Husbands and would have seen that as arrogant and inappropriate, but i certainly see them as heroines myself, and i think they have the right stuff. [laughter] [applause] this program is part of the seventh annual savannah book festival. For more information visit savannah book festival. Org. Megan mcardle argues that the u. S. Is unique in its willingness to let its citizens and businesses fail and says this is whats made the country successful. This hourlong Program Starts now on booktv. Thank you, everybody for coming. Welcome to the American Enterprise institute. Im tim carney, a visiting fellow here as well as a senior Political Columnist at the examiner or what i do here is the two programs one is called the cultural competition where we talk about competition, talk about things like subsidies and crony capitalism and when competition yields good fruit and when the pursuit of profit might not just good food. The other thing i work on is called the program on human flourishing, where we talk about happiness. And both of those topics are addressed in the book we will be discussing today which is the up side of down why failing well is the key to success. Here to talk about this we have the author, megan mcardle. She is an Economics Writer at bloomberg. She is written at the atlantic, the economist newsweek, in addition to writing this her first book. Our respond is tyler cowen from George Mason University and the mercator center. You might know him from his blog, marginal revolution and his recent book the great stagnation and averages over a couple quick comments about the program before we begin. If you have a cell phone just turned it off. Feel free if you want to do twittering stuff about this, to do that. We just dont want phones ringing. That we who will be time for questions but it will be a formal question and answer. We will intersperse it and well have something of the conversation. If you have a question try to spend some time thinking of how to make it as concise as possible because we will break up at about 6 30 for wine and cheese, and we are selling copies of the book outside. Megan will scientific if you like what you hear, i recommend you buy them. Im in favor of people buying books they find interesting. This is a very important economic me, too. So again, thank you for coming. Megan, i read the book. I love the book. I thought there were a dozen interesting things in here more than that stories from all sorts of things ranging from bad dates you had to failed companies to drug addicts. My favorite line i think i can remember off the top of my head is if you dont already have trouble with the delayed gratification, the best way to get there is to develop a drug habit. I am probably misquoting. No end of interesting stories in the book but for this crowd, we have a washington crowd what do you think is the most interesting thing you came across while writing it or what they will come across while reading it . We all know failure is a learning opportunity and often we learn things by failing. Failing. Starting with we would learn to walk which is mostly a tale of tripping and getting up and going over all the way up to how the economy large. Most products do. Most companies fail. Even a successful entrepreneur who was done this before as a seven out of 10 chance of filling the next time he tries to start a company. So the most interesting thing ive learned was how amenable for bad credit attitudes are to change. I learned this in my own way. As a writer i have what psychologists call a fixed mindset, which is basically there are two ways you can approach a challenge. You can approach it as an opportunity to learn something and expand your brain or you can approach it as a dipstick that is measuring your innate level of talent and ability. Most writers are the latter kind of person a fixed mindset. Growth mindset people tended to better, they can to learn more from the challenges that you face, they do it again and develop more skills and grow more. Its hard to develop a special if you look at the way most bright kids go to school. Its easy and to learn from that, success is about finding work easy. When you get to the big leagues thats no longer true. Youre competing with all the people who found it easy and have to have the grit and resilience to first take on things we really might fail, and second of all, to learn from them. Talking to a psychologist who came up with this distinction through her research, and i said at the end of the i felt like i kind of had to confess. I said i feel like a fraud. I totally feel like it take on the challenges this is a of me as a person and if i fail that just means i never had what it took to she said, me too. Fairly common among academics. She said, but i changed. I knew it i had change one heard myself saying wow i suck at this. This is really fun. And i thought wow im never going to get there. I do like doing things im bad at. I never had. Over the course of writing the book, i did. I changed and it wasnt because a lot of these books into being 12 steps to help yourself to failure and thats not what this book is. The interesting thing is it wasnt a 12 step program. It was remind myself of the truth which is when they take on things we dont know how to do think about how you learn to play tennis. You didnt sit down and develop an elaborate theory of tennis. If that were the way to get good at tennis been every year wimbledon would be won by some guy with glasses from mit. You learn to play tennis by hitting a ball. It doesnt go where you think what the first hundred times and by accident you in the right direction. Your brain makes a connection and you say right thats how it feels. You dont know quite what you did so usually the next time but over time he develop that talent. Finding a few things do work out of the many, many wrong ways to hit a tennis ball. And so developing that ability to embrace that isnt a matter of having a 12 step program. Its a matter of remind yourself that this is true. When you Say Something saying to yourself, i might not be very good at this, probably i wont but i can get better. The whim going to get that is by doing it and not being very good at it. Similarly with things like unemployment, with things like what psychologists call the fundamental attribution error we tend to attribute things that happen to the agency of some person. This person with someone meet you in the supermarket you think thats a terrible, mean person. You dont think she probably had a bad day and maybe her mother is sick. Just remind yourself that usually its because her mother is sick most people do not randomly Wander Around snarling at everyone they meet changes to interact with those people. That was the most surprising thing i learned was its easy to describe the way in which its hard to fail but i was surprised how easy it is by describing them to get better at doing it. Tyler, you have ideas and thoughts and opinions on nearly every subject, whether its thai food in suburban strip malls or the Unemployment Rate or whether inflation is, in fact everywhere and always a monetary phenomenon. When you read to when you read megan spoke of what was the thing that struck you as most interesting . First of all this is a great book and you should go out and buy nine copies of it. We could be calling it the upside of up. I learned from this book we should teach Young Children to play chess at a very early age because you cannot be good at chess right away so you have to learn failure. And furthermore your failure is rather brutally measured and you see everyone around you failing. You know exactly how bad you are but you also have a way of learning how to be better and you can measure your progress. This is one of the most important skills to teach people early on is how to fail. We need to think about this more in educational terms. So when i think a failure and how to move towards success i think of issues concerning children. To say that one had a child and youre asking yourself what can you do to make this child learn the lessons of this book. To me thats really the big question coming out of this book. To some extent we learned these lessons as a nation. Im afraid were going to forget them. Im afraid were headed toward a future where theres so little privacy and so much measurement may be eventually genetic measurement that we will lose a lot of the upside of down and become a society where Second Chances are more difficult. Im also intrigued by the idea that there are some areas where failure is good for you and other areas where failure is completely disastrous. Some of you may have read megans recent blog post, the bitcoin, it is completely gone. Thurber of all bitcoin in circulation is that the number . I dont know but it is a large percentage. Makin predicts that it will eventually spell the end or dramatic decline of bitcoin. So we dont say it went boom the bitcoin is going to learn something. Its a fixed architecture to bitcoin angina properties of increasing returns systems based on liquidity and common focal point. You have a case where both the architecture and increasing return to scale means that mistakes multiply and accumulate and then things will go poof. So to try to think about more systematically what other cases where we see learning, certain area and learning in the austrian since . What other cases where things what did that term mean . Entrepreneurship, learning. Doesnt matter if you dont know. What are the conditions where you get one outcome or the other . What should you actually read for insight into this . I would say read the up side of down and then read the sequel, the upside of up. I predict there will be such a sequel. The problem with chess, that ive intent is i am teaching my daughter and son to play chess. And so as a result i always win because they are seven and five and i have beaten them every single time. Now my brother challenge me and im afraid to blame because ive gotten us used to winning, i dont know if i could handle it. On a policy front, your book ends with a discussion of u. S. Bankruptcy code and how thats so different from the rest of the world. And in fact your book starts in the fort with a comment on how america is sort of unique compared to a lease europe in our approach to failure. A story i was told by a european cabinet minister, it mightve even been angela merkel, back in 2004, this German Cabinet minister, top Government Official told a group of us traveling something about there wasnt a lot of new business formation even while declining in the u. S. , in germany, someone said why . Europe has been historically two kinds of people, the risktakers are willing to fail and people who sort do what theyre told and what hold onto what they have. The first time the people all got on a boat and went to america. Is america different . Does it have to do with our character, our founding or does it have to do with their Bankruptcy Code . I think these things build on each other. Bankruptcy is relatively modern invention most people arent aware. It comes out in the 19 century as we now know. There was something that looks like it earlier in british common law but it comes out of the 19th century in u. S. Because in our constitution it says the federal government has the power to create a Bankruptcy Code. While the cant prove this, one suspects that because so many Founding Fathers were heavily in debt. When Thomas Jefferson would either taking up a collection to pay off his massive debt which he could not get out from under. He was a very very good writer and thats a good at running a plantation. That ends up showing up i think in a lot of Ways International character. Our Bankruptcy Code is so much more generous than anywhere else in the world. People dont believe it. People are surprised to the america doesnt care about the downtrodden is incredibly lenient if you get into financial trouble. I went to bankruptcy court, i went to memphis which is the bankruptcy capital of the world as a journalist, to go for this book, take a look at what is the worst with the bankruptcy capital of the world in memphis bankruptcy capital of the United States. Were extrapolating. Memphis has Something Like 1 of the population which is a high number. If that were normal, all of you we dont have the people you them would have declared bankruptcy at some point in their lives and thats not the case. I went to memphis to look at this and you would think that i was expecting kind of screening mothers hurling themselves at the feet of judges and so forth. It was nothing like that. Traffic were. You cant believe how much nothing happens. The judge says scientists and then you go away. This astounds europeans. When i try to explain in 2005 when were having our draconian bankruptcy reform, what the new reform looked like. My colleagues said he had reform the. Thats ridiculous. Know, thats the draconian new reform. Because in know the country and what can you walk into a judge and say i cant pay and the judge is like okay, you dont have to. Go in peace. That doesnt happen anywhere else. Everywhere else are on a payment plan and its harsh. Its so different i was in the middle, in the book i was interviewing an expert on a completely different topic and he just started making making fun of you is Bankruptcy Code because he thinks its crazy we do this. This guy is candymaking so you would think he would be, no just weasel out of debt. It turns out its really a hidden strength of our economy because when you look at states, the exemptions are state level in states with more generous exemptions, you get a higher rate of entrepreneurship. This is built out of the fact that in the 19th century unlike most glitches we had a lot of small landlord and western states with a lot of money. So in 1898 when we finally set out our permanent Bankruptcy Code, the constitution said you could have won he didnt have to. We finally passed when in 1890s. All the people in the west which egypt to send is that the people in these that make you give me to get out of my debts, and they did. That changes how you see people declared bankruptcy. In america we tend to give people not as rich people try to get out of paying their data the people that an enterprise where they took on too much debt with Capital Investment and then something out of their control like crop failure and that in turn means where again i think these two things go together. As of today could he be genetic . Im sure theres part of that. I was talking to a historian who pointed out that the vikings strength of the worlds most violent and warlike race and said that they turn into suites. And what happened, while all the violence left and many of them are in minnesota, so that could be part of it too, but i think a lot of it is the culture and institutions because you see even within the United States when people move to a state that has a high level of entrepreneurship, they are participating in the culture not where they came from. The other side of that is worried about moral hazard. Anytime you this thing were if you for your kind of okay. Youre encouraging excessive risktaking at by a lot of accounting the financial collapse we just had was from excessive risktaking when there was an implicit sort of uber bankruptcy behind these banks were they knew they would only be allowed to fail so much. Could it be especially considering the crash we just had or that moral hazard of bankruptcy is causing as much harm as the sort of cushioning is causing good . So moral hazard and bankruptcy israel. You can see it. For one thing todd sawicki was a scholar at george mason, and i disagreed about the bankruptcy reform. He was for it. He had sexual see the bankruptcy rate dropped and he was right and i was wrong. I think we can do for i think we can infer from that there were people didnt need to declare bankruptcy were. At the same time most people could benefit, percentages, many more people dont use it when they could and do use it when they shouldnt. In general, we focus a lot on abuse. We focus a lot on moral hazard because it really takes off and correctly, Bernie Madoff we should really angry at them. He did something really terrible. By the optimal level of abuse is not zero. You tend to think, you talk to banks, they dont really say this but it is widely known in the Banking Industry they just offered some level of embezzlement because the optimal amount of investment reduction is not 100 but getting that last 10 is so much more expensive than getting first 90 , at some point you can send all of the resources, like your immune system. So do i think there is moral hazard in a financial crisis . Yes, i do. Dont think thats why . No. The desire and the belief believe this injured risk out of the system theres nowhere as dangerous as states. So i start as an economic journalist in 2003 2003 i was reported something called the great moderation. Whole careers were i was talking to ken rogoff in 2008 and he said, whole careers have been built on the great moderation. The idea of the great moderation was this regulation had regulars had gotten so good and so far far other jobs will never would have another financial crisis began, that it just wasnt possible to have any the culture like the United States or the eu to have a financial crisis the way we did in 1930. You really saw this reflected in a whole lot of things. Bankers, for example, you would talk to them about debt and mortgage bonds and so forth and they would say things like yes but for this to be a problem to date a sustained nationwide decline in house prices and weve not had one of those since the Great Depression. With the implication that, of course, since the great the Great Depression was impossible, i tend to think of the financial crisis mostly, not entirely but mostly as a sort of everyone getting the same that signal from the market. The central banker saw what they were doing and the other regulators of the Financial System were easing things off in various ways. What this does nothing happened. The economy grew in inflation was level and everything looked great. Bankers were loosening credit restrictions. What they saw was the vaults were going down. It wasnt dangerous to make a subprime loan for about 10 years. Every are the instant a little wider and heavier they saw their default being fine. We now know because house prices just kept rising, anyone who got into trouble could simply sell the house rather than getting into trouble. Homeowners saw it everyone they knew had gotten rich owning a house. It was the best deal ever. You could buy a house, put in a pool, Granite Countertops and you could also retire on that. Savings as consumption of every thought they found a sure thing. When you think you found youve got into a place where you are safe youre in for a double whammy. First of all it probably means that you have reduced the number of bad things that happened but increased the shock when they do. It also means youre completely unprepared which is exactly where we were spinning making gives the account it was more the suspicion that we were not going to fail that led to the financial crisis. I remember reading a column he wrote called the inequality that mattered, sort of a lot of bankers were kind of banking on the fact that Something Like they cant let us all go out of business, so you bet together on an unlikely, against an unlikely but catastrophic event. Am i interpreting that correct . Do you buy in your idea that it was sort of this mass idea that we were safe that led to that or wasnt moral hazard and the idea that they wont let the banks failed that led to that . I think it both as factors but its not that they spoke up in 2005 and said, im going to take this very risky gamble and if and when it goes bad someone else will pay. Its the fact someone else is going to pay that meant the cognitive pressures that wouldve otherwise wised up banks or made them think more critically were never there in the first place. So theyre not cynically playing moral hazard. The cognitive framing is itself shaped by the existence of moral hazard, and in this sense the two explanations are fully complementary. What i wanted to ask make it is today in u. S. As a result of this financial crisis, we have this group of people the longterm unemployed they made mistakes. It seems they are still keeping the reservation wages too high. They are much less mobile than American Workers were in the 1980s. Somehow they as a group of people have not failed found the key to success. What is it they are missing . How is it that they fit into the store . Was the variable that makes them different from how it is you ended up with the job for the economist in doing multiple other wonderful things . Part of it is systemic. I was unemployed for two years between 20012003, or i had an imminent jobs but nothing that looked like a permanent fulltime employment opportunity. 2001 was bad was not as bad as 2008. What we are seeing now it looks to me is if you lost her job after 2012 youre basically back in the labor market of 2007. Its the people lost their jobs between 20082013 who are basically still stuck to the did manage to get out quickly. Your resume pages after about six months and then youre in real trouble. Even back in 2001 what i observed was that your two groups of people. This is a bit of a simple vacation as everything is, but you at people who kind of freaked out and did a lot of different things. They left the house they volunteered whatever it was. I knew one guy who ended up working for his uncles pizzeria. When last heard was opening multiple franchises around, sometime in 2005. It wasnt what he thought he was doing but it turned out the kind of liked making pizza. So it was the people who were willing to do anything, and this is often not what you hear. People tell me i can take a job at walmart, it would look bad on a resume. But also you were hearing stories of people who are in starbucks and some guys says you are good at selling them come work for me. Everything you do something you are opening up a possibility. Of something that will turn into something better. Its never coming into your better. I guess it did my case but i was doing something that connected with the outside world. Part of it is moving around. Part of it is i like and unemployment to a darkroom but it shut you income you shut the door and now you cant see anything. Its dark and scary and instinct is to sit there. And to wait for things to be back to normal but youre not going to find the answer to assure moving and stomach and the people. Its terrible and this book does not in anyway take a decision that philly is great we will all eventually. It doesnt feel good. When youre unemployed every time you go out and look for work youre basically going out and saying hey, want to reject me . Most people said yes, i do. So the people who just kept trying anything, whatever it was. My favorite store, one of my favorite stories in the book is Harland Sanders was a serial failure. This guy he kept losing jobs. His wife left him because she was so sick of it. She came back but then they got divorced late. Finally, in his 40s he kind of gets it together, and then he has a little cafe on one of the main highways in kentucky. He what was in the duncan hines guide. Then this could kentucky [inaudible] he loses his business. He picks up take the pressure program goes doortodoor to restaurant Gulf Coast Convention he says let me show you how to make the best fried chicken. He asked like a thousand people and want one of them took him up on it and the rest is history. Is everyone going to grow to be Colonel Sanders . Obviously not. But how do you have the best shot . Its moving. Policy wise we made mistakes on that. We now are looking at north carolinas Unemployment Benefits and i think that we do have evidence that the we willing been on deployment benefits causes people because it is the worst feeling not to be moral hazard in the sense of im just going to enjoy living on Unemployment Benefits. Theres some of that. I know people who have done it. Most of it is when i look for java i feel anxious and terrified and again stand. Ill do that later. And when you have money coming in, later is a lot later. The problem is the resumes over time for scoring big we couldve done a lot better on the policy front. We couldve looked for ways to keep people connected to the labor force one way or another. Not for ever something that wouldve kept people the best place to look for a job is always from a job. Instead we let people get stuck in this bad equilibrium and i dont know how to get them out because of this point on the policy level i have some suggestions. I talk about them in the book. But, you know, we really need to take that incredibly seriously because the last time this happened we were fixed it was world war ii and the dont think thats a good plan. We really need to be thinking of this personally, the main thing to do is just keep moving into something. It doesnt matter what it is. Take a job at walmart, do something that will get you back connected to the labor force and work from there instead of waiting for something to happen. On a policy level they should be our Number One National priority right now. It is a phenomenally stupid waste of human capital. Unemployment is about the worst thing that can happen to you in a modern society but its also for the economy were already losing labor force participation. We cannot afford of these people out of work. I want everybody to come up with a question in a minute but my last question for you know so everybody contemplated all your questions you talk about blame in the book and sometimes how its almost instinctual for us to bring people. I think that in my mind that ties in with kind of the american mindset that made us so upset about the bailouts and about other things is you did something wrong. You ought to suffer. Sometimes i wonder in a lot of my ideological compatriots who are conservatives if thats part of the opposition to a generous safety net, is that they think as herman cain said, if youre not rich, thats nobodys fault but your own, blame yourself. Is that a natural thing . Is that an american thing . Is that problematic . Do we need to have some sort of playing in a program . None of us should feel better. If failure didnt feel bad we would stop doing whatever it was. It should feel bad any very specific way. So an example of really bad failure, feeling bad, is is prison where are you going to screw up you do something wrong, 20 or 100 times and then suddenly we lock you in for 25 years. Thats not a good way. Youve destroyed a human life which is series even if theyve done something wrong. Most people in prison have done something wrong. I spent a week in julys probation system which would be enough as a journalist. Yes. It was interesting to the locked me in a holding cell for like a minute, and i thought i would do anything, i would be on my knees in front of the judge saying how do i never go back there . It was amazing to me anyone ever goes through the prison system choice. Its a really bad way of handling it. I think americans our answer to the crime wave is to make sense is longer and longer and it didnt work. We shouldve been making to more consistent. This should happen every single time and they should be short and were easy to recover from. So i think of that with bankruptcy also. Bankruptcy hurts and should. Is a social stigma on and it should be. Most people in bankruptcy did make mistakes. They just dont end up there because a financial whirlwind came by. Most of them borrowed more money than they could recently afford to pay or they borrowed money that is anything or went wrong theyre unlikely to repay. On the other hand, many people in this room, if youre out of work for your would not be able to pay their debt. Because thats generally true of most americans. Im not picking on you guys particularly. Most people live that way. These are the people who got caught living that way. So generally its not that there is a moral hazard and we dont need to punish people, its that we focus too much on it. The problem with it is, first of all we tend to do this thing blame storming. You sit down and we all figure out who did this and how we can get them. That tends to make you overlook the systemic causes. Okay, so now we find the guy who is bad and he feels really bad and we still have exactly the same systemic problem the same incentives are there. So generally i think its not that you dont want there to be consequences. Unemployment shouldnt feel good even if he didnt do anything to deserve it because otherwise he wont exit quickly enough. What you want to do is figure out operate making the pain the right kind of pain or not. Probably didnt a do a great job with it in a financial crisis. Spent all those guys are still rich see, the bank ceos speed is i dont think thats it. Like if you what it personal if i lost a job and the person in tanzania as be why i was sad and i was like, im going to move to an apartment ended the sake neighborhood. You have hot and cold Running Water and youre not going to be hungry at all and the roof is going to keep rain off. Doesnt work that way. You dont think im better off than a farm in tanzania. I guess i dont mind losing my job. They feel the same way. Which people are special in that way. Everyone hates losing status everyone hates losing 95 of what they have which is what happened to the people. So i dont know how much dick fuld acted like an idiot. Its hard to read the books awaited and i think act like a. He acted like an idiot and with many, many, many people in the world acted like idiots. Dont want to single out the dick fuld . If it were not for him act like an idiot everything wouldve been fun, i can think the wouldve been some other idiot who wouldve done something similar. Tyler, do you have any whats the private and social wedge . Most mutations are bad for the individual animal or human being, but they may be good for the species as a whole because it allows it to evolve thanks to develop and so on. So fairly well in your account on net overall are you saying that is something that is good for society are good for america but actually bad for people so we need to subsidize them take more chances so they can fail well for our mutual benefit, which everyone feels better and better will be good for most people, or are you saying that failing well is something which if we did a bit more up at the margin would be good for us, to . We get to it because we are weak and crazy and we hate failing and we need to be nudged in that direction, but more fitting will would be good for individuals and the good for the broader policy . Note if youre saying the latter, this has big implications for children in education. Blending in with interval, the shriveled into a voucher which is quite striking i think, and how one would do with a child is a very good cutting edge question for these margins fall. There you just care about the child. You dont care about the social benefits of what the child might learn. In general what your views are on the wedge between private and social benefits what gets subsidize, what are the behavioral introductions, and do we as purely selfish individuals actually want to take the weird bill that will mean we take more chances and fail better to have all that pain, yes or no she would take more weird bills . Yes, as individual. I see this as a weird individual. I may not be entirely objective. The downside in america is just not that far down. As i say the worst thing that happens to most people lose their jobs is that they end up living in a small house in a less nice part of their but it is not that they end up starving to death or in the time of some disease that we know how to cure but didnt bother to. And given that on the margin we should be willing to take more risks than we are. We tend to think about this as if were still out on the belt somewhere, and if we screw up we could get eaten by a saber tooth tiger. Actually dont know saber tooth tigers lived on the belt. But for individuals it is also better to take more weird bills. For individuals, that kind of mediocrity is not such a happy place to be because we spent it was time defend your place in it. I think of this without an education. I did have a chapter on kids in the book but something dont have kids i didnt want to be in a position of the purse was like, hey, ive got a flood of great parenting tip for all you folks who are actually doing it. So i look at the way the Education System works, and this is a good example, right . I think its reasonable to say that 60 years ago College Education in america with the way in which people were acquired skills and getting faulted in the workforce and actually sort of bettering both their productivity and the changes. I think now which are looking at also it wasnt so much high pressure. You could afford to work your way through college. The cause of it was pretty minimal, the outside was pretty good. Now college is mostly about as far as i can tell about loss aversion to its about people in the uppermiddleclass youre desperate to make sure their kids cant possibly fall out of the uppermiddleclass. Everyone wants to send their kids to elite schools that have the same number of seats as they did when i was born in 1973, more or less. When i was in school in 1990 it was about a third of the class got let in, and now its under 10 and thats the second highest admit rate in the ivy league. Everyone hates it. All the parents and whos been all the being terrified that you will end up homeless and the reaction to that theres been allall of the time shepherding their children to 97 activities designed to ensure that theyre both a champion concert violinist and an awardwinning saga but it is was of course being a straight a student so it will look good on their college application. They hate and they feel like they cant stop. We are now in this zerosum competition where were doing more and more things no one wants to do merely to ensure that we stay in this narrowband. My aspiration is that my kids lose lots of chess matches. Questions. Starting in the back wait for the microphone. Thanks, much obliged for the form. I was one among yes. To get your forum the other day. Did you survey the gulf was one other point you made the other day the gulf and perspective between saving a business, starting a business, running a business in the training versus europe . Thanks. Its a big difference. Whats interesting is we are not the best at making it easy to start a business, there are lots of countries and we should be. We should make it a lot easy to start a business, just in terms of paperwork and find out if you are legal. One way in which we are getting worse at this and a lot of the reason i wrote the book is i think america is getting worse in a lot of ways is that businessmen now exist in this state of radical uncertainty. Where i talk to a a guy who start a business and eventually got out of it because he said he couldnt tell whether he was in compliance. This guy is a pretty liberal so he wasnt just railing against the government, he was against regulations but he said he didnt know whether the Payroll Company would give him 100 charge of something and he would have no way the disputed. He couldnt get him he couldnt tell whether he was in compliance with the payroll law in this state which is a pretty liberal have a record state. I interviewed a danish author and he said no they come in and tell you if it doesnt look safe and then you try to fix it because of course im in there and i dont want to be a safe. It was a totally different attitude. Werent we are good at this kendall their grisly ones talking a swiss banker about why they didnt start their own banks. This is something ive heard in other ways from other people and they were like you know here it would be like if you knew an 18 yearold who was getting married, people would say i hope that works out for you but thats not a good idea. I would you leave a good job at a Solid Company to go do that . He was still trying to pay off the debt in 2012. Athena that, as if it hadnt gone anywhere and he was on the verge of losing his house because of it. That kind of just paying people to bad decisions. It wasnt a bad decision in mississippi was the photographer and photography changed. It got more competitive after Digital Production came in and there is cost of production went down. Hes not expanding you cant do anything because hes got the debt sitting there. His creditors will let in. [inaudible] businessman who have failed at the companies . Talking to an entrepreneur who said he actually only likes to hire people a couple times because when something goes wrong to be retried that. That does not work. We wish we had to have this other thing. Also in kingsville generally because theyve been through it, they dont freak out about around like chickens with their heads cut off. Ive seen this. The tear through a sea can with it. More questions. For a period i want to go back to the Higher Education issue in particular because it seems that all the political stakeholders involved covers State Government and the federal government, think tanks, philanthropist has bought into costed ideas and Economic Growth will go a. How do you convince all those people that its about skills . Thats really difficult. Theres a great book called seemed like a state that tucks away states have to make things legible in a systematic way we can do it. David thinks we can see pretty clearly. Degrees easy to observe. In fact that is part of the reason we came into this mindless credential is done. A degree assenting h. R. Can specify. No offense to the college professor. But he teaches real skills. Similarly if you are a politician you can say i am proposing that reaches million more College Graduates a year. This sounds right. You can describe how to get to that. Its harder than it sounds because it turns out the marginal people tend to be much my likely to flunk out that the people who are already there. Its something you can lead to refinancing and so forth. Its really hard to say what to make americans to do 7 better at handling failure and 12 better at doing basic math. You can kind of describe it but even pushing on that it is slow going. People tend to describe the credential and so the thing that credentials are present. Your observations academia, tyler . I dont think we need some i should tell people about the model. It is collapsing from the labor market site. For your College Graduates earn higher salaries in the year 2000 daring today. We have somewhat of a night called the public and student debt, which is now more or less over. Which is an absolute terms going down. Student debt at previous levels being a thing of the past. Politicians can say what they want. A lot of things who seek sluggish enrollment moc two sets of responses. People who turn on the treadmill harder and harder to get into the top places, which would be a nightmare and people who drop out altogether and stop trying which would be a nightmare of a different kind. We make it the worst of those two worlds, but i dont think well have the problem of more and more throughput at the navy and the envy those days. More questions. Yes gentlemen at the orange pocket square. Celebration of denmarks speedskating the turin olympics. Michael promis aei and the washtington examiner. I am a colleague on both accounts. They can mention one of the reasons bankruptcy work since there is a stigma to it. It seems to me that much of American Life would give people Second Chances. We have to keep that balance. You could argue in the 1970s we reduce the stigma of divorce and lots of people got divorced, which turned out to be sort of bad. Sr colleague pointed out well credentialed affluent people start getting divorced and people in bouma and fishtown are still getting divorced or never getting married. How do we maintain that balance if there is a moral component to it . I dont think you address that a lot in your book in the serious about tylers idea. Theres some way to quantify that. I think this is usually important. I do talk in the book about russia, where there is a lot of thinking in the early 90s and people try to reconstruct the former soviet union that markets for the absence of government. Versus National Inheritance we had. It turned out that was wildly wrong. Theres an enormous amount of the software of a society. The hardware is the capital and then you can take a the operating system as the institution in the country. Hope Cultural Capital that makes it worth construct. Its Little Things like stephen in line. It really matters a lot for how you manage because of people people moving somewhere. Its also the sense that i spend money on the temperature of random strangers ive never met and they send me stuff back. The youre talking about ebay and amazon . But its phenomenal how much of that work suntrust. A lot more fraud could be happening and it just not. Countries that dont have the cultural opportunity if you dont trust strangers is actually really hard to do what it takes a lot of cultural work to make that happen. Similarly i agree we had a lot of Cultural Capital around marriage and family and i would actually trained this to the 50s because thats what it shows up in the movies. Theres the chesterton described the problem of testers since fans. I comes to france in the middle fit the middleoftheroad and says this is done. Lets tear it down. The last person who should be allowed to tear it down. The feds didnt just grow there. Somebody put it there for a reason. You can say that recent no longer applies. We can get rid of deities in the batter. If you think we should just destroy defend, then you are a you are a dangerous lunatic and should not be listened to. We did that with a lot of stuff around energy families in the fifth to use. Subleasing their ancestors for more on the mood to these ideas about marriage and children and so forth. When you see is true that marriage is great, its never been better. Kathryn eaton also super relationships. Were you meet this person can be of huge numbers of interesting and, you vacation together and so forth, but the bottom we need to figure out how to put that back together because memory is absolutely right. The values the elites espouse is not the values they actually is. Devised a part as the coop will it really make in 50s america and they were. Theres better places to raise kids in their better for the people in them. Its better to have someone else who has your back. Those things are important. Have you to cultural change . One of 300 Million People at a time. I may be more pessimistic about stigma, so i think a lot of human beings is naturally being fairly cranky and prejudice in a lot of ways. Our choice curveball is how much stigma can be applied . Im pretty happy for stigma as able to be weakened because it means a lot more tolerance for groups, which otherwise suffer under state. It means you the stigma under a lot of bad