Garett Jones — Immigration, national IQ, & less democracy

Host: Go ahead and run your experiments in Iceland. Let's run that for 50 years and see what happens. It's weird how everybody's obsessed with running the experiment in America, right? They'll balance the long-run budget on the backs of the poor and the middle class. Anything that lowers the innovation in the world's most innovative countries has negative costs for the entire planet in the long run. But that's something you'd only see over the course of 20, 30, 50 years. And libertarians and open border advocates are very rarely interested in that kind of time frame.

Host: But it's worth thinking through why it is that the successful so-called monarchies aren't really monarchies, right? They're really oligarchies. We should presume that the average skill level of voters, the average traits that we're bringing from our ancestors, are having an effect on our current productivity for good or ill.

Host: Okay. Today, I have the pleasure of speaking with Garett Jones, who is an economist at George Mason University. He's most recently the author of *The Cultural Transplant: How Migrants Make the Economies They Move To, a Lot Like the Ones They Left*. But he's also the author of *10% Less Democracy* and *Hive Mind*. We'll get into all three of those books. Garett, welcome to the podcast.

Garett Jones: Glad to be here. Thanks for having me.

Host: First question: isn't *The Cultural Transplant* still a continuation of your argument against democracy? Because isn't one of the reasons we care about the values of migrants the fact that we eliminate democracy? So should we view this book as part of your critique against democracy rather than against migration specifically?

Garett Jones: Well, I do think that governments and productivity are shaped by the citizens in a nation in almost any event. I think that even as we've seen recently in China, even in a very strong authoritarian dictatorship, which some would call totalitarian, even there, the government has to listen to the masses. So the government can only get so far away from the masses on average, even in an autocracy.

Host: If you had to split apart the contribution, though, the impact of migrants on the culture versus the impact that migrants have on a country by voting in their political system, how would you split that apart? Is the cultural impact we see for migration mainly due to the ability of migrants to vote, or because they're just influencing the culture just by being there?

Garett Jones: I'll cheat a little bit because we don't get to run experiments on this. So I just have to make an informed guess. I'm going to call it 50-50. The way citizens influence the country through formal democracy is important. But citizens end up placing some kind of limits on the government anyway. And the people in the country are the folks who are going to work in the firms and be able to either establish or not establish those complicated networks of exchange that are crucial to high productivity.

Host: I want to linger on *Hive Mind* a little bit before we talk about *The Cultural Transplant*. If you had to guess, do the benefits of national IQ come from having a right tail of elites that is smarter? Or is it from not having that strong of a left tail of people who are low productivity, more likely to commit crimes and things like that?

Garett Jones: Yeah, I think the upper tail is going to matter more than the lower tail in the normal range of variation. I think part of that is because nations, at least moderately prosperous nations, have found tools for basically reducing the influence of the least informed voters and for keeping productivity up, even when there are folks who are disrupting the whole process. The risks of crime from the lower end is basically a probabilistic risk. It's not like some zero to one switch. So we're talking about something probabilistic. And I think that the median versus the elite is the contrast that I find more interesting. The median voter theorem, the way we often think about democracy, says that the median should matter more for determining productivity and for shaping institutions. And I tend to think that's more important in democracies for sure.

Host: So when we look at countries, if you just look at a scatter plot of the raw data, if you look at the few countries that are exceptions to the rule where the mean IQ is the best predictor of productivity compared to elite IQ, the exceptions are non-democracies and South Africa. You see a few places in the Gulf where there are large migrant communities who are exceptionally well-educated and exceptionally cognitively talented. And that's associated with high productivity. Those are a couple of Gulf states—probably Qatar, the UAE, maybe Bahrain. And then you've got South Africa. Those are the countries where the average test score, it doesn't have to be IQ, could be just PISA, TIMSS type stuff. Those are the exceptions to the rule that the mean IQ is the best predictor of national productivity.

Host: Interesting. Does that imply that, at least in certain contexts, elite IQ matters more than the left tail? Does that imply that we should want a greater deviation of IQ in a country? If they could just push a button and increase that deviation, would that be good?

Garett Jones: No, I don't think so.

Host: If you could just increase the deviation, holding the mean constant?

Garett Jones: Yeah, I think so in the normal range of variation. People at the top tend to be coming up with the big breakthroughs—the big scientific breakthroughs, the big intellectual breakthroughs that end up spilling over to the whole world. Basically, the positive externalities of innovation.

Host: This is a very Pollyanna-ish, Paul Romer, new endogenous growth theory thing, right? That the innovations of the elite just swamp the negatives of the low-skilled among us. Can we just apply this line of reasoning to low-skilled immigration as well? The average goes down, the average IQ of your country goes down if you just let in millions of low-skilled immigrants, and maybe there's some cultural effects of that too. But you're also going to have the elite IQ still preserved, and more elites will come in through the borders along with the low-skilled migrants. So since we're talking about the deviation anyway, more immigration might increase the deviation, and that's a good thing.

Garett Jones: Notice what you did there. You did something that didn't just increase the variance. You simultaneously increased the variance and lowered the mean and median. I think that hurting the mean and median is actually a big cost, especially in democracies. And so that is very likely to swallow the benefits of the small probability of getting higher elite folks in as part of a low-skilled immigration policy. Pulling down the mean or the median swamps the benefits of increasing variance there.

Host: But if you get rid of the migrants' ability to vote—and I guess you can't do that, but let's assume you could—what is the exact mechanism by which the cultural values of the lower median is impacting the elite's ability to produce these valuable externalities? There's a standard comparative advantage story that they'll do the housework and the cooking for the elites, and the elites can get more productive.

Garett Jones: Taking all the institutions as given, which is what a lot of open borders optimists do, they take institutions as given, take cultural norms as given. All that micro stuff works out just fine. I'm totally on board with all that Adam Smith division of labor. But institutions are downstream of culture. And cultural norms will be changing partly because of what I call spaghetti theory. We meet in the middle. When new folks come to a country, there's some kind of convergence, some part where people meet in the middle between the values that were previously existing and the values that migrants have brought with them. I call it spaghetti theory because when Italians moved to America, that got Americans eating more spaghetti. If you just did a simple assimilation analysis, you'd say, "Wow, everybody in America eats the same now, like burgers and spaghetti. Look, the Italians assimilated." But migrants assimilate us. Native Americans certainly changed in response to the movement of Europeans. English Americans certainly changed in response to the migration of German and Irish Americans. This meeting in the middle happens all the time, and not just through democratic channels, but through the sort of soft contact of cultural norms that sociologists and psychologists would understand.

Host: I'm sure you saw the book released in 2020 titled *Wretched Refuse*, where they showed a slight positive relationship between immigration and pro-market laws. The idea is there's selection effects in terms of who would come to a country like America in the first place. But they never ran the statistical analysis that would be most useful, I think. Powell and Naroste ran a statistical analysis that said, "In all of the statistical analyses we've ever run, we've never found a negative relationship between low-skilled migration, any measure of it, and changes in economic freedom."

Garett Jones: I actually borrowed another one of Powell's data sets. I thought, "How would I check this theory out, the idea that changes in migration have an effect on economic freedom?" I used the normal economist tool. I thought about how economists check to see if changes in the money supply change the price level. That's the quantity theory. The way you do that is on the X-axis, you show the change in the money supply. On the Y-axis, you show the change in prices. This is Milton Friedman's idea. So that's what I did. I did this with a student. We co-authored a paper. The very first statistical analysis we ran, we looked at migrants who came from countries that were substantially more corrupt than the country's average. And we looked at the relationship between an increase in migrants from corrupt countries and subsequent changes in economic freedom. Every single statistical analysis we found had a negative relationship. We ran the simplest estimate you could run: change on change. Change in one thing predicts change in another. They somehow never got around to running that very simple statistical analysis. We found negative relationships every time, sometimes statistically significant, sometimes not. Always negative. Somehow they never found that. I just don't know how.

Host: What about the anecdotal evidence that in the U.S., in the periods of the greatest expansion of the welfare state or of government power during the New Deal or Great Society, the levels of foreign-born people were at historical lows? Is that just a coincidence?

Garett Jones: I'm not really interested in migration per se. My story is never that migration per se does this bad thing, that migrants are bad. That's never my story. But my story is that migrants bring cultural values from their old country to their new country. And sometimes those cultural norms are better than what you've got, and sometimes they're worse than what you've got, and sometimes it's just up for debate.

Host: If you had to guess, what percentage of the world has cultural values that are equivalent to or better than the average of America's?

Garett Jones: Equivalent to or better than? Just off the top of my head, maybe 20%. I don't know, 30%. I'll just throw something out there like that. For country averages.

Host: Currently, it would probably be hard for 20% of the rest of the world to get into the U.S. Would you support some policy that would make it easy for people from those countries specifically to get to the U.S.? Just have radical immigration liberalization from those places?

Garett Jones: That's really not my comparative advantage to have opinions about that. But substantial increases of people who pass multiple tests—let's take the low-hanging fruit and then move down from there. People from countries that on average have higher savings rates, higher education levels, higher S, A, and T deep root scores. Countries that are half a standard deviation above the U.S. level in all three.

Host: Why do they have to be higher? Why not just equivalent? You get all the gains from trade, and if it's equivalent, there's no trade-off.

Garett Jones: Part of the reason is because the entire world depends on U.S. innovation. So we should make America as good as possible, not just slightly better than it is.

Host: Very few firms would find that their optimal hiring policy would be to hire anyone who's better than your current stock of employees. Would you agree with that?

Garett Jones: Yeah, but you have to pay them a salary. If somebody just comes to the U.S., you don't have to pay them a salary. If somebody is producing more value for a firm, the salary would pay them.

Host: Is a firm's job to maximize its profits or to just make a little bit more than it's making right now?

Garett Jones: Maximize profits.

Host: There you go. So you find the best people you can. Sports teams that are hiring don't just say, "We want to hire people who are better than what we got." They say, "Let's get the best people we can get." Why not get the best? That was Jimmy Carter's biography: *Why Not the Best?*

Garett Jones: But you can do that along with getting people who are, in unexpected terms, as good as the existing Americans.

Host: I don't get why you want this. This seems crazy. What are you talking about? Why not the best? What did you trade out there? I'm not saying you don't get the best. But once you've gotten the best, what is the harm in getting the people who have equivalent SAT scores and the rest of the things you mentioned?

Garett Jones: I think part of the reason would be you'd want to find out what's best for the planet as a whole. What's the trade-off between having the very best, most innovative, talented, frugal people in America doing innovating that has benefits for the whole world, versus having an America that's 40% better but where the median skill is a little bit lower? Because the median is shaping the productivity of the whole team. This is what it means when you believe in externalities.

Host: But if you have somebody who's equivalent, by definition, they're not moving the median down. You're totally right about that. But why wouldn't I want the best thing possible? I'm still trying to figure out why you wouldn't want the best thing possible. You're trying to go to the start of why you don't want the best thing possible. I'm like, why not? I'm not disagreeing with you. I'm just a little confused about why that precludes you from also getting the second best thing possible at the same time. You're not limited to just the best.

Garett Jones: Because the second best is going to have a negative externality on the first best. Everything's externalities. This is my worldview. Everything's externalities. You bring in the second best, and that person is going to make things on average a little worse for the first best person.

Host: But it seems like you were explaining earlier that the negative externalities are coming from people from countries with low SAT scores. By the way, you can explain what SAT means for the audience who's not familiar with how you're using that term.

Garett Jones: Oh, yeah. There are three prominent measures in what's known as the deep roots literature. Two are S and A: state history and agricultural history. That's how many thousands of years your ancestors have had experience living under organized states or living under settled agriculture. And the T-score is the tech history score. I use the measure from 1500. It's basically what fraction of the world's technology were your ancestors using in 1500, before Columbus and his expansive conquest ended up upending the entire world map. So S, A, and T are all predictors of modern prosperity, especially when you adjust for migration.

Host: Gotcha. We can come back to this later. But one of the interesting things from the book was you have this chapter on China and the Chinese people as a sort of unstoppable force for free market capitalism. And it's interesting, as you mentioned in the book, that China is a poorest majority Chinese country. What do you think explains why China is a poorest majority Chinese country? Are there nonlinear dynamics here where if you go from 40% to 90% Chinese, there's positive effects, but if you go from 90% to 95% Chinese, there's too much?

Garett Jones: No, I think communism is just dumb and has terrible, sometimes decades-long effects on institutional quality. I don't really quite understand. North Korea, if we had good data on North Korea, would be an even bigger deep root outlier than China is. Don't have a communist dictatorship in your country seems to be a pretty robust lesson for national prosperity. China is still stuck with a crummy version of that mistake. North Korea is stuck with an even worse version. That's my hunch. China is stuck in an institutional cul-de-sac, and they just don't quite know how to get out of it. And it's bad for a lot of the people who live there on average. If the other side had won the Chinese Civil War, things would probably be a lot better off in China today.

Host: What about the deep roots literature? The three biggest countries in the world are China, India, and America. It underpredicts their performance? Or in the case of China and India, it overpredicts their performance, and in the case of America, it underpredicts. Does that say something about how reliable this is if the three biggest countries in the world are not adequately accounted for?

Garett Jones: Communism is a really big mistake. I think that's totally accounted for right there. India's underperformance isn't that huge. The U.S. is a miracle along many ways. We should draw our lessons from the typical country. I don't think that one third of the knowledge about the wealth of nations comes from the current GDP per capita of China, India, and the U.S. Much less than one third of the story of the wealth of nations comes from those three. In all three cases, if you look at the economic trajectories, China and India are growing faster than you'd expect. And this is the most important point: when Brian Kaplan made this claim that the ancestry scores, the deep root scores, don't predict the prosperity of India and China, he only checked the S and the A in the SAT scores. Which letter did he not predict? He never tested the T. What do you think happens when he tests the T? It goes back to being statistically significant again. With T, which we've always known is the best of the deep root scores, somehow Kaplan never managed to measure that one. Just as Powell and Naroste never managed to run the simplest test—change in migrant corruption versus change in economic institutions. Somehow the simplest test just never got run.

Host: And what is the impact if you include T? If you look at T, then contrary to what Kaplan says, that deep roots measure is statistically significant.

Garett Jones: Yeah. The puzzle goes away.

Host: Interesting. So somehow these guys just never seem to run the simple things, the transparent things. I don't know why. The one you mentioned from Naroste, who wrote *Wretched Refuse*—you said you did the regression on institutional corruption from the countries that migrants come from. The measure they used, I just took Powell's data set from another study. It was the percentage increase in your nation's population from relatively poor or corrupt countries. They had multiple measures.

Garett Jones: And what is on the Y-axis there?

Host: Change in economic freedom. That's my preferred one. There's also a change in corruption one, which is a noisier indicator. You get much clearer results with change in economic freedom.

Garett Jones: Gotcha.

Host: Now, does the "ideas getting harder to find" stuff and the great stagnation imply that we should be less worried about impinging on the innovation engine in these countries that people might want to migrate to? Because worst comes to worst, it's not like there are a whole bunch of great new theories that are going to come out anyway.

Garett Jones: No, I think it's always good to have great things and new ideas. Yes, new ideas are getting harder to find, but the awesome ideas that we're still getting are still worth so much. If we're still increasing lifespan a month or a year for every year of research we're doing, that just seems great. A decade that adds a year to life, just to use a rough ballpark measure.

Host: So we have a lot of these countries where a lot of innovation is happening. Let's say we kept one or two of them as immigrant havens from any potential downsides from radical changes. We already have this in the case of Japan or South Korea. There's not that much migration there. What is the harm in using the other ones to decrease global poverty by immigration?

Garett Jones: It's obviously better to create a couple of innovation powerhouses rather than none. So that's right. But instead, I would prefer to have open borders for Iceland. If the open borders advocates are right and open borders will have no noticeable effect on institutional quality, then it's great to run our open borders experiment in a country that's lightly populated, has a lot of open land, and has good institutional quality. Iceland fits the bill perfectly. We could preserve the institutional innovation skill, the institutional quality of what I call the I-7: China, Japan, South Korea, the U.S., Germany, the UK, and France. Choose any country out of the couple of dozen countries that have good institutional quality. Pick one that's not an innovation powerhouse and turn that into your open borders country. If you wanted to get basically Singapore levels of population density in Iceland, that would be about 300 million people, I think.

Host: But the value of open borders comes from the fact that you're coming to a country with high agglomerations of talent and capital and other things, which is not true of Iceland. Isn't the entire point of open borders that there's institutional quality and some exogenous institutions that make that place more productive than other places? By moving, that's my version of what I've been exposed to as open borders theory: institutions exogenously exist. Some places have moderately laissez-faire institutions, and moving a lot more people there will not reduce the productivity of the people who are currently there, and they'll become much more productive. So institutional quality is crucial. If you're a real geography guy, you'd be excited about the fact that Iceland is so close to the North Pole. Its latitude is a predictor of prosperity.

Host: I want to go back to the thing about what should we have open borders for that 20% of the global population that comes from equivalent SAT and other cultural traits as America. I feel like this is important enough to dwell on. It seems similar to saying that once you picked up a $100 bill on the floor, you wouldn't pick up a $20 bill on the floor because you only want the best bill. The $20 bill is right there. Why not pick it up?

Garett Jones: What if the $20 bill turns your $100 bill into an $80 bill and turns all of your $80 and $100 bills into $80 bills?

Host: But aren't you controlling for that by saying that they have equivalent scores along all those cultural tests that you're considering?

Garett Jones: No, because the median... Take the simple version of my story, which is that the median of the population ends up shaping the productivity of everybody in the country, or the mean skill level ends up shaping the productivity of the entire population. That means we face a trade-off between being a small country with super awesome positive externalities for all the workers by just selecting the best people. And every time we lower the average skill level in the country, we're lowering the average productivity of everyone else.

Host: But what if we didn't lower it? You have to have skills that are even greater than the median of a median American. This is a ceteris paribus story. Suppose the U.S. is at 80 now on a 0 to 100 scale. And you have a choice between being 100 and being 99. If you're 99, compared to the world of an average of 100, the world of an average of 99 is reducing the productivity of all those hundreds. If we chose 90, we're reducing the productivity of all those hundreds. Let's say we admit all the smartest people in the world, and that gets us from 80 to 85. That's a new median in America at that point. But this is because we've admitted a whole bunch of 99s that have just increased our average. At that point, open borders for everybody who's able to be 85... This ends up being a math problem. It's a little hard to solve on a podcast. It's the question of: do I want a smaller country with super high average productivity, or a bigger country with lower average productivity? And by average productivity, I don't just mean a compositional effect. I mean relatively fewer positive externalities. I don't exactly know where this trade-off is going to pan out. But there is a case for a sort of Manhattan project. When people talk about a Manhattan project, right?

Host: They're talking about putting all, like a small number of the smartest people in a room. And part of the reason you don't want like the 20th smartest person in the room is because that person is going to ruin the, ruin stuff for the other smart people. It's amazing how your worldview changes when you see everybody as an externality.

Garett Jones: I'm kind of confused about this because just having at some point you're going to run out of the smartest people. The remainder of the smartest people in the world if you admitted all the brilliant people...

Host: Yeah, given how big the U.S. population is to begin with, you're not going to change the median that much by doing that, right? So it's almost equivalent to just having more births from the average American. If the average American just had more kids, the population would still grow and the relative effect of the brightest people might dilute a little bit. And maybe that's a huge tragedy. We don't know without a bunch of extra math and a bunch of weird assumptions. So the point at which I have to say is, I don't know, right?

Garett Jones: Okay, yeah. Is diluting the power of the smartest person in America keeping us from having wondrous miracles all around us all the time? I mean, probably not, but I don't know.

Host: But I guess the meta question you can ask about this entire debate is, listen, there's so much literature here and it's hard to tell what exactly will happen. It's possible that culture will become worse. It's possible it will become better. It's possible it'll stay the same. Given the fact that there's this ambiguity, why not just do the thing that on the first order effect seems good? Moving somebody from a poor country to a rich country, first order effect seems good. I don't know how the third and fourth order effects shape out. Let's just do the simple, obvious thing.

Garett Jones: I thought that one of the great ideas of economics is that we have to worry about secondary and tertiary consequences. But if we can't even figure out what they are exactly, why not just do the thing that at the first order seems good?

Host: Because if you have a compelling reason to think that the direction and strength of the second, third, and fourth order things are negative and the variances are really wide, then you're just adding a lot more uncertainty to your outcomes. And adding uncertainty to your outcomes that has sizable negative tail, especially for the whole planet, isn't that great. Go ahead and run your experiments in Iceland. Let's run that for 50 years and see what happens. It's weird how everybody's obsessed with running the experiment in America, right? Why not run it in Iceland first? Because America's got a lot of great institutions, right? We can check and see. Iceland's a great place too. I don't use Iceland as a metaphor. People are obsessed with running it in America. There's some kind of need. I don't know why. So let's try in France. Let's try Northern Ireland.

Garett Jones: Are places with low SAT scores—and again, we're not talking about the college test, we're talking about the deep root test, state history, agricultural history, tech history, right exactly—are those places with low scores on that test stuck there forever? Or is there something that can be done if you are a country that has had a short or not significant history of technology or agriculture?

Host: Well, I start off the book with this, which I really think that one thing they could do is create a welcoming environment for large numbers of Chinese migrants to move there persistently. I don't think that's the only thing that could ever work, but I think it's something that's within the range of policy for at least some poor countries. I don't know which ones, but some poor countries could follow the approach that many countries in Southeast Asia followed, which is create an environment that's welcoming enough to Chinese migrants. It's the one country in the world with large numbers of high SAT score, with a high SAT score culture, large population. It's enough of an economic failure for at least a little longer that folks might be able to be interested in moving to a poorer country with lower SAT scores. In a better world, you can do this with North Korea too, but the population of North Korea isn't big enough to make a big dent in the world. China's population is big enough.

Garett Jones: Another thing you have to worry about in those cases though is the risk that if you do become successful in that country, there's just going to be a huge backlash and your resources will get expropriated, like what happened in Indonesia, right?

Host: Yeah, there have been many times across Southeast Asia where anti-Chinese pogroms have been unfortunately a fact of life.

Garett Jones: Yeah, yeah. Or Indians in Uganda under Idi Amin.

Host: Idi Amin, yeah. Okay, so actually, I'm curious how you would think about this. Given the impact of national IQ, if you're an effective altruist, are you just handing out iodine tablets across the world? What are you doing to increase national IQ?

Garett Jones: Yeah, this is something that I—yes, finding ways, this is what I call a Flynn cycle. I'm hoping for a world where there are enough public health interventions and probably K through six education interventions to boost test scores in the world's poorest countries. And I think that ends up having a virtuous cycle to it. As people get more productive, then they can afford more public health, which makes them more productive, which means they can afford more public health. I think brain health is an important and neglected part of child development. Fortunately, we've done a fair amount to reduce the amount of environmental lead in a lot of poor countries. That's probably having a good effect right now as we speak in a lot of the world's poorest countries. You're right. Iodine, basic childhood nutrition, reliable health care to prevent the worst kinds of mild childhood infections that are probably creating what economists sometimes call health insults—things that end up hurting you in a way that causes an ill-defined long-term cost. A lot of that is going to have to show up in the brain. I'm a big fan of the view that part of the Flynn effect is basically nutrition and health. Flynn wasn't a huge believer in that, but I think that's certainly important in the poorest countries.

Host: Yeah. I think Brian showed in *Open Borders* if you look at the IQ of adoptees from poor countries who go to Sweden—Sweden is the only country that collects data—if you get adopted by a parent in Sweden, half the gap between the averages of those two countries goes away. So it is one of the ways you can increase global IQ, just by moving kids to countries with good health outcomes that will nourish their intelligence.

Garett Jones: Oh, that's a classic short run versus long run effect. Libertarians and open border advocates tend to be focused on the short run static effects. So you're right, moving kids from poor countries to richer countries is probably going to raise their test scores quite a lot. And then the question is, over the longer run, are those lower skilled folks, the folks with lower test scores, going to degrade the institutional quality of the places they move to? If you close half the gap between the poor country and the rich country, half the gap is still there. And if I'm right that IQ has big externalities, then moving people from a lower scoring country to a richer scoring country and closing half the IQ gap still means on net, you're creating a negative externality in the country the kids are moving to.

Host: Yeah, yeah. We can come back to that. So it basically comes down to the question: is this lowering the mean test scores in your country? And if it's lowering the mean test scores in the long run, it's on average going to lower institutional quality, productivity, savings rates, those things. It's hard to avoid that outcome.

Garett Jones: I don't remember the exact figures, but didn't Brian address this in the *Open Borders* book as well? That even if the national IQ lowers on average, if you're still raising the global IQ, that still nets out positive? Or am I remembering that wrong?

Host: Well, notice what he does. He attributes some productivity that's just in the land, geographic factors. So basically, being close to the equator boosts productivity substantially. And again, that's a static result. The reason I mention that is it ignores all the I7 stuff that I'm talking about, where anything that lowers the level of innovation in the world's most innovative countries has negative costs for the entire planet in the long run. But that's something you'd only see over the course of 20, 30, 50 years. And libertarians and open border advocates are very rarely interested in that kind of time frame.

Garett Jones: Is there any evidence about the impact of migration on innovation specifically? Not on the average institutional quality or on corruption, but just directly the amount of innovation that happens, or maybe the Nobel Prizes or things like that?

Host: No, I mean, I would presume—I think a lot of us would presume—that the European invasion of North America ended up having positive effects for global innovation. It's not an invasion that I'm in favor of, but if you want to talk crudely about whether migrations had an effect on innovation, you probably have to include that in any kind of analysis.

Garett Jones: Yeah, yeah. Do you think that the people who are currently Americans, but their ancestry traces back to countries with low SAT scores, is it possible that U.S. GDP per capita would be higher without that contribution? How do you think about that?

Host: I mean, it follows from thinking through the fact that we are all externalities, positive or negative. I don't know when any particular country could turn out to be some exciting exception to the rules, an interesting anomaly. But on average, we should presume that the average skill level of voters, the average traits that we're bringing from the nations that are the nations of our ancestors, is having an effect on our current productivity for good or ill. Just following through the reasoning, I'd have to say on average that's most likely. But there could always be exceptions to the rule.

Garett Jones: I guess we see large disparities in income between different ethnic groups across the world, not just in the United States. Doesn't that suggest that some of the gains can be privatized from whatever the cultural or other traits there are? Because if these gaps continue over decades and centuries, I don't see where that would follow.

Host: If everything is being averaged out over time, what did you expect, that these gaps would narrow?

Garett Jones: Well, I'm being a little rhetorical when I'm saying everything's literally an externality. I don't literally believe that's true. For instance, people with higher education levels do actually earn more than people with lower education levels, so that's literally not an externality. So some of these other cultural traits that people are bringing with them from their ancestors' nations of origin could be one likely source of these income differences. If you think about differences in frugality, differences in personal responsibility, which show up in the surveys that are persistent across generations, those are likely to have an effect on long run productivity for you yourself and your family. Not alone the hive mind stuff where you find that there's a positive relationship between test scores and productivity.

Host: There was a blogger who took a look at your 2004 paper about the impact of national IQ on GDP. And they calculated—they were just speculating—let's say you cloned a million John von Neumanns and assume that John von Neumann had an IQ of 180. Then you could raise the average IQ of the United States by 0.21 points. And if it's true that one IQ point contributes 6% to increasing GDP, then this proposal would increase U.S. GDP by 1.26%. Do you buy these kinds of extrapolations?

Garett Jones: 1.26%? Yeah, because you're only cloning a million.

Host: Oh, yeah. Okay. So it's about 1 million.

Garett Jones: Yeah, that sounds—I mean, that's the kind of thing where I wouldn't expect it to happen overnight. I tend to think of the IQ externalities as being two, three generations. I lump it in with what economists call organizational capital. That sounds about right.

Host: Yeah, yeah, yeah. I can't remember where I saw this. I think I stumbled across it myself at some point too. By the way, his name is Alvaro de Menard, if you want to find out.

Garett Jones: Oh, okay. Yes, yes. Okay. Yeah, it's in that ballpark. It's just this idea that—and more importantly—a million John von Neumanns would be a gift to the entire planet.

Host: Yep, yep, yep. So yeah, if you had a choice of which country to have the million John von Neumanns, it's probably going to be one of the I7. Maybe Switzerland would be a good alternative. What is the optimal allocation of intelligence across a country? Because one answer, and I guess this is the default answer in our society, is you just send them where they can get paid the most because that's a good enough proxy for how much they're contributing. So you have these high agglomerations of talent and intelligence in places like Silicon Valley or New York, because their contributions there can scale to the rest of the world. This is actually where they're producing the most value. Another is you should disperse them throughout the country so that they're helping out communities, they're teachers in their local community. I think there was an interesting anecdotal evidence that during the Great Depression, the crime in New York went down a ton because the cops in New York were able to hire—they had like 100 applications for every cop they hired. So they were able to hire the best and the brightest. And there were a whole bunch of new police tactics that were pioneered at the time. Anyways, so is the market allocation of intelligence correct? Or do you think there should be more distribution of intelligence across the country?

Garett Jones: Yeah, I mean, the market signals are terrible. But this is my inner Paul Romer kicking in and says, innovation is all about externalities and there's market failures everywhere when it comes to the field of innovation. So I personally like the idea of finding ways to allocate them to STEM style technical fields. And we do a fair amount of that. And maybe the U.S. does a pretty good job of that. I don't have any huge complaints at the crudest 50,000 foot level. For the fact that people know that there's a status game that they can play within academia that are perhaps more satisfying or at least as satisfying as the corporate hierarchy stuff. So you don't want them all just—I wouldn't encourage them to solely follow market signals. I'd encourage them to be more Hansonian and play a variety of status games, because the academic and intellectual status game is worth a lot both personally and then it leads to positive spillovers for society.

Host: But how about the geographic distribution? Do you think that it's fine that smart people leave Kentucky and go to San Francisco?

Garett Jones: I'm a big agglomeration guy. Yeah, yeah, yeah. I'm a big agglomeration guy. I mean, the internet makes it easier, but still being close to people, being in the room is important. There's something both Hansonian and Gerardian here about needing to find role models to imitate, and that's probably important for productivity.

Host: Are there increasing or decreasing returns to national IQ?

Garett Jones: No, I think in my findings, it was all basically log linear. And log linear looks crudely like increasing returns, so yeah, it looks exponential. So yeah, there's increasing returns to national IQ.

Host: But this is a commonplace finding in a sense, because so many human capital relationships I'm familiar with end up having something like a log linear form, which is exponential. So why is that?

Garett Jones: There's something multiplicative. That's all I have to say. It's something somehow this all taps into Adam Smith's pin factory, and we have multiplicative not additive effects when we're increasing brain power. I suspect it does have something to do with a better organization of the division of labor between people, which ends up having something close to exponential effects on productivity.

Host: Are you a fan of genetic selection for intelligence as a means of increasing national IQ? Or do you think that's too much playing at the margins?

Garett Jones: If it's voluntary, I mean, people should be able to do what they want. And after a couple decades of experimentation, I think people would end up finding a path to government subsidies or tax credits or something like that. I think people voluntarily deciding what kind of kids they want to have is a good thing. So by genetic selection, I assume you're meaning at the most elementary level, people testing their embryos the way they do now. We already do a lot of genetic selection for intelligence. Anybody you know who's in their mid-30s or beyond who's had amniocentesis, they've been doing a form of genetic selection for intelligence. So it's a widespread practice already in our culture, and welcoming that in a voluntary way is probably going to have good effects for our future.

Host: What do you make of the fact that GPT-3, or I think it was ChatGPT, had a measured IQ of 85?

Garett Jones: I've seen a few different measures. Yeah, I think it's a sign that a lot of mundane, even fairly complex, moderately complex human interactions can be simulated by a large language learning model. And I think that's going to be rough news for a lot of people whose life was in the realm of words and dispensing simple advice and solving simple problems. That's pretty bad news for their careers.

Host: I'm disappointed to hear that.

Garett Jones: So yeah, at least for the transition. I don't know what's going to happen after the transition, but yeah, I'm hoping that's not true of programmers or economists. I mean, it might be right. The car put a lot of people who took care of horses right out of work.

Host: Yeah. Okay. So let's talk about democracy. I thought this was also one of your really interesting books.

Garett Jones: Oh, thanks.

Host: Even controlling for how much democratic oversight there is of institutions in the government, there seems to be a wide discrepancy of how well they work. The Fed seems to work reasonably well. I don't know enough about macroeconomics to know the object level decisions they make, but it seems to be a non-corrupt, technocratic organization. If you look at something like the FDA, it's also somewhat insulated from democratic processes. It seems to not work as well. What determines, controlling for democracy, how well an institution in the government works?

Garett Jones: Well, I think in the case of the Fed, it really does matter that the people who run it have a guaranteed long-term and they print their own money to spend. That means that Congress has to really make an effort to change anything of the Fed. So they really have the kind of independence that matters. They have a room of their own. And the FDA has to come to Congress for money more or less every year. And the FDA heads do not have any kind of security of appointment. They serve at the pleasure of the president. So I do think that they don't have real independence. They're living in this slack, this area of slack, to use the poli-sci jargon. They're living in this realm of slack between the fact that the president doesn't want to meddle with them and the fact that Congress doesn't really want to meddle with them. But on the other hand, I really think that the FDA and the CDC are doing what Congress more or less wanted them to do. They reflect the muddled disarray that Congress was in over the period of, say, COVID.

Host: Hmm. I think that's a first order important. I do think that the fact that FDA and CDC don't seem to have that culture of raw technocracy the way the Fed does has to be important on its own. But I think behind that, some of that is just that FDA and CDC are creatures of Congress much more than the Fed is. Should the power of the president be increased?

Garett Jones: No. The power of independent committees should be increased. More of Congress should be like the Fed. My plan for an FDA or CDC reorganization would be about making them more like the Fed, where they have appointed experts who have long terms, and they have enough of a long term that they can basically feel like they can blow off Congress and build their own culture.

Host: So the European Union is an interesting example here because they also have these appointed technocrats, but they seem more interested in creating annoying pop ups on your websites than with dealing with the end of economic growth on the continent. Is this a story where more democracy would have helped? How do you think about the European Union in this context?

Garett Jones: No, in the EU, the European voters just aren't that excited about democracy. Excuse me, aren't that excited about markets overall. The EU is going to reflect that. What little evidence we have suggests that countries that are getting ready to join the EU improve their economic freedom scores, their sort of laissez-faireness, on the path to getting ready for joining the EU. And then they may increase it a little bit afterwards once they join. But basically, when you're deciding to join the EU, it's like you decided to have your Rocky training montage and get more laissez-faire. And so the EU on net is a mess. It pulls in the direction of markets compared to where Europe would be otherwise. Just look at the nations that are in the EU now. A lot of them are east of Germany. Those are countries that don't have this great history of being market friendly. And a lot of parties aren't that market friendly. And yet the EU sort of nags them into their version of as much markets as they can handle.

Host: So what do you think explains the fact that Europe as a whole and the voters in there are less market friendly than Americans? If you look at the sort of deep roots analysis of Europe, you would think that they should be the most in favor of—I don't know, the deep roots of—actually maybe the planet, but yeah, compared to the planet as a whole they're pretty good.

Garett Jones: Right. So I never get that excited about the small little distinctions between the U.S. and Europe, like these 30 percent GDP differences, which are very exciting to pundits and bloggers. I'm like, 30 percent doesn't matter very much. It's not really my bailiwick. What I'm really interested in is the 3000 percent between the poorest countries and the richest countries. So I can speculate about Europe. I don't really have a great answer. I mean, I think there's something to the naive view that the Europeans with the most—what my dad would call gumption—are those who left and came to America. Some openness, some adventurousness. And maybe that's part of what made—so basically, there's a lot of selection working on the migration side to make America more open to laissez faire than Europe would be.

Host: Does that overall make you more optimistic about migration to the U.S. from anywhere? You know, the same story—ceteris paribus—America gets people who are really great. I went with you there.

Garett Jones: Yeah.

Host: Does elite technocratic control work best only in high IQ countries? Because otherwise you don't have these high IQ elites who can make good policies for you, but you also don't get the democratic protections against famine and war and things like that.

Garett Jones: Oh, I mean, I don't know. I think the case for handing things over to elites is pretty strong in anything that's moderately democratic. It doesn't have to be anything that's substantially more democratic than the official measure of Singapore, for instance. That's why my book *10% Less Democracy* really is targeted at the rich democracies. Once we get too far below the rich democracies, I figure once you put elites in charge, they really are just going to be old-fashioned Gordon Tullock rent seekers and steer everything toward themselves and not give a darn about the masses at all. So elite control in a democracy, a lot of elite control in any kind of democracy, I think is going to have good effects. If you're really looking at something that meets the Martin Yassen's definition of democracy—competitive parties, free press—does Singapore meet that criteria? No, because their parties aren't really allowed to compete. That's pretty obvious. The People's Action Party really controlled party competition there. But Singapore is one of the great examples of technocratic control, and they're just an exception to the rule. Most countries that try to pull off that lower level democracy wind up much worse.

Host: So what is your opinion of neo-reactionaries? I guess they're not in favor of 10% less democracy, they're more in favor of 100% less democracy.

Garett Jones: Yeah, I think they're kind of too much LARPing, too much romanticizing about the Rohirrim, I guess. I don't know. All these guys in *The Lord of the Rings*. Romanticizing monarchy is a mistake. It's worth noting that, as my colleague Gordon Tullock pointed out, along with many others, in equilibrium, kings are almost always king and council. And so it's worth thinking through why king and council is the equilibrium—something more like a corporate board and less like either the libertarian ideal of the entrepreneur who owns the firm or the monarch who has the long-term interest in being a stationary bandit. In real life, there's this sort of muddled thing in between that works out as the equilibrium, even in the successful so-called monarchies. So it's worth thinking through why it is that the successful so-called monarchies aren't really monarchies. They're really oligarchies.

Host: Yeah, yeah. If you look at the median voter in terms of their preferences on economic policies, it seems like they're probably more in favor of government involvement than the actual policies of the United States, for example. What explains this? Shouldn't the median voter theorem imply that we should be much less libertarian as a country?

Garett Jones: Yeah, that's a great point from Bryan Caplan's excellent book, *Myth of the Rational Voter*. I think part of it—I mean, I think his stories are right, which is that politicians facing re-election have this trade-off between giving voters what the voters say they want and giving the voters the economic growth that will help politicians get re-elected.

Host: So it's a version of saying, "I don't want you to pull off the band-aid, but I want my wounds to get better." So the politician has to handle the contradictory demands of the voters. By delegating authority to the elected politicians, you get some of the benefits of elitism, even in a so-called democracy.

Garett Jones: Over the long run, should we expect any of the tensions of ethnic diversity to fade away? Like, nobody today worries about the different Parisian tribes in France butting heads at the workplace. The anti-German ethnic sentiment in the U.S. is totally gone.

Host: That's a good point. The problem is that ethnic conflict has been a hardy perennial. It's not the only conflict people can ever have. I don't know to what extent these things will fade away. As I emphasize in *The Culture Transplant*, the ethnic diversity channel is actually the least important of any of the channels I discuss. So I'm open to the thought that what you're saying will happen. Maybe we'll just find something else to get mad at each other about, like social media tribes or religious groups. It hasn't happened yet in all of documented human history. People seem to find some ethnic bounds for conflict.

It is worth pointing out that in one study I report—I think it's a Wagyar Kawatha piece—the source of ethnic conflict happens when private values are correlated with ethnic groups. If cultural values are basically uncorrelated with ethnicity, then there's nothing to fight over. That's really what's happened with a lot of old ethnic battles in the U.S. So you're right, some of these things will fade with time. The problem is that one of our great evils is that we are always looking for a focal point. People will use visible appearance as a horrifying focal point around which to peg their conflicts. It's an easy one because our brains are looking for visual patterns. I don't like that, but it will probably keep happening.

Host: One of the interesting points you made in the chapter was that the benefits of diversity are greatest when search costs are lower and the costs of vetting are lower. How do we make sure that is true for non-elite professions? If you're looking for a plumber or a carpenter, how do you make sure you can vet them easily?

Garett Jones: I have to say that this is a case where Yelp and Google and all these online ratings have given us tools for checking these things out. We have to be skeptical, of course, but for people who know they're good at something, the cost of entry into a new field has to be much lower than it was a few decades ago. Ten or twenty good Google reviews and you can actually enter. So basically, not banning disclosure of data is the most important thing we can do. I think you sometimes hear that medical doctors often make it very risky to give bad reviews—sometimes you get a lawsuit. Making that a lot harder is worth it. We know some negative reviews will be malicious and inaccurate, but the benefits of information flow seem really high.

Host: I thought one of the really interesting chapters in *10% Less Democracy* was the chapter on bondholder democracy. Corporations are an obvious example where they have bondholders who hold them accountable, but the average lifespan of a corporation is 10 years. Do you think it would be even shorter if bondholders had less say? What does the transience of the corporation tell us about its controls?

Garett Jones: That's a good point. We can suspect that the average person investing in a corporation makes money, because otherwise people wouldn't be doing it. On average, it must work. You actually have me stumped here. Can you rephrase the question?

Host: If bondholders extend the longevity and long-term thinking of organizations they hold bonds in, why don't corporations that give out bonds tend to live longer than the average of 10 years? Would it be even shorter without bondholders?

Garett Jones: I'd say it would probably be shorter without bondholders or any kind of financial monitor. But second, most corporations just shouldn't live that long. Most corporations are ideas you try out, and then you find out it doesn't work, or it should be bought up by somebody else, or the IP should be sold off. Having a lot of companies fade out is actually on net a good sign. This is part of the John Haltiwanger line of research on creative destruction, which finds that low productivity firms exiting means those workers and that capital can get reallocated to a more productive firm. The alternative is stereotypically Japanese zombie firms, kept limping along by banks under political pressure to lend. A lot of human and physical capital gets tied up in low productivity projects. So a brutal bond market is a good way to send a market signal to move capital from low productivity to high productivity projects.

Host: Why are yields on 30-year fixed treasuries so low? Theoretically, investors should know we have a lot of liabilities in the form of Social Security for baby boomers, and we've radically inflated the money supply very recently and may do so again. Are investors being irrational with the low yields, or what's going on?

Garett Jones: No, I'm a fan of the view that the bondholders are going to win in the long run and that super high inflation is not going to be the path of the future. Thinking about the U.S., the way the bondholders are going to win is that there will be a mixture of tax hikes and slower spending growth, especially hurting the poor. That's how the U.S. is going to close its fiscal gap. The U.S. has this one superpower sitting in the room that it hasn't used yet: a VAT. The U.S. could dramatically increase its tax revenue through either an overt or disguised value added tax. That would raise a ton of money, just like it does in Europe. That's the easy way to close the U.S. fiscal gap. We probably won't even have to get to that. Just making Medicaid worse slowly over the long run, maybe making Medicare worse over the long run—that by itself would close a lot of this fiscal gap. I think they'll balance the long run budget on the backs of the poor and the middle class. That's probably the most likely outcome. Hence no hyperinflation.

Host: So you're expecting the welfare state to shrink either in quality or quantity over time?

Garett Jones: In relative terms, compared to the trend. If America is still getting 1% or 1.5% richer each year, that by itself adds a certain level of quality to healthcare over time. If it ends up staying the equivalent of zero percent, you get healthcare spending in real terms to be zero percent over time. That would end up closing the gap when you compound it out long enough.

Host: When Liz Truss tried to implement tax reform in the UK, there was a bondholder revolt and she was ousted. Bondholders won there. Do we already live in the bondholder utopia?

Garett Jones: I think that was a nice reminder that, contrary to the MMT view and the pop Keynesian view, debt is no barrier at all. That showed the bondholders are actually paying attention to long-term signals of fiscal policy credibility, and they'll take action.

Host: What are the deep roots of Mormonism? Why do they have such high trust and such tight-knit communities?

Garett Jones: I think part of it is that they reflect a lot of the Western pioneer culture—upstate New York, Pennsylvania, Ohio. Those communities tended to be high trust communities necessarily because of the difficult environment they were living in. There was a lot of selection over the first few decades of Mormon history. Those who were willing to trust the group stayed in, and those who weren't willing ended up leaving. And not just trust, but trustworthiness. I think a lot of people probably got weeded out because they weren't contributing to the common good. By the time the Mormons got established in Utah, they had already selected for a strong culture of in-group pro-sociality. That helped them weather the storms of the 19th century. For the whole 19th century, people were only joining during the era of polygamy in Utah. They were signing up for deep sociality with a mixture of a lot of unconventional stuff. That foundation really helped. The fact that Mormons have stayed as a religion that requires a medium-high level of commitment also weeds out people who just aren't willing to make that commitment. I was raised Mormon. I wasn't ultimately willing to make the commitment, and maybe part of the reason is because I'm too much of a free rider. Mormons who are left are probably better than me.

Host: The Mormon church has more than $100 billion in assets. What is it planning on doing with all this money?

Garett Jones: I don't know. Maybe they're planning to hand it to the Savior when the second coming happens. There's a great argument for the option value of just having the wealth there. It must give them a kind of independence from the world when various cultural or political storms come along. I don't actually know what their plans are for what they would do with all the money, but normal economics tells us that being frugal is good for the economy overall. Steven Landsburg has a great essay, "In Praise of Scrooge," especially appropriate for this time of year. Being frugal means you're building up the capital stock and giving an invisible gift to future generations. Mormon frugality is basically helping build up the U.S. capital stock and indirectly the world's capital stock, helping make us all more productive. That fits in with Mormon values.

Host: People have pointed out that people should be spending more money given how much they have left over by the time they die. Leaving a large inheritance is socially valuable. You're producing a lot but not consuming very much, so you're building up the capital stock. There's also a large amount of multilevel marketing schemes that proliferate in Utah. Is that one of the downsides of high social trust? Can people predate upon it?

Garett Jones: It strikes me as a total rent seeker sort of thing. I have to say, the knives are really good. Everybody I know who has ever had Cutco knives abuses them and protects them. That's one of the popular multilevel marketing schemes that actually gets to men. A lot of them are targeted at women through cosmetics. At least the men's one works out.

Host: If you had to implement an immigration system from scratch, would you consider these SAT scores and other deep roots scores as part of somebody's admittance? Or would you just consider individual-level skills and education?

Garett Jones: I'd want to launch a 10-year, maybe 20-year research project to figure out how to turn the deep root scores into something useful. Right now with the deep roots literature, we're about where Milton Friedman's monetarism was in the late 60s. Friedman said, "I figured out where inflation comes from, and we'd be a lot better off if we just grew the money supply 3% a year." Ultimately, nobody thought he was right about the 3% a year thing, but they did think he had a lot of good advice. Friedman ended up having a lot of good ideas, but they weren't policy ready. That's about where we are with the deep roots literature. At most, one would use it as a small plus factor in a point system, but I don't even know which points I'd use. Something along those lines is worth thinking about. I would never use a cutoff or any quotas or hard cutoffs. If you think about points-based systems, 10 or 20 years of further research, and maybe you'd find a way to put the deep roots into a points-based system.

Host: How did the SBF thing happen? Did he just say, "I'll fly you out"?

Garett Jones: I was there for the EA Bahamas. While I was there, I talked to somebody who knew him. I said, "I would love to interview him."

Host: I would ask him. It was one of those where I feel like I would really want to redo that one. I was aware of some things back then that we were asking about in retrospect. I should have poked harder rather than asking philosophical questions about effective altruism. Is it as simple as he was commingling funds? He lent a bunch of FTX money over to a hedge fund and they lost it?

Garett Jones: I'm guessing that's an approximation. It's old-fashioned financial fraud, partly driven by not having a really good board or good oversight.

Host: I'm really curious to ask you this because you've spoken highly about the fact that higher IQ people on average are more cooperative in prisoner's dilemma type situations. I just interviewed Bethany McLean on the podcast—it hasn't been released yet—but she wrote *The Smartest Guys in the Room* about Enron. There is this thing where maybe they are less likely to commit fraud on average, but when they do, they're really good at it.

Garett Jones: Exactly. Maybe one of the downsides of having a high IQ society is that when people do commit fraud, they're super successful at it. The evil of super smart people is obviously a huge risk to all of humanity. I don't have to worry about humanity being wiped out by a bunch of people with sticks and stones. I have to worry about humanity being wiped out by nuclear weapons, which could only be invented by smart people.

Host: Are smart people more cooperative in a very calculating sense? Like, "This game is going to go on, so I want to preserve my relationships"? Or even in the last turn of an iterated prisoner's dilemma, would they cooperate?

Garett Jones: There is no correlation between intelligence and agreeableness, or conscientiousness for that matter. Machiavellian intelligence is what's driving the link between IQ and cooperation. In a repeated game, that Machiavellian intelligence turns into quotient intelligence where people find a way to grow the pie. But it's a very cynical, self-interested form of growing the pie. I don't think it's driven by inherent pro-sociality. I think it's endogenous pro-sociality, not exogenous pro-sociality. That's a reason to worry about it. What happens to these high IQ people if society goes into a zero-sum mode where there's not much economic growth, and the only way to increase your share of the pie is by cutting out bigger slices for yourself? Then you've got to watch out. It's like the Middle Ages right there.

Host: Awesome. Garett, thanks so much for coming on the podcast. This was interesting.

Garett Jones: Thanks for having me. It's been fantastic. Thanks for reading my books. Appreciate it.

Host: Of course.