At Students for Liberty’s Freer Future Fest in Nashville, I spoke with Dr. Bryan Caplan about freedom and innovation. Caplan is a professor of economics at George Mason University, a scholar at Cato Institute, and the author of four books (plus several in progress), most recently Open Borders: The Science and Ethics of Immigration. I’ve edited the transcript for brevity and clarity. You can listen to the original conversation on the “Innovation Celebration” podcast.

Angelica Walker-Werth: Thank you so much for taking the time to speak with me today.

Bryan Caplan: It’s a pleasure to be here.

Walker-Werth: In Open Borders, you mention that having open borders and more immigration would greatly improve the economy in terms of GDP. Do you think that increased immigration would have an effect on innovation? And is that part of what’s driving that growth?

Caplan: Absolutely. The main thing to understand about innovation is that it’s very closely connected to population. The great economist Julian Simon, as well as Michael Kremer at MIT, have surveyed human history, and here’s the amazing thing: Almost all new ideas come from populous, connected areas of the world. In the pre-Columbian era, almost all new ideas came from Eurasia, which, if you look at a map, was one of the most populated, connected areas of the world. After that, idea creation started spreading. More people means more minds, which means more possibility for creativity. More people also means more customers. Combining the greater supply of ideas from a larger population with the greater demand of the larger customer base is an essential part of the recipe for innovation.

The key thing about immigration is that it rescues people from places where they would never have contributed what their minds are capable of, because those places are outside the main loop of the modern economy. Immigration brings people from the periphery to the center, where they can actually contribute.

I like to talk about the old show Gilligan’s Island, which is not a great show, but it makes a great economic point. There are only seven people, one of whom is the professor, and he has a brilliant mind. But with only seven customers (counting himself), if the professor comes up with a one-penny-per-person idea, that’s not worth even a couple minutes of his time. If the professor were back on the mainland with 7.5 billion customers, on the other hand, a one-penny-per-person idea is a $75 million idea. And the benefits of that idea are enjoyed by every one of those customers.

The last key thing underlying this argument is that ideas have a low marginal cost. Thomas Jefferson made this point: When I light someone else’s candle, mine does not go out. The candle is a metaphor for ideas. It’s similar to an ultra-popular YouTube video with billions of views: Sharing the ideas with billions does not cost the creator any more than sharing them with a single person. And that is why humanity has so much to gain by moving innovators from places where they would be relatively unproductive to places where their ideas can blossom and be enjoyed by more people, including people who don’t leave their home country, because ideas go from the center back to the periphery.

Walker-Werth: You’re working on a book about housing deregulation and how housing laws and regulations, particularly those against buildings larger than single-family homes, cause problems. How do you think eliminating those regulations could increase housing innovation?

Caplan: We have lots of fantastic ideas for how to deliver high-quality cheap housing, but implementing them is all but illegal right now. I’m a big enemy of hyperbole; I do not like to say anything that is not literally true. But to say that it’s almost impossible to build a skyscraper is literally true. There was a period of about fifteen years in San Francisco where zero new skyscrapers were built. Today is considered a golden age—they’re building about one per year. But because of a new referendum, it may go back to zero per year.

We have the technology for building tall buildings; we have the technology for building multifamily homes. It’s not that complex or difficult to put a lot of housing on a small amount of land. We see fantastic opportunities—they’re just illegal. It’s common to have, for example, one-acre zoning: only one home per one-acre lot.

There are two kinds of innovation: There’s the really exciting kind where no one knows what could happen, and if we unleash these minds, they could discover great things. But we also have innovations, such as those possible in housing, that are proven, demonstrable, known. And, as the old saying goes, a bird in the hand is worth two in the bush. Still, government will not allow them.

Nuclear power is another example of this. We don’t need to speculate about green energy sources—we have something that is literally “the bomb”—nuclear power—and yet, it is extremely hard to build nuclear power plants due to regulations.

Walker-Werth: So, the solution is both allowing people to try new things and allowing people to do the things we already know work.

Caplan: That’s the obvious place to start. You don’t even have to speculate or say, who knows, maybe something great could happen. We know something great will happen the day you get your foot off the backs of the people who want to do it.

Walker-Werth: You’ve written about protectionism and its competing effects (the income effect and the substitution effect).1 Given these interacting factors, what would you say is the effect of protectionist trade policies, such as tariffs, on innovation?

Caplan: The honest answer is that I’m not totally sure. On balance, I think it’s very unlikely that protectionism is anything other than very bad for innovation. What I wrote was in response to a debate I saw on free trade versus protectionism in the United Kingdom. Specifically, I was responding to Terence Kealey, who said, in effect, if you keep foreign producers out of the country, there’s a greater gain for domestic producers in figuring out how to improve. That’s the income effect. That’s true, but it also means that you are now counting on these few people who happen to be in your country to deliver the goods, when people all over the world may already be better producers of that good and probably will continue to improve. So that argument really does not make a great deal of sense.

When you cut off your country from the rest of the world, you are counting on your country to come up with all the good ideas. It is not a reasonable bet that the good ideas now primarily will happen in your tiny country. Every now and then you may get lucky—it is shocking how much great classical music came from a small area of the German-speaking world. But that was not protectionism; that was global competition at work. A small area of the German-speaking world won, but there wasn’t anyone who said, “You guys are going to be protected. We’ll just pick the best German; the best German wins.” That wasn’t the system; it just turned out that all these incredible geniuses—Bach, Mozart, Beethoven, and Brahms—happened to be in the same region. They played off each other, but they could have come from anywhere.

Walker-Werth: You mentioned a couple of years ago that, as an economics professor at George Mason, you’re pretty free to speak your mind. Is that still the case? And what role does free speech, particularly in universities, play in innovation?

Caplan: The main area of danger in universities is hiring. This is the choke point. If the next generation of creative and outspoken people is not hired, I’ll still keep my job (and I will be there till I drop dead)—but there won’t be any new young people who are outspoken like me. At George Mason, there are brainwashing sessions where some try to not-so-gently nudge the university into never hiring anyone like me again.

A couple years ago, UC Berkeley switched to a policy requiring that applications for certain departments be vetted by the diversity and inclusion committee. The committee now ranks applicants by diversity and inclusion criteria, and departments never even see the applications of those who don’t meet the criteria. It’s not enough for applicants to proclaim that they love diversity—they have to demonstrate with qualifications, such as being an officer in an organization upholding diversity and inclusion. I am very concerned that the Berkeley model will become the standard for universities, which would mean that mine is the last generation of people who disagree with the system who can still be part of the university.

The other problematic area is humor; that’s where people jump on you. Fortunately, in the twenty-four years I’ve been teaching, I’ve never had a complaint on a student evaluation about anything I’ve said. But some of my colleagues have said something that either was a joke or was misinterpreted as a joke, and they were denounced by university administration as being evil, or worse. If you have tenure, that’s not such a big deal. But if you don’t, and your university puts out a statement saying you are evil, that is something to worry about.

This causes a lot of self-censorship, which I think is the main issue. Consider a professor with my personality. My perspective is, if they won’t cut off my finger for saying this thing, then I’m going to say it. I’m not claiming I’m a hero. If it were my finger or shut up, then I would shut up; I’m not going to lose a finger over a statement. I even tweeted, saying, in effect, “if I ever apologize for politely saying something that’s true, know that some incredible coercion was put on me, and it’s insincere.”

A lot of what’s wrong with today’s universities comes down to self-censorship by people who just don’t want trouble. Strangely, I get a lot less grief than people who are much more moderate, because when you’re a moderate, you’re part of a mainstream social circle, and their threats of social isolation and ostracism matter. By contrast, all my friends are people I can talk to honestly. I’m not worried that they’re going to get mad at me.

I am a big fan of Dale Carnegie’s classic book, How to Win Friends and Influence People. Whenever I speak or write something, I always ask myself, “Is there a more constructive way of saying this?” I don’t encourage anyone to deliberately antagonize other people. Rather, make friends everywhere you go, have a big smile on your face. Whenever people ask me, “How can libertarian arguments be more persuasive?,” my answer is always, The arguments are probably really good, better than people can actually appreciate. What you need is to improve your attitude; be super-friendly. That is almost as important as the quality of your arguments.

That said, I really love arguments. I just spoke on having children, and Tyler Cowen said, “It seems like you have more affection for your arguments than the children themselves.” I said, “You’re acting like there’s a difference; an argument is a child.” That’s how I feel about my best arguments: I love this child; he’s so good! I raised him from nothing, and now look at him!

Walker-Werth: Ha ha! How do you think a willingness to speak one’s mind leads to innovation, both in universities and in the corporate world?

Caplan: When people don’t talk, it’s bad for innovation. Of course, there are many ideas that people are afraid to say because those ideas are stupid; that’s not really a loss. The loss comes from the good ideas people are afraid to say. And it’s hard to know which idea is good until you discuss it. If I say ten things, nine might be false, but I don’t yet know which one is true. If we have a good conversation, we can probably filter out the nine wrong ideas. But if I’m afraid to speak, then we lose that tenth idea with the rest.

Walker-Werth: In The Case against Education, you argue that schools teach a lot of things that aren’t useful, which is not only wasting time and money, it’s also wasting people’s mental effort. It sounds like the modern education system is not facilitating innovation.

Caplan: Overall, I’d say that’s true. A counterexample might be that the top tech schools bring together very talented people, and they talk to each other, which leads to amazing things. Incredible things are happening at Stanford computer science (CS), for instance. But what would happen in a world where people started working years earlier? You would still congregate that amazing talent, but in apprenticeship programs at Google and the like instead of at Stanford CS.

You would then filter out a lot of the pseudo-innovation in universities, where people work on problems that are only interesting to other academics. It’s frightening to me how many brilliant, creative people go into academia and are creative in a way that is of no concern to the rest of the world, because they only work on problems that only academics care about. Academics love the rare counterexample where it seemed totally impractical and would never have a real payoff, and then it did. But they don’t like to talk about the vastly larger number of cases where the work never has a big payoff in the real world.

Further, the education system makes our entire society much more credentialist, to the point where talented people without degrees are often ignored (and, because the system doesn’t work that well, there are also a lot of incompetent people with credentials). In a system that was less credentialist and more focused on apprenticeship and working at an earlier age, I think we’d be better at finding the diamonds in the rough—people who are very good in practical terms but do not like school because they don’t want to conform. I don’t blame them; I conformed as little as possible to get a PhD. There was still an enormous amount of conformity, but I was always asking, “Do I really have to? Or can I weasel my way out of this stupid thing?” There are a lot of ways to weasel out.

It’s also worth pointing out that the academic disciplines where free speech is the worst are the ones that have the least practical value to offer the world anyway. Self-censorship within STEM is quite low. There are only a few areas, such as human genetics, where you might have to worry. The areas in which the orthodoxy is mind-numbing are the social sciences and humanities—areas in which not much happens in terms of immediately practical ideas.

Many policy ideas from the social sciences go nowhere because they’re too hard to demagogue. People who run governments are demagogues, so they’re mostly interested in ideas that come out of academia if they’re easily demagogue-able. If an idea is too sophisticated, for good or ill, it tends to just stay in academia.

Walker-Werth: It’s always easier to throw slogans at people than it is to make an argument. Going back to your thoughts on having children, you’ve written about the benefits of having more children; could you talk about some of them?

Caplan: The heart of that book derives from one of those few areas of STEM that can be hard to talk about, which is human genetics. People have debated the question of nature versus nurture for millennia. But sixty years ago, scientists finally figured out a way to answer the question by studying adoptees and twins. If you adopt a child, he’s not your blood, so any similarities between adoptive parent and child will be due to nurture. How does that compare to similarities between a child and his biological parents?

In first-world countries, especially in the long run, almost all similarity between parent and child is due to nature, not nurture. The popular helicopter style of parenting—where parents ruin their own lives, and often their children’s, on the premise that they’ll improve their children’s future by micromanaging their development—is based on an error. It is not true that you need to spend every waking second on your children’s development in order to give them a good future; it’s going to turn out about the same either way. The stuff you’re doing for your kids’ future that you don’t like and they don’t like—stop, because it doesn’t have the benefit you think.

Once you have adjusted your parenting in line with science, you might consider having more kids because it’s a much better experience. Around the time my book came out, there was an op-ed on what I call “soccer as contraception.” It was by a mom saying, essentially, “We have two children, and their soccer practices absorb our entire lives. We talked about having a third child but realized that would require a third set of soccer practices, and we can’t do that.” It is not true that you have to send your children to soccer for them to have a good life. Almost all the things that parents are doing, particularly middle- and upper-class parents, are based on misconceptions.

But it does matter what country you’re brought up in, which is another key point about open borders. Being adopted from the third world and growing up in Sweden, for instance, leads to massive gains in height, weight, skull circumference, IQ, educational performance, and so on. This truly dramatic change in a child’s upbringing makes a night-and-day difference, just as intuition would say. But the difference between growing up in a first-world country in one home fit for adoption and another is nil. This has critical implications for optimal family size. Publishing that book was very gratifying; I have heard from well over a hundred people saying that I changed their minds. There are more kids in the world because I wrote that book.

Walker-Werth: What a great way to have an impact on the world! People are making drastic life changes because of your book.

Caplan: My words give life.

Walker-Werth: Exactly! I completely agree with you about the problems with the current education systems, but some people are trying to innovate in education, including those at Montessori schools. Do you think these people are having an impact on innovation?

Caplan: I am ambivalent about that. People who work in this area predict great things, but when it comes to showing what they’ve accomplished, it’s a blank check. A lot of work has been done on trying to raise IQ, for example. People tried really hard, but it turns out to be super-difficult, especially in the long run. It’s easy to raise scores for a while, but they typically go back down. Most studies show an increase in scores on the particular test students have been prepped for, but their scores on a different IQ test show no improvement, which suggests that they didn’t gain in intelligence but only in the knowledge required for that specific test. Creativity is much less studied, but it’s worth studying. But when many people fail to improve something that is easily measured, we should be skeptical that they will succeed in something that is poorly measured. So, I wish them luck.

Also, when I wrote The Case against Education, I underestimated private education in one very important way. If you take a look at private versus public education, the curriculum typically is very similar; even the brainwashing is quite similar. The big difference is that almost all private schools stayed open during COVID, or reopened much more quickly. Private schools actually cared about customer satisfaction and at least delivered the day care that parents are looking for. Public schools in many parts of the country said, “Hey, we’re going to take all your tax money, and we’re not even going to give you day care. Never mind teaching your kids how to read or write or do math; we’re not even going to take your kids off your hands so you can do your jobs.”

Whether private education will deliver the goods for innovation is much less clear. It’s important to remember that you can’t just look at kids from one school versus another, see the kids who went to the private school are more creative, and then say this causes creativity. A lot of work has been done studying the benefits of going to an elite private school. If you look at it naively, you might conclude, for instance, Harvard graduates achieve tons of great things, so Harvard must cause tons of great things. But not so fast. Weren’t the Harvard students special before they went to Harvard? Yes. When social scientists investigate, they find that most of the apparent gain of going to elite schools actually boils down to a class ring.

It’s important to keep that in mind, though it doesn’t preclude people from figuring out ways of cultivating creativity in students. One speculative guess is that we could increase creativity by completely ignoring diversity and inclusion and unashamedly bringing together creative, high-achieving kids and a great curriculum.

Another idea, one in which I’m ultra-confident, is open borders. Rescue all human talent that currently is going to waste. There are many geniuses in farming villages in China and India who may never be noticed. They may be the smartest person in their village, but we’ll never hear about them or enjoy the fruits of their intellect and creativity. With open borders, maybe we would. It’s far more likely we’d find those people and that they’d move to the heartland of idea creation—to their benefit and humanity’s.

Walker-Werth: To sum up, what’s the connection between freedom and innovation?

Caplan: A big predictor of innovation is population and connectedness. Throughout history you see large populations connected to other parts of the world, and that is the recipe for almost all innovation.

If you look further, you’ll often see very large populations that are not innovative. Those tend to be very oppressive societies. Mao’s China had an enormous population but almost no innovation, except in the realm of horrors; nuclear weapons, for example. In North Korea, they put almost all their energy into killing, and you can guess what sort of “results” they get out of that. In terms of innovation for the betterment of mankind, nothing came out of Mao’s China, and nothing comes out of North Korea today. If you look at the data, you see that freer areas of the world are the hotbeds of innovation.

You’ll also see that often we have highly innovative minorities. One of the most impressive graphs I’ve ever seen is in Charles Murray’s book Human Accomplishments. The graph shows the number of accomplishments by Jews over time. Before the Jews’ emancipation, when they were basically locked in ghettos and heavily discriminated against by governments, they made almost no scientific, technological, literary, cultural, or philosophic achievements. Right after emancipation, they were responsible for about 25 percent of European achievements—a huge jump. The willingness to respect the basic human decency of people who are different from us—to lift the crushing power of government—is sometimes enough to reveal that they can achieve incredible things. People have done wonders with a basic respect for life and property—standard individual rights.

Walker-Werth: I couldn’t agree more. Thank you so much for your time.

Caplan: This has been extremely fun. Thank you, Angel.

At @sfliberty’s Freer Future Fest in Nashville, I spoke with Dr. @bryan_caplan about freedom and innovation. Caplan is a professor of economics at George Mason University, a scholar at @CatoInstitute, and the author of four books.
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1. The income effect is the decrease in demand when the price of a good increases. The substitution effect is the effect of price changes on demand overall; if the price of a good increases, but a consumer’s total consumption remains the same, the consumer will typically purchase fewer units of that good. As applied to protectionism, Caplan writes, “innovation is subject to both the substitution and income effects. Giving firms a protected market raises the incentive to improve (the substitution effect), but also gives firms the breathing room they need to take it easy (the income effect).”

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