failure of our system and that helps us do a better job to help us fix and a lot of that is globalization that i think is positive but all income inequality is bad one - - not all income inequality is bad. >> so with healthcare and capitalism that they don't seem to work very well at the same time we see every single democratic candidate coming up with their own medicare for all plan with a slight nuance. can you talk about how you see that market and what can be w done quick. >> easy to answer in one minute question. [laughter] the singapore system is

mandatory savings you save your own money for smaller expenses i don't think we'll ever get there i don't think we'll get to single-payer. those who have good private health insurance are happy eaenough they don't want to give it up there is that strong inertia we need to fix piecemeal what we g have with that cost control to make innovation much easier to achieve it does take more risk to do that right now we have a healthcare crisis and then depending on income and education. >> i wrote a book last year that was classified one of the 12 best books of the year. but i want to give you two statistics and ask you to

comment the first is from india is growing at the fastest rate of the world but two or three days ago statistics on happiness just came out and happiness just collapsed in 160 countries. so that is the link between growth and happiness. but to imply that economic growth that the other statistic comes in washington which is even more shocking that with chevy chase two steps from where we are and with that life expectancy is

shocking. and then with 9 miles apart or even in the same zip code. does the government have any responsibility quick. >> money and happiness they are hard the correlated long-term they are massively correlated people want to move to the wealthier countries. people want to go to poor loan - - don't want to go to the poor countries thank you for coming. [applause] but and he is a deserving small business and he has a book.

please buy that. [laughter] >> the book is available at the p register. [inaudible conversations]

>> hello. good evening welcome to barnes & noble for go thank you for coming out tonight we have joseph with us tonight who is an economist of public policy analyst and the recipient of the 2001 nobel prize in economics and a former senior vice president and chief economist at the world bank german at the council of economic advisers also the author of several