Will AI Take Your Job?

Welcome to "The Informed Investor" where we break down the latest financial headlines, bringing in research and insights to help you separate the news from the noise. Welcome to "The Informed Investor," a show brought to you by Dimensional Fund Advisors. We are a $900 billion asset manager with offices all around the world in 15 different cities. And today we are coming from our Charlotte, North Carolina office. We are hosting an educational event. And you think about Dimensional, we've been very blessed for over 40 years to work with some of the brightest minds in academia as well as in the finance industry, many of whom have worked at the University of Chicago. And that's exactly what we have going on here today. And we have Professor Kevin Murphy joining us from the University of Chicago, where he is a professor of economics as well as one of the most respected economists here in the country. So today's topics, we are going to get into the workforce. We're gonna talk about how technologies, like AI, impact the workforce, the way the workforce has to adapt. And we're gonna apply some other factors to that, thinking about demographics, thinking about education, all how that applies to the workforce, ultimately trying to meet the needs of businesses that are out there. So with that, let's get started here. Professor, it's great to have you. Thanks for joining us today. Ah, my pleasure to be here. Always fun to talk to you and the other folks here at Dimensional really put some perspective on us who do economics but do it mostly in academic settings. So it's great to get out here in the real world and talk to people for a bit. Well, and you're here in Charlotte to present actually at our conference that I mentioned a moment ago. So I appreciate you taking a little time to do a little side hustle here and enjoy the show. Yeah, I'll try. Probably some of the stuff I'm gonna talk about today here in Charlotte we'll come up in our discussion, but you'll be the judge of that 'cause you're going to run the show. So I'll do my best to respond. Alright, well let's go back a little perspective about you and sort of your background. So you went to UCLA? Yeah, I was an undergraduate at UCLA where I started studying economics. I was very fortunate to get introduced to a number of very famous economists at UCLA, many of whom came from Chicago, which kind of explains how I ended up back in Chicago after that. And they really gave me an introduction to applied economics that is using economics to understand the world. And when I got to Chicago, that tradition continued with all the great economists who were there when I got there. Are you from California? I am. I grew up in Southern California. I grew up in Inglewood, California, right by the forum in California. And I went to UCLA as an undergrad. I had the great experience actually working in a grocery store both during high school and through my undergraduate career and even in the summer my first year after graduate school. And that was good for me because I learned a lot about how the world worked 'cause I could see the economics that I was doing in class but also see the economics that underlied that business. And it's surprising to me and to others how often I use grocery store examples to kind of illustrate how the world works. And then you got tired of the perfect weather, I guess, and went to Chicago. And you've been there ever since. You got your PhD at University of Chicago and been teaching there since? Yeah, I got my PhD in the econ department at Chicago, actually started teaching at then GSB what later became Booth when I was still in the PhD program at Chicago. And then went on to become an assistant professor and then eventually a full professor. And I've been at Chicago since 1981 when I came as a graduate student. Tell us a little bit about some of your areas that you like to love to dive into. I know your expertise is more in microeconomics, maybe for the audience, just sort of, you know, compare, contrast micro versus macroeconomics and the areas you'd love to get into through research. Yeah, I mean I would say micro everybody hears about macro 'cause everybody hears about, "Well, what's going on with the unemployment rate? What's going on with GDP, what's economic growth gonna be? What are interest rates gonna be?" I am more from the micro school, which focuses on how markets work. Now that might be as small as the supermarket. You know, I also do a lot of work in antitrust. So in trying to understand antitrust issues like, you know, Google or Facebook or Apple or any of the things that are out there. You kind of have to understand how the marketplace works and why the world is organized the way it is. Fortunately, and as economists have realized this more and more over time, even those macroeconomic questions, they're often best approach with microeconomic tools. And Chicago was one of the leading places in the country at really bringing in that revolution. You go back to Milton Friedman, everybody's heard of Milton. He was both a micro and a macro economist. He was just a fantastic economist in general. But his approach to macro, whether it was talking about money or talking about monetary policy, really used microeconomic tools. And then Bob Lucas, who took over from there, you know, in finance, Gene Fama, you know, he has a very economic-oriented approach that, you know, so the Chicago tradition has always been one to think about. There's a core set of economic ideas that can be used to explain anything from the grocery store to Fed policy. So that's kind of the fun thing about Chicago. There's nothing that's off limits. Did you have Milton Friedman as a professor? I didn't have him as a professor. He left the right before I got there. I got to know Milton over the years when he was out at the Hoover Institution. So I got to know him, but I didn't have him as a professor. I had, Gary Becker was probably the most influential professor I had at Chicago. Armen Alchian and Ben Klein and Finis Welch were probably the most important people I had when I was at UCLA. Those are some heavyweights. Yeah, they were great economists. You learn a lot from talking to them. Alright, on this show we'd like to read some headlines. And then I'll get your reaction to them. So I've got two headlines for you here. Okay, the first one, and this is going to touch on AI 'cause we're gonna bring that into sort of how it's impacting potentially jobs in the future here. Okay, so the first one, "Artificial Intelligence Could Add 13% to Global GDP." And by the way, that was just a week ago. This is article was written the day before. "Could AI Drive the Economy into Recession?" Okay, so am I excited about the opportunities that AI can bring to the workplace? Or am I nervous that hey, we're gonna lose a bunch of jobs and we're going to reception? Both. Okay. I mean, and I was gonna talk about this today, that technological changes like AI and, you know, take the electric motor or the internal combustion engine, things like that have an enormously beneficial effect on the economy over the long term. And inherently they require us to make changes to implement those technologies. And two big changes always has to happen is one, we need to make the physical capital investments to actually implement the new technology. And you see that today with AI in the great demand it's making, for example, for power generation, you know. Here we thought we were in this world where we were gonna conserve on energy and use less energy and you know, now AI comes along and you suddenly realize, geez, this is enormous demand for energy. And you know, it's had an implication, for example, that, you know, we're now much more seriously looking at bringing nuclear power back. That, you know, not that long ago people thought, you know, nuclear power was behind us in some sense. It certainly wasn't viewed as a growth sector. But now the demand for energy by AI and we will make the kind of needed. The other kind of capital investments are needed, are all the complimentary assets required to use AI. And that might be in the downstream, say medical areas where AI is probably gonna play a big role. And in doing so, it also affects the workers because it changes the types of workers we need. And it reduces, and this is where the recession view comes in, it reduces the demand for lots of different types of workers because it does the work that people themselves used to do. On the other hand, it raises demand for other workers who need to produce the products that are complimentary with AI and also can use AI to make valuable products downstream. And you know, one of the things I most dislike for somebody to tell me as a student is, "Oh, this is unprecedented." You know, because it's a useless concept. It's a useless concept because there's always precedent. They're not always perfect precedents. AI hasn't happened before, but we've had tremendous technological changes that have happened. You know, you could go back to the late 19th century, early 20th century and the mechanization of agriculture that, you know, if you go back to the late 19th century, we had like 60% of the population in agriculture. You know, that declined dramatically, you know, really rapidly from the early 1900s through the mid-1900s where, you know, and then it's continued to decline since then. Yeah. What is it at today? Low single digits, you know? And you know, not just farmers, but farm laborers, you know? We had 20% of the population were farm laborers, right They were just physical strength. They were out there and they were displaced by the mechanization that happened in agriculture. And even though we have far fewer people, the output grew tremendously. And this is another thing that people often think incorrectly about that is one of the sectors where there's been enormous technological improvement is agriculture. And you look at, for example, the output of corn per acre. And you know, starting in the mid-1930s after basically 70 years of no progress, that output per acre was constant. From the 1860s up till 1930s, we've been on a straight upward trajectory. And you know, I think six or seven times the productivity per acre, a lot of that through a series of technological improvements, whether they're in the fertilizer, whether they're in the seed. And farmers had to adjust to that. That is, you know, we think of farmers as like, you know, country bumpkins, but they're not. It takes a lot of sophistication to run a modern farm. You have to know a lot. And one of the lessons that came with the advent of hybrid corn in the 1930s is that it benefited educated farmers much more than it benefited less educated farmers because they were better able to implement the new technology. So one of the things that is out there and will be out there today is you want people to be able to adapt because predicting where technology is going to go isn't as easy as you think. A couple examples that kind of come to mind, it wasn't that long ago that people said, "Well geez, computers and computer technology is the future, so I should be a coder." And what we didn't think about is that computers are really good coders too. And you know, that maybe computers not just need coders, but they can replace coders. Another example is what we're doing here today, that you go back to the 1950s and one of the things that people thought was television would revolutionize education. That boy, we could just record the best teachers and play it for all the audiences. Didn't happen, didn't work. And Covid kind of showed us that it doesn't work, right? But we knew it didn't work based on what had happened over the preceding decades. So it's not that easy to predict how they're gonna change things. But the two things that really make us be able to take advantage of technology is one, making those capital investments that implement the technology and having the workforce adapt to that technology. And those are the two things that we need. So if you go back over time, like AI, the idea of innovation and technology is not new. Not at all. Not at all. It's different. It's happened over... It's a series of things that have happened. It's, you know, you can go back and you have, you know, go back far enough and you have the agricultural beginning of actually human agriculture, that's way back in time. But more recently, you know, you had the electrification of the economy and the electric motor. More recently the electric motor has revolved again to be a much more controlled source of power than it was. And so the motors that drive everything that we have, all those little devices you have that have a little teeny motor in there that can do all kinds of things that it used to take people to do. You know, all those things have happened one on top of the other. So each one's different, but the fundamentals are the same in terms of capital investment and how the workforce adapts is what I'm hearing you say. Why is this so hard to make predictions about what an innovation may mean in terms of jobs, businesses, things like that? Because I heard you mention that, that they're almost always wrong. Well I don't wanna say they're almost always wrong. It's not as easy as you might think. And part of it is this idea that technology is both a substitute and a compliment at the same time for other things. And you know, the coder example's a great one. It takes people to code to create the AI, but once the AI's created, it can displace the coders because it can do the coding for them. So it's that dual nature that it's kind of adding and subtracting at the same time. We're confident that both of those will happen. We just don't know which one is gonna play out to be more important than the other. So it's not that we don't kind of understand how technology works, it's just we don't necessarily understand how it's gonna play out. Give you another example. So for example, I don't know if you know this, but since about 1950 or so, been enormous expansion in the productivity of milk cows. That in 1950, I think it's about five or 6,000 pounds a year of milk from a average cow that number's like 28,000 now, it's like fivefold increase. Over the first part of that period, what that led to was a shrinking of the herd. Basically the herd shrank 'cause each cow was producing more milk. And with more milk per cow, we didn't need as many cows. However, since then there's been basically a stable herd and just growing production of milk. And where's that going? Well, it's going into cheese, is probably the biggest growth. And all those pizza places you see out there a reflection of kind of the... And so it would hard to know whether that meant fewer cows or more cows, right? 'Cause on the one hand, making cows more productive means for a given amount of milk we need fewer cows. On the other hand, milk's cheaper so we can use it for more stuff. So that conflicting force is partly what makes it hard. And you know, there's often a sequence where initially, you know, it may displace some people, then we figure out how to use it, then it'll grow and then eventually it saturated the kinds of things we can do. And then we'll start shrinking again. So it's not even monotonic necessarily. Some of those examples you gave with technology, I'll call it more of a working, I dunno if it's low skilled, but manual labor, manufacturing, things like this. Is this one a little bit different as you think about AI in the sense that it's more white collar type jobs that might be displaced? Have we ever seen something like that before? We have, I mean we, you know, for example, in the early growth of manufacturing in the first half of the 20th century, we replaced a lot of craftsmen who were skilled at making products with a combination of machines and operatives, right? That is, you would have a lower skilled operative running a machine who would be producing the product. So you wouldn't need a craftsman say, to actually be doing the whole thing by hand. So we've seen some of that. That was more, not so much on education based skills, but on, you know, market acquired skills. Skills, obviously outside education. But that would be an example where it actually went the other way. By and large technology has changed, tended to favor high skilled workers and displace low skilled workers. You know, mostly because the limitations of the technology. That is, you know, the big difference between machines and people is people are enormously adaptable. They can do such a wide range of things. And thank God we can do a wide range of things because, you know, if 60% of us had to work in agriculture and that was the only thing we'd know how to do, we'd have a bunch of people living in poverty today because yeah, they've been displaced by the technology that happened in agriculture. Fortunately, those people, you know, not necessarily the exact same people, but that part of the population has been able to move over to other things. And they did that, for example, in the 20th century by a big expansion in education, not higher education at most of the time period. It was fraction of people graduating from high school in the late 19th century or maybe 1870, 1890 2% or 3% of the population graduated from high school. There was an explosion in high school graduation that happened between 1910 and 1940. Claudia Golden, who won the Nobel Prize just a couple years ago, kind of well known for her work, talking about the growth in education. And that really allowed us to adapt to that big displacement of workers that happened because power became so cheap and things like that. But, you know, the electric motor at that time and the internal combustion engine were really sources of power and so displaced people as a power source. But there were many things that those technologies couldn't do. One of the things you point to is, well, maybe AI can do some things further up the skill spectrum than that. And no doubt it will, but it'll also displace lower skilled jobs at the same time. You know, so it may be great at reading x-rays and things like that. So radiologists might want to be aware of where that's going. 'Cause those are the kind of tasks, from my understanding, AI are well set to do, but AI can also do more mundane tasks. It's really good at categorizing and doing things incredibly, incredibly quickly. And that's kind of the difference between people and machines. People can do all kinds of things and switch from one thing to the other. Machines historically have been more specialized. Okay, when you think about then, you sort of alluded to this, but who benefits then? Let's just call it these efficiencies that, and I'll call it AI and that's a big bucket, but is it the workers? Is it the companies, the inventors? Well, they both benefit in different ways. First off, the standard way we think about it is for major innovations, inventors capture a very small part of the value that they create. That is, you can get very rich, but nonetheless, most of the value you created is captured by others. And now when technology improves, it typically has a benefit like to both capital and labor that workers and businesses. But what happens is that higher return that businesses are getting induces more investment and more investment in that technology drives down the return to that technology. The productivity of that technology is still there. It's not driving down the productivity, it's just driving down the part of the productivity that goes to capital. And so what we've tended to see over time is that technological improvements have led to growing real wages, but the return to capital stayed essentially where it was in the early 20th century. I mean, really there's been very little change in the return to capital while the return to workers have gone up, you know, almost, you know, almost over magnitude. But that happens through the marketplace. That through the marketplace, the higher returns to investment induce more investment, which competes the productivity back to workers away from the inventors. The worst thing you could do would be to create the technology and then not allow the investment that then subsequently competes the return back to the workers, right? Because then you'd cement in the return for capital that would be there. Now the other side is within workers. So capital's, you know, what we call an economics, very elastic supply of capital, basically keeps the return to capital down to competitive levels. It's not that you... And there's more and more capital. So in terms of them, they're benefiting on the quantity side, more and more capital. Within workers, though, you need that same investment. So for example, over the 20th century and really into the 21st century, the growth in technology has favored skilled workers over less skilled workers. As you said, maybe that won't always be the case, but that's been true for 100 years that, you know, on average technology has favored skilled workers over less skilled workers. But what's allowed low skilled workers to gain is growth in the supply of skilled workers. In the first part of the 20th century, it was growth in high school graduates allowed the remaining people who didn't have a high school degree to still get a benefit because there were fewer of them out there. Even though there was less demand, there was less supply. And that's a prescription for higher prices. In the post-war period, we had a big expansion in education, a secondary, I mean, sorry, higher education. That even though there was growing demand for higher education, that higher supply kept the return in check. In fact, the return to college actually fell over the 1970s, mostly because this huge baby boom cohort that was highly educated came into the labor market. Now since 1980, we've had continued growing demand for skilled workers, but the growth in supply has slowed, as a result the return to going to college more than doubled over that time period and still remains high today, even though supply is starting to respond. Now, you might ask yourself, "Well geez, why is supply so slow?" Capital seems to respond pretty quickly, but, you know, why does labor supply? And the answer is people are incredibly durable. They last a long time. You think about, you know, we're producing productive assets. I'm gonna hate to be so crass to think of people as productive assets, but if you view... Hopefully they're productive. Hopefully they're productive. But, you know, we're training workers today who are going to be for, they're gonna be living 70 years, 80 years from now. They're gonna be working 40 years from now. That's a very long time. Not that many long lived assets like that. The other side is they take a long time to produce, right? You think about how do you produce a PhD? Well, you start when they're in preschool, right? 'Cause you can't just say, "Okay, I got this 4-year-old, I'm gonna send him to college, you know?" No, and so it's a cumulative process. It takes time to build. And so what happened when the return to schooling went up in the '80s and '90s is people responded. They said, "Geez, I gotta get educated." Unfortunately, a lot of them didn't have a very good elementary and secondary education. So a lot of them went on to college, but most of them didn't graduate because they really weren't prepared. Now we're starting and hopefully starting to do a better job and there's where we have a bit of a mixed bag because I think a lot of our suburban schools and other schools have responded and they really realized we gotta invest a lot in our kids. But a lot of our larger school districts have been slow to respond. And you know, you worry about that because you know that's gonna keep those workers behind. But when you keep some workers behind, you don't only hurt those workers, you hurt all the other low-skill workers 'cause they're more low skilled workers. And when there are more low skilled workers, everybody earns less. It's all supply and demand, right? The whole world is supply and demand. I come from Chicago, that's the only thing I understand. So, everything's supply and demand. You went to the education, let me just go with there. And particularly I wanna get your thoughts as an educator. So here is a headline. This came out just a few weeks ago and the headline reads, "Twelfth-Grade Math and Reading Scores in the US Hit New Low. So going back to then the supply that's trying to get created, the supply that workforce, we're not there. And their quality on average of education. I think that is a problem. And the reason is, those skills are the kind of skills that I'm not being trained... When I learn how to read, I learn how to do math, I learn how to take an analytical approach to things, I'm not being trained for a specific job. I'm being trained how to think, how to some Jerry general skills that I could use, whether I'm gonna be an engineer, whether I'm gonna be a plumber, whatever I'm gonna do, I'm gonna be able to use those skills. And so in this world where we know things are gonna change, but we don't know how they're gonna change, I worry the most that we're not giving the people the things we know are going to be useful no matter how they go. And not only are they gonna be useful, no matter which direction we go, all the evidence we have is that people that have a good solid beginning education respond more. They're able to adjust more. So in a world where you don't know what's gonna happen, those kinds of skills are even more important. 'Cause they're not only useful everywhere, but they help you move from one thing to the other. And, you know, if there's one, you know, I talked about people and you know, big things about people. One is they last a long time. Number two is they kind of build on themselves. You know, you build a person tomorrow on the top of the person that was there yesterday. You know, so it's a cumulative process that you have with people. So you really gotta think about the world that way when you think about how the world's gonna be affected. There's some quick fixes you can do to solve some of the educational challenge? You know, and there's disagreements about this. I'm a big fan of charter schools. I think charter schools, particularly for lower income and minority communities, have proven to be a tremendous advantage. And you don't have to take my word for it. All you have to do is look at the lines that show up when there's a charter school available, right? You know, New York right now is limiting their enrollment in charter schools. And they're big lines. They're big, you know, cues to get into those programs. And that's the other thing that's always impressed me is, you know, we tend to think, well it's gonna take experts to decide this. You know, people are a lot smarter than we often given credit for. Even low income households are, you know, they know what they need to do. It's just often we have a system that doesn't necessarily allow them to effectively utilize those choices. So I do like charter schools in that regard because number one, they create opportunities for people. And number two, that opportunity for some people in some sense benefits even the people who don't go there through the mechanism I talked about before. But also they create competition for the public schools that hopefully will then have to respond in some way. The response you don't wanna see is say, "Oh, let's cut back on charter schools. There are too much competition for the public schools," that's not a good response. Yeah, choice is valuable. It drives competition, which drives hopefully better outcomes. Yeah, I mean, and I was gonna talk about this today a little bit. It's really, as much as we like to quote "manage progress," it's a very hard thing to do. So, for example, if you look at the history of railroads in the United States, throughout most of the 20th century, really up until 1980, they were incredibly highly regulated. And they were regulated because they were viewed as being so important that we needed them. They were so important for everything that we do. And they were regulated with the idea that we needed to protect the people who needed the railroads. So what that did though, and it wasn't that anybody was trying to hold back progress. It really led to a management of the railroad system that was very focused narrowly. So it was like, "Oh, we gotta keep this railroad because the guys who live in this town are really, really dependent on that railroad." And if you look at railroad productivity, no, no growth, no growth. And then the Staggers Act comes along in early in 1980 that gave railroads a much greater flexibility on how to invest and how to run. And what you see is just productivity took off. And in that case, productivity took off because we were able to redirect investment to where it was productive. And take investment away from places where it was unproductive. You know, because the old system had a bunch of railroads that were unprofitable. Now, money's gotta come from somewhere, right? 'Cause you know, conservation of matter, basically you have to get the money from somewhere. So implicit in the subsidy to those railroads was attacks on the more productive railroads. And so what the Staggers Act allowed to was like, you don't have to subsidize all these things. So the track miles in the United States fell a lot. we got rid of trackage that just didn't make any sense. But we made our investments into the tracks where we needed more capacity. And you know, as a result, productivity went up, prices for railroads went down and traffic soared. And, you know, created a lot of competition for trucking, for example. It's interesting though, this inability to see the whole, it's not really a fault just of people, it's just a characteristic of the world that, you know, technology comes in, it's easy to think about who's doing something right now that that technology's gonna displace. It's harder to imagine the opportunities that are gonna arise 'cause we don't know where they're gonna arise and we're gonna be wrong about where they're gonna rise. You know, that's one of the reasons why productivity doesn't just immediately follow technology. Because we come up with a computer technology for example, we try it in 57 different places, maybe 36 of those places it doesn't work. But eventually we get rid of the 36 that don't work and we're left with the 21 that did work. And boy, that's great benefit. So there's often kind of a adjustment period where we're trying to implement the technology and it just doesn't necessarily pan out the way it did. And we've seen that in computers. We've seen that in other areas. I was talking about this earlier, you know, there was a view early on that TV was gonna revolutionize education. Well, TV did a lot of things, but it didn't revolutionize education. It did a lot of great things in other dimensions. Yeah, it got sports to us. Changed the sports business dramatically. I mean it, you know, the sports industry has changed where, you know, if you go back not that long ago, very few teams broadcast their home games because that they viewed attendance at the ballpark as really the big money winner. And they were afraid if people could watch the game on TV, they wouldn't go to the game. What they now realize is that watching the game on TV is probably one of the best ways to get them to go to the game. Not that game, but another game, right? So you're building your fan base. And so more and more teams in sports have gotten away from the local blackout rule. Hey, let's go do some of your consulting work that you do. And you said you do quite a bit around antitrust and things like that. And some of these companies now have just gotten so big. The Googles and some of these, well, I'll default and call them a tech company I suppose. But I guess for what you're able to share, like where are we at? Is that something that's gonna be more challenging for these businesses depending on what the government does and tries to think they're too big so we gotta break them up? Well, I think navigating the regulatory environment, and I would say these are worldwide companies, remember, so you don't want to think about Google or Apple or anybody. They're US based companies, but their businesses are worldwide. So for like a lot of these companies, there are challenges in the US but there are even bigger challenges in Europe that is Europe is, you know, probably ahead of the US in terms of trying to limit what the tech companies can do. And they have a different concern as well, which is, you know, they're American companies, not European companies. So I think navigating the regulatory environment is a big part. I mean, you think about, you know, somebody like Google or Apple or Microsoft or any of those, it's hard to think about running that business without thinking about the antitrust side of the world. Whether that's needed or not, it's a reality. And one of the things is that I always try to figure out is like, well why is the industry organized the way it is? You know, and what makes the industry tick? And you know, I'm limited as to what I can comment on some of these 'cause I've done work there and I guess still got pending litigation, but I think we've gotten a lot of benefit from the tech companies and revolutionized our lives. I mean, you know, the cell phone is a remarkable device, right? I mean, you think about all the things that we do on a cell phone that we didn't before, you know, your calendar's on your cell phone, you do email on your cell phone, Pay bills. Pay bills on your cell phone, you know, take pictures with your cell, right? I mean cell phone has displaced a lot of the photography industry, right? That is the cell phone, you know, you guys actually have cameras, but I mean, a lot of these things, you know, most places I'd be doing a podcast, they'd have an iPad, I mean a iPhone, like on a tripod. And that would be, it does a pretty damn good job. It's so high quality. You know, it does. Well the problem with these high quality cameras, they show too much, all your little spots and everything else. Okay, but yeah, so no, I mean, I think we've gained a lot. I think people are worried not just about the competition issues. You know, one of the things that shows up a lot when you talk about tech is just control issues. They feel like, oh, they're running our life. They decide what I see, how I go, you know? And there I tend to have less concern. But let me kinda lay out the way I think about it, is, you know, there's no question that if you wanna become informed, becoming informed is easier now than it ever has. I mean, you know? Now when it comes to media, it's not clear. People always want to be informed, right? That is when it comes to how to, like, how to fix my car, YouTube has been fantastic, right? 'Cause I don't care what breaks on your car, there's some dude who made a video of how you fix it. It's shocking how fast you can get it too. How fast you can get it. But I'm telling you, it could be... You have a car that, you know, you have an Alpha Romeo, there's not that many out there, but there's some dude who says, "When this part goes out on your Alpha Romeo, here's how you fix it. You know, here's what you need to buy, here's how you take it apart, here's how you put it back together." I mean, it's been enormously useful in that regard. Similarly, if you wanna just learn a topic, you know, look at this video. I mean, people want to... How many of these you guys got out there and you're not the only guys. I mean, you can go out and get a video on just about any topic you want. Now you gotta sift through and find out which ones are good and which ones are not. That's probably not as hard. The areas where I think people have a problem is there are many areas of your life where you're not really looking to be well-informed. So for example, in politics, why do I want to be well-informed? I mean, I want to learn about politics I enjoy it, you know, it's part of my social life or whatever it is. And there's no reason to becoming law informed. I always give the example that, you know, there's no market for fake weather, right? There's no market out there for some guy to get on the TV's in Chicago in February and say, "Oh, another great day in Chicago, wear your short pants." You know, it's like that guy's off the air tomorrow because I go outside in my short pants, it's like, oh man, this is freezing. So, you know, on the other hand, in a world where you have, you know, there's not really an incentive to learn what's right, whatever 'cause what am I gonna do with it? You know, then people are gonna silo themselves if that's what gives them the most enjoyment. And we had a disciplinary device. I was talking to someone right before we got on the air here, you know, back in the days where there were fewer stations, the market was kind of disciplining. You had to kind of go down the middle to some extent because you had to appeal to a broad swat of the audience. Nowadays, that's not how you succeed. You succeed by giving a segment of the population exactly what they want, you know, and what they want is maybe what they want to hear. And, you know, so that's a challenge. And I think people do worry about that. Now on that, would I want to go back to a world where we didn't have access to all this information? No. And will we figure out ways to get around this? To the extent that's what people want, that's what we'll do. But the thing that worries me is not always what people want. I don't wanna put words in your mouth, but you generally an optimist in terms of their creativity that's out there. Absolutely. The ability to figure stuff out, things are gonna be better down the road. That's just what humans do it seems. Absolutely, I mean there's just, you know, we economists talk about a term called gains from trade. I mean, if I make the pie bigger, that's the most sustainable way to get more for myself because it's not coming outta the other guy's pocket. And so I'm very much an optimist. And I'm very much an optimist, not just in terms of how individuals act, but how we can organize society in ways, you know, that we can bring in institutions that make the world work better. I mean, I go back, I remember I told you I started in the supermarket. Supermarket's a phenomenal thing. I mean, it replaced a bunch of different places where you could buy stuff with a place where you can buy just about anything. And now the supermarket's been extended. I mean, the biggest grocery in the United States is Walmart. And that's why, because they don't just sell groceries, they sell all kinds of other stuff. And they're willing to sell groceries at very attractive prices to get people to come through the store because they're gonna buy not just groceries, but other things they sell at Walmart. So, you know, the market has been really, I think, tremendous at not just producing the products, but also organizing the way things work. You go back to your grocery store days, supermarket days. You obviously saw firsthand, go back to supply and demand and the impact on prices and things. But then also I suspect you learned incredibly valuable traits in terms of dealing with customers, suppliers Yeah, I think dealing with customers, dealing with suppliers... Has that changed over the years that you've seen with students coming through on their ability just engage with people? You know, one of the things that has changed is particularly high school aged kids don't even work. They don't take jobs as much as, like when I was a kid, I mean, that was very common to have a job. And I thought it was a very strong compliment to the education. I think I learned a lot working at work. The biggest thing I learned in the supermarket though, and this has to deal with both customers and suppliers, is the greatest market attribute that's out there is between a buyer and seller. Where the deal that is struck over and over again is, I'll give you a lower price if you buy more from me, right? It's the trade of price for volume, is everywhere. And that was true whether you negotiating with a supplier to say, "Hey, if you give me this much more off per case, I can put it on an end cap, or I can put an ad in the paper and I can sell 20, 50, 100% more, but I can only do that if you give me a deal, right?" It's a deal of like price for volume. And probably the concept that's helped me most in my work has been to see how that price for volume transaction explains so many institutional features that we see. You know, everything from credit cards to, you know, basically the credit card deal is merchants will take less on the credit card in exchange for getting more volume than they would if they didn't accept a credit card. And the consumers benefit through lower prices. And you know, business to business world runs on that all the time. You know, that, you know, you go to a supplier and you say, "Look, I'll buy more from you if you gimme a lower price." Then a supplier comes to you and says, "I'll give you a lower price if you buy more." And you know, somebody like Costco is the poster child, right? 'Cause Costco plays this game on the supplier side where they go to the supplier and say, "Look, I'm only gonna have one brand of ketchup. I'm only gonna have one brand of tires. But if you get my business, you get all my business." And they negotiate a good price. And then they go on the customer side and they say, you know, "Hey, I'm gonna take three bottles of ketchup and tape them together. And if you buy three bottles, you get a great price." You know, 'cause that helps them with the supplier, but helps them sell more volume. And if you go up to the counter at Costco and say, "Look, I only want one, can we cut this and I'll get one of them for a third to price?" The answer is no, because it's part of that price for volume deal. And you know there's just everywhere. It feels like everyone's a winner in that really. They are, that's the only win-win there is. If you just say, "I want a higher price," as a seller, The buyer says, "I wanna lower price." There's no mutual gain to say "I'll buy less and pay more," that's not a mutual gain either. The only mutual gain is I'll buy more and pay less. The buyer can gain from the lower price and the seller can gain from the more volume, which is why you see that so frequently. All right, last question for you then we'll turn you loose. Several of the folks at this conference, myself, in fact we were talking about it on our ride to the office yesterday from the airport here in Charlotte, that kids are in that college age or they're outta college. What advice would you give to somebody that's, let's call it the 19, let's call it the 18 to 24, what should I be thinking about in terms of my major in college where, you know, a few years ago it was this business information major was really, really valuable. And I think that's declined quite a bit with AI. So are there something out there? I guess my question would be like, how would these college students think about a career now with a little bit of the uncertainty of what technology may or may not be doing? I would say first off, don't give up on analytical skills. And you can get analytical skills all over the place. You wanna exercise and, you know, economics is a great place. What's good about economics? You probably won't use the tools in a lot of jobs, but you can learn analytical, mathematics is great for analytical skills. I would say getting those analytical skills are really important. The other thing is take what you learn in school and try to apply it every day. Just get the newspaper, read the newspaper and say, "How can I think about this using what I've learned in school?" And that's what I think a lot of students don't really do is to say, you know, "How can I actually use this stuff?" Because it's through the use that you really start to understand what it is you learned. And so I would give that piece of advice. If I was giving advice to parents, I would say, you gotta know your kid. Don't make them go to the school you'd want to go to. Because schools differ a lot in the mix of things they offer. And if a kid ends up at the wrong institution, they may not succeed even though they could have succeeded somewhere else. You gotta know your kid and you gotta listen to your kid. You know, I had three kids, they all went to very different schools. My youngest daughter was well suited for the University of Chicago. My other two kids would not have done well at the University of Chicago. It just wasn't this school for them, you know? And they knew it. And I knew it. And you know, fortunately we were able to get them into a school that fit their needs. You know, some kids, you know, can't make it in a school that has 500 personal lecture classes 'cause they need more one-on-one instruction. They need a teacher that making sure they're there every day. So, you know, you want to go to a smaller school. I would say those are the big things that you do. Keep in contact with your kids, find out what they're doing. You know, one of the things that, you know... If your kids ever call you on the phone, whatever you're doing, stop, answer the phone, right? I mean, I think that's probably the most important thing. The other thing is, you know, what really helped me, and this is more personal experience, was, you know, finding that professor that was doing something that I thought was interesting and, you know, whether it was being an TA or an RA or whatever, you know, if you can do that, I think that really helps you build your interest. 'Cause it's a little bit like trying to, it is like trying to apply it right now. So I guess that would be my advice. And you know, if you find out higher education isn't for you that, you know, you're just not the person who's gonna succeed in college. There are lots of other ways to go. But remember you're young and when you're young, it's the time to invest in skills. So, you know, pick something and work at it. You know, the people I know who, you know, one of the ways you don't become successful is always something different. You never stick with anything. But, so, you gotta get that fine line between, not experimenting at all is not great... But expertise. Expertise. In what you're doing, yeah. Pick up expertise because you know, you gotta have something you're good at. And you know, this is the most important, you know, I talked earlier about education, human capital, one of the biggest things about human capital is in a modern society, any one person knows a very small part of what we know. You know, in a primitive society there might be a guy who knows everything, he knows everything that anybody knows, this guy knows it. And in the modern world, that's not true. But the key is you don't have to be good at everything. What matters is how good you are at what you do. So get good at something and dedicate yourself to getting good at that. And that's probably the most important thing because you know, the fact that I know how to be a plumber, I may not need to know something else. Or if I'm a computer programmer, I might not need to know something else. Be good at what you do. I'm so glad you mentioned that. I was actually gonna mention that. Are we getting to the tipping point with universities not being so expensive and to me, you're introducing trade schools where you can be an expert in what you do. It can be a very valuable, or I should say a nice income occupation as well. Yeah, I think, you know, university's not for everybody. You know, you don't want to think that, you know, college for all. It's education, skills for everybody. Everybody needs to get good at something but it need not be what you get at the university. All right, I'm gonna summarize a couple of key takeaways that I've heard from our conversation here. I think one is innovation is good for, I won't say everybody, most people, some people get displaced, but overall has a positive impact in many areas and in many cases in increasing wages. Oh, for sure. As a whole. Okay. So that's the takeaway for me. Time with family is incredibly important to spend time together. Yes, people are important. Never forget that, people are the most important asset we have and the people close to you are your most important assets. So yeah, people as a broad sense are a most important asset, but your people are your most important assets. So I love that one. I loved your comment about just become an expert in something. There'll be value there. And then ain't nobody wants fake weather. That was the other one that I really liked too. Yeah, think about the world in terms of, yeah, those are the kinds of... There's a lot of discipline on information when people want good information. Less so when people don't. Professor, it was awesome having you on the show today. I really appreciate your time. Thanks for coming out. My pleasure, always fun. Pearls of wisdom all over the place and we're gonna go get it in our conference as well. Okay, thank you. Thanks so much. And thanks everybody for joining "The Informed Investor." Have a fantastic rest of the day.