Conversations with Tyler: Spain’s Stalled Growth and AI’s Messy Jobs

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I just finished listening to Tyler Cowen's conversation with Luis Garicano, and there's so much to unpack here. This episode really captures what happens when politics, markets, and technology collide and reshape a country in ways we barely notice.

Right, and Garicano has such a unique vantage point—Spanish economist, former member of the European Parliament, and now author of "Messy Jobs." What struck you first? The Spain section was fascinating. He says the country has become incredibly NIMBY about development. Before the financial crisis, they were building up to 800,000 homes a year. But after the housing bubble burst, building became this political and cultural liability. And now they have completely rigid supply, despite high migration levels. That rigidity goes beyond housing though, doesn't it? Absolutely. Garicano describes Spain as trapped—weak productivity growth, aging demographics, and a pension-heavy political balance. Since 2008, most growth has gone into pensions rather than investment or infrastructure. But he does see hope if Spain leverages solar, wind, and nuclear power to become energy-rich and attract tech talent and data centers. That's interesting because he also tackles Europe's industrial policy challenges, especially around Chinese electric vehicles. What's his take? He's not dogmatic about industrial policy, but says it only works with clear objectives and the freedom to let failures fail. Europe's current approach gets captured by incumbents and weighed down by mixed environmental, labor, and security goals.

The conversation also goes deep on Spanish history and culture. He talks about the Civil War as unresolved national trauma, and the ongoing instability around Catalonia and the Basque Country. The Basque fiscal model gives one region special autonomy that others want but the country can't sustain. Building on that institutional theme, when they discuss the European Union, Garicano argues that unanimity requirements on defense, foreign policy, and taxation create total deadlock. He wants majority voting and stronger common functions, though sovereignty remains a major barrier. Now, the AI section is where his book title really comes alive. What's his core argument? AI won't lead to mass unemployment because jobs will become "messier"—more relational work, more judgment, more knowledge problems that machines can't fully solve.

Retraining matters, but the real priority is teaching people how to use AI in practice.

And strategically, he thinks Europe should stop trying to control the whole stack and instead become a "fast implementer"—a major client that adopts AI aggressively while keeping systems interoperable. As he puts it, "sovereignty is not a realistic objective at this moment." The episode ends on a personal note. Given free time, he'd choose Vietnam. And what does he still want to learn?

Economics, the knowledge problem, and the excitement of a field entering a new, faster phase.