<html><body>The Future of Culture in a Globalized World May 2, 2005 Unedited transcript prepared from a tape recording. <TABLE width="100%" border=0> <TBODY> <TR> <TD vAlign=top align=left width="25%"> 5:15 p.m.</TD> <TD vAlign=top align=left width="75%" colSpan=2> Registration</TD></TR> <TR> <TD vAlign=top align=left width="25%"> 5:30</TD> <TD vAlign=top align=left width="25%">Introduction:</TD> <TD vAlign=top align=left width="50%">Christopher DeMuth, AEI</TD></TR> <TR> <TD vAlign=top align=left width="25%">  </TD> <TD vAlign=top align=left width="25%"> Lecture:</TD> <TD vAlign=top align=left width="50%">Tyler Cowen, George Mason University</TD></TR> <TR> <TD vAlign=top align=left width="25%"> 7:00</TD> <TD vAlign=top align=left width="75%" colSpan=2> Adjournment and Reception</TD></TR></TBODY></TABLE> Proceedings: MR. DEMUTH:  Ladies and gentlemen, can we come to order, please?  We're coming down to the end of this academic year's Bradley Lecture Series.  We will conclude in a month, on June 6th, when John Yoo of Boalt Hall and AEI will deliver the final lecture this year on Fighting the New Terrorism.  We will be back next year, and I will have a little bit of a teaser of next year's lineup a month from now. Our lecturer this evening, Tyler Cowen, is a man that although I have just met him for the first time, is somebody that I have long both greatly admired and deeply resented, first because he's a very young man.  He received his Ph.D. in economics from Harvard in 1987, after having done his undergraduate work at George Mason. Secondly, as a young man he fell into the category of academic administrator, one of the really benighted parts of the academic world and something that I belong to myself.  He has been for many years the Director of George Mason's Mercatus Center, which studies regulatory policy, and he has also been the Director of the James Buchanan Center for Political Economy. And yet he has somehow found the time, at the same time, to be a professor of economics at George Mason and at their Center for the Study of Public Choice, and to write prolifically both on issues of the day and some very important and original academic works.  I don't know how he does it. But the icing on the cake is that he also finds time to write one of the most widely followed guides to dining in the Washington area, his Ethnic Dining Guide on the web, which makes it clear that he has dined frequently and heavily at almost all of Northern Virginia's good restaurants, and yet he still seems to keep fit and in shape and ready for more. Among his books, he wrote one back in the early '90s with Randy Kroszner of the University of Chicago and AEI, titled "Explorations in the New Monetary Economics."  But in recent years his attentions have turned to the economics of culture, and he has written several extraordinarily interesting works, most recently in 2002 from Princeton University Press, his "Creative Destruction:  How Globalization is Changing the World's Cultures."  And previous to that, in 2000, from Harvard University Press, "What Price Fame?", a study of the economics of fame and stardom.  And two years before that, also from Harvard, "In Praise of Commercial Culture." He is a man of extraordinary talent and great output, and we're delighted that we could finally attract him to AEI, to the Bradley lecture podium, where his title tonight, subject tonight, will be "The Future of Culture in a Globalized World."  Please give a warm welcome to Professor Tyler Cowen. [Applause.] PROFESSOR COWEN:  Thank you for the very kind introduction. Bill Gates recently observed that 20 years ago you would rather have been a B student from Poughkeepsie than a genius from Shanghai.  Today you would probably rather be a genius from Shanghai.  And this is perhaps the strongest argument in favor of the ongoing globalization of the world, simply that it opens up new opportunities for people to construct identities, to build lives, to become wealthy, to move other places, to start businesses, to have a greater measure of political freedom, and these benefits of globalization are well known. Much of my work has focused on cultural globalization, and what I would like to do tonight is take a look at some of what I consider the difficult issues in cultural globalization.  But let me first start, as did Gates, with the positive case, which is quite strong in many dimensions. And the positive case is simply that if you look at most areas of culture or most cultural products, be it food or music or books or art--if you take a look at my on-line dining guide, it's on my home page, but it's about 70 pages single-spaced.  It's not just that you have your choice of over 10 different Bolivian restaurants, but you have cuisines from different regions of Bolivia.  There is simply much more choice today than there ever was before. I can remember when I first started working in this area, it was a big debate whether bookstores were getting better or worse.  That was at the time of bookstores in malls, so you would go to a Walden's, which we now would probably consider laughable in many ways.  And Walden's was driving out the independents, and people were complaining about this. But this debate really is over, and it has been won by the forces of commercialism.  There is really very little doubt that for almost all of us, we live in a better book world.  If you have access to Borders, Barnes & Noble, Amazon.com, various internet search services that I don't even know how they work, but they get you used books at very low prices, this is much better than the world of books we had before.  And maybe if you live in midtown Manhattan, you might have been better off with some of the independent booksellers, but for the most  part it's simply a story of more choice. So it's now pretty clear that culture will be giving us greater diversity, greater centralization, and greater choice,  The question now really is, what kind of choices will we have and what kind of choices will we not have, and what will be the difficulties as the world marches forward with this progressive advance of globalization, diversity, capitalism, and markets? And there's a few particular critical issues I would like to turn to.  The first has commanded a great deal of attention, sometimes on the Right, sometimes among neo-conservatives, but it's not a problem that I personally worry about much. And that is the claim that in a world of increasing diversity, we somehow do not have a cultural centrality; that we are all going off in different directions, we're all listening to different music, we all have different beliefs; and that somehow a polity or the United States cannot be held together without greater cultural centrality.  So this is the argument that too much diversity in the area of culture can be a bad thing. I think ever since 9/11 this argument has, for a number of reasons, been less persuasive.  But I would put the case fairly bluntly.  When I look at the United States, I see a cultural centrality not based upon the fact that we all listen to Bach, which we do not, or that we all go see the paintings of Monet, which we do not, or that we all read Mark Twain, which sadly we do not. But, rather, there are certain American values quite distinct from any particular style or genre or cultural creator, and those values would be things like innovation, entrepreneurship, generosity, and to some extent religion, and that those values really are our cultural centrality, and that those values are not only consistent with this increase in cultural diversity but those very values help drive that diversity. Because if you think about innovation, the internet; if you think about entrepreneurship in the profit and for-profit realms; if you think about generosity, Americans being the leading donors to the arts in the world, it's pretty easy to see how those values very much mesh with the diversity that we enjoy.  And when you look at generosity, it's a little known fact that for many art museums in the United Kingdom, the leading donors will nonetheless be from the United States. So that problem hasn't concerned me too much, but I think there's also the broader issue of, as we have so much change and so much diversity, what will survive and what will be fragile?  And how can we live with those underlying fragilities? It's quite important to realize that diversity and fragility are often two sides of the same coin; that you have diversity because you have underlying market conditions that will support a great number of niches, that will support creators doing many different things.  But you get a fragility because what people are doing depends upon those markets being able to survive and support them. So what I'm trying to do in some of my work right now is look at what I consider to be some of the more fragile areas in culture and see why it is that they are fragile and try to draw some lessons from that.  So my current project, for instance, which is just getting underway, it has to do with food markets, and in particular I'm studying the economics of barbeque. Barbeque is arguably a fragile area.  We all know today there are many food chains.  There are many barbeque chains, some in this area.  Maybe Red, Hot & Blue would be the best known one.  Barbeque chains tend not to be very good, and barbeque has remained--barbeque in its most classic, tastiest, most delicious form--has remained an extremely local art, and it has not been possible, as far as I know, to globalize classic barbeque and bring it to everyone. If you want classic barbeque, you still have to drive to the right part of Texas, perhaps near Austin; or you still have to drive to Lexington, North Carolina; or, depending on the style of barbeque you want, go to the right place in Kansas City.  So why is it that the barbeque recipe is not so flexible, but in so many other areas we find that diversity means that something can spread virtually everywhere? So if you look at the world of blogging, blogging is spreading everywhere.  There are blogs on virtually every topic.  There is now a blog on avian flu, of all things.  So blogging, it seems you get this proliferation of diversity, technology is replicable, it can spread, but barbeque, not. And it seems there's a few features of barbeque.  One is that the best barbeque requires very low rent.  Even if you go to Texas or North Carolina, best barbeque, it tends to be in what are called dumps.  They're on the side of the road.  Having a health code violation is considered a badge of honor in the very best barbeque restaurants. Working a barbeque pit requires a great deal of expertise, so it's not like a McDonald's.  You open up a McDonald's chain, you get some high schoolers to work for you, maybe some senior citizens.  They work for you for a year, they come and go.  You have a high rate of turnover.  But working a barbeque pit requires more expertise, a lot of strength.  You need, say, you know, a male who is at least 20 years old, which would be maybe a higher wage category. There are also health code issues, as I mentioned.  The knowledge of how to make the sauces and how to grill the meat, it's very much locally specific knowledge.  And it simply seems that barbeque does not travel well, and as we have tried to globalize barbeque, to some extent we've lost it. Now, I don't think we should interpret this as a pure or outright critique of the market.  Because if you look at the history of barbeque, barbeque exists in large part because of markets.  When people started having automobiles, you could drive to barbeques.  Barbeques started first in church picnics.  They started at political rallies.  And they became commercialized, and barbeque came about through this very process of commercialization, yet it has remained something quintessentially local. So there is always the question coming up, what will be the fate of the local in the world of the global?  I think we need to look at the 20th century, and it's really a very anomalous period in one particular way that I have in mind, and this is not commonly appreciated. If you look at the period from something like 1920 to something like 1980, this is very much an age of incredible cultural centralization in a manner which is unprecedented, and you have a large number of technologies and tendencies and developments all pushing you in this same centralized direction. So you have network television coming along.  You have radio essentially starting in the '20s.  You have the long-playing record, and later of course, the compact disk. If you look at transportation, you have the growth of an interstate highway system.  Looking at food, you have trucking, you have refrigeration.  You have refrigerators in trucks.  You have canning.  You have health codes. So you see, all operating at the same time, really a very large number of centralizing forces going on for a period of about 60 years, giving us a very prosperous culture, more prosperity than people really had ever imagined, but also a fair degree of cultural homogenization.  And I think in part that homogenization was simply due to this technological partly accident and partly coincidence of forces, that all of these tendencies were working together at the same period of time. Therefore, for a long time there was the issue of, does capitalism in fact bring us homogeneity?  But let's not forget this is very much a historical accident, and if you look at the tendencies from something like 1980 to the present day, and what most reasonable people would project for the future, we do not expect greater homogeneity but in fact we expect very much the opposite, greater diversity. So if you look at improvements in transportation, the big story is airline deregulation, and it's now much cheaper to fly everything around.  And if you want to eat at a restaurant in Washington and have them fly in mussels from New Zealand, salmon from the Northwest, foie gras from wherever, this is done on a regular basis.  No one thinks twice about it. The other major technological development of this period, of course, is the internet, and now broadband, if you want access to music.  I don't just mean in the last 10 years.  I mean even in the last six months, my increased ability to access music is simply mind-boggling. Right now I'm exploring a technology called podcasting.  Do you all know what pod casting is?  Podcasting is to music as blogs are to writing.  So now everyone is a DJ.  You have some songs, MP3 files.  You put them up on the web.  People can click on the file and they can listen.  This is something new.  We don't yet really have like a Google of podcasting to tell you what are the sites you ought to listen to. There is satellite radio in the last few years.  iTunes is quite recent.  It's simply mind-boggling, what is going on.  And in general, people have more income, more leisure time.  They are traveling more, and they have a greater interest in the diverse products of the world. So forget about this model from 1920 to 1980.  It is very much a historical anomaly.  The world will continue to move toward this greater diversity, greater choice, greater decentralization.  And there will be some artistic forms that perhaps cannot make the leap to being global, such as barbeque. But again, we should not get too fixated on what I call classic barbeque, you know, the barbeque of North Carolina, the barbeque of Texas.  Because if you just look at barbeque with a small "b", how many Korean restaurants are there in Annandale, Virginia.  One source counts 37.  I'm not sure this is an accurate number.  Of those 37, my guess is at least 30 of them serve barbeque. Now, it's Korean barbeque.  It's not Texas barbeque.  If you have been to an Indian restaurant, you will see there is tandoori chicken. That is in many ways a form of barbeque.  It's cooked in a clay oven.  It's very delicious.  So barbeque is in fact alive and well.  What's happening is that barbeque itself has become more diverse. So the concept of diversity is itself diverse, and what's happening is that the forms of diversity which we experience and consume are very much changing over time.  So this issue of what is fragile, you know, what will be lost, there I think the picture is a relatively optimistic one. But one of the areas that I see as a problem, and I think it's both a policy problem and I think it's a problem for actually having people feel good about themselves, is the issue of the relative status of different cultures.  And let me give you an example here. Let's consider Hollywood, where movies are made, some television programs are made.  Hollywood has, in some parts of the world, a very strong international position with regard to market share.  In a typical year in Europe, Hollywood movies might account for 70 to 80 percent of box office, depending on how you measure it. Now, if you look at Hollywood, Hollywood is something quite complex.  One of the leading studios is Sony, which is a Japanese company.  For a while the French owned Universal, which made talk of the cultural exception very interesting. A large number of actors and directors in Hollywood have been from other parts of the world.  This number is increasing all the time.  There are a large number of Canadians who work in Hollywood.  I've never seen data on this question, but my guess would be that the percentage of Canadians in Hollywood is about roughly proportional to the percentage of Canadians in North America. So Hollywood is itself very much a synthetic product.  Movies that are sold are geared toward varying tastes.  They are geared toward world markets.  But nonetheless, what you might call the international brand of Hollywood is very much a U.S. brand. So if a Hollywood movie is exported, there is a knee-jerk reaction in many countries that it is U.S. culture that is being supported, or in some cases Western culture that is being supported, and there are a number of countries, most prominently France and Canada, where there is really a great deal of political resentment against Hollywood movies. Now, in my view of culture, just about all of culture is very strongly synthetic.  It draws upon influences from all over the world.  The music we listen to, rock and roll has its roots in blues; blues has its roots in Western Africa.  Rock and roll is blues electrified.  Electronic technology comes from all over the world, draws on traditions from European song. There is really no art form that belongs to a single nation, and that's equally true of movies.  But nonetheless, when a Hollywood movie goes abroad, no one thinks we're watching a product that is, say, 1/13th Canadian and some other percentage European, some other percentage Asian.  It is seen as an issue of United States exporting its culture to the rest of the world. What has actually happened is a trickier kind of Faustian bargain.  What you would call the real U.S. culture, the local culture, classic barbeque, is exactly what's not being exported.  What we have done here is make up some other culture which is not what you would call our own classic culture, but it's polyglot and synthetic, and we sell that. But at the same time there is this perception of imbalance and unfairness, and it's because the credit for synthetic cultural products is not and will never be shared in what you might call an equal fashion or a just fashion or a proportional fashion.  There will always be certain dominant cultures, languages, groups, whatever, that will get more than their share of the credit. Now, UNESCO right now, there is going on a movement to check the power of Hollywood exports, and this is called the Convention on Cultural Diversity.  The Convention on Cultural Diversity is in part an attempt by France, Canada, and some other nations to take the issues of cinema and audiovisual products away from the hands of the World Trade Organization which, whatever its imperfections may be, is more or less a free trading organization, and to create a separate body within UNESCO that on issues of culture would render judgments as to when there should be free trade and when not.  And film then would come under the purview of UNESCO, and that if countries wish to erect trade barriers, the WTO no longer would have the ability to come in and rule that those trade barriers are excessive. So what has happened is, there has been a political backlash precisely because of this disparity of recognition.  So no matter what the wonders of our system may be for actual choice, if you look at what is on DVD or what kind of movies you will be able to download in the next five years, the choice of movies will be far, far greater than ever before, but nonetheless in terms of recognition, there is this institutional failure. My view here is that we do need to address this failure.  It would be a mistake to do nothing.  But we also need to recognize that it is partially this issue of recognition.  And there's a bit of a paradox for individuals such as myself who view themselves as defenders of capitalism or a market economy. And that is, we must recognize that whether it be cinema or other areas, that market economies do not typically reward the most meritorious with the greatest amount of fame, and they do not typically extend recognition in a just or equitable fashion.  If they did, there would not be a political debate to worry about, so the very fact that we have this political debate reflects a kind of market failure. Now, my vision of what the U.S. should do with the cultural diversity convention is not to allow a convention to move forward that would have nations closing off their markets or somehow carving out exceptions to WTO.  I think we need to recognize that we in this country have not extended enough recognition to foreign cultural products, and I would like to see a kind of positive U.S. program really to talk more about trade, help countries do more to export their products to the United States, create more open markets here. And the problem in the U.S. is not that we have tariffs or quotas or any other restrictions on foreign cultural products.  There is nothing legal stopping the French from selling more movies here.  The problem is simply that American consumers are not very interested; that most of the U.S. box office, as you all know, consists mostly of Hollywood movies.  It's a very small share.  Every now and then you get a breakthrough movie like "Amelie" or "Crouching Tiger, Hidden Dragon," but those movies are few and far between. So what I would recommend as a kind of workable compromise solution is for the U.S. Government to positively address this idea of a cultural diversity convention, and to do so by offering this positive vision where we grant some kind of marketing opportunity to foreign culture, some kind of greater publicity, some kind of greater recognition, in the hope that this will address or redress or rebalance one of these flaws of globalization.  And this harkens back to what I have called the unjust assignment of credit. Now, I've talked a bit about cultural fragility and cultural diversity.  There is another problem with cultural diversity that comes up in many cases.  It's not typically considered a cultural problem, but I think it's related to cultural problems. And there is the view promoted by people such as Benjamin Barber, that there is a problem with diversity because diversity--that is, cultural diversity--it gives too much cultural saliency to terrorists, to lunatics, to people who are somehow disruptive of political order.  And this gets back to the questions of cultural centrality that I talked about before. So in its extreme form, the question is, if over time we have so much diversity, does this not mean that various subcultures of hate, envy, resentment can--like small presses, independent movie-makers, Korean barbeque, whatever it may be--that these subcultures of hate can support themselves using the same techniques of marketing through the internet, or finding donors using new information technologies or coordinating more effectively? And I think this is one of the most critical questions facing our civilization today.  If you imagine subcultures now having occasionally the ability to hijack jets and crash them into buildings, or blow up buildings, but maybe 20 years from now having small nuclear weapons, this is a worry that I think we all have had many times over the last several years. So another question I'm very much thinking about, and I'm working on a piece on right now, is when we talk about cultural diversity and we talk about fragility, and we talk about which things will be supported in this new and diverse world order and which will fall away, what are the bonuses or penalties that are placed on subcultures of hate or resentment?  I think this is really a critical question. Are those subcultures somehow hard to replicate and export?  Are they a bit like barbeque, where they will tend to stay local in certain key ways?  Or are those subcultures somehow more like blogs, that they will spread everywhere and take advantage of the new economies, and become stronger in relative terms compared to, say, mainstream cultural ideas. On this issue I think I'm actually somewhat optimistic, but I understand the difficulty of the points of view I must steer here.  On one hand I realize, due most of all to my personal consumption experience, just how much diversity and how much choice we have due to modern technology, capitalism, and the internet.  But on the other hand I can imagine, as a liberal vision, a world where the other countries, the other regions of that world share in some version of that liberal vision and do not use these new technologies to construct subcultures of hate. If we look for instance at the country of Mexico, Mexico is an extremely diverse country.  It has a lot of languages, a lot of cuisines, a deep and rich history, and it's also entirely fair to say that the United States has never treated Mexico very well as a neighbor.  We've invaded them, we've taken their land, done all kinds of things, humiliated them in various ways. Yet nonetheless I find it a striking fact, an incredibly important fact, that there really is not much if anything in the way of Mexican terrorism directed at the United States.  There are no Mexican terrorists who might, five years from now, sneak a nuclear weapon into Port Elizabeth and try to blow up New York City with a nuclear bomb.  Simply no one worries about this, and we probably should not worry about this. If we look at the distribution of suicide bombings in the world, I've seen one recent study by Diego Gambetta, and he estimates that over 80 percent of the suicide bombings are found in two groups in recent history.  Those are in Sri Lanka, the Tamil Tigers, and then of course the Palestinians.  And that accounts for most of these cultures. That is, some of these subcultures, they tend to be fairly fragile, just like certain kinds of barbeque are found only in North Carolina; you know brisket is done very well only in Texas; you go to St. Louis, the sauce has more tomato in it, it's more ketchup based; you go to Georgia, the sauce is more mustard based and you're not going to get that good mustard based sauce in Texas. So what is it about the production of terrorism, the use of terrorist theater to motivate human beings?  What kind of cultural commodities are those?  What kind of spectacles lie behind terrorist organization that perhaps might tend to make them local and dwindling rather than replicable in a world of increasing diversity? So just to sum up some of the ground we've covered and where we're at:  Globalization has some enormous benefits which we're all aware of, and we live those benefits every day.  This turns up in the food we eat, the music we listen to, the books we read, and many other areas.  The criticism of globalization, that it leads to a world of no cultural centrality, I think is far overstated. Yet, nonetheless, many cultures will be fragile, many will remain strictly local, and many will perish, go away, dwindle, or otherwise weaken.  After all, how many silent films are still made today?  Not very many. What our world must do is somehow thread a very narrow precipice where we encourage enough subcultures that really strengthen rule of law and a liberal order and some kind of well-functioning capitalist democracy, yet on the other hand not give rise to too many subcultures of hate.  I very much like to think that this is an entirely possible endeavor. When I look out in the world, I see that it can be done.  I am not completely sure that it will be done, but I think we're very much entering a new era of technological changes far more rapid than we've ever seen before.  If you look even at the last--you know, going back to say 1920, or take 1950 to the year 2000.  Things got a lot cheaper and better and quicker and faster and more efficient, but the world as a whole was still like people and houses and cars and can openers, and things basically were the same, 1950 to 2000. The changes do not compare to what happened, say, 1900 to 1950, where you have things like automobiles coming along, and radio, and electricity being widespread, people having refrigerators.  We're now about to enter another period where technologies will change as rapidly or more so than they did in the era of something like 1880 to 1950, so we need to be prepared for that. In my view, the central issues today, they are not pure economics.  They are not even pure politics.  They really are cultural issues.  We need to understand culture, using the tools of economics and politics, but culture will be the central question as to whether a free society continues to survive and continues to prosper. Thank you all very much for coming. [Applause.] PROFESSOR COWEN:  We have questions? MR.          :  We're going to have a microphone for that. QUESTION:  The hate groups have obviously found each other, and people have found reinforcement on the web.  Can you talk a little more about why and how that reinforcement that is supporting groups might dwindle away, why it might dwindle away? PROFESSOR COWEN:  I think we don't yet have a very good theory of what the web encourages and what the web discourages.  But if you think of the web in its simplest form, the web lowers the costs of communicating information.  When costs fall, people tend to consume things in bite-sized clumps. Go back to the blog.  Blogs are based on posts.  Posts are very short.  Most people who read blogs, how much time do they spend with a given blog?  Sometimes it's 40, 50 seconds, maybe 2 minutes.  They want something they can take in quickly.  Then they go to another site.  They go to another blog. So my guess is that the clearest general tendency we have in the world of the web is to have ideas that are well expressed, in short bits, and ideas that can stand up in competition with other ideas, because people can go to many different sites, be exposed to many different sources. And the positive best case scenario is that we're in a funny world where some aspects of the web have kicked in, like ability to organize, but other aspects have not, such as openness.  So you have small minorities who commandeer web sites, internet, as organizing devices, but those minorities are coming out of communities whose underlying ethos still has not been much affected by the web. So the positive case scenario is that as the web and web-like technologies, including satellite television and everything else, as those spread, there will be more openness, more bite-sized ideas, more small bits.  And ultimately, in my view, my hope, my very cautious hope is that that will be more supportive of a liberal order. And my guess is, this is true, because if you look at the world as a whole, you look at the effect say of technologies like television, satellite transmission, radio, Voice of America, jus access to information, the overall effect has very much been a liberalizing one.  Many more people today live in freedom. So my best guess is, we're on one of these huge bumps in the road, while we're getting some of the costs of more coordination without having all the underlying benefits.  And that's what the positive scenario looks like. Veronique? QUESTION:  Can you elaborate a little about your perception of the role of the government in trying to promote foreign cultures?  Because I'm always quite suspicious of the government involved in anything, but particularly in culture. I mean, just like for instance the Federal Government has undertaken to make us healthy, and they are force-feeding us broccoli and advice on our health.  I mean, Elmo is actually now going to be promoting broccoli for our kids instead of the alphabet, you know, whatever. So I was trying to imagine, I mean, what the government could do and when to stop.  I mean, are we going to be force-fed or like advised to watch a French movie every night?  I mean, could you elaborate? PROFESSOR COWEN:  Yes, you will be advised to watch a French movie every night. [Laughter.] My wife advises me this as it is.  But we're always doing theory of second best, and I think we can find cases in the past where an indirect role of government has been beneficial. And some of you here will hate me for this, but I think the anti-smoking campaign, which was run by government for the most part, actually has worked, and I'm glad that that was done, even though at the time a lot of things about it were pretty ugly.  But it saved a lot of lives, and people live longer, and there's more happiness in the world.  And it cost something, yes, but I feel overall it was good bargain. Now, without wanting to spend anything close to that much money, just take what the U.S. is spending on the arts now, forget about whether it should be bigger or smaller, just take that as a pot of money that's there and think about redirecting some of it, just to give publicity and more openness.  Think about what's the more likely institutional failure, that people in country X value foreign cultures too much or too little?  Think of it in a completely ahistorical context. Well, just a little evolutionary biology or psychology will get you very rapidly to the conclusion that people tend to create in groups and out groups, and they favor the products of their in group, and then tend to discriminate against some selectively chosen series of out groups. So to whatever extent we're going to spend Federal and State monies on the arts, I would rather we did not use them simply to reward domestic artists as a political constituency, but I would rather use them in a context of cultural diplomacy.  I think that would be more effective for the arts.  I think it would be better for our civilization.  I think it would be better for our foreign policy. The U.S. has a long history of cultural diplomacy programs in the arts.  Those are not perfect programs, but I think actually they're the best arts programs we have had, and I would do more in those directions, and it wouldn't simply be sending American artists abroad.  It's probably more important at this point that we be listening to other people rather than talking to them, and it would be helping to bring some products from those areas to the United States and give them some recognition. So that's my imperfect, totally hedged, libertarian with a small "l" but still thinking we could do something that would be good for the world kind of answer.  Does that halfway satisfy you? So, yes? QUESTION:  You mentioned the spread of subcultures of hate, and one of them appears to be heavily subsidized with oil revenue, particularly the Wahabi doctrines.  And I was wondering if you had some thoughts on how to reconcile our preference for liberal values and free speech and private schooling with that problem. PROFESSOR COWEN:  That's a real problem.  I'm no energy economist, but I've never seen why we shouldn't be using more nuclear power right now.  When you count all of the social costs of our dependence on oil, it seems to me there would be a net benefit by having more nuclear power, and defunding of various groups might be part of that. It's very complex, though.  I really don't think I have an answer here.  I think you could just as well argue that over time more funding will create conservative bureaucracies in these subcultures.  And is it really better for the price of oil to go up, for the price of oil to fall?  I don't feel I have a very good handle on that at all. And in fact you could argue it was really the declining stature of Saudi Arabia over a fairly large number of years with declining oil prices, and the sense of the Saudi place in the world was somehow doomed, that led to some of the radicalization.  And I'm not going to say I have evidence for that, but just as a story that does not strike me as crazy. So I'm not sure what is the right thing to do there, in a nutshell. Jonathan? QUESTION:  I just wanted to ask you to comment on the application (inaudible).  I'll try to speak loudly.  It seems to me that in terms of the analysis of cultural fragility, a couple of relatively basic concepts of industrial organization might be relevant, and I would like you to comment on them.  One is the minimum efficient scale of production.  The other is the transportation costs. It seems to me that as you look over time at changes in the viability of certain cultural sectors or products, it's really the influence of technological, the impact of technological change on minimum efficient scale of production and also on transportation costs.  That has a lot to do with these changes. And just as an example with regard to transportation costs, as a kind of counterpoint to the barbeque, the case of artisan cheese in the United States, it actually seems to be--production seems to be growing relatively rapidly.  And I think it might have something to do with the transportation costs for cheese are perhaps lower than (inaudible). PROFESSOR COWEN:  That's a good point.  Let me answer that, first by putting in a plug for my new book which came out this week.  It's called "Markets and Cultural Voices:  Liberty vs. Power in the Lives of Mexican Amate Painters."  And it's an economic biography of three lives, three brothers in rural Mexico, and how globalization has affected their lives. Now, how does this relate to your question?  If you go to this part of rural Mexico, it's a small village called St. Augustine, the cultural outputs that these people produce moves very directly with transportation costs. So in the 1950s they mostly produced pottery, but there wasn't a good road, and they're on top of a mountain, and to get down from the mountain they had to take the pottery by burro, and the rate of breakage, as you can imagine, was very high, and even if it didn't break, it was a pain in the neck. So they started painting on bark paper instead, which they rolled up or piled, and was very easy to transport, so very quickly you had a new art form, these bark paper paintings, replacing pottery, and the pottery of the region dying out almost overnight, over a series of a few years.  And then through the '60s, '70s, '80s and some of the '90s, everyone is doing these paintings on the paper. But now there is a halfway paved road.  They have access to newspaper, so they can wrap the pottery.  They have bubble wrap, some of them.  They have a variety of other ways of transporting the pottery.  And now all of a sudden the pottery is making a big comeback, and it's the painting on bark paper that's in danger of disappearing. So what markets tend to do in general, they will kill off more artistic forms than any other system you can imagine.  They will just kill them off like flies.  But it's the same system that's creating those additional forms, and we see all these forms disappearing, dwindling, declining, going out the window, and we see the forms that we know diminishing, but there will be this continual fragility of the status quo. And if you think of people as having some kind of cultural endowment effect, or some kind of attachment to what they grew up with, or some kind of peer effect or a demographic effect where the old never quite buys into the culture of the young, all of these mechanisms will get you to a world where there is an incredible burst of variety and innovation. Yet the people in charge and power or the people who are in culture are never really quite happy with it.  And essentially that's what we have in a market economy, and transportation costs is one example, but it's part of this more general rapid rise and decline of different artistic forms.  There's not much baroque music today anymore, either. So, yes?  In the back? QUESTION:  Thanks.  (Inaudible), CATO Institute.  I wanted to follow up on Veronique's comment regarding the films and their promotion in the U.S. market.  I wanted to know how you felt, how you reconciled the fact that you were calling for basically subsidization of foreign films? I mean, it seems that you're arguing that we should, instead of promoting domestic films solely, we should promote foreign films as well.  But doesn't this really not address part of the problems foreign films have breaking into the American market, in terms of their ability to maximize their profits and break through language barriers and go through marketing techniques?  I mean, aren't you really arguing for something that doesn't really help the foreign film industry? PROFESSOR COWEN:  Well, first there's the question of level playing field.  There are some ways in which we subsidize--maybe "subsidize" is not the right word, but we encourage domestic Hollywood movies.  They're allowed to export as a cartel. It's not a huge effect.  In the past there's been various forms of foreign policy protection, discouraging foreign nations from levying quotas, using American diplomatic might toward that end.  So there's some subsidy in place anyway. I think over time foreign movie-makers are becoming much more commercially astute.  We're finding more countries making greater efforts to make movies and penetrate markets around the world and to think commercially, and to some extent this problem will take care of itself. But what I'm suggesting is a quite modest subsidy.  Look at something like what the AFI did when it listed the 100 best comedies, the 50 best movies of all time, and so on.  If you speak to people in video stores, they will tell you there was quite a run on those movies when those lists came out. Why not simply have our NEA or some other cultural agency, or the AFI for that matter, do something similar for foreign movies or world musics, or just some small amount of publicity, both to address the recognition issue and also to get some consumers at the margin more interested in these products?  It seems to me we could do that at almost zero cost.  We could do it essentially out of budgets we already have.  It would make people better off. And the alternative is, there is a world out there, there are governments out there that right now are in the process of trying to write treaties that will restrict trade.  And if our only vision in return is to say, "Everything is fine, don't worry about it, just take what we're sending you," I don't think exactly that's going to work, even if that would be a kind of purist position. I think it's imperative for us to come up with some other positive vision that trade is good for culture, we would like to do something to encourage trade.  This will redress a kind of imbalance, which is an imbalance even though it's voluntary in nature.  And I would be for that. So again, that's my guilty, second best, but I think the best possible answer available, all said, by a small "l" libertarian answer to your question. Yes? QUESTION:  I'm struck by your recognition that in some sense barbeque does travel, that there is a lot of barbeque, a lot of different kinds of barbeque.  And I also think that you're right on when you talk about the internet as promotion openness and culture clash, confrontation, and that's how cultures do grow and change. And now we come to terrorism.  I mean, I've been thinking about this a lot lately.  It seems to me that that type of culture clash, confrontation and openness, is always a two-way street.  We change, as well as others change, and I think that focusing upon watching a French film every night is one way in which we might change. If now we have open access to terrorist blogs, terrorist internet sites, I think that as we change, we want to take the best and get rid of the worst.  I guess it wouldn't be the hate or the killing that we would take from the terrorist sites, or that society or people would take. Is there anything that they would take?  I mean, how would the openness or communication with terrorists affect us in the way in which our culture would change and grow?  Is there a good side to that, and what would it be? PROFESSOR COWEN:  Well, I'm not ready to argue we can learn something from the terrorists, but I think we could learn a great deal from Middle Eastern cultures, and especially in the area of culture. If you were to ask me, "What's the most vital popular music tradition in the world today?" it's probably Arabic music, coming ultimately from Algeria but often done in Paris or elsewhere, just for good pop music which is often politically subversive and clever and well thought through, and both commercial and having some depth at the same time. It's somewhat of a slow period right around here, but coming out of the Middle East is an awful lot of ferment and a lot of great stuff to listen to.  And the fact that hardly anyone here knows that, to me suggests something is wrong.  And there's not any way in which I want to force people to know that, but I think that's something we need to learn from that region. And part of the problem is that we're not listening, and if we're not listening, we don't even know what it is we're up against.  Now, listening alone is not going to solve the problem, but if you're not even at that stage, it's no wonder that we don't in many parts of the world have a decent idea what's going on. Yes, in the back, on my left? QUESTION:  My understanding is that the only other great movie industry in the world is the Indian, where they produce about three times as many movies as Americans do, something like 900 movies, last I saw, 900 movies a year.  Some of them aren't very good, but some of ours aren't very good. And I wonder why it is, or what do you think is the reason that those movies don't travel, that nobody much--I mean, I guess there are some exceptions--really goes out and watches these movies?  And why don't the Europeans--the numbers you gave I think are correct--why don't the Europeans want to see movies about European life, and instead they much prefer to see the same thing?  I mean, Americans and Europeans are alike in the sense that they both want to see American life, and I wonder if you could extrapolate on that. PROFESSOR COWEN:  There are a lot of questions in there.  To some extent Bollywood movies do travel.  They are exported very successfully to many parts of the Middle East and to many parts of Asia.  Some of it is non-resident Indians, but by no means all of it. I think roughly you can draw a line as to where Bollywood exports well.  Most Bollywood movies, no matter what they are called, essentially they are musicals.  They can be three, three and a half hours long and have a large number of songs.  If the native music tends to be microtonal in some way, then Bollywood movies tend to do pretty well in that country.  It's a very rough rule of thumb. So I think how well those movies do internationally just depends on how well the music fits into what people are used to.  To a lot of American ears, microtonal music sounds like screeching of various sorts, or a cat being tortured or whatever.  I happen to love the stuff.  But I think that's a major barrier with exporting Bollywood movies either to Europe or the United States. So that's part of your question.  Now, why is it in Europe that people who go to movies are so interested in the U.S.?  I think there's two things going on in the movie sector that give you more centralization than you would see, say, in novel writing or popular music. The first is, there is an effect on the supply side, where talented people are drawn to the movie-making center.  So there's a lot of great European directors, but a lot of them go to work in Hollywood.  There are simply clustering economies to having them in one place, and Paul Verhoeven, the Dutch director, he earned much more in Hollywood than he would have earned in the Netherlands, for fairly obviously reasons.  It's just a larger country and a larger native linguistic base. So a lot of European talent tends to get sucked off, and it comes to Hollywood.  The French to some extent are an exception to that, and of course the French have the largest movie industry in Europe. There is another factor.  I think movie-going, and to some extent music, it's a demographic effect.  It's done mostly by the young in most countries, and for youth, peer effects are very important.  So you want to be seeing either the same movies or the same kinds of movies that a lot of your peers are seeing. This means also a lot of attention gets focused on a relatively small number of movies, compared say to the number of novels that are read or the number of CDs that are listened to.  The number of movies that are seen in any real number are smaller in relative terms, plus you have higher fixed costs of production. So the peer effect gets you some clustering along a dominant tradition.  The supply side effect gives you a kind of brain drain.  And if you look, even say within India, you find similar clustering, that within India there are regional traditions and there's Bollywood, but with the exception perhaps of Bengali cinema, Bollywood has tended to out-compete a lot of the regional traditions because a lot of the talents go to Bollywood, and the Bollywood movies are the focal ones within India, and that's what young people want to see. So my guess is, movie-making will always tend to be more centralized than most other cultural forms.  But keep in mind, there has been a Hong Kong cinematic industry which did quite well before the Chinese takeover.  And just a number of countries making small numbers of quite good movies, places like Argentina, Mexico, Taiwan.  Actually Iran is a cinematic power of sorts, in a strange way.  That number of countries is much higher than ever before.  Mainland China.  Korea now is on the rise.  Filipino cinema is doing relatively well. So it's not just a story of only one or two places.  There's a lot of innovation and ferment popping up all over the place.  And European cinema of course is heavily subsidized.  There are some estimates which are not very reliable, they'll say subsidies are 70 or 80 percent of the cost of the film.  And when the level of subsidy is that high, it's no longer assistance to getting an entrepreneurial idea off the ground.  It's really just government has become the main customer, and then it's no surprise why people don't want to go see those. Yes? QUESTION:  Why do you think that Mexican food in D.C. is so terrible? [Laughter.] And when you are in the mood for Mexican food, where do you go? [Laughter.] PROFESSOR COWEN:  This question is very dear to my heart.  I have a personal recipe for mole sauce, which you can find on my blog.  If you Google "Tyler Cowen mole," I think you'll come right to it.  So I cook at home.  My wife and stepdaughter, they come to me, and I cooked one actually last night for a bloggers party I held. But why is Mexican food here so bad?  There's a number of reasons, but one has to do with what kind of--partly, this is not the central area for Mexican migration.  We all know that. El Salvadoreans come here, and El Salvadorean food in this area is often quite good.  Some of the best Mexican food around here will be cooked by El Salvadoreans.  It's not perfect.  It's not your dream Mexican food, but it's better than the junk you'll get elsewhere. So this area is capable of doing good Latin food.  Mexicans tend not to come here.  But also in general when Mexicans come to the U.S., who is it that tends to come?  It's the young and it's males, not exclusively, but we all know these are near universal qualities of immigrants. Now, let's say you took Frenchmen and you had a large wave of French migration to the United States, and everyone who came was a French male between the ages of 18 and 30, and these Frenchmen would live together on the outskirts of major cities and they would have their equivalent of tacorias, and there would be restaurants to serve them food.  Would that food be good?  Some of it would be excellent, but it would not be French cuisine as we know it because that demographic is not really the carrier, on the consumer side, of quality cuisine. And in Mexico, as you know, the best cooks  are so often the grandmothers, and what is the group of people least likely to immigrate to the United States?  Typically it's grandmothers.  So you get bad food consumers and you don't get the best cooks, so that dynamic in the first place leads to some problems. And there's a lot of great Mexican food in L.A., Chicago, and Texas, but it's quite specialized, and a lot of it is kind of fast and cheap and oily and greasy, even though it's yummy.  But even there you don't get first-rate moles, and you don't get what is really Mexican food of Mexico. So some of it is just the dilemmas of immigration, but this will change.  There has been a lot of progress here.  We now have several bad attempts to serve good Mexican food, like Andale and Rosa Mexicano.  I don't think they're very good, but I think they're trying to be good.  We have more and more tacorias.  There's a few good tacorias in Arlington. I'll stake my reputation that five years from now we'll have some pretty excellent Mexican food in this area.  It's just taking some time, just like in the old days when you went to the shopping mall and you saw Walden's book store and you winced, and you thought, "Is this all there is?  How come Walden's is putting out the independents?  This hurts."  I think we're in that same phase of Mexican food.  It has yet to take off.  It's coming right around the corner.  Just wait. MR. DEMUTH:  With that, Tyler Cowen, than you very much for a fascinating presentation. PROFESSOR COWEN:  Thank you. [Applause.]</body></html>