Tyler Cowen: prediction

Transcript context

…I broadly think people overpredict evil and underpredict competence. I thought I was sophisticated for believing this, and then got to my adult life and realized, “Oh, wait, evil actually exists. I need to increase my predictions, but maybe not to the level that society generally predicts it.” Places where there is much less fraud than I expect there should be — one place where we detect much less fraud than I would expect us to detect is in insider trading and other forms of, obviously, illegal market manipulation. I’m undecided on whether that is truly, truly rare relative to the size of all market participation, or we are just abominably bad at detecting people that do it with a B-plus-student level of execution ability. When the SEC announces, “Hey, we got this person for insider trading. Here’s the evidence. They did it on their work computer at Goldman Sachs after googling, ‘How do I get away with insider trading?’ on their work computer at Goldman Sachs.” That is barely an exaggeration, by the way. Then they left a huge paper trail. This repeats in all the SEC’s press releases, and so I’m wondering, am I getting a biased look at the world? Or are we only detecting the dumbest possible criminals? Or is it that no one does insider trading after they achieve some level of competence because there are easier ways to make money that don’t involve going to prison? For a while and continuing, I thought that crypto was drawing a lot of the fraud out of the more traditional sectors of the economy, because if you do it in crypto, that wasn’t fraud, or it was fraud that you would get away with and make a substantial amount of money doing. You could do it in broad daylight and still get invited to the best parties. But I don’t think that is fully explanatory. My model is that there should be much, much more fraud happening in the legitimate parts of the economy than there is in crypto. Yet we can see the obvious frauds in crypto and the investigation of those obvious frauds. We don’t have nearly that level of visibility into it in the real economy, so I continue to be conflicted by this. As we’re speaking in October of 2023, Elon Musk has suggested that he will take X — formerly Twitter — and turn it into some kind of universal payments app. What’s the chance he can succeed with this? If you’re bearish on it, what’s the fundamental problem? If he hypothetically does that, he will likely hypothetically be attempting commercial negotiations with a company that I previously worked for. I’m absolutely not speaking for them in the following. As a neutral market observer, it seems extremely unlikely that you will successfully embed payments into the Twitter experience, the X experience, these days. I feel journalists feel some obligation to call it X now that the official name is X. Twitter will always be Twitter for me, so I’ll call it Twitter. The thing that users expect to get out of Twitter doesn’t involve payments, doesn’t typically involve interaction with businesses or even, generally, with individuals that they’re on a repeated interactive basis. They get an entirely different basket of goods out of it. Simply grafting payments onto that basket of goods will not make people adopt the payments. I understand, from a product management perspective, how you could believe that that would be fantastically valuable if you got it to work, because the super apps that exist in large portions of Asia are fantastically valuable businesses. They have figured out loops that get users to adopt it for one feature and then adopt all the other features because it’s already on your phone, and the biz dev to get it pre-installed on all the phones, et cetera, et cetera, et cetera. This is much harder than net gloss I’ve just given with it. The fundamental reason why I am extremely bearish on it happening for Twitter — and I would put the percentage at below 1 percent, far below 1 percent — is that this is very, very hard. It feels unlikely to me that the organization that is Twitter is resourced or competent enough to make this happen. I will say, I’m an enormous fan of Twitter. I think it is actually descriptively one of the most important products that exists on the internet because it has not solved, but ameliorated a lot of cross-organization coordination problems that happen in very important places. [laughs] It is broadly under-appreciated how Twitter is the message bus, the sub rosa coordination mechanism for the United States federal government, for every counterparty that the United States federal government or any agency or individual faces, for the media, for everything. People see Twitter, and they see celebrities posting and the phenomenon that is shitposting, et cetera, et cetera. To a very real degree, it is an integrated part of the operating system that is the world, but that doesn’t mean that you can graft payments onto it and succeed just because you want to.…

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