A few minutes from Tyler Cowen's interview with Chuck Klosterman

Reflections on things falling apart

As I type Ukraine is being invaded by Russia and everyone is trying to make sense of what is happening. Even on the other side of the world, ones sense of calm and safety comes into question. What does this mean for me? For my family? For my friends? For the future?

In early 2016 I wrote a post reflecting on a trip to Egypt in 2010, right before Tahrir Square. I called it “Things fall apart.” I was reflecting on how suddenly things can change on a global scale and how peace is something to be cherished. I was writing it during the 2016 presidential election when it was becoming clearer that Trump was a serious contender for the presidency.

When I look back at the me from 2016 I was a such different person. Much of what happened at the macro and personal level during the last six years was impossible to predict - reality was just one potential scenario among countless, unimaginable others. I could have spent every minute worrying and trying to predict the future only to be completely wrong.

I listened today to this Tyler Cowen interview with Chuck Klosterman, author of a great book called “But What If We're Wrong?: Thinking About the Present As If It Were the Past”. In that book Klosterman gives many examples of how terrible we are at predicting the future and how things that are popular in one era become completely forgotten soon thereafter. “When you’re gazing into the haze of a distant tomorrow, everything is an assumption.” And the best approach is often “the philosophical belief that the best hypothesis is the one that reflexively accepts its potential wrongness to begin with.”

Chuck and Tyler speak about a lot of things but there are a few minutes of this interview that really spoke to me (starting at minute 52). I want to include them in full below. The first piece is Tyler’s thoughts on global risk and the second is Klosterman’s reflections about success and enjoying his time with daughter:

(1)

COWEN:

I see the world as follows. Every decade, to me, is super weird, but the 1980s and ’90s pretended they weren’t weird. The ’80s pretended to be good versus evil. The ’90s pretended that good won. But when crypto comes and persists, you have to drop all pretense that the age you’re living in isn’t totally weird.

You have internet crypto, and everyone admits, right now, everything’s weird. And that, to me, is the fundamental break with the 1990s because everyone pretended most things were normal and that Seinfeld was your dose of weird, right? Jason Alexander — that’s a very manageable weird.

KLOSTERMAN: Oh, absolutely.

COWEN: Some guy in an apartment in New York City cracking sarcastic jokes — like, whoop-de-do.

KLOSTERMAN: The ’90s — there was not the sense that culture was unraveling, which I think is a common feeling now. That crisis is not unmanageable.

I have a financial adviser, and he always wants me to take more risks. But I always have this fear that at some point, the way the economy of the United States works — it could just collapse. He always tells me, “Well, if that’s your concern, it’s a concern for everybody. You can’t build that into your portfolio, the idea of what happens if there’s a catastrophic end to capitalism.”

As an economist, what is the likelihood of — the way our economy is built — just completely hemorrhaging and falling apart? Would you say there’s a 2 percent chance of that? A 20 percent chance of that? Is it always 50–50?

COWEN: I don’t think economists are especially able to judge that. I am mostly optimistic, and the biggest risks I worry about are at the level of international peace: China, Taiwan, Russia, Ukraine, right? Big problems that I’m sure I don’t understand, but I’m not sure they’re going to work out well.**

I used to think the countercyclical asset was to have a second residence or savings in some other country. But increasingly, I’m wondering if the countercyclical asset isn’t the United States, and you’re already, in a sense, over-invested in it. Maybe it’s parts of Florida are the countercyclical asset. Wouldn’t that be weird? How about North Dakota, even? Not impossible, right?

KLOSTERMAN: Like buying land, you’re saying?

COWEN: There’s fracking, climate change — it could become warmer — all the better for agriculture. I know there are nuclear silos there, but I don’t really think anyone’s going to attack. You can have cheap hobbies, watch basketball, enjoy the internet, listen to your music till you die. My guess is you’re more invested in the countercyclical assets than your adviser thinks and than you think, which does mean you can take more risk.

It’s the person who lives, say, in Singapore, where if China becomes a truly dominant Pacific power, might start feeling they’re screwed. They’re the ones that have a hard time truly diversifying. You don’t.

KLOSTERMAN: It might be, though, just what your personality is like. There’s a certain personality whose goal seems to be to make more money, and my personality is, “Don’t lose the money you’ve made.” I seem so lucky to have had things work out the way they have. My fear always is that, in the end, I’m going to have nothing again. Somehow, I’m going to have put all this time in, and done all of these things to accumulate this wealth that seemed absolutely unfathomable to me for most of my life, but somehow, I’m going to end up exactly the way I started.

COWEN: It’s not going to happen unless you blow it through some weird addiction. **I would say high-quality real estate and cheap hobbies — I’m sure you have at least one of those right now, probably both — are the best hedges. You’ve got them. Take more risk.**

KLOSTERMAN: Okay.

COWEN: You are human capital, right? No one can touch that, short of you destroying yourself or just dying. The more money you spend . . . like spending money is insuring against an early death, because if I hit 96 years old and I’m broke, I’m like, “Oh my goodness. I made it to 96. I can at least read Wikipedia every day. This is still pretty awesome.”

KLOSTERMAN: Do you have kids? Oh, you did, you said that.

COWEN: Yes. She’s a huge fan of yours. She just had a daughter, a baby girl — beautiful.** I can enjoy her for free. I’m hedged. The real risk is premature death, in my view. You want to do things that are fun now, so if you die when you’re 63, you still will feel, “I got my stuff in,” whatever that’s going to be, and I bet you do that.**

KLOSTERMAN: Well, that’s an interesting way to look at it, I guess. I don’t know if I look at it that way; 63 — I’m 14 years away from that. Do I even look 14 years ahead? I don’t think I do. I feel like I’m almost trapped in this perpetual now, where it’s hard for me to think about my life in the future but very easy to fixate on my life in the past.

COWEN: It probably means you should take more risk. If you just hold safe assets, and we have above-average inflation, you get hammered, right? You lose compound returns every year, that cumulates. Real estate, equities — you at least have a chance of outrunning the demon, so to speak. You can always earn more. That’s another great thing about being in your position.

KLOSTERMAN: True.

COWEN: Until you’re senile, you can supply more labor, earn more, give talks, write more books, consult, teach — whatever you want to do. You’re golden.

KLOSTERMAN: Well, we’ll see. We’ll see.

COWEN: We will see.

(2)

[In response to what project Klosterman is going to do next]

KLOSTERMAN: […] Well, I am just trying to appreciate the high likelihood that in some distant future, I will look back at this period of my life as the best period I had. I’m trying to stay conscious of that as it’s happening. My daughter is six, and she still likes me to lay in bed with her and hold her hand before she falls asleep. Sometimes that’s a drag. Last night, for example, I wanted to see what was going on in the football game, and I was, “Well, you know . . .”

But then, another part of me is like, when I am dying, and I’m thinking about the moments in my life that mattered, it’s probably going to be things like lying in bed with my daughter and holding her hand in this extraordinarily intimate situation. We’re so close to each other, both physically and intellectually, that if I could build a time machine on my deathbed, that’s probably where I’d go back to.

What I’m really trying to do now is try to be cognizant of the fact that all of the things that I wanted in life — I’ve got them, but it’s way beyond it. I don’t know what you’re supposed to do when your actual life has completely usurped any dreams you had, but that’s totally how it is.

Like I said, I used to read Spin magazine in college. When I worked there in the early 2000s, all my friends from college were like, “Ah, your dream, you’ve realized your dream.” I was like, “I never dreamt that when I was reading that magazine. I knew somebody wrote it, but I didn’t think I could get that job.” I never imagined. I was always thinking if I wrote one book in my life, that would be amazing, but now I’ve written 12.

Why doesn’t that make me completely happy? Why am I not completely satisfied by the fact that everything that I was hoping for has not only happened but happened many times over? Because it doesn’t. In some fundamental way, you stay the same. In some ways, I feel the same as I did 30 years ago, even though my life then — I would never want to really revisit except maybe on a vacation, but I wouldn’t want to re-experience it.

That’s not really an answer to the question, but I guess the answer is that I’m almost not thinking about what’s next. I’m trying to think about what I’m doing now and failing.

COWEN: There’s an old 17th-century French saying I’m quite fond of, and it goes something like, “Things are never as good or as bad as they seem.”

KLOSTERMAN: It’s true…