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Podcast Episode #1: Arnold Kling – A complexity thread in his thinking?

For my first podcast episode, I had the opportunity to interview Arnold Kling. I aimed to discuss whether Arnold sees a complexity thinking thread running through his work. We covered a lot of topics, including the how to think about economic activity, a critique of mainstream Economics, VC & startups, Arnold’s 3-axis model for political discourse, BLM & racism, post-modernism in universities, cultural evolution, and even Israeli dance.

I highly recommend you dig into Arnold’s work. Be sure to check out Arnold’s blog and his multiple appearances on Econtalk. For a distilled presentation of his ideas on economics and political dialogue, check out 2 of his concise books: Specialization and Trade and The Three Languages of Politics.

For context on my own views on complexity & economics, check out a previous blog post critiquing complexity economics from a Hayekian epistemological humbleness position.

You can download the podcast here, and find the Youtube video below.

A unique thinker

At a high-level, what is it about Arnold Kling’s views and writing that stands out?

A couple features that come to mind are:
1) His well thought out framework for thinking about economic and social issues.
2) His uncanny ability to filter, identify and evaluate new evidence and arguments.
3) His clear, concise communication. He seems to have mastered effective communication across mediums – through his blog, articles, books, and interviews & talks.
4) Topic breadth: Arnold covers an enormous set of topics. Here is a list of a couple of the areas I find compelling:
• Economic themes like prices, specialization & emergent order, the role of money & banking, and technological change.
• A critique of the economics profession and the use of statistics and mathematics in mainstream economics.
• Cultural Intelligence: Joseph Henrich, Kevin Laland, etc.
• Post-modernism, BLM & police brutality, and Social Justice’s effect on universities and society
• Societal cohesion in recent years: Populism, Martin Gurri’s Revolt of the Elites

Full Interview Transcript

Joe: So thank you everybody. I’d just like to introduce you to Arnold Kling who has agreed to do this podcast with me. Arnold has a PhD in economics from MIT, has spent the last 20 years roughly though as an author and blogger, which is where many of you may know him. Prior to that he was involved in his own startup as well as at Freddie Mac and a component of the fed, doing economics research. So Arnold thank you very much for joining.

Arnold: Nice to be here Joe.

Joe: Great, thank you. I’d like to, as we sort of just talked about offline, use this podcast to among other things talk a little bit about the sort of complexity thinking that I see as sort of implicit or almost explicit in a lot of what you write about. Um I’ll just quote a little bit of what I said in my email to you that ” I see a complexity or complex adaptive systems style thinking underpinning a lot of what you talk about & write about and here I’m referring to traditional economic themes like prices specialization and emergent order – which we should note is not necessarily traditional to neoclassical  economics students one might say, but then also your thoughts on you know the economic profession versus the private sector and tech, and then moving a little bit outside of economics you have a strong interest in cultural intelligence as you sort of term it um so I’m talking about guys like Joseph Henrich and Kevin Laland and then you’re also interested and you write rather extensively on critical race theory so sort of post-modern issues that are coming up today in academia in society more broadly, you’ve written on critiquing stats and econometrics. Potentially I would say you’re critiquing the economic or scientific sort of method overall, or you have some creative ideas about that and then of course about societal cohesion in general. Yeah, so in all of those sort of you know disparate places that you’re writing I see a sort of implicit complexity thinking there. Could we just open by maybe ask you just to comment on that and what do you think about that?

Arnold: That’s probably right although again as we were talking beforehand I have no formal background in complexity theory I’ve read I guess a um you know a couple of books that have talked about it and didn’t feel I was getting much more than what I kind of knew intuitively.

Joe: Okay so I mean you have an, for instance a review of the Colander book right which is kind of classic somehow by now, although it’s not that old, in the sort of public policy and economics complexity space.

And then you’re you I mean you’re certainly referring often to Hayekian emergent order decentralized prices bestowing information etc. So, I mean clearly there there’s what would be termed complexity thinking I would say. Path dependence you know whether or not you want to term it that way um  so yeah I mean I think one can go a couple ways with that sort of thinking um obviously we can you can head down the sort of how one should do economics route um you’ve also used it to sort of yeah critique economics as it’s done so if I just  sort of quote you –I’ve you heard you say this in the Torenberg interview you also said I think speaking with Russ Roberts probably at multiple times but um you sort of mentioned that if you would try to break down this hostility towards capitalism, I mean um via an understanding of economics, you would emphasize you would de-emphasize um the incentive emphasis that’s certainly pushed in sort of mainstream economics at the expense of talking about unintended consequences mattering, you would critique the function of economics as not to disperse resources but rather to facilitate coordination specialization with strangers, so this is out of your Specialization and Trade book. Would you comment on that in terms of, yeah, how you see that thinking sort of critiquing mainstream?

Arnold: So, I’ll call mainstream economics or neoclassical economics an attempt to describe an economy as an almost a mathematical system and to have very close to the surface a kind of a theory of value that somehow we can know as economists what the values of things – even though you know the labor theory of value doesn’t seem to work you still have neoclassical economists trying to say that well, marginal productivity is sort of a useful measure of the value of what a worker produces.

So, it’s really a project that I think developed especially after world war II as a tool for central planners, even though you know with without and the emergent order view or the Hayekian view or whatever um says no central planning is not a is not a doable project because the central planner doesn’t have the information to formulate sensible plans.

Joe: And then if you if you think about – so now I’m sort of thinking of a sort of adaptive evolutionary system – if you think about economic development in terms of sort of your view as opposed to the mainstream, how would you say it different so how is innovation or the transition between technological phases taking place um let’s take from the 50s on for instance.

Arnold: Sorry, what was the last thing you said?

Joe: I said maybe from the 50s on so taking your example post-war.

Arnold: Okay so I think you know the profession really tried to focus on mathematics and optimization -you know Paul Samuelson almost defined his economics, as you know people solving optimization problems. And for many years the project was to solve the government’s optimization problem by coming up with something called a social welfare function that the government was supposed to maximize. So, it was you know very optimistic about being able to quantify things, measure things and approach economic problems as optimization problems. Um and I guess the view that I’ve come to is that you can’t really do that and a lot of that I think was based on my experience in business. Some of my blog readers asked me to say more about my intellectual influences so I’ve been writing a series of posts that haven’t gone up yet about that and what I notice is the longest post I’ve written is about the Freddie Mac career which, because I learned more in those you know half a dozen years in business than I learned in my undergraduate and graduate economics. I mean in some ways the learning was complementary but if you had to throw out one it would be the classical economics. Because you know one of the things that first you know hits you if you work in business and all you’ve done is study economics is these things that that a business is supposed to optimize – like it’s supposed to minimize costs or maximize profits, you know solving a calculus problem. That’s not the problem at all. You don’t even- you don’t know – your challenge is to figure out what’s going on, and beyond that if you were in a large organization the challenge is to get the large organization to function. You know it’s amazing, human beings have a real propensity to engage in conflict and that happens within an organization, and so you know when the textbook economist models a firm as a unitary thing, that’s very misleading because the firm is not a unitary thing. It’s a bunch of different people with different interests and a lot of the challenge that the management faces is getting some degree of alignment from these different people who just as human beings have a tendency to be jealous of one another, to disagree with one another, to be suspicious of one another and so on.

Joe: Yeah, so as I mentioned off before we started, I’m working in a software as a service startup, which is now 10 years old. But you know it’s producing a rather proprietary piece of, or software platform, um in that sense we don’t have strong competitors. And lot of I would say a lot of what the company is doing is interacting with its long-term customers to learn what they want as we continue to build the platform. And then internal to that as you just said, you have various teams of product developers, product managers, service facing – so client-facing groups and they all have of course their own agendas saying different things at different times depending on who’s listening. So, it’s really itself operating as a sort of complex organization.

Arnold: Yeah, you couldn’t write down a demand function, and it wouldn’t do any good to do that that’s my guess. You couldn’t write you couldn’t write down a cost function.

Joe: Yeah, and so much of it is about, in B2B, winning longer term client contracts and then working against, you know again the cause the price tag there is negotiated to some extent. It’s a lot of intangibles going on there.

Arnold: Yeah.

Joe: Um I wanted to ask. So you, of course you’ve talked, I mean it’s clear you’ve spoken about you’ve spoken about finance being a missing piece of mainstream economics you know in the lead up to the crisis for instance the models themselves, didn’t you know didn’t have money and banking you know in them –

Arnold: Well, they do sort of but in a very abstract sense and without I think deeply understanding the purpose that um you know financial companies serve.

Joe: Yeah right, right. I want to ask how you would connect finance, so we can we can be talking about you know larger financial institutions or VC, or the various ways that companies are funded, so the sort of interplay between finance and companies again in that sort of developmental way of looking at economic change, growth etc.  How do you see finance interplaying there?

Arnold: Well my fundamental way of thinking about it is that you know that households and firms typically would like to issue very risky liabilities but hold risk-free short-term assets. So the types of liabilities they’d like to issue, like a firm would like to issue you know equity or long-term debt something that’s risky and that doesn’t have to be paid off soon because the firm wants as much time as possible to kind of figure out how to serve its market. And households, you know they’re interested, if they want assets they would like them to be short-term, safe, liquid assets because that’s the most useful thing for a household to have. But if they issue liabilities it’ll be something like a 30-year mortgage in the United States or you know at least a five-year in Canada. So again it’s a risky long-term liability –  that’s what they like to do. And to me what the financial sector does is it accommodates that by doing the opposite.

So a bank will have risky long-term assets loans you know it’s the most basic and issue riskless short-term liabilities you know checking accounts. So that’s sort of the abstract general picture of finance. And then um there’s a lot of complexity that arises I think some of it from sort of regulation and accounting that you know because it’s easy to construct financial instruments that are close substitutes for other financial instruments, it’s really easy for financial firms to come very adept at gaming whatever system they’re dealing with. Whether it’s you know an accounting system or a regulatory system.

Joe: Yeah, that’s right. I know you’re familiar with Perry Mehrling. So at least you’ve I guess reviewed his Fisher Black book a while ago but um in the last again at this think tank I was mentioning before we worked on a little bit on how the Eurodollar market sort of developed in an institutional framework over five decades essentially from the 60s on. And again and we there we really emphasized this interplay between regulators, private players um you know sort of feeding back off one another so it’s not as though the regulator is setting the rules and the players are simply working within a framework but it itself is dynamically sort of developing.

Arnold: Yeah

Joe: You just more or less brought me to the point you mentioned that you learned a lot of Freddie Mac – so more than you for instance, in your studies. I wanted to add – and then just for the listeners your startup or your tech company was again in the somehow in the real estate space – do you think that there’s something to you having spent you know 15 years working on real estate, mortgage finance, these type of issues, that help shape your economic views, versus if you had arbitrarily gone into I don’t know labor policy or you know tech policy let’s say. Is there something to that: so real estate’s tangible it’s something that many many many Americans eventually will interact with throughout their life?

Arnold: I haven’t thought of it in though that that that being in that particular industry I’m trying to think you know if I’d been in a, you know gone into automobiles would I have had a different education, um I haven’t really thought about that. I can’t really say right okay

Joe: Okay. Yeah, just to link it finally with the startup you recently commented that, or you comment on Paul Graham’s article about what yeah, so essentially how billionaires are created but in other words kind of what YC does, Y combinator, what he’s learned from founders and so on and you kind of evaluated whether or not you could have um you know passed muster back in I guess the early 90s.

What do you think about I mean at that time when you were starting a startup there was no there was no accelerators right there? None of that that sort of ecosystem um what do you think about the developments over the last 30 years do you think that it’s a pure positive or do you see it as potentially also you know it’s a bit too easy almost to start a startup?

Arnold: Well, I don’t know that it’s so easy. I think I would rather have it be easy to start a private firm than to create a non-profit. I think it’s I think we sort of overestimate the social value of non-profits and underrate the social value of for-profit firms. So, I don’t think I would say that that’s necessarily a bad thing. What I do worry about is the way that the sort of, winner take all approach about you know internet firms that there’s that they’re either you know grow big or die. Which is, you know the venture capitalists set up, and I think it has to be the venture capitalist point of view because you know except for that they have they have to put so much effort into any one firm that’s just not worth it to them to go for a single they have to go for a home run. But that home run mentality, um I’m not sure it provides, it gives us the best overall business ecosystem. So I that that’s something that concerns me.

Joe: So, so really at the at the product level? Not at the societal cohesion level or something about inequality or something but really at the level of new companies being created? This potentially not the optimal way or you could see it.

Arnold: Well, I just I guess what I worry about is, I mean it is partly an effect on society because um you know it means that the type of people who go into business on the internet is kind of different than what I would you know what I might like them to be. I mean I think people who only aim for you know singles and doubles or you know might have some value to contribute.

Joe: Like lifestyle businesses is a term used so you just want a lifestyle startup I mean, not a negative term but you know something where you don’t have to kill yourself to try and become a billionaire.

Arnold: Right and you know I think a lot of you know, America from very, very early on you know starting you know you know from really first settlers was based on a notion that you um you know you’re you’re on your own if you’re a farmer, you make it on your own it was and small business has always been a big part of this country and I’m just pains me to watch so many you know with the pandemic so many small businesses in trouble because, I just I just don’t think that it’s going to be healthy for the social fabric to have you know everybody dependent on large corporations either for employment or for begging them for money to start a non-profit.

Joe: Yep, yeah I would agree. Um so maybe one yeah one more thing on economics is it sort of links up you talked about you have a post on economists should do an internship something along those lines.

Arnold: Yes.

Joe: it’s quite nice because I mean I guess you’re directing it at PHD economists who would probably go into academia –  I mean that seems clear – would you flesh that out? About so what industries would you like to see them go into or is it a year of work that you know it could be in government or it could be a startup um and what is it about it that?

Arnold: Okay what I think I want people them to get out of it is that again I just think you can you can learn an awful lot in general and but specifically the sense that you know a business is just you know it’s not born as with a demand curve and a supply curve it’s born with a lot of you know uncertainty about things and even you know mature business if you’re talking about going to an intern. Being intern with a mature business you’re going to see you know just a lot of unknowns that people are dealing with and that and that maybe gets back to your complexity idea I think people would appreciate the complexity of the business world a lot more if they just lived in it

Joe: But you I guess you would agree that it’s the kind of thing that needs to come from the schools as well I mean it’s quite difficult to for a up-and-coming PHD student to kind of do that right on their own?

Arnold: Right and you probably you know it probably is a career limiting thing to do yeah

Joe: Yeah I would agree. So one kind of thing there on your startup, you sold in the late 90s so you have it in a recent post where you sort of detailed your life essentially right you know shortly I guess. And you sort of say somewhere in there that you sold it for enough that you could, I don’t know how to word it, but you know essentially, you could do what you wanted after but not in some crazy sum of money right, where you’re some kind of super rich super rich guy, and you talk a lot about or you talk often about Nassim Taleb. I have you ever thought about the parallels there between the two of you just purely in that sort of life path you know so he’s done something similar he didn’t do a startup, but he apparently made good money in finance um and then was able to as of again something like 2000 focus on writing, blogging.

Arnold: No I hadn’t considered that parallel. But that’s one.

Joe: But can you comment on the ability of you, to not need to worry about an employer for instance, in sort of facilitating your last 20 years of output? Or would you think if you were a tenured prof at a university for that period it would have been rather similar?

Arnold: That’s an interesting question I think um, I think you know sort of not worrying about grant money is useful and I like and I like having the freedom to just um you know so say what I want I don’t have to um yeah um I don’t have to worry about whoever is granting me money. So that I think that’s been a real privilege.

Joe: And you would say that’s binding even economists? I mean so you’re obviously writing outside of just pure economics.

Arnold: Well, here’s my thought on that. It’s like you know a lot of people want to see conspiracy when um you know, when you know when somebody pursuing a research agenda gets funded, um it isn’t so much you know, okay so it isn’t that somebody who is a professor says “okay there’s money if I you know write papers supporting the drug industry, therefore I’ll write papers supporting the drug industry”. It’s more the other way around, a professor who honestly believes that pharmaceuticals have you know contributed a tremendous amount to the value of society and are very cost effective in terms of health care, and writes that will then find himself getting, you know, getting certain sources of funding. So, there’s kind of a selection that goes on that people are selected by, um by you know sort of funders who appreciate them to do certain types of work. So it’s not that people, are sort of so corrupt that they just say I’ll just write whatever, you know the funder wants. It’s more the other way around that they, um they have a point of view but because that point of view is more popular with the funder um, that you know then um that that’s kind of how they link up.

Joe: And what about the sort of whole journal article peer-reviewed process. Does it play as strong a role as the funding or is it actually over kind of overplayed how important that is in terms of?

Arnold: what I think that leads to is kind of a buddy system where sort of you know it’s much easier to get something published that’s very close in style and content to what is, you know what generally gets published. And then it becomes quite difficult for something that is out of the ordinary to make it through. Because you know that there’s a real I’ll scratch your back you’re you’ll scratch my back kind of world going on, and it’s particularly strong I think in economics. And I think it’s very unfortunate there.

Joe: I think I mentioned in my email to you that I worked with a kind of classical liberal, German economist for several years and he would kind of lament, jokingly but, that it was sort of when economists stopped writing books as their, for you know, sort of primary output as opposed to journal articles a lot was lost there in terms of what could be said, and just sort of the cadence of writing a paper versus what you could one could structure in a book. Um it’s certainly the case that economics is I guess at the forefront or it was in terms of these newer forms of communication so blogging twitter etc. I mean the Nobel winning economists are all on Twitter and they typically maintain a blog and so on um what do you does that interplay at all with the sort of the this back scratching?

Arnold: Well no, I think that probably represents an opportunity for something better.

Joe: yeah sure

Arnold: You know but it probably as long as it’s the case that what your tenure depends on is you know publications and top five journals then that’s going to be the main driver um. I think it’ll be quite a while before it becomes at all mainstream for somebody to be tenured on the basis of blog posts.

Joe: Yeah, I think they’re more likely to get Patreon funded and go to their own career somehow. Something like that. Um, maybe one more thing on your sort of output let’s say from 2000. So you also um were until recently teaching in a high school, I guess in a volunteer do you want to talk about that at all or did you I mean,

Arnold: Sure

Joe: I found it quite interesting that you did that and maybe whatever you’d like to say about it

Arnold: Okay well when I was in high school myself, I had a very charismatic chemistry teacher, you know who really seemed to enjoy himself. And sort of when I you know had sold the business and exited um and I was kind of casting about thinking well you know what should I do next and you know who seemed really happy doing what he’s doing and this chemistry teacher in high school seemed really happy doing what he was doing so I said well maybe I should try high school teaching and I managed to land a position at a local private high school. And I found that I got along well with the students and enjoyed it so I did it for 15 years. And then I knew that a grandchild was going to be born in Boston and that it really wouldn’t be fair to students to you know to sort of be, I knew I’d want to visit the grandchild and I didn’t want to be in a position where I was you know not around the students because that wouldn’t be fair so um.

Joe: So you really were I mean this was daily in the school not just doing ?

Arnold: Yep yeah I mean the advantage of doing it as a volunteer was that you know I didn’t have to do any of the ancillary you know sure control the halls, work the lunchroom kind of stuff.

Joe: My mom and two sisters are teachers so I know the deal. Um okay great, um yeah maybe let’s jump now. So I said a few other topics I wanted to speak about one which um I find it quite interesting that – you’re I mean I don’t find it interesting that you’re interested in, so it’s I’m talking about race, BLM, um sort of critical race theory, this sort of yeah, as a subset of a sort of postmodern movement. Um, I find it interesting that many people are arriving at the sort of same critique of it without necessarily coming from the same – so I mean the mainstream maybe wouldn’t be, but still nonetheless many people are starting to sort of critique, you know some aspects um and they’re arriving at it from different points. So I wanted to just ask you about um your sort of views on it so for you, mean you’ve written, you’ve referenced Glenn Lourie several times now. You recently wrote a rather long post, sorry an actual published article, um which you mentioned even you had a little bit of trouble getting it published or at least one journal didn’t want to take it.

I don’t know how to sort of arrive at this. My question would be sort of, why are you so interested in it? Um I have ideas and I know why, at least I think I know why I’m interested in it, but maybe how would you phrase that, why is it of interest to you?

Arnold: Well yeah that’s a good question. Why does that upset me so much?

Joe: Yeah, why does it upset you? Exactly.

Arnold: I think because I guess I would rationalize it as you know I’m really a believer in rigorous thinking and um I see this as you know definitely not rigorous thinking and um you know so that’s that would be one rationalization.

And I guess, I’m bothered by that and I guess maybe being sort of someone who’s kind of ideologically leans toward the right, I see this as a very a real power move on the part of the left. That’s you know almost unfair in the way it sort of mobilizes emotions. You know what I think of as a kind of a manipulative way. And I’ve seen close up some of the, what I would consider propaganda, and the way it affects people and it just makes me cringe. And I get I guess if I were, perhaps if it was, you know deliberate propaganda that sort, roughly supported my views maybe I wouldn’t be so negative on it but hopefully. I would I mean hopefully I’m against propaganda of all kinds.

Joe: That’s exactly, that’s you know in one way that’s the exact question I ask myself. Is it in a particular way because it’s something that you know, if it was good for or something I really believed in? I also hope it’s really a distaste in overall poor rigorous thinking you know, bad use of logic, stats etc. And then you didn’t mention it just there but maybe it’s implicit in the power move of the left point. What do you think about it just in terms of for society over the next 15 years. Or I mean it doesn’t have to be economic output, but I mean overall um what do I think that the effects of this of this sort of propaganda would be? Do you really see them being potentially extremely negative or is it rather at the level of it’s just bad thinking, it’s just annoying?

Arnold: Well, I guess that’s the question I have a feeling that or noticed that Tyler Cowen only very rarely alludes to any of this stuff, which suggests to me that it’s not one of his big worries. And so, I kind of try to wonder, well you know, maybe that’s right maybe one shouldn’t be so worried about it. But I think the affirmative action movement, I think had a terrible effect on higher education. It really it really ended up forcing universities to move in the direction of mediocrity and against, and you can see this almost now very explicitly, against rigor and merit and those sorts of things.

It really became a downward spiral where okay so Harvard needs more minority students and so it reaches down and basically pulls the students who are minorities who would be perfectly well qualified at the university of Michigan, but who really are kind of under-powered for Harvard. And then that means the University of Michigan needs to meet its quota by pulling down from the next layer and so on. So, at every layer you’re putting minorities under tremendous pressure to do sort of more than what they can handle. Then you’re putting administrators under pressure to sort of make them make them successful. And that just ends up you know in kind of a terrible equilibrium.

And what I fear now is that that spirit is going to take over corporate America. As I watch universities kind of get you know, increase the proportion of dumb departments and dumb administrators and sort of dumbing down the academy, you know if corporate America walks down that same path, it’s like a parasite eating at the eating at the system. So yeah, you know as I think about it in those terms I think I’m entitled to be worked up about it.

Joe: I think the first sort of exposure I maybe had to this fear was from Jordan Peterson, maybe I guess four years ago now. And he at the time sounded like saying, you know crazy things about what the Canadian government might end up like, what the Canadian sort of institutions, human rights councils and so on. And I don’t know if it’s him having put it on my radar that itself has led me to me thinking that, or now it just seems actually rather normal – maybe a little out there sometimes the way he words it now and then, but um certainly an actual risk.

Arnold: Yeah, he certainly caught on early to you know, to what the um and what the dangers of that whole movement were.

Joe: Yep. So if we return to the I mean sort of the BLM. Maybe to the benign sort of rationale behind it for the average person, if we sort of separate it out from the BLM you know hardcore manifesto, but just what the average you know middle of the road American is sort of thinking about what BLM means for instance. So it’s tough to know sometimes if they’re just seeing it as speaking out against a certain subset of inner let’s say inner city black people having a sort of persistently bad life situation or if it’s explicitly against police brutality.

Arnold: I think, well yeah there are lots of stories. I think my way of looking at it is, you know nobody wants to, nobody wants to be indifferent to anybody any individual or group who struggles or suffers. And you know so it’s perfectly legitimate to certainly say the expression “Black lives matter” you know it’s the opposite of that would be you know “I’m indifferent to Black lives you know I can you know I can watch these young men be killed by police and not care at all.” Well, you can’t take that stance.

But the challenge is once you begin to think it through, you know rationally what’s going on, it’s not it’s not that police are on a campaign to exterminate young Black men. The problem is that police have a hard time dealing with challenges to their authority. You know, they feel that if their authority is challenged and they don’t respond that that’ll be fatal to them. You know maybe that’s right maybe that’s wrong, but that’s the way they approach things. And at the same time, you know they encounter these young Black men, who um sometimes are on you know, on drugs or just are you not able to kind of control their emotions very well. And so, they do defy authority, they do try to resist arrest, and these confrontations you know come up. But you know talking about it in those kinds of terms offends the people or it’s just not as um you know it doesn’t um satisfy people to the way sort of you know crying racism and saying it’s all police racism or society’s racism. And that has you know a much more emotional appeal. It’s more satisfying to have a clear victim or clear villain I’d say. That you know treating the police as villains works out to be more satisfying.

Joe: Yeah, so echoing that I found just in personal conversations on this – and it’s totally absent from sort of mainstream media conversation, that even beginning to discuss the overall the larger situation of say, in inner city areas, like let’s say take Chicago as an example, with very high crime rates murder rates etc., as you know may be a proxy for the likelihood that the police are then interacting with, let’s say young Black men in this case. Or even just to speak about it as itself a bad thing for this subset of people. Even that people are very cautious to speak about, or they take it as a kind of bait and switch you’re trying to pull, or a sign of maybe of racism or just something that shouldn’t be said kind of. And I’m talking about with friends you know where in another situation totally normal to speak about.

Arnold: Yeah, I think there is a huge element of something that just about everyone is really terrified of is being called a racist. And I think I think the only solution to this is really for people to get over that fear and just say okay that’s a bullying tactic, I’m going to you know adopt an attitude toward minorities that I hope works. I mean I certainly try to in my own life, treat them you know the way I would treat anyone else. And if some you know somebody comes along and says, no that’s not enough you have to be anti-racist, just say “okay well you can say that but I’m just gonna be me um I’m gonna you know live what I think is an ethical life and not let you bully me around and tell me what I have to do.”

Joe: Of course, it’s harder for let’s say younger people or people who can be summarily let go from work for instance. It’s obviously a really sort of a binding kind of behavioral check there maybe.

Arnold: Yeah well, that’s you know again another advantage of being financially independent. Among other things I don’t have to worry about that.

Joe: Yeah, I mean for me it’s a lot of having grown up in Toronto in an area where, and an elementary school where a good portion of the students were – in Canada the Blacks tend to be, at least previously, Caribbean immigrants, first second generation, so not the long-term African American population (as in the US). Simply being friends with them and having grown up with them it’s absurd for me to be to think of someone accusing me of being racist, that it sort of inoculates me in that sense against speaking against it.

I would say that being in Germany as I told you for the last eight years, where it’s you know, it’s an international crowd at the in the startup scene, but nonetheless they have no idea about let’s say my background or the the reality of let’s say big North American cities. And they can immediately confuse it for some kind of, yeah the type of racism that they would expect to see in, I don’t know in small town Germany or something. You know they have no way, no bearing to sort of view it in a North American context. Which can be frustrating to be so out of your element.

Arnold: Yeah

Joe: Um, yeah okay thanks for talking about that component. Um, so you have written your recent book on the sort, of these three axes of, I would at first have said of political outlook. But through sort of listening to you speak about it recently and kind of re-reading um what you said in the more updated versions, you refer to it rather as – now I’m sort of paraphrasing, as more of a communication style or a way by which we speak about our views.

Arnold: Probably the best way to avoid talking about it is a political outlook, which I at first was tempted to do myself, is to talk about it as a way of demonizing and belittling different, you know, viewpoints that differ from your own and so what I claim is that each sort of political tribe has its own characteristic way of demonizing people who disagree. So, you know here are some all things that sound bad: oppression barbarism and coercion.

And yet what I claim in the book is that each tribe sort of thinks of itself as having a monopoly on opposition to one of those things. That progressives act as if they have a monopoly on being opposed to oppression and so when they use their political language they will make it sound as though those who disagree with them are on the side of the oppressed. Conservatives act as if they have a monopoly on being concerned with barbarism and the preservation of civilization and so they will talk as if those who disagree with them are really just out to destroy civilization as we know it and sort of become barbaric. And libertarians act as if they’re the only ones concerned with liberty and that those who disagree with them just want to have this use the state to coerce people to do with what they want.

So an example I’d give would be something like the BLM movement where the instinct of progressives is to see the Blacks as the oppressed and so if you disagree with them on BLM issues then that must mean that you’re on the side of the oppressors and they’ll call you a racist. Maybe if you’re a conservative you think well police they’re very they’re essential to civilization you can’t have a civilized order if people um you know if you don’t have police. So when they hear a phrase like defund the police it’s like oh these people you know they just want to take us back to barbarism they just there’s no appreciation for civilization at all. And libertarians will tend to would be to want to look for the cause of proud of you know Blacks losing their lives at the hands of police as for the state being too strong and too aggressive. So you know maybe they’re being arrested under laws that shouldn’t exist in the first place maybe the police are too militarized. You know they’ll look for they want the state to be the villain.

Joe: And yeah, so I mean thank you for yeah explaining each of the points. I found them extremely interesting. And you had you’ve had quite a dialogue I mean at least online, for instance with Russ Roberts in several podcasts and also with Pluckrose and Lindsay vis-a-vis Russ Roberts, but also in some blog posts and where they sort of again frame a kind of barbarism-like critique, but not along this libertarian line that you do but sort of imagining I guess you could say imagining populism as a sort of, yes somehow a protection against the elites who are not necessarily aligned along any, you know left-right spectrum, but rather just elites against the regular people so to speak.

Arnold: Yeah as sort of Donald Trump emerged I began to see that there are just a lot of people who don’t really they have a different sort of set of demons and the demons are kind of  as you said the elites, the people and um and so like so there’s this kind of anti-elite axis. And Trump was such a kind of I want to say strong figure, but very prominent figure, very polarizing figure that um he kind of brought out the that a lot of people were very the people who were not sort of as anti-elite as the as Trump supporters began to be I think very defensive of the elite or very not so much defense of the elite but very hostile to populism.

So long story short he created a very strong populist versus anti-populist kind of settlement or axis and so for some people the villains were the elites. The trump supporters felt that the villains were the elites, and then for everyone else the villain was the Trump supporter.

Joe: And I guess you would see that along the sort of the center right and left in American politics coming from either

Arnold: Yeah I think he kind of you know shook up everything up I don’t know I don’t know if it’ll get back to normal now

Joe: but um would you define what the sort of far left strain of the democratic party is as anti-populist or are they they’re kind of own animal?

Arnold: they’re not a populist yeah I think they’re kind of their own animal um you know some people even call them the left populists, I don’t know if that’s a good phrase or not I suspect.

Joe: I guess at least Bernie Sanders was somehow. I mean I wouldn’t group him with the sort of the newer age like AOC, etc ones. But um it’s funny I think in in Europe I think you see a maybe even a cleaner sort of anti-populism.  So really against those who might be for what are termed populists in Europe, um and that sort of across the spectrum up and to the point of I mean if it’s in Germany’s case the AFD (Alternative for Deutschland) or in France’s case whatever the right party is. It’s quite a unified dislike for the party and I would say just dislike for the people who are voting for them. Would you comment at all on this sort of emergence? I don’t know if this is novel, maybe you could even comment if it’s novel of a kind of hybrid political economic outlook that some of the these again sort of what’s termed right parties have. So, in Europe maybe in Hungary or in Poland, maybe also in England at times sort of socially conservative but economically rather not conservative, so funding public policy, etc.

Arnold: Yeah, it’s sort of the opposite of libertarian.

Joe: Yeah exactly.

Arnold: And I think it’s it appears to me to be fairly fast growing and, yeah I mean it it’s certainly not a libertarian moment right now that’s just the way I put it.

Joe: Yeah sure. When I was listening to you speak with Russ Roberts on somehow the juxtaposition of Martin Gurri’s position. So, sort of revolt of the elites you know in one sentence summarized as sort of I guess: via social media at this point the elites as he terms them are sort of exposed to the populous for being, you know, not maybe what people thought they were at previous times. And at the same time the people can somehow organize themselves – I know Gurri has been a little critical of their ability to really organize themselves in a longer-term fashion as opposed to just a frenzy which peters out after some months.

And then Russ Roberts at times has spoken about the fact that there’s just a splintering of um what was once kind of two, three media outlets, TV stations, which were really sort of sense making to use the terminology of like Eric Weinstein for instance. Yeah ,and I think you’ve also said some things to sort of that effect. And what that strikes me as from one angle is it’s a heavy focus on not the actual content or message or political policy, but rather simply the interplay you know, the network theory of what’s going on itself leads to um discontent, etc. Do you see some actual truth to that? That regardless of what the underlying social level is –

Arnold: I see a lot to that. I think one of the ways I conceptualize things a lot is that with the Dunbar number. Yeah which is sort of the number of groups in a mammal setting that can you know that can kind of operate and it’s from an anthropologist Robin Dunbar and for humans the number is 150. That is you know humans can recognize about 150 faces give or take, and so they can operate kind of informally up to that number. And that that’s kind of I think that’s true for businesses that if your business has about 150 people or less you might look around at other businesses that have you know formal organization charts and fancy you know complex compensation policies and say what do you need that for? And then when you find yourself in an organization that’s bigger than the Dunbar number all of a sudden you see oh the you know things kind of break down if you don’t have more formal communication channels and decision processes so. Sorry take me back to what we were –

Joe: Yeah, it was sort of it was about, if it’s really the median not the message.

 Arnold: Okay so what I think that the media have done has created a confusion in that we’re used to you know, with old media we lived in a world where our everyday encounters were with people we were, with the immediate world: the sub-Dunbar world, you know our friends, our family, our co-workers, things like that.  And then the world of politics and celebrities was a remote world that was, you know, we saw them on screens or in magazines or on television or something like that. Now we’re in a world where your friends are on a screen you flick your finger and now you’re looking at a celebrity on a screen and I think people are very kind of confused by that and I think they’re much more emotionally caught up with the remote world, the world of the celebrities and so on. So it just hits them with a much more emotional kick. So the um you know so the problems of African Americans with police hits with much more of an emotional kick than   it would have before. So that I think that does account for some of the differences in the way in the sort of intensity of politics today compared to what it was you know years ago.

Joe: So, I mean as these technologies are here – okay they’re changing and so on – but nonetheless they’re not going away. I mean that doesn’t bode well one could say, or do you –

Arnold: Well, I guess I a more optimistic take is that the culture needs to adapt but we’re going to go through something you know – if this is an optimistic take it’s not a very optimistic one – but if you go to the you know back to the invention of the printing press and how disruptive, you know the church didn’t really survive it. So, but eventually society adjusted and you know we stopped having you know religious wars following the printing press. But now we’ve got this new internet technology environment, and how long will it take for people to adapt to where they are able to live with each other without you know, coming to you know without having such bitter political feelings toward one another.

Joe: Yeah, you mentioned there, well you sort of alluded to if I now jump to this cultural intelligence idea that you again have written many times about. I’m talking about Kevin Laland, Joseph Henrich. Yeah, just to summarize I would say it is the kind of idea that we as humans maybe the majority of our actual intelligence, what we often would think of as our intelligence, is culturally learned so it’s coming from a sort of evolved set of norms, ways of doing things, that we download so to speak. It’s much more than innate abilities.

Arnold: Right, it’s like the cloud. You know we’re getting you know if you can think of culture as like the cloud, and we get like you say we get you know norms, habits, practices from the cloud as it rather than you know from our own internal operating system or whatever.

Joe: And why is that, also ask myself similar to the BLM, kind of why is that so interesting to you? Is it just because it’s a very persuasive narrative that also clicks and you know it’s a kind of critique or an update on evolution?

Arnold: I think what’s interesting about it is, how do you reconcile that with economics which is so you know tries to start out with the individual and of course and the kind of the Austrian economics tradition which seems somewhat close to the way I think about economics is so insistent on methodological individualism. How do you reconcile that desire for individual freedom and liberty with just the reality that we’re sort of nothing without the culture that forms us? And I don’t have, you know a quick sound bite on reconciling that but I think that’s what makes it interesting to me is that it makes it clear that you don’t want to just say well you know everyone’s an individual and this it all ends there and because that clearly can’t be all of it.

Joe: And I take it you would sort of make the jump to saying subcultures or certain cultures that we – so more like ways of thinking not cultures in the sense of some national culture, but maybe what’s learned from the family or sort of religious and familial way of doing things are then important for outcomes, life outcomes etc.?

Arnold: Yeah, and you know Henrich’s latest book is you know really kind of extreme on that. You know, he thinks that sort of everything boils down to you know, how much, to what extent Christianity penetrated cultures. His thinking there is that non-Christian cultures were tolerant and even encouraging of fairly close family marriages, cousin marriage in particular and he says that just leads to a whole different set of cultural practices than the Christian one where cousin marriage is prohibited. So now he just traces through a whole bunch of consequences that flow from that.

Joe: And maybe sort of one of last thing there. Do you do you see a sort of teleology or at least a Darwinian survival of the fittest, you know a better culture is emerging kind of propagation or development of culture? Or do you see it as, you know rather the result of some fair degree of just arbitrary “the path goes this way it goes that way”?

Arnold: I think my instinct is to be more Darwinian. That, you know things have to at some point, you know the culture that’s more successful in some dimensions is going to win out.

Joe: Yeah, I sometimes I want, you know, so if you take Hoch Deutsch, so the high German that’s now spoken in all Germany. I guess the reason that that cultural artifact language is now spoken by 80 million people isn’t because it’s it was a better, more effective language versus the fact that probably some prince won some wars, or it was spoken by you know Goethe or one of these you know major thinkers who sort of formalized the language and there was a kind of institutional push there.

Arnold: Okay, so yeah a little like there can be yeah well it’s not a fully determined, sure.

Joe: Just thinking about it before I was thinking that, yeah surely the sort of tacit knowledge about which berries are poisonous is you know, a direct and binding result of a kind of survival of the fittest. Whereas the status of a language seems rather arbitrary and opposed somehow to a survival of the fittest style outcome.

Good, I think sort of wrapping up um I had one more sort of personal thing I wanted to ask you. So, um you’ve written about, or you do dance Israeli Dance, correct?

Arnold: yes

Joe: And you actually have written about it not only in and itself – so in sort of documenting it, you have some videos etc.  But you at least in one post have used it to riff on cultural appropriation. I’m not sure if you’ve used it elsewhere.  Any comment on that? So I mean do you see some value in in this, in taking something like that, so personal passions, and trying to see how they can fit into other areas of thinking? Or is that just having a bit of fun?

Arnold: Um, well the thing I wrote was just in reaction, to what I thought was a really kind of obnoxious piece in the New York times. So that was that’s kind of a one-off. I think the only thing I’ve noticed that’s of significance about Israeli dance is that how you know how old we are those of us who do it are getting. And that made me look at general at sort of hobbies that have been around a long time are kind of aging out because you know young people have different opportunities and what happens is that the people who stick with an old hobby get more and more dedicated to it and they raise the barrier to entry for new people. And so there’s almost like this natural cycle where you know where hobbies used to be mass hobbies just fall into niche hobbies you know. I guess other things might become mass hobbies, but the old ones just naturally turn into you know niche hobbies.

Joe: So, I mean on the ground example when a young guy comes to the dance night you’re saying he can’t cut it so he’s sort of not allowed in, so to speak?

Arnold: It’s just much harder. Like when I first started dancing if you spent once a week going to a session for three months you could feel like on top of the whole thing. Like you really knew enough to not feel awkward at it. Now that period of time you probably have to go to, so that would be what once a week for three months. That might be 10 sessions. Now you probably have to go to 60 or more sessions before you’d feel comfortable. That’s a huge barrier of entry. Especially for something like dancing where you’re very sensitive to you know, how you feel about your body, because you know while you’re awkward dancing you feel bad about your body and that’s a bad feeling to have.

Joe: Sure, and is this I mean, is this due to your group improving or as sort of globally, or whoever’s doing Israeli dancing worldwide is the level getting better for some reason?

Arnold: Oh, I think it’s you know it’s definitely worldwide it’s getting tougher.

Joe: Interesting, interesting. Yeah, so I mean I found it interesting that it’s a passion of yours that you also are quite open about. I play soccer and it’s also you know, rather of a large part of my identity I would say. And I also see all sorts of areas in life where it feeds in, just also in terms of meeting people and so on and seeing a different side of people that you don’t see in other settings.

Arnold: I wish we had more of that because I think people would get along better if they realized that you know, there are people with different political points of view that are still you know fun to be around and share your same hobbies and so on.

Joe: Yes, sorry just to wrap that, you’ve multiple times written about at your synagogue, sort of differing or it seems like the majority have differing political views to you. I don’t know if that’s a fair summary.

Arnold: Yes, that’s fair.

Joe: But would you say in that environment one can actually speak openly and so on or is it also rather hostile.

Arnold: No no. I think I haven’t outed myself to very many people there.

Joe: Okay got it.

Great um, yeah Arnold thank you very much. I really enjoyed hearing what you had to say about these topics.

Arnold: Very interesting questions.

Joe: Thank you, thank you. Yeah, so mean I’ll be putting this up I guess on YouTube and also on as a podcast.  I’ll send around the links to you and so on once I do so.

Arnold: Okay sounds good.

Joe: Great thank you very much take care.

Arnold: Okay bye.


Author: rinijose

twitter: @JoeRini6 From Toronto, living in Kiel (after 8 years in Berlin). Interests:, economics, sociology, complexity studies, philosophy, political/cultural movements, history. MA in international and development economics Work experience: Economics and systemic risks research at a German publicly funded think tank, as part of 3 EU-funded projects (Financial Stability, Green Growth, and the Precautionary Principle); 2) SaaS consultant at a Berlin startup; 3) Internships at UNCTAD and DIW Berlin

4 thoughts on “Podcast Episode #1: Arnold Kling – A complexity thread in his thinking?”

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Ergodicity economics

Formal economics without parallel universes


taking the most charitable view of those who disagree


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Writing under the influence of: economics, sociology, complexity studies, interest in the history of thought across many fields

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