The Steve Hanke interview: “Writing a tweet is the endgame of the Feynman Technique”

It is fair to describe Steve Hanke as an “economist” — but that’s nowhere near the whole story, because his position as Professor of Applied Economics at Johns Hopkins University offers little suggestion of international intrigue or mortal peril. Hanke has encountered no shortage of either.

Three times during his long and storied career, rattled governments have put a price on his head. In 1999, he was singled out for disappearance by official Yugoslavian actors, on the colorfully bogus grounds that he was “a French secret agent who controlled a hit team code-named “Pauk” (Spider), and that this five-man team’s mission was to assassinate [president Slobodan] Miloševic.”

Raised in rural Iowa, where “the radio was always tuned in to what was happening in the livestock and grain markets,” he quickly got to grips with hedging, the price discovery process, and — during college — the economic theories favored by the Austrian School, which he continues to champion. Hanke describes himself, “broadly speaking,” as a classical liberal economist. He made a name for himself (and a presumed fortune, to boot) by anticipating that currencies would tank, as the French franc did in 1993, and the Russian ruble in 1998.

He was an advisor under Reagan in the early 1980s, and high demand for his expertise has taken him around the world on many occasions. The list of countries that have awarded him honorary degrees reads like the index to a veteran stamp collector’s album. In Albania, he’s a Knight of the Order of the Flag. He also has a substantial following on social media, which makes him a shrewd octogenarian “influencer,” in the current parlance.

Whether deep in the weeds of economics in print or grazing the eyeballs of the scrollerati on X, Hanke has made an art of shedding light on conceptual crannies impenetrable to most non-economists. Big Think caught up with him for a chat about the new communication techniques, tariffs, the future of economics in the age of AI, and more.

Big Think: You’re a prodigious user of X — what attracts you to the platform? 

Hanke: I like using X because it allows me to distill complex ideas into a digestible format for a broad audience. My method is similar to the late Nobelist Richard Feynman’s of Caltech. It’s my version of the great Feynman Technique. Think about the four-stage Feynman Technique, and you will see that the last stage is nothing more than writing a high-quality tweet. That can’t be done unless you understand the subject. And that requires, among other things, the art of pattern recognition, or what Napoleon had: “coup d’oeil.” With a glance of the eye, Napoleon could get the lay of the land and the context of things on the battlefield. Writing a tweet is the endgame of the Feynman technique. 

Big Think: As a medium, X is the polar opposite of the book: epigrammatic and instant vs. deeply immersive and time-consuming. Why should digital natives read Making Money Work? 

Hanke: Another one of Richard Feynman’s principles was that one must work hard — often to the tune of thousands of hours — to master something. A post on X is only valuable if it is a reflection of a deeper understanding of the topic at hand. That requires deep reading, beyond a surface-level scroll through X. Another corollary to the increased supply of short-form digital media and AI-generated writing is that the written word has become less valuable. It’s harder to distinguish signal from noise. I can attest to the fact that Making Money Work is filled with signal, not noise.

Big Think: You post eye-catching and meme-friendly cartoons — which seems very astute and on-point. 

Hanke: A picture is worth a thousand words. I have a large library of serious books on this topic, going all the way from Famous Figures and Diagrams in Economics (2010) by Mark Blaug and Peter Lloyd to Data Visualization (2018) by Kieran Healy. Plus, I have a large international following, and using cartoons and photos allows me to transcend language barriers. 

Big Think: Although critical of President Donald Trump, you use his most effective social media techniques: all caps and frequent repetition. Why? 

Hanke: In May of 1998, I had lunch with the famous management guru, Peter Drucker, in Santa Monica. During the lunch, he indicated that successful salesmanship was nothing more than repetition enhanced by incremental product improvement. That’s been my mantra ever since. 

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Big Think: You have attacked misinformation, and have been accused of spreading misinformation — how do you think public discourse can become more productive and civilized in this age of mutual mistrust and often rabid polarization?

Hanke: In my decades of experience interacting with journalists and closely monitoring the political and financial press, I’ve devised Hanke’s 95% rule: 95% of what you read in the press is either wrong or irrelevant. In other words, there’s a lot of misinformation. Ironically, journalists have become the arbiters of determining what is, and what isn’t, “misinformation.”

The rapid politicization of life that we have witnessed over the last decade has caused real misinformation to abound. The government and politicos have become involved in all aspects of life, and truth has taken a backseat. President Trump’s rhetoric on trade is just one example — nearly everything he says about trade deficits and tariffs is flat-out wrong. The only solution to this problem is to start by shrinking the state’s power. This is urgent, because it’s also in the realm of possibility that AI — specifically large language models — will allow misinformation to proliferate by mindlessly regurgitating information that reflects simple correlations rather than real-life observations.

In sum, my views on misinformation are closely aligned with those of Harry G. Frankfurt, which he explained in his classic essay On Bullshit, published by Princeton University Press in 1986. Truth-tellers and liars are both ultimately concerned with the truth. Bullshitters, on the other hand, only care only about convincing other people they are right. That makes them more dangerous to the truth than liars. Fact-checkers are mostly bullshitters. They make strong, convincing claims that crumble under questioning.

Big Think: Could you concisely explain why you think the current administration’s tariffs policy is bound to fail? 

Hanke: With its tariff policy, the Trump administration is partially seeking to reduce the level of trade deficits the United States runs with its trading partners. This strategy is flawed because it is based on a misguided notion of what causes trade deficits in the United States — the size of the United States trade deficit is governed entirely by the savings-investment identity. Indeed, by definition, a country’s trade balance is governed entirely by the gap between its domestic saving and domestic investment. If a country’s domestic saving is greater than its domestic investment, like China’s, it will register a trade surplus. Likewise, if a country has a savings deficiency, like the United States, it will register a trade deficit. 

So, the only way to reduce the United States’ trade deficit is to raise its level of domestic savings relative to domestic investment. There are a few ways to do this, but the most obvious way would be for the Trump administration to reduce the federal deficit, not by implementing tariffs. Ironically, Trump’s “big beautiful bill” does just the opposite. It will increase the deficit, and further add to America’s savings deficiency. In conclusion, keeping one’s eye on the balance of trade as a policy variable in the United States is in and of itself a very foolish objective. 

Big Think: Milton Friedman was your friend and mentor. Could you share a Friedmanian pearl of wisdom that seems especially useful now?

Hanke: I’ll drop a Friedmanian pearl that is highly relevant to the current economic discourse in the United States. In an interview, Friedman once said “A trade deficit is not a deficit. In another sense, it’s a capital surplus.” 

Big Think: Do you enjoy bursts of humor because, for the uninitiated, explaining complex economics can be like swimming through treacle? 

Hanke: Humor is the spice of life. Can you imagine suffering through a lecture that contains no humor? Humor is also a powerful rhetorical tool. The Romans understood this, and would frequently employ humor as a rhetorical device. So do I. 

Big Think: You are a knight in the Republic of Albania, Sir Steve. Please elaborate. 

Hanke: Way back in the day, the road to become a Knight was long and painful — you were always preparing for war. You started out as a page and eventually worked your way up to squire. By the time you were 21, if you had mastered a myriad of physical and combat abilities, you could become a Knight. 

Luckily for me, being a Knight today isn’t what it used to be, and my work in Albanian economic reform allowed me to jump up the ladder. From 1991-1992, I served as a Special Advisor on Currency Reform to the Deputy Prime Minister and Minister of the Economy, Gramoz Pashko. My primary goal was to design and implement a currency board system in Albania, a kind of fixed-exchange rate regime that would turn the Albanian lek into a clone of a stronger anchor currency, like the euro or the U.S. dollar. This plan was published in A Currency Board Solution for the Albanian Lek, co-authored with Kurt Schuler in 1991. 

I had high hopes for an Albanian currency board system. After all, Gramoz Pashko was a trained economist and supported the currency board idea. Unfortunately, he was hopelessly disorganized and an ineffective advocate. As a result, the main thing I was actually able to accomplish was to introduce the Albanians to the international chattering classes. This culminated in a colorful session at the World Economic Forum in Davos, Switzerland in 1992, which I helped organize, and was marked by Greeks sparring with Albanians.

I can recall the first time I entered Pashko’s office in Tirana. He stood to greet me; a photo of Mother Teresa was on the wall behind him and a revolver was strapped to his belt. After that encounter, nothing struck me as strange in what, at the time, was a strange and beautiful country. 

Big Think: One version of our economic future sees AI replacing most jobs, while people are given a Universal Basic Income paid for by socialist levels of taxation on capital. Is this, for you, a likely scenario? 

Hanke: No. AI is overhyped and oversold. It probably will effectively replace 5% of repetitive and clerical work.

Big Think: Yuval Noah Harari, in Nexus, explores a future where AI economists far outperform human economists: Do you feel your profession is approaching its end times? 

Hanke: The economics profession has been sliding downhill for a long time. No one has a clue where it will end, and I left my crystal ball in the closet today.