Alex Tabarrok on Innovation and Baumol Effect

My guest for this episode is Alex Tabarrok (youtube, player page), the Bartley J. Madden Chair in Economics at the Mercatus Center and Professor of Economics at George Mason University, blogger at, co-founder of Marginal Revolution University and co-author with Eric Helland of “Why Are The Prices So Damn High?” which is short, free book and which we discuss on the show.

Alex has written many other books and papers and there is a theme of thinking about innovation throughout his work. Several years ago he wrote a book on the topic called “Launching the Innovation Renaissance” which we also touch on as well as how the era of a country’s birth affects its institutional makeup, how national rivalries can generate positive externalities (pop quiz: what was NASA’s budget as a % of US GDP at its peak?), whether and why there has been a decline in innovation (and what’s the difference between innovation, entrepreneurship and economic growth?), where we might look for a model of education reform and how we might get there (what would a Hollywood-style investment in education reform look like?) including Alex’s own observations in launching his own education platform (marginal revolution university!), and much more!

I wanted to highlight one clip from the conversation that really caught my attention. Here is Alex’s favourite policy idea for improving economic growth:

Alex Tabarrok’s favourite policy idea for improving economic growth: reduce crime!

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