A Few Things: America's Working Class, Jordan Peterson & Iain McGilchrist, America's Debt Crises, Bremmer & Friedman on Middle East, Evolution of Religions, Musk & Tangen on AI, Healthcare & AI.....
April 12, 2024
I am sharing this weekly email with you because I count you in the group of people I learn from and enjoy being around.
If you missed last week’s discussion: A Fulfilling Life, You Are Not Special, Long Distance Thinking, The Anxious Generation, Marko On Markets, What's Happening in Japan, Fixing Our Democracy, How To Know A Person....
This week’s edition is action packed and wide ranging. I really hope you enjoy it cause it took a long time to put it together!!!
Quotes I Am Thinking About:
“Nothing in this world can take the place of persistence. Talent will not: nothing is more common than unsuccessful men with talent. Genius will not: unrewarded genius is almost a proverb. Education will not: the world is full of educated derelicts. Persistence and determination alone are omnipotent.”
-Calvin Coolidge
“Never look back unless you are planning to go that way.”
- Henry David Thoreau
"Never do things others can do and will do if there are things others cannot do or will not do.”
- Amelia Earhart
“Being deeply loved by someone gives you strength, while loving someone deeply gives you courage.”
- Lao Tzu
“If something looks irrational – and has been so for a long time – odds are you have a wrong definition of rationality.”
- Nassim Taleb
“Instead of asking how many tasks you can tackle given your working hours, ask how many you can ditch given what you must do to excel.”
- Morten Hansen
“Throughout all my years of investing, I’ve found that the big money was never made in the buying or selling, the big money was made in the waiting.”
- Jessie Livermore
A. A Few Things Worth Checking Out:
1. Morgan Housel had a great and simple piece titled: Smart Words from Smart People.
2. Arthur Brooks at the Atlantic on The One Big Thing You Can Do for Your Kids.
Batya has been on a journey for the past eight years to understand how Trump won the White House in 2016 and how the left fundamentally misunderstood the American working class. She eventually came to the conclusion that the most salient feature of American life is not our political divide.
It’s “the class divide that separates the college-educated from the working class.”
Democrats have historically been the party of the working class. But for the better part of the past decade, Democrats have seen their support among working-class voters tumble.
Policy wonks and demographic experts kept saying just wait: the future of the Democratic party is a multiethnic, multiracial, working-class coalition. But that didn’t pan out. Instead, in 2016, Trump carried 54 percent of voters with family incomes of $30,000 to $50,000; 44 percent of voters with family incomes under $50,000; and nearly 40 percent of union workers voted for Trump—the highest for a Republican presidential candidate since Ronald Reagan in 1984.
Meanwhile, in 2022, Democrats had a 15-point deficit among working-class voters but a 14-point advantage among college-educated voters.
This conversation helped me see the election a little more clearer. I highly recommend a listen.
5 Key Insights:
The Democratic Party has shifted away from being the party of labor and the working class towards catering to college-educated elites and the dependent poor. Policies like offshoring manufacturing jobs, welcoming mass immigration that undercuts wages, and focusing on issues like climate change have alienated working class voters.
Working class voters of all races are increasingly supporting Republicans and Trump, believing they are better for the economy and jobs. Polls show rising Trump support among Hispanics and black men. The idea that Trump voters are motivated primarily by racial resentment seems inaccurate.
Many working class Americans feel the "American Dream" is out of reach, even if they work hard. Stagnant wages, unaffordable housing, and the decline of unions have made a stable middle-class life inaccessible for those without a college degree. They want dignity through work, not welfare.
Mass immigration is a top concern for working class Americans who believe it drives down wages and makes it harder to earn a decent living. There is frustration that concerns over immigration's economic impacts get dismissed as racist.
Most Americans hold moderate views on polarizing cultural issues like abortion, but the parties have moved to the extremes. There is an opportunity for either party to capture a multiracial working class coalition by taking populist positions on economics, immigration, and healthcare while avoiding the extremes on social issues. Trump seems to be moving in this direction.
The socioeconomic and cultural divide between college-educated elites and the working class seems to now be more salient than traditional right-left divisions, scrambling political coalitions. The party that can successfully appeal to working class economic concerns while adopting a moderate cultural stance is likely to dominate elections going forward.
4. Dr. Jordan Peterson sat down with researcher, philosopher Dr. Iain McGilchrist.
Iain is the author of a number of books, but is best-known for The Master and his Emissary: The Divided Brain and the Making of the Western World (Yale 2009). In November 2021 his two-volume work The Matter with Things: Our Brains, Our Delusions, and the Unmaking of the World was published by Perspectiva Press.
3 Key Insights:
Attention as a moral act has far-reaching consequences. It implies that what we consider "facts" and "reality" are not neutral, but shaped by our intentions, conscious and unconscious. To see clearly and truthfully, we must cultivate the right quality of attention - patient, humble, and holistic. This is a form of "unknowing" or "beginner's mind" that lets reality disclose itself, rather than prematurely imposing our assumptions.
The left-brain / right-brain dichotomy, while an oversimplification, points to crucial complementary modes of cognition. The categorical, language-based, linear thinking of the left-brain needs to be in dialogue with the gestalt, metaphorical, embodied cognition of the right brain. Our culture tends to privilege the former at the expense of the latter. Healing this imbalance is crucial for our intellectual, emotional and spiritual wellbeing.
Overcoming the modern disenchantment of the world requires re-weaving science, reason, intuition, imagination, and spirituality. This means recognizing that the scientific method, for all its power, is not the only path to truth, and that its reductive materialism leaves out many crucial dimensions of existence. We need a new synthesis that honors the best of science while recognizing its limits.
Prof. McGilchrist also wrote a great article titled: RESIST THE MACHINE APOCALYPSE.
He argues that despite increasing affluence, people are more anxious, depressed, and lacking in purpose than ever before. This is attributed to the dominance of the left hemisphere of the brain, which favors manipulation, control, and a narrow, decontextualized view of the world. In contrast, the right hemisphere sees the bigger picture, understands context, and recognizes the interconnectedness of everything.
He suggests that Western civilisation has moved further towards the left hemisphere's worldview since the Enlightenment, leading to a reductionist and mechanistic understanding of reality. This is exemplified by the rise of artificial intelligence (AI), which replicates the left hemisphere's functions and lacks a sense of context and values.
To make the most of these new technologies, he suggests relinquishing control and working with nature, allowing for spontaneity, openness to risk, and trust in intuition. They emphasize the importance of giving people with intelligence and insight the time and freedom to exercise their creativity without excessive monitoring and control.
5. Demetri Kofinas at Hidden Forces spoke with Economist Lacy Hunt about America’s national savings and debt crisis. I first learned of Dr Hunt 5 years ago and his work has been a useful tool to have in the back of mind.
While there is a huge narrative on inflation and growth, he argues that the U.S. economy is in a perilous state, with excessive debt, negative savings, and rising interest rates threatening to depress living standards and destabilize demographics. Bold policy action is needed to avert stagnation.
Dr. Hunt is the Executive Vice President and Chief Economist of Hoisington Investment Management Company. He previously served as Chief U.S. Economist for the HSBC Group, as Executive Vice President and Chief Economist at Fidelity Bank, and as Senior Economist for the Federal Reserve Bank of Dallas during the course of a 55-year career studying markets and the economy.
5 Key Insights:
The U.S. faces a structural decline in economic growth, with the 20-year average real per capita GDP growth rate falling from 2.2% in 1970 to just 0.9% now. This 1.3 percentage point decline reflects the law of diminishing returns triggered by excessive debt levels. If growth had remained at 2.2%, average real per capita GDP would be $78,000 today instead of $66,000 - a huge difference in living standards.
Unprecedentedly, the U.S. now has negative net national savings for a non-recession year, as the $2 trillion federal budget deficit in 2023 exceeded private and foreign savings. Without a surplus of savings to finance net physical investment, the capital stock cannot grow, labor productivity stagnates, and the standard of living drops. Solving this would require politically difficult shared sacrifice to drastically shrink the deficit.
Under the surface of the strong reported GDP growth and robust labor market, signs of an unacknowledged recession are emerging. Home sales are down over 30% from recent highs, vehicle sales are down 14%, and aggregate hours worked have declined for 12 months. Income-based GDI is flattish, diverging enormously from spending-based GDP. The household survey shows employment contracting.
Despite 500bps of Fed rate hikes, monetary policy still has not constrained growth, possibly because pandemic-era fiscal transfers are still boosting demand beyond what the private sector can fulfill. But financial conditions have tightened severely, with interest rates of 9% on auto loans, 23% on credit cards, and 10% for small businesses. These debt service burdens are unsustainable and portend a sharp retrenchment in spending.
Economic stagnation is demographically destabilizing, causing young people to delay marriage and family formation as they doubt their financial prospects. Falling birth rates and an aging population then reduce economic dynamism in a vicious cycle already underway in Japan, China and Europe. The same pattern is emerging in the U.S. as well, with jewelers reporting falling marriage-related sales. Ignoring how debt-burdened growth impacts demographics is perilous.
6. Ian Bremmer and Thomas L. Friedman spoke to unpack the intertwined dynamics of Hamas, Netanyahu, and regional powers in the Gaza war, underscoring the complexities and challenges that hinder a pathway to lasting peace
3 Key Insights:
Israel and Hamas are locked in a codependent cycle that perpetuates conflict. Netanyahu relies on Hamas to weaken the Palestinian Authority and avoid a two-state solution. Hamas gains global sympathy when Israel causes civilian casualties. Neither side has a viable long-term plan beyond dismantling the other.
Achieving progress requires simultaneously opposing extremists on both sides - Hamas and Israel's far-right - while bolstering moderate forces, namely a reformed Palestinian Authority capable of governing effectively and partnering with Israel. This is the most pro-Palestinian, pro-Israeli, pro-American, and pro-peace position available.
Iran and its proxies, including the Houthis, Hamas and Hezbollah, have developed advanced military and weapons manufacturing capabilities that could plausibly inflict mass casualties on the U.S. or its allies. Even a single major attack, like the sinking of a U.S. warship, risks triggering a regional war between the U.S. and Iran. Current U.S. military posture is vulnerable to this heightened threat.
7. Warren Buffett: “If I were on Wall Street, I’d probably be a lot poorer. You get overstimulated. You hear lots of things. You may shorten your focus and a short focus is not conducive to long profits.”
Neckar had a great peace titled The Skillfulness of Stillness.
He argues that in a world of constant noise and distraction, the ability to find stillness and listen to one's inner voice is crucial for success, particularly in the realm of investing.
Legendary investors like Warren Buffett, Stanley Druckenmiller, and George Soros have emphasized the importance of creating spaces of stillness to support focus and curiosity, allowing them to spot and prioritize "fat pitches" in the market.
This stillness can be cultivated through various means, such as carefully structuring one's physical surroundings, practicing meditation or other inner practices, engaging in activities that promote a flow state like walking or martial arts, or intentionally protecting periods of stillness in one's schedule.
By approaching attention with intention and avoiding the trap of constant busywork, investors can remain open to the subtle yet crucial guidance of their unbounded curiosity and unconscious mind, ultimately leading to better decision-making and the ability to seize opportunities when they arise in the midst of market chaos.
8. Michael Shermer (Skeptic Magazine) spoke to Lance Grande about his new book: The Evolution of Religions in a podcast titled: The Formation, Diversification, and Extinction of World Religions.
Lance Grande is the Negaunee Distinguished Service Curator, Emeritus, of the Field Museum of Natural and Cultural History in Chicago. He is a specialist in evolutionary systematics, paleontology, and biology who has a deep interest in the interdisciplinary applications of scientific method and philosophy.
The question he asks: Thousands of religions have adherents today, and countless more have existed throughout history. What accounts for this astonishing diversity?
He examines the growth and diversification of hundreds of religions over time, highlighting their historical interrelationships. Combining evolutionary theory with a wealth of cultural records, he explores the formation, extinction, and diversification of different world religions, including the many branches of Asian cyclicism, polytheism, and monotheism.
In the conversation with Michael Shermer they discussed three big ideas:
Religions evolve through a process of diversification and branching over time, similar to biological evolution. Shared characteristics between religions point to common origins, while unique characteristics arise later. Religions also influence each other through cultural diffusion when they come into contact.
An interdisciplinary approach drawing on both scientific fields like evolutionary biology and social sciences/humanities like history and religious studies is valuable for understanding religion's development in a systematic way. Religion should be studied comparatively, examining the evidence and considering the historical and cultural context.
In the modern world, religious tribalism and fundamentalism have become major obstacles to global cooperation and problem-solving. To adapt to current challenges, a pluralistic attitude promoting tolerance of diversity and a focus on our common humanity is crucial. Religion must evolve to remain relevant and beneficial to human flourishing.
9. Invest Like The Best spoke to Robin Dunbar in a conversation titled: Optimizing Human Connection.
5 Key Insights from the conversation:
Dunbar's number (150) is the maximum number of stable social relationships humans can maintain, part of a fractal-like series (5, 15, 50, 150, 500, 1500) where each layer is 3 times the previous one. The innermost 5 relationships, which require weekly interaction, are the best predictor of health and longevity.
To bond groups larger than 50, the limit for primates, humans evolved ways to trigger endorphins without physical touch, including laughter, singing, dancing, religious rituals, feasts, alcohol consumption, and sharing emotional stories. Time spent together doing shared activities is critical for building and maintaining close relationships.
Homophily, our tendency to bond with similar others, is friendship's "secret ingredient". The more traits that are shared, especially the seven key dimensions (language, background, values, interests, humor, etc.), the smoother the interactions, enabling long-lasting, cooperative relationships. However, this can also create silos.
Organizations should facilitate bonding by providing opportunities for shared activities and rituals (e.g. communal singing, having a drink after work). For optimal functioning, teams focused on a task should be homophilous experts, while leadership groups should be diverse. Time is a limited resource, so leaders must balance engaging employees with avoiding micromanagement.
The "tsunami of loneliness" and rise in mental health issues is exacerbated by online interactions that lack nuanced in-person social cues. Historically, religious communities provided bonding activities that brought people together physically. To combat loneliness, we must find new ways to foster in-person interaction and build close, supportive relationships.
10. Tyler Cowen interviewed Jonathan Haidt on his podcast.
Not everyone agrees with Haidt on his recent work about the impact of social media and smartphones on kids and Cowen is not convinced. Cowen’s main reasons: AI will help once AI autonomous agents can summarise and have conversations on our behalf, freeing up kids and teens to be screen-free.
Tyler also thinks that social media can be a force for good in allowing gifted kids to collaborate across the globe on topics on interest. And finally he is not convinced that the spike in teenage depression and mental illness since 2010 is caused by smart phones and social media, though it may be correlated to it.
Cowen had a full go at Haidt, who responded cooly (mostly) and with facts to each question. On the whole I felt that Haidt made the points well and backed up his claims with evidence. Of the points Cowen made which left me with more to consider, collaboration across the internet on social media is important but I think that this focuses on a small segment of highly capable and driven youngsters who will use Twitter (in particular) for good rather than is relevant to the majority of youngsters.
But this was superb and is highly recommended to see for yourself the many sides of what I believe is possibly society’s greatest challenge today.
Thank you Stuart Fox for flagging.
B. The Science and Technology Section
1. The Economist had a great set of articles discussing AI and Healthcare and where we go from here.
The Big Ideas from the articles:
AI is transforming diagnostics by enhancing the speed and accuracy of image analysis across multiple modalities, enabling earlier disease detection and reducing errors, while also powering chatbots and virtual avatars that provide personalized, interactive support for patients seeking health information and mental health resources.
AI-driven command centers and decentralized care models, such as virtual wards and AI-assisted point-of-care diagnostics, are optimizing hospital operations, reducing costs, and improving access to care, particularly in underserved areas, by leveraging real-time data, remote monitoring, and mobile technologies.
AI is revolutionizing drug discovery by accelerating the identification of novel targets, the design of optimized compounds, and the prediction of drug efficacy and safety, using techniques such as knowledge graphs, generative models, and automated experiments, potentially reducing the time and cost of bringing new treatments to market.
Foundation models that integrate diverse biomedical data types are opening up new possibilities for uncovering disease mechanisms, identifying biomarkers, and personalizing treatments, by learning the "language of biology" and generating novel hypotheses, but their development and deployment require addressing challenges related to data access, privacy, and bias.
The adoption of AI in healthcare is being driven by the confluence of big data, cloud computing, and advanced algorithms, as well as the pressing need to improve efficiency, productivity, and outcomes in the face of rising costs, aging populations, and workforce shortages, but realizing its full potential will require significant changes in the organization, financing, and delivery of care.
2. Tyler Cowen had a good piece on Bloomberg titled: AI Could Have a Surprising Effect on Interest Rates.
Key bits:
Real inflation-adjusted rates will go up, and for a considerable period of time. The conventional wisdom is that rates tend to fall as wealth and productivity rise. It is easy to see where this view comes from, as real rates of interest have been generally falling for four decades. As for the theory, lending becomes safer over time, especially as the wealth available for saving is higher.
My counterintuitive prediction rests on two considerations. First, as a matter of practice, if there is a true AI boom, or the advent of artificial general intelligence (AGI), the demand for capital expenditures (capex) will be extremely high. Second, as a matter of theory, the productivity of capital is a major factor in shaping real interest rates. If capital productivity rises significantly due to AI, real interest rates ought to rise as well. Think about capex in a world of AI. The scurry to produce more high-quality semiconductor chips will continue. Those investments are not easy or cheap. But the demand for investment will not stop there. The more that AI is integrated into lives and business plans, the higher will be the demand for computation.
That will induce a significant expansion of energy infrastructure. Again, those are not cheap investments. Northern Virginia, for example, is now facing a major dilemma along these lines, and not only because of AI. The region is home to major data centers, and now needs the equivalent of several large nuclear power plants to meet projected energy demands. And that could be just the beginning of the rise in capex. AI is already driving some advances in the pace of scientific discovery, a trend that can be expected to continue.
Thank you Sean Maher for flagging.
3. Nicolai Tangen at NBIM spoke to Elon Musk about AI, Space, EVs.
The 5 Key Insights:
Elon believes AI is progressing at an unprecedented rate, with hardware and algorithmic breakthroughs fueling rapid advancement. He predicts AI will surpass individual human intelligence by end of 2024, and collective human intelligence within 5 years. Musk emphasizes the critical importance of training AI to be truthful to avoid dangerous unintended consequences down the line if AI gains immense power.
Musk sees the transition to electric vehicles as an inevitable shift, similar to how internal combustion replaced steam engines. He notes Chinese EV companies are extremely competitive, making great cars and working very hard. While there may be some ups and downs, he believes the ultimate victory of EVs is assured and the sooner it happens, the better.
Musk outlines an ambitious plan to establish a self-sustaining city on Mars, which he estimates will require transporting 1-10 million tons of cargo. This could necessitate around 10,000 Starship flights over a 20 year period, with the first uncrewed ships landing within 5 years and first human missions within 7-9 years. Musk notes no fundamental technology breakthroughs are needed, just a massive scaling up of rocket production and launch cadence.
Musk views expanding human presence to Mars and becoming a multiplanetary species as essential for maximizing the longevity of human consciousness and civilization. He argues remaining on one planet leaves us vulnerable to eventual extinction from events like global war, pandemics, asteroid impacts, or the expansion of the Sun. Spreading to Mars and then throughout the solar system and beyond provides a backup for consciousness. Musk estimates the resources needed are less than 1% of Earth's total.
With his acquisition of Twitter, now rebranded as X, Musk aims to transform it into the "best source of truth on the internet" and build it into an all-encompassing "everything app." However, this has led to clashes with governments, such as in Brazil, over demands to suspend accounts of journalists and politicians. Musk has resisted complying with these takedown requests. His stated goal is for the platform to represent the "collective will of humanity" while fighting misinformation and manipulation.
4. From the Sohn Conference: Eric Steinberger and Daniel Gross on the future of AI at Sohn 2024.
5. Good Twitter thread on my favorite AI tool: Claude 3.
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"Mastery is not only about getting better at your craft, but also about finding ways to eliminate the obstacles, distractions, and other annoyances that prevent you from working on your craft.
Top performers find ways to spend as much time as possible on what matters and as little time as possible on what doesn't. It is not someone else's responsibility to create the conditions for success.
You have to actively work to eliminate the things that don't matter from your workload. If you haven't figured out how to do that, you haven't mastered your craft."
- James Clear