The tension between lack of trust in big business and argues that corporations despite americans are essential in balance, productive and Progressive Society by spurring innovation, rewarding talent and hard work and creating on which tech come to dependent. Tyler cowen with finance and tech industry, both critics and walter frick, beauty editor of Harvard Business abuses tyler cowen mounts a compelling defense of the tech industry. There critics and defenders will benefit from reading this book. Tyler cowen is joined in conversation by edward luce, National Editor for New York Times and author of the retreat of western liberalism. Join me in welcoming tyler cowen and edward loose. Thank you very much. And not a neutral, impersonal we have been friends for many years. I can confidently say tyler is not just an example of disagreeing without being disagreeable but disagreeing without being disagreeable and being far more knowledgeable at the end of it. We do agree on something that i will get into productivity but let me emphasize tylers fraternity. We had a great stagnation. And averages a remarkable book, we had the completion of this. Highspeed this weekend. But anyway, that is another purpose. One thing i will say, tyler is unusual, most economists wait for the data, they wait for data. When the data comes in they torture it sufficiently until it confesses whatever case that is. Tyler cowen has as many books on history as he does on economics. I know a lot of economists, for the intuitive tyler this evening. Lets start by imagining a town called 20thcenturyville in pennsylvania or ohio. There main street has been hollowed out. They got used to shopping at walmart, but walmart is pretty thinly spread because everybody is starting to shelve analyst. They have friends who work in walmart. Not particularly happy campers, they got people they know who drive 50 miles to the Amazon Fulfillment Center, always tired, they have permission to take bathroom breaks. Why should the people of the town of 20thcenturyville, pennsylvania love big business . I have some data actually. In West Virginia it is about the same as in sweden. Middle america has completely devastated but that is not quite true for the entirety of it but the most distressed areas are those lacking big business. A lot of those regions will never come back. I dont think there is an answer. West germany never called the germany problem migration deals with. Im for better policies to encourage migration. I think people a can they want to move to areas where there is more business and that is the case for big business for them. What would you say to those covering stories . They might have cost a bit more, the consumer chose walmart and amazon and that is the result of preferences but is there another measure of what makes a community . Keep in mind most societies face choices. They can do things and bear transition costs or stay put. We see many countries that decide to stay put or you can bear the transition costs on lower prices for all consumers and as time passes you have a better, healthier, richer, more politically secure factory reducing the size of the surplus and transition costs. The china shop they have reason studies. We overstated how big that is. Some of it is automation and some is regional rebalancing. California or new york, capital flows to those places. In your book you make a very strong case that even though there is thank you. Okay. You make a strong maybe, i dont know. If you keep yours down when mine is up. It is working now. You make a strong case that although there is more market concentration you dont see signs of monopolistic behavior in terms of price gouging and so forth by these companies but let me mention a few statistics that might not be exactly precise but roughly. In the Home Supplies market you have office depot, staples, 80 of the market and confectionery, you have hershey, in car rentals, you think you bought brands but all i joined by her enterprise washing machines, you have 50 brands but they are owned by maytag. Airlines, only four of them. The market, sector by sector, you mention strongly in your book healthcare, Health Insurance but the market. The American Economy is getting more concentrated. Nike, 86 . You are seeing real concentrations of power. Why isnt that a bad thing . If you look at prices or quantities purchased by consumers what you find is more competition, not less. Bigger national brands, amazon and walmart are further examples, large brands are lowering prices so it is not like the old monopolies. What are these sectors where prices have been out of control, basically healthcare and Higher Education each of which is fairly business impoverished. People allow too many hospital mergers, the things you buy like confectionerys. I buy chocolate chocolate, the prices over time have done some phenomenally well. If you look at airlines for each individual market there are just as many carriers as before. The number of airlines traveled is going up. We could do better by allowing Foreign Airlines in us markets. The government restriction on trade i would gladly remove. Foreignborn americans are able to fly each year. Healthcare aside i dont think the story of rising monopolies, the numbers bear that out. We will get to that in a moment but lets get to the heart of the book. When i looked at your numbers about trust in business in america i was delighted to see it is lower than trust in media. It is 2 lower. 8 of Americans Trust big business and 10 first media because media is owned by big business. This is only exceeded by congress i believe. How does that happen . Talk us through what it is about big business especially in the abstract that they hate about it and why. Distrust of big business comes in ways. We are at a time when people trust many institutions less, not just business. A kind of collateral casualty but also real events, business has had some role in this, the financial crisis, income inequality. The role of business or the responsibility is often overstated but you cannot say it has been 0. Everything is talked about, every joke made at someones expense and it is hard for largescale institutions to look good. The institution with the highest trust rating is the military and it is striking to me we are at a time the military is not in the news that much, most people dont have contacts with it. And consequently easy to trust. It has gone down a lot. Business is mistrusted is there another element to that . Some of it is this. You rely on business to do more things precisely because it is highly effective. In contemporary culture, the more you talk about something the easier it is to acquire a negative tag and often we evaluate businesses by the standards of people, that an economy is an impersonal order. They might sell you wonderful books and pretend to be your friend in advertisements, with you or your family but you need to evaluate them on impersonal terms. How good a job are they doing improving the economy and society and not do they act like a friend, why do they keep me on helpline 23 minutes when it took 5 minutes to fix that problem. Resentment toward business grows. You mentioned airlines being more monopolistic than you might suppose. Individual roots. Im sure everybody here can share the united horror stories. The feeling is this is not competition in terms of quality of service, we as individuals because of technology and price Discovery Drive costs lower. That is what we are after but in terms of competition that is not the competitive market and are you blaming government for that . I would say what frustrates us about airlines is they do not have real markets. My colleague wrote about this at great length. Airlines created the safest form of transportation ever devised. We take that for granted. Flying used to be relatively dangerous. For a long time it has been safer than driving. It is amazing what we had and dont appreciate anymore. Flying has been relatively safe. I dont feel they are more expensive. There are fewer people flying. Market trains are more useful, there are more connections. We put fresno to bakersfield highspeed rail in california but other than the trains in this country that are unlikely to be very important, a burden removed from the system. The american airport system is one of the greatest Transportation Networks ever devised and it actually works surprisingly well. Our corporations people, my friend . Mitt romney said that. Corporations arent people, dont personalize them. The companies try to trick you, we are your friends, buy from us, you are frequentflier, frequent buyer, frequent stay or, they are tempted collusion. The goal is to make you feel loyal to them but they are not loyal to you. It is a trick. So be a little coldblooded and ruthless and asked the bottom line question. Different areas, how good a job, you will find some sectors but the record is pretty abysmal. Higher education has been a train wreck but for most of the goods and services we consume the record of companies is quite excellent. What is it about higher why is a trade wreck . Where markets go wrong, big businesses acting badly wise it acting badly . What is it about that market that has gone wrong that has been going wrong . We dont understand why for profit higher it is so fraudulent. Them is easily available government loans and they captured that revenue but that is not all that is. Private forprofit certification works well. If you are learning a concrete trade like how to be a hairdresser, that is worth trying for decades but the attempt to use for profit higher ed to give people supposedly normal 4year degrees, it hasnt caught on it his been worse than mediocre. I would stress forprofit education is a broad concept and Higher Education is higher than high, it worked wonderfully. Your ipad is for profit higher ed, apple, there are plenty of services you pay for that work perfectly well. There is a reason we dont understand a 2 or 4 year degree that seems to go back. You mentioned the complacent task and in many cases counterintuitive, Silicon Valley created a culture of conformity. If you go to any big tech names, that the core looks the same, and it is individualistic, uniform, the spread to many places. The impact of the technology in their lives. The millennial generation, risk conformity. Is Silicon Valley decreasing entrepreneurialism in terms of the net effect in American Society . The net effect is positive. It is the most rapidly developing part of the economy. It is easier to do that is mediocre or destructive ways. It will not make you more innovative. That is a significant spillover. And connecting people with common interests, people doing Research Together or people getting ideas to start companies. All the technologies, rough and bumpy patches, typically we learn how to use them better. That doesnt happen automatically. The press and radio had their patches early on to some extent and still do. Not all radio is wonderful but the key is to be focused, intellectual battles have to be rethought all the time, dont blame technologies that value the radios. To take for granted your favorite ideas will reign supreme. When a new step of Technology Comes along youve got to make your case all over again. People just like that. The rate of Small Business creations load quite markedly and the number of people, roughly speaking, has gone down from 107 americans to fewer than one in 10. It doesnt explain what explains it according to you. Big business starts as Small Business. There is entrepreneurialism and Small Business creation that succeed and the pipeline seems to be shifting up. Does this have to do with market concentration . Here is the most likely answer. The biggest decline in Small Business in some of the areas of retail, you are much more likely to buy your retail from a brand and brands are much longer linked. Companies like nordstrom have a very good data, as the decades pass they can adjust relatively effectively compared to the 1980s. More than a stamina dark they are old and antiquated and some Dynamic New Company comes along. Now the establishment uses better data, just keeping up with the markets, and true innovativeness. The biggest retail story is amazon and that is completely new and remarkable. I am not worried retail hasnt progressed at all. Amazon, correct me if im wrong, accounts for the book sales. A lot of those sales are sales that were occurring in here. I carry my ipad, more competitive about that. It touched the trillion dollar valuation. It is a massive with the washington post, it is a powerful company. Facebook and social media equally powerful, i guess twitter. But apple of course. These are big enough and they are not competing with each other. They are buying up Smaller Companies and absorbing whatever Technology Data related but innovation tends to stop. They are boa constrictors bulging with acquisitions. Theres a lot that i would challenge. My question this is no abuse of power going on. Talk about this company, look at google, ten other Search Engines you can use, duck duck go doesnt even collect data on you. It is fine. It is there now. I prefer google. I use google. In china there is no google. Google has not stopped innovating. The notion of driverless cars. Google is a leading player in that through gmail, which is widely used mail service, you get it for free. Google is a major innovator there. Youtube was a mess before google took it over and upgraded it. And they get rid of as many copyright violations, it is arguably the greatest Educational Institution in the world, what wikipedia meant to be. Google hasnt stopped innovating at all. You are not in favor of antitrust action. Not against google. What about facebook . There are many social network sites. Knocking on your neighbors door believe it or not. There is for night which out of nowhere captured the attention of tens of millions, you can write a blog. And an eye on twitter, and social networking. There is email, a list of contacts in your cell phone. Different ways of social networking, we have seen peak facebook. I wouldnt slip them up. Is a good for amazon, good for america . Conditionally now but amazon to date has been good for america, absolutely. I spend so much money on amazon and now whole foods it is embarrassing. I often by 3 books a day and i love browsing in bookstores, sitting in fairfax. Keep in mind the number of independent bookstores have been going up. It used to be borders, barnes noble, borders is gone, barnes noble dwindling, independent bookstores making a comeback. I am happy about that. They are places to network, independent bookstores, so i understand, we are in an independent bookstore. Im happy with amazon. The state of virginia, maryland, spending taxpayers money to get amazon to live here. A good way of spending taxpayer money. I dont think so. Amazon would have gone where it had gone anyway. In the broader calculus, small, relative to the benefits of the company. It is crony capitalism, i used to call it crystal city. What is in a name . I want to come to National Landing and you need to upgrade the subway stops. That is perfectly justified and you should do that anyway. Just to give them forms of cash to come by i wouldnt do it. Washington dc is a whollyowned subsidiary of big business. You push back very strongly. There are only 3 billion a year spent on lobbying so big business, Procter Gamble spend double that on its advertising alone. And big business thinks it is worth trying to influence washington or is that a measure of how cheaply washington is bought . A bit of both. Most of the federal budget voters approve of. Keep that in mind. Some areas dominated by business, a lot of defense procurement, sometimes dominated by business, numerous cases you could. 2, most of the money spent is spent as voters desire, when you look at donald trump, what he is doing on trade i very much disapprove, most american businesses disapproval. What he is doing in terms of predictable in the rule of law most businesses are against. What he is doing or trying to do on immigration most businesses are against. So the idea businesses are pulling all the strings, trying to achieve to his base, trump tweets it often against ceos demonizing them, doesnt approve of that either. It is a mixed picture. And some areas, most of it voters. The biggest single thing trump has done is the tax cut. Businesses spent a lot of money on a taxcut. He hasnt done anything on other things. He made a lot of noise but one area he got something through, concrete, kinetic, was massively beneficial to business and they spend a lot of money. We cannot business tax rate to 21 . The oecd average, we brought hours in the range of that, Obama Administration wanted to cut this tax, 28 . 21 is probably too low, Something Like 24 . The major thing business did pushed in a direction democrats wanted to move in is mostly the right direction. You can blame business for the overshoot to 21 . Trumps advises being lobbied by businesses, 21 is too low and he wanted to be really low and trump feeling stubbornly it had to be very very low. You mention disapprovingly what Milton Friedman wrote in 1970 where he said they maximize shareholder value. The argument you make which i agree with is profit target like happiness. If you aim for that and that only you are going to miss. If you have other pursuits you are likely to be happier and be profitable with a longterm company is a byproduct. Have we reached a point that capitalism must be reformed . It depends what you mean by reformed. The competition across a lot of models, john mackey, socially Conscious Capitalism and other values and missions but i dont think there is any sin