Bitcoin investors stuck it to the man and the big government by getting approval…from the man and the big government.
I’m boycotting the Maldives. The fact that I can’t afford it has no bearing on my decision. I’m a patriot first, poor second.
Bangalore traffic police pass a new rule: the minimum distance between vehicles in traffic signals is 1 cm.
John Maynard Keynes famously said, “The government should pay people to dig holes in the ground and then fill them up.” He was saying this was a way for the government to create jobs and reduce unemployment. The Bruhat Bengaluru Mahanagara Palike (BBMP) digs up good roads because it’s Keynesian.
People in Silk Board honk like they’re in a rush to save dying people so that they can engage in road rage at 6 kmph.
If you don’t read books to show off that you are reading a book and post tweets about it, what’s the fucking point of reading a book?
The poetic physicist Alan Lightman said this on an EconTalk podcast episode, and my jaw dropped to the floor as soon as I heard it. As of the writing of this post, my jaw is still firmly pinned to the floor by gravity. I know this sounds obvious to anybody who remembers their science classes, but lucky for me, I had forgotten. Lucky because I got to hear the breathtakingly profound observation once again.
Alan Lightman: So all of the material of our body, except for the hydrogen and helium, was literally made in the nuclear reactions inside stars. And, if you could tag each one of the atoms in your body and follow it backwards in time as it went through the various materials that you’ve eaten during your lifetime and then to the air, soil, water, back billions of years ago to the time that the earth was formed, and even before that when material that formed the earth was in a gas cloud circling around, eventually each one of those atoms, each particular atom that you had tagged, maybe tagged it with your social security number, would eventually end up at the center of a star.
Russ Roberts: And—pardon my naivete—there’s a lot to say about that, obviously. Of course, my first thought for a non-scientific person is, ‘Aw, come on, you’re kidding.’ But, there is a great deal of evidence for this; and it is so extraordinary. One is tempted to say miraculous. That would not, I guess, be the appropriate word in the context of the conversation so far.
Before we get to our regular programming, here are a few things on my mind:
If you are looking to build a career, the real money is not building the actual career but teaching people how to. From trading to self-help, the total addressable market (TAM) for trainers that can teach wannabe grifters—sorry, I mean trainers—is yuge.
Be careful when wishing someone dead; with COVID back again, your wish might just come true.
There’s an epidemic of active laziness. People go all the way to the gym to lift weights and take substances until they look like embryos that were dipped in a vat of industrial sludge, but still take the gym lift instead of the stairs
2024 will be a stock picker’s after a long time, excluding 2022, 2021, 2020, 2019…
Sell-side research is the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) for financial services.
This new year, don’t fall for the propaganda of big fitness, big nutrition, big health, and big bariatrics—just take Ozempic.
AI will change everything, dude. Ok, let me kill myself.
In praise of doing random things
We all end up in situations where people, both young and old, come and ask for advice. I can think of very few situations that are as uncomfortable as people older than you asking for advice. In a relative sense, being in situations where people younger than you ask for your advice is better than being in situations where people older than you ask for advice. What advice do you give to people older than you? They not only have more hair on them, but they’ve seen more than you.
When you are young, you tend to blurt out random shit because you’re dumb. As you get older, you learn that everything is 50 shades of gray, and you learn to think before you speak. While the ability to see the nuance and complexity in everything saves you a lot of grief in life, it is ill-suited for situations where people ask for advice.
When people ask for advice, they want a clear-cut answer. But if you are older and a little wiser, your answer should and will be some version of you don’t know, or it depends. You have to say you don’t know because you probably haven’t done anything of note in life and just got lucky to be where you are. But if you say that you have no clue about anything, you’re in bigger trouble. People say, “Wah, how humble you are, bro.” Randomness and luck = humility. Little do people know that you are actually telling the truth, and on top of that, you have a debilitating and raging impostor syndrome wreaking havoc like a category five hurricane in your head.
The problem is that the last thing people looking for advice wanna hear is I don’t know, or it depends. Whenever you say something nonspecific, you almost always come off looking like the metaphorical male reproductive organ or the hind part of the human abdomen. But, if you think about it, there’s no good or bad advice because everything is context-dependent, and you almost never have all the context. You can always disguise generalized principles of a good life as advice, like working hard, being consistent, and being curious, but that’s not what most people are looking for. They want specific answers. This reminds me of one of my favorite quotes ever:
There really shouldn’t be such a thing as bad advice. It’s all just perspective. But because we mistake pencil sketches for indelible ink, we get into all sorts of unnecessary problems. This starts out as a language problem and manifests as an error in reality modeling. In this view, there’s no such thing as good advice, either. There’s just perspective. All of it is conditional; none of it is universal; some of it is occasionally useful. All advice is context-dependent to a degree you may not appreciate until you encounter another context. Sufficiently caveated advice is indistinguishable from chaos.
It’s like this: every piece of advice is a simplification. Every simplification has imperfections. But to fully explain every single imperfection in a little bit of advice would take longer than a human lifetime. And it would take even longer to understand it. — Link
Hm. I think I’d also claim “insufficiently caveated advice is indistinguishable from ignorant generalization.” On average, the most useful, non-obvious insights have some essential oddity and complexity but retain elegance. So maybe one should aim somewhere in between.
My staple advice for a long time was a version of Do what you like. When I was young, this sounded cool and romantic. I hadn’t realized that there’s sufficient vagueness to the advice that you can avoid looking like the proverbial reproductive organ. The problem is that when people reply, I’ve no idea what I like. You then do verbal and semantic gymnastics to not look like an idiot. I ended up in a situation where someone young asked me for some advice twice in the last couple of months, and I came away with the nagging feeling that I didn’t say anything helpful.
The reason I’m writing about this is because of a few things. The first is that I’m a comedy geek, as you know by now. The way I listen to podcasts is to subscribe to a bunch of shows, then listen to the episodes I like. I’ve never read Ryan Holiday’s books, but I subscribe to his podcast. Earlier this year, comedian Tom Segura was on his podcast, and I had added the episode to my playlist. I finally got around to listening to it last week, and the conversation didn’t disappoint. The first half revolves around the art of crafting a comedy act, career choices, and mistakes. The discussion about shaping a comedy special was really good and applies to writing as well. But it’s the conversation around building a career that got me thinking about giving advice.
The second was that a few weeks ago, some unfortunate souls asked me for advice, and the only thing I was comfortable saying was to do random things in life. The third thing was a smart kid yesterday said the kids these days in college have the philosophy of fuck around and find out. That’s a damn good way to live life. The only side effect is that you may catch some unwanted and unspeakable diseases, but I digress.
There were parts of the conversation where I was thinking, “Hmm, that’s good advice that I can give to others.” I hope I don’t get sued for copy-pasting long bits of transcripts, but I loved these parts of the conversations. If you notice, even though it’s unsaid, the subtext of the conversation about doing random things in life to figure out what you like. We aren’t born with a gene that’s encoded with our purpose in life. The only way to figure out what you want to do and what you like in this miserable life is to fuck around and find out—preferably without catching diseases. Tripping over and busting your face is the only way you’ll learn not to walk like a rapper.
Ryan Holiday: If you can go, “Hey, this is what I’m trying to accomplish here,” then it makes it easier to make decisions about including it or not including it. I think people are bad at this with life as a whole. They don’t know what they want their life to be like, what success is, so they just go, “Well, someone offered me a lot of money to do X,” or it’s unpleasant to do. Why, yeah? So, sometimes you do unpleasant things to get to a place you want to get, and sometimes you turn down lots of money or a cool opportunity because it gets you far away from where you want to go. But if you don’t have a sense of where you’re trying to end up, you’re just making these individual decisions, and you don’t actually have the perspective to know what the best choices.
Tom Segura: Yeah, you’re totally right, and it’s very hard to be able to see clearly all those things when you’re 25. I mean, at this age, I can look back and go, “Oh, I understand why someone is unaware or not yet there to make those decisions.”
Ryan Holiday: If you don’t have this sense of where you want to end up, you end up just taking things that are cool or exciting or where you’re getting some traction or momentum, but that’s getting you far away from where you ultimately want to end up.
Tom Segura: This leads me to this kind of thought for you, though, and maybe because you have an answer on this. I feel like I really knew that I want to do. I want to perform, right? I didn’t know I wanted to stand up at the time. I thought maybe I want to act, but I knew. I knew that. But what do you say to people? Because I imagine, and I’ve heard people be like, “I don’t know. I don’t know what I want to do.” Yeah, what do you tell them when they’re being like, “Yeah, you’re right. I don’t know where I want to end up.”
Ryan Holiday: Yeah, in Robert Greene’s Mastery, he talks about your sort of life’s task, like how do you find what that thing is? People go like, “What’s my passion?” He’s basically saying, and I think it’s true, it usually goes back to some point in your childhood or early teen years. You discovered this thing that lit you up, that got you excited, and then there was some part of you that said, “This is impractical. This is impossible. This is too hard,” and you turned away from that. It’s usually not that you don’t know what it is; it’s that you have decided that it can’t be something that you’ve already tried, you know what I mean?
Tom Segura: Your brain is almost blocking out, “Well, it’s obviously not photography.”
Ryan Holiday: Yes, but it’s photography. Like I knew I loved books; I wanted to be a writer. I had done this stuff to fund being a writer. It was like, “It’s time I got to go get serious about this thing,” and I ended up quitting and moving across the country maybe 6-8 months later.
Tom Segura: Here’s the thing, all those stories, right? Like, they sound insane. Now it doesn’t because you’re wildly successful.
Ryan Holiday: It worked out.
Tom Segura: But right, you tell somebody, “I quit this and I packed up,” and they’re like, “It’s fucking stupid.” So if you’re listening or watching, you’ve got to remember that it might look, it probably will look crazy or stupid to a lot of people for you to pursue the thing that you really want to do.
Ryan Holiday: I would say one way to handle that is just don’t fucking tell people. When people say it’s not going to work out for you, you feel that so deeply that it affects you, right? Like, I didn’t want people to be like, “You’re going to do that? You know how hard it is.” So I just did it quietly, and it wasn’t until I had done it that I talked about it, and I wasn’t susceptible to either judgment or ego or anything. I was just doing the thing.
I love the idea of doing random things with any sense of direction in life. This has been a big part of my life for a long time, and even though most of the things I’ve tried have gone nowhere, I lost nothing but gained a lot. I’ve met some amazing people and learned a ton of things that I otherwise wouldn’t have. Another way of saying do random things is to say have no goals. I learned this from Patrick O’Shaughnessy’s wonderful philosophy of growth without goals.
Now I just want to explore. That may mean blog posts, research papers, new investing strategies, letters, podcasts, long periods of nothing, or maybe another book. Who knows? Exploration is continuous, there is no end point. Focusing on exploration is very rewarding all the time. It may produce things that look like end points, like achievements, but those things are just byproducts.
It is in these woods that I’ve begun to teach my son (and will soon teach my daughter) this lesson: explore for the sake of exploration, without expectation. Discover essence in your surroundings and in yourself, free from external conditioning (stories) and expectations. Build from the inside out and bottom up. Great habits and practices make a great and successful life. Cultivate those and the rest will take care of itself.
This reminds me of a passage of conversation between Stephen Fry and John Cleese that I talked about in a previous post:
Stephen Fry: One of the things that always maddened me about self-help books is the ones that start off with goal orientation—setting yourself goals—and I think it’s the most dangerous and despicable inimical thing imaginable because I don’t know a human being who, when they reach a goal they’ve set themselves, isn’t dissatisfied.
John Cleese: Absolutely.
Stephen Fry: Always an anticlimax.
John Cleese: So many of the Nobel Prize winners get very depressed when they win the Nobel Prize.
Stephen Fry: I can imagine exactly, because what do they do next?
The cool kids even have a fancy phrase to describe doing random things: “surface area of luck.”
If there’s one thing I’ve discovered in recent years it’s this. The amount of serendipity that will occur in your life, your Luck Surface Area, is directly proportional to the degree to which you do something you’re passionate about combined with the total number of people to whom this is effectively communicated. It’s a simple concept, but an extremely powerful one because what it implies is that you can directly control the amount of luck you receive. In other words, you make your own luck.
This reminds me of a quote my boss loves and uses often:
“I have two basic rules about winning in trading as well as in life: 1. If you don’t bet, you can’t win. 2. If you lose all your chips, you can’t bet.” — Larry Hite
In the same vein, there was another brilliant quote that Ryan Holidays shared in the podcast:
“According to Seneca, the Greek word euthymia is one we should think of often: it is the sense of our own path and how to stay on it without getting distracted by all the others that intersect it. In other words, it’s not about beating the other guy. It’s not about having more than the others. It’s about being what you are, and being as good as possible at it, without succumbing to all the things that draw you away from it. It’s about going where you set out to go.”
I know nothing about the stoics, but these are some smart dudes. No wonder all of them have abs.
Oh, to try to try random things is a good new year’s resolution as well. Just try random things. Life might just surprise you.
But without a cell, a genome doesn’t mean much. For creatures ranging from a virus to a human being, it is cells that give meaning to those sequences of nucleic acids by translating stretches of them into proteins. It is cells that use those proteins to take care of and repair themselves. Most importantly, it is cells that work with other cells to construct an organism. The cell decides which genes are used for what purposes and when, rather than being at the mercy of the genes, a feat on most magnificent display during the development of an embryo.
“Cells hold a creative potential that genes cannot dream of.”
Being able to chant Mungerisms and Buffettisms on cue is one thing, but knowing how to use them to make money is a whole new thing. Brilliant piece by Tom Morgan.
Like most people, I was told that thinking from first principles is the way you understand anything. Rules come first. But CFT argues that “ill-structured” domains like investing are so variable that there are rarely any consistent first principles that apply to every situation. Reality is simply too messy. Instead, the right approach is to consume a vast number of case studies, in order to understand all the various ways principles may appear in the real world.
This approach is somewhat at odds with the blogs, threads, listicles and books that are focused on revealing the “10 universal principles of success.” Sure, these may exist, but they’re useless without understanding how to apply the principles- especially given the way the principles show up are always different. It’s about understanding the power of context. This is why you can’t get as rich as Warren and Charlie by following rules. Intelligence can quote Warren and Charlie, chapter and verse, but wisdom might actually help reproduce their results.
A thought-provoking post on the perils of over-reliance on technology and the attendant life of convenience. As we become enamored with the erotic comforts of technology, are we losing the good things in life? If you feel disenchanted by the modern era of technology, this is a wonderful blueprint on how to live a fulfilling life by rebelling against the false promise of technological convenience and comfort.
Our age is rare, in that we’ve thrown ourselves into a laboratory of new technologies that have not been tested through the careful sifting of history. Our children and teens are being subjected to a global experiment, whose early results are disturbing, yet with no sign, as yet, that Big Tech or our elected officials are seriously interested in slowing the experiment down.
Which is why many of us will choose to creatively resist with anachronistic action. Step two of the 3Rs, which we introduced in an earlier essay, is Remove: physically remove devices and other forms of technology from any places where we don’t want them. The next step, Return, happens more naturally. Free of the magnetic pull of our devices, we will instinctively start to look elsewhere for stimulation, connection, and meaning. Anachronistic actions can be a part of this return, whether reading older books or writing by quill, or perhaps restructuring our lives around an ancient cycle of prayers and devotions.
This is what I’ve been calling “comcom” — competitive compatibility. For most of modern history, this kind of guerrilla interoperability, achieved through reverse engineering, bots, scraping and other permissionless tactics, were the norm. But a growing thicket of “IP” laws creates severe legal jeopardy for these time-honored traditions. Just one of these IP rules — the “anti-circumvention” provision in Section 1201 of 1998’s Digital Millennium Copyright Act — provides for a five-year prison sentence and a $500,000 fine for anyone who bypasses “an effective means of access control.” And that’s for a first offense!
There’s a utilitarian logic to this approach. The impact of technologies on our well-being can be both significant and unpredictable. The technopoly mind-set holds that we should accept the positive impacts of new tools alongside the negative ones, hoping that, over time, the positives will outweigh the negatives. This optimism might prove justified, but techno-selectionists think that we can do better. If we aggressively repudiate the technologies that are clearly causing net harm, while continuing to embrace those that seem to be more beneficial, we can direct our techno-social evolution much more intentionally. Such attempts at curation—which can occur at every scale, from personal decisions to community norms and civic regulation—are unavoidably messy. Often, it’s necessary to forgo some positive developments in order to eliminate larger negative impacts. And curation can easily go wrong. What is widespread vaccine hesitancy, for example, if not a prominent example of techno-selectionism?
This, Mr Allen and his co-authors say, is evidence that that the fist states were formed by farmers co-operating for economic reasons. A canal network would have been too large a cost for any to bear alone. But by spreading the cost, the construction was worth it for each. Such decisions were momentous. They represent some of the earliest examples of governments providing infrastructure in return for taxes, and thus the genesis of the earliest states.
As we head into a new year, here’s a cheerful and jolly message about how we’re fucked by Ray Dalio. I wish you all a merry Christmas and a happy new year.
History shows that the painful seismic shifts part of the Big Cycle comes about when there is simultaneously 1) too much debt creation that leads to debt bubbles bursting and economic contractions which cause central banks to print a lot of money and buy debt, 2) big conflicts within countries due to big wealth and values conflicts made worse by the bad economic conditions, and 3) big international conflicts due to rising world powers challenging the existing world powers at a time of economic and internal political crises In doing this study, I also saw two other big forces that had big effects. They are:
Acts of nature (droughts, floods, pandemics) including climate change.
Learning leading to inventions of technologies that typically produced evolutionary advances in productivity and living standards —e.g., the First and Second Industrial Revolution, and computing/AI revolution.
Pair this with the following cheerful and uplifting posts:
In the same vein, let’s fast forward the we’re buggered reality to it’s logical end: what happens when the sun around which the earth orbits dies? Well, the good news is that you won’t be around to find out, but the bad news is that earth might be turned into a planetary version of Domino’s cheese burst.
Go and try tripping a friend or a sibling. If they fall on their face and get angry, tell them you’re welcome because you learned the importance of being mindful, and pain is the best teacher.
Everything is cyclical. Fear and greed. Hope and despair. War and peace. Creation and destruction. Minimalism and maximalism. Monogamy and harems. Happiness and sadness. Boxers and G-string chaddi (remember this). More and less. Untorn jeans and torn jeans. Things come and go, but the more things change, the more they remain the same.
There was a time when more was good. There was even a word for wanting more—aspirational. Things have changed. If you are the kind of person who likes more stuff, you will be labeled a planetary murderer. Wanting more is passé. Wanting less is the new virtue. Wanting less even has a new branding—minimalism.
The reason I’m writing is because of a long read (archive) in The Guardian on the cost of mindless consumerism by Chip Colwell. The article is an excerpt from his book Stuff: Humanity’s Epic Journey from Naked Ape to Nonstop Shopper. It’s an article about the emptiness of consumer culture and his attempts to embrace a minimalist lifestyle.
By the tour’s end, I couldn’t help but admire the landfill’s efficiency, the engineering that goes into managing so much waste. Dads enables the endless cycle of consumption of my city to go on uninterrupted while reducing the chances of immediate environmental harm. But not every place has the resources to manage such monumental waste. Ghana, for instance, imports around 15m items of secondhand clothing from countries including the UK, US and China every week. Many of these garments end up in informal dumps, which, after seasonal rains, wash out millions of rotting, tangled pieces of clothing on to local beaches.
There are a wide range of possible motivations for this kind of strategic living: an aesthetic sense (when people like spaces with fewer things), sustainability (driven by concerns over the environment), thrift (saving money), mindfulness (wanting to be more intentional in one’s life) and experience (when people are excited to try different lifestyles). For my daughter, it was the environment; for my wife, mindfulness. For me, I lean toward a minimalist aesthetic. But mainly I was exhausted by endless shopping, and terrified by the possibility that our over-consumption was destroying the planet.
All humans, even the quarter-witted ones, know that overconsumption is bad. Despite this knowledge, why do we keep buying stuff?
That was the question in my head after reading the article. So I started looking around for some answers. What follows is a collection of seemingly random perspectives on materialism and consumerism from a wide variety of thinkers.
One of the first things that popped into my head as I was reading the article was the brilliant George Carlin bit on on stuff:
That’s the whole meaning of life, isn’t it? Trying to find a place for your stuff. That’s all. Your house is just a place for your stuff. If you didn’t have so much goddamn stuff, you wouldn’t need a house. You could just walk around all the time. That’s all your house is; it’s a pile of stuff with a cover on it. You see that when you take off in an airplane and you look down, and you see everybody’s got a little pile of stuff. Everybody’s got their own pile of stuff, and when you leave your stuff, you’ve got to lock it up. Wouldn’t want somebody to come by and take some of your stuff. They always take the good stuff. They don’t bother with that crap you’re saving. Ain’t nobody interested in your fourth-grade arithmetic papers; they’re looking for the good stuff.
That’s all your house is; it’s a place to keep your stuff while you go out and get more stuff. Now, sometimes you’ve got to move; you’ve got to get a bigger house. Why? Too much stuff. You’ve got to move all your stuff and maybe put some of your stuff in storage. Imagine that; there’s a whole industry based on keeping an eye on your stuff.
Enough about your stuff; let’s talk about other people’s stuff. Did you ever notice when you go to somebody else’s house, you never quite feel 100 percent at home? You know why? No room for your stuff. Somebody else’s stuff is all over the place. And what awful stuff it is. Where did they get this stuff?
And if you have to stay overnight at someone’s house unexpectedly, and they give you a little room to sleep in that they don’t use that often, someone died in it 11 years ago, and they haven’t moved any of his stuff or wherever they give you to sleep, usually right near the bed, there’s a dresser, and there’s never any room on the dresser for your stuff. Someone else’s [ __ ] is on the dresser. Have you noticed that their stuff is shit and your shit is stuff?
It’s brilliant. Stand-up comedians are philosophers and the sharpest observers of the human condition. What did I tell ya?
Now to the question at hand: Why do we buy stuff even if we know we are making ourselves miserable and destroying the planet?
A few weeks ago, I started writing a post on behavioral economics that I’ve yet to publish. While I was doing some research for the piece, I read a little about the evolutionary psychology perspectives on human behavior. I think the discipline is fascinating and adds an important dimension to our thinking about why humans do what they do. So I started searching the evolutionary psychology literature for some insights on consumer behavior. I came across a fascinating paper by Douglas Kenrick, a professor of psychology at Arizona State University, and Vladas Griskevicius, professor of marketing and psychology at the Carlson School. Here’s their hypothesis on why we consume and the consumption choices we make:
The fundamental motives framework highlights that people everywhere have the same ultimate motives. From Afghanistan to Zimbabwe, all humans have an evolutionary need to evade physical harm, avoid disease, make friends, attain status, acquire a mate, keep that mate, and care for family. These deep-seated ancestral motives continue to shape consumer preferences and decision making, albeit not always in obvious or conscious ways.
People everywhere have the same evolutionary needs, and these fundamental needs have a profound influence on people’s preferences and behavior. While an evolutionary perspective points to the ultimate reasons for human behavior, it does not in any way suggest that proximate reasons are irrelevant or uninformative. Rather, an evolutionary perspective highlights that there are critically distinct and complementary levels of analysis. At the proximate level, consumers seek goals such as novelty, value, self-esteem, meaning, quality, happiness, simplicity, reliability, entertainment, efficiency, identity, and hundreds of other goals. But at the ultimate level, people are often pursuing something very different, even if we’re not always aware of what’s happening behind the curtain of consciousness. The brain is designed to solve a set of perennial ancestral challenges. The need to solve these deep-seated evolutionary challenges continues to powerfully influence modern product choices and economic decisions.
They contend that our consumption choices are influenced by deep-rooted evolutionary imperatives. Here’s a cool table from the paper on evolutionary motives and how they manifest in terms of consumption choices:
Here are a couple of examples from a brilliant talk by Dr. Gad Saad (archive), who also applies an evolutionary lens to marketing and consumer behavior:
To give you another example of how gorging manifests itself in the human context, there was a classic study where the number and distribution of colors of M&Ms were manipulated. Objectively, the coloring is odorless and tasteless; objectively, there are no differences in taste between the various conditions. Yet people end up consuming more when exposed to greater variety. Their brains are visually tricked to eat more precisely because of what is known as the ‘variety effect,’ which has also been shown using single versus multiple flavors of yogurt, and by manipulating the number of pasta shapes in an offering. Now, the evolutionary reason is quite simple: our bodies actually need to sample a multitude of nutritional sources, but secondly, if we only eat one source of food and if that source is contaminated by food pathogens, then that’s a real problem. So you’re diversifying your risk of being exposed to pathogens by sampling from multiple sources. This was a mechanism first proposed by Paul Rozin, a food psychologist at the University of Pennsylvania. And so here, even though objectively speaking, people should not be succumbing to the variety effect, they do because it is such an alluring Darwinian pull to do so.
In the next example, we’ve got grizzly bears that have to gorge on a lot of fatty salmon if they hope to survive the period of hibernation. And, of course, we pick the juicy burgers and we’re more than happy to gorge on that fatty food. The Atkins diet was very popular for many years because it actually prescribed a behavior that was perfectly consistent with our evolved gustatory preferences. It didn’t say, ‘Eat all you can eat raw celery.’ It said, ‘You can eat fatty burger patties, steaks, and eggs and bacon, and guess what? You’re actually going to lose weight.’ Now, of course, what the Atkins diet doesn’t tell you is that some of your cholesterol metrics didn’t fare too well, but from a strictly commercial perspective, it worked well because it was consistent with what our evolved gustatory preferences were expecting. If you look at the top restaurants in the world, they’re top restaurants not so much because they’ve got Justin Timberlake as an endorser; they do very well because they provide us with exactly what we want, which is fatty foods—fatty and tasty foods.
Ok, all these fancy evolutionary theories are nice, but how did modern consumer society come about?
Most explanations about the prosperity of the modern world start with the industrial revolution in Britain, which started in the second half of the 1700s. The putative explanations for the origins of the industrial revolution range from Marxian explanations of the exploitation of labor by capital to progressive explanations of slavery to technological explanations of the birth of the steam engine, rail roads, containerized shipping, immigration, mechanized production, etc. For some, the problem with these explanations is that they may be teleological—they explain the effect and not the cause.
During the millennia from the caves down to 1800 the average person on the planet earned and spent in today’s prices some $2 or $3 a day, as now in the Central African Republic. By 1800 the average person in the richest countries, such as Holland and Britain and Britain’s newly independent daughter in the New World, had attained perhaps $6 day, as now in Afghanistan. Still pitiful. But in the 19th century, after a precarious beginning during the 18t,h century in Britain, a Great Enrichment transformed western European countries and their offshoots.
But Dierdre McCloskey disagrees with these explanations. She argues that while capital, labor, technology, etc. were needed for the industrial revolution, the secret sauce was individual liberty. In other words, the vanishing distance between barons, bishops, and serfs and the death of hierarchies. An enlightened environment of economic equality that lets anybody with an idea have a go at it to make their own destiny was what led to the birth of the age of plenty.
What we can show very clearly is that the usual suspects do not work. The slave trade, colonial exploitation, overseas trade, rising thrift, improved racial stock—no such material cause works to explain he modern world. We must recur—as other economic historians like Mokyr are recurring—to ideas, the ideas about steam engines and the ideas about the standing of bourgeois people who make the steam engines and the ideas about liberty that allow the ideas to change. The change in ideas arose perhaps from the turmoil of 17th-century Europe experimenting with democratic church government and getting along without kings. It certainly arose with the printing press and the difficulty of keeping Dutch presses from publishing scurrilous works in all languages. It arose also from the medieval intellectual heritage of Europe, free universities and wandering scholars. In short, it was free people who innovated and kept their just rewards. — The Industrial Revolution (archive)
The enrichment, I repeat, is recent. Some centuries before 1800 a few technological ideas had started to be borrowed by Europe from China and other economies to the east and south—paper, for example, and gunpowder, and the silk worm, and the blast furnace. But from the seventeenth century onward, and especially after 1800, the political and social ideas of liberalism shockingly extended the technology, through equality of liberty and dignity in Holland and Britain and Belgium and above all in the United States, and then beyond. The economic historian Joel Mokyr in a new book chronicles the improvements in communication and the welcoming of novelties that made for a freewheeling and largely egalitarian Republic of Letters after 1500, and especially after 1600.3 The outcome of such rhetorical developments was a technological explosion, especially after 1800, that radically improved on Europe’s old overseas borrowings. The Great Enrichment is not to be explained, that is, by material matters of race, class, gender, power, climate, culture, religion, genetics, geography, institutions, or nationality. On the contrary, what led to our automobiles and our voting rights, our plumbing and our primary schools, were the fresh ideas that flowed from liberalism, that is, a new system of encouraging betterment and a partial erosion of hierarchy. — Liberalism Caused the Great Enrichment (archive)
Mass consumerism was born in Europe, then spread to America, and then to the rest of the world through movies and music as the world got richer and more globalized.
If liberty is our greatest export, consumerism is a strong No. 2. Americans figured out how to tap into the brainstem to persuade people without ever reaching the cerebrum. It works–and merchants everywhere are adopting it. Including idea- and candidate-merchants. — David Von Drehle
If consumerism had its initial roots in Europe in the seventeenth century, as the fruits of conquest and colonization gave rise to increasing material wealth and a growth in the range of products available for consumption (McKendrick et al., 1983; Brewer and Porter, 1993), the ‘imitation’ that quickly took hold in the American colonies, and then in an independent USA, became from the late nineteenth century the ‘real thing’, a way of life to which, in due course, more and more people around the world have aspired, albeit while also at times attaching local meanings and values to the commodities and services purchased and consumed. — Consuming: Historical and Conceptual Issues (archive)
If we stop buying stuff, what should we do instead?
In the previous edition (archive), I had quoted this wonderful bit from Stephen Fry’s interview with John Cleese:
So I… I had this empty hole in me, this vast empty hole that said, “Feed me. I need this sugar. I need it.” And then when it wasn’t sugar, it became tobacco, and I smoked. And then in my 20s, it became cocaine. I just… And I couldn’t sit still without going, you know, and it’s that addictive impulse that many people, many people watching will know what I mean. And many people won’t because this is the important thing to remember. I said, “Not everybody has this.” And it’s a kind of addictive gene. And I guess the money people have it for money. There’s this hole in them they have to acquire and they have to own.
Here’s the point of this story: If Andrew and I were sharing stories around a campfire with friends today, we might talk about the crazy fight in the hotel lobby. We might laugh about begging our way onto a local Cuban bus while the driver stopped to pick up milk and chickens. But we wouldn’t likely talk about anything we bought that year. We value our experiences over the things we buy. Yes, we might be a couple of dorky dudes, but most people prefer life experiences over stuff.
When I give talks about happiness and money, I ask attendees to recall their most memorable material purchase. Sometimes, I ask them to write down what they felt when they first acquired that purchase. I recall one gentleman saying, “I love tech gadgets. When the first iPhone came out, I was one of the first to buy one. I loved it. I thought it was amazing.”
Next, I present the following scenario: You have one more month to live. The Grim Reaper says, “I’m going to erase one of your memories. It’s going to be the memory of your favorite material purchase or the memory of your favorite experiential purchase.”
Not surprisingly, the man said he would sacrifice the memory of any “thing” he bought before relinquishing a memory of an enjoyable time with his family.
Sounds sensible, doesn’t it?
Not so fast.
Sash Chapin wrote a wonderful response to this topic (archive) of spending on things vs. experiences. The TLDR of his long post is: It’s complicated. That we like experiences over possessions isn’t as black and white as people assume. Meaningful and utilitarian material possessions can be as fulfilling as experiences.
I guess it should go something like, “try to buy experiences instead of possessions, or maybe buy possessions that enrich your life by enabling novel experiences, or, if you’re the kind of person who tends to buy possessions over experiences, ignore us, we wouldn’t dare make broad generalities and purport to know better than you do about what makes you happy based on a couple of surveys, happiness is way too complicated for that.”
Adam Mastroianni studies human behavior and also writes a substack that I really enjoy reading but am not smart enough to understand in full. He had an insightful reply to Sasha Chapin’s post:
I agree. It’s not clear to me how you could reasonably answer a question like, “Which makes you happier, things or experiences?”
Buying my toothbrush didn’t make me particularly happy. But if it fell in the toilet, should I say, “Too bad I can’t buy a new one, because to maximize my happiness I should really put that $1.50 toward buying Coldplay tickets”?
In fact, I bet people overestimate their momentary happiness more when predicting for experiences than for possessions. There’s research on how people expect fun experiences (like a European vacation) to be great, they remember them being great, but when they’re actually experiencing them, they’re less great: https://www.sciencedirect.com/science/article/abs/pii/S0022103197913330
That’s because when you imagine going to Rome, you picture yourself sucking down Negronis and strolling through the Coliseum. You don’t picture yourself waiting in line, or getting dehydrated, or tossing and turning while sirens wail outside your AirBnB. All those things fade in memory, both because negative things fade faster than positive (https://en.wikipedia.org/wiki/Fading_affect_bias), and because you had a strong theory in the first place that “European vacation = fun”, and things that don’t fit with that theory tend to get lost.
I bet this happens less with possessions. I buy a TV in the hopes of watching entertaining images on it, and that’s exactly what I end up doing. I never expect buying a new thing to make me transcendently happy, but I do expect experiences to do that for me sometimes, and I’m often disappointed.
TLDR: We’re all beautiful and unique snowflakes.
Going back to the question of why we want moar and moar, I found a couple of brilliant perspectives. The first perspective is from the great American novelist David Foster Wallace, talking about the ethos of individualism and consumerism in America. After I watched the video, I was ashamed that I didn’t know who he was. The man is a goddamn genius.
A few highlights:
In the book, there’s an element in which various people are living out something that, I think, is true, which is that we all worship, and we all have a religious impulse. We can choose to an extent what we worship, but the myth that we worship nothing and give ourselves away to nothing simply sets us up to give ourselves away to something different. For instance, pleasure or drugs or the idea of having a lot of money and being able to buy nice stuff.
Whatever the conditions of hopelessness you’re talking about, at least in “Infinite Jest,” have to do, I think, with an American idea, and not a universal one, but one that I think kids get exposed to very early. That you are the most important and what you want is the most important and that your job in life is to gratify your own desires. That’s a little crude to say it that way, but in fact it’s something of the ideology here. And it’s certainly the ideology that’s perpetrated by television and advertising and entertainment and the economy thrives on it. Well, of course, nobody tells you. I mean, mom and dad don’t sit you down and say this. This is something very subtle and is delivered by a great many messages.
That feeling of having to obey every impulse and gratify every desire. It seems to me to be a strange kind of slavery. Nobody talks about it as such though. It talks about the freedom of choice and you have the right to have things and spend this much money and you can have this stuff. Again, saying it this way, it sounds to me very crude and very simple, but that’s sort of the way. And it works very well as a system for running an economy and keeping goods produced and sold. It works wonderfully. The ways in which it doesn’t work are much more difficult to talk about. One of the things it causes is tension and unhappiness in people. I don’t think it’s very complicated and I don’t think I’ve named the only reason for it. The paradox is that that sort of tension and complication and conflict in people also makes them very easy to market to. Because I can say to you, ‘Feeling uneasy? Life feels empty?’ ‘Well, here’s something you can buy or something you can go do.’
The legendary linguist, activist, and philosopher Noam Chomsky has a darker take on consumerism:
We should be careful to consider consumerism and the consumption culture, which is largely artificially created. This is not just my opinion; if we go back to about a century ago and examine the origins of the public relations industry, including the advertising industry, we find an interesting history. In the freest countries in the world at the time, such as England and the United States, there was a conscious and articulated recognition among elite sectors that enough freedom had been won through popular struggle. As a result, people couldn’t be controlled by force anymore, so alternative means were necessary to control them. This alternative means was the control of attitudes and opinions, leading to the call for the manufacture of consent.
We indeed need a mechanism for the manufacture of consent, but we also need to create conditions where people are driven towards more superficial aspects of life, like fashionable consumption. I’m actually quoting from the business press when I say this, as they recognize that by creating such conditions, we can effectively control people. This concept is often referred to as “fabrication of wants,” a term used by the great political economist Thorstein Veblen, who understood and wrote about it. By fabricating wants, we can trap people into consumerism and debt, among other things.
If you examine television content directed at infants and two-year-olds, you’ll notice that it’s already attempting to create a culture of demand for goods. In fact, there’s now an academic discipline within Applied Psychology that deals with the concept of nagging. The reason behind this is that the advertising industry recognized a couple of decades ago that a significant portion of the population doesn’t have disposable income, so they can’t make purchases. To address this, they focus on children, as they can influence their parents through nagging. For instance, a child might insist, “I need that toy or video game,” and this form of advertising, targeting children through television and other mediums, employs various types of nagging techniques tailored to different kinds of purchases. The overarching idea is to ensnare infants and children into a culture of fabricated wants, so they can later be ensnared into a consumer culture, effectively controlled alongside the manufacturing of opinions.
Chomsky sounds like one of those conspiratorial kooks, but he isn’t wrong. American consumerism was both a grand psychological experiment and an explicit political project. At the turn of the century, the biggest worry for American companies was: What if people said enough and stopped buying more? An excerpt from Jeffrey Kaplan’s brilliant post on the history of American consumerism:
By the late 1920s, America’s business and political elite had found a way to defuse the dual threat of stagnating economic growth and a radicalized working class in what one industrial consultant called “the gospel of consumption” — the notion that people could be convinced that however much they have, it isn’t enough. President Herbert Hoover’s 1929 Committee on Recent Economic Changes observed in glowing terms the results: “By advertising and other promotional devices . . . a measurable pull on production has been created which releases capital otherwise tied up.” They celebrated the conceptual breakthrough: “Economically we have a boundless field before us; that there are new wants which will make way endlessly for newer wants, as fast as they are satisfied.”
If you had read my previous post on the history of media, you’d remember that by the early 1900s, advertising agencies were beginning to mushroom in America. American companies wanted to sell more. With the help of advertising agencies, they unleashed what can only be termed a deliberate campaign of propaganda to convince and program people into believing that they always needed to buy more. Advertisers perfected the art of hacking people’s desire for status. A key figure in early American advertising was Edward Bernays, the nephew of Sigmund Freud. Thanks to him, propaganda became public relations, and people became guinea pigs on a hamster wheel of endless consumption:
Having seen how effective propaganda could be during war, Bernays wondered whether it might prove equally useful during peacetime.
Yet propaganda had acquired a somewhat pejorative connotation (which would be further magnified during World War II), so Bernays promoted the term “public relations.”
Bernays’ publicity campaigns were the stuff of legend. To overcome “sales resistance” to cigarette smoking among women, Bernays staged a demonstration at the 1929 Easter parade, having fashionable young women flaunt their “torches of freedom.”
In the 1930s, he promoted cigarettes as both soothing to the throat and slimming to the waistline. But at home, Bernays was attempting to persuade his wife to kick the habit. When would find a pack of her Parliaments in their home, he would snap every one of them in half and throw them in the toilet. While promoting cigarettes as soothing and slimming, Bernays, it seems, was aware of some of the early studies linking smoking to cancer. — The manipulation of the American mind: Edward Bernays and the birth of public relations (archive)
“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. …We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. …In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons…who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.” ― Edward Bernays, Propaganda
We don’t consume in isolation but in a social context—we’re all keeping up with the Joneses. In other words, we have a reference group against whom we compare ourselves. Our friends, neighbors, peers, and popular culture all have an influence on what we consume. Juliet Schor (archive), a professor of sociology and economics at Boston College, has an interesting theory of how America became a nation of shoppers. The reference group for Americans in the 1950s were their neighbors. The wants and desires of Americans were in comparison to what their neighbors had and wanted. But then married women entered the workforce and were exposed to a diverse group of people. As neighborhood bonds weakened, the reference group for comparison shifted upwards to successful people in professional settings.
The other key factor was inequality. The share of income going to the richest 20% kept increasing. As radio, TV, and the Internet proliferated, Americans were exposed to more media than ever. Nobody likes watching poor people on their TVs and phones, so the media started broadcasting the lives of the rich and the famous. This further led to an upward shift in reference groups. Americans no longer wanted to emulate their neighbors or bosses but wanted the lives of the rich and famous—the ones on TV and glossy magazines. So they started working more at the cost of family time, friendships, and leisure to earn more. When that wasn’t enough, they started borrowing more and piling on mortgage and credit card debt so that they could have a piece of that juicy American dream. I believe this is what’s happening around the world. We are in an age of aspirational inflation.
There’s what I’ve called competitive consumption, you know, where we just want to maintain our position in society. Not necessarily trying to get ahead of everyone, but simply keeping up and not falling behind. In a world with a growing economy, this often entails escalating our standard of living.
Growing social inequality fuels a spiral of “competitive consumption.” As the wealthy get richer, the pressure on the middle class to maintain their relative position intensifies. This manifests in a constant need to keep up with the rising standard of living, even if it means acquiring unnecessary luxuries. This fear of falling behind and losing social status is exacerbated by the widening gap between the rich and everyone else.
Consumption as a remedy for economic woes: The Great Depression and its aftermath instilled a fear of economic collapse. Consumption, in this context, is seen as a way to keep the production engine running and creating jobs.
Questioning consumption, but not jobs: While the idea of endless consumption for happiness might be debatable, the need for employment is less so. Hence, consumption carries a “golden halo” as a solution to unemployment.
An AI generated summary of this video of Juliet Schor
Some of these perspectives give the impression that we’re all mindless robots without agency, consuming our way to oblivion. I’m not sure how I feel about that. The notion that we’re all mindless puppets and playthings in the hands of brands and advertisers to be molded and programmed to satisfy their needs is depressing. It’s a tough pill to swallow, but we have to accept that there’s an element of unconscious consumption. We give into our evolutionary impulses because we’re easily aroused by things. People selling trinkets have perfected the art of making humans horny for shiny objects.
Modern life is hard. Consumption is as much a social activity as it is an individual one. We’re all infected by the raging epidemic of social comparison, and there’s no known vaccine for it. Having said that, while it’s fashionable to rant against consumerism, we have to start by accepting that modern prosperity has given us many good and pleasurable things—it’s made our lives better. As economist Jayati Ghosh put it eloquently, romanticized notions of an ideal past are wrong and useless.
But we should not romanticize life in the past, which in much of the world, until quite recently, could still be characterized, in Thomas Hobbes’s formulation, as “poor, nasty, brutish, and short.” In the long course of human history, one of the most striking features of the twentieth century—simultaneously a terrible time in many ways and for many people—was the dramatic increase in life expectancy in all the regions of the world. After around two millennia when average life expectancy is estimated to have remained broadly flat at around twenty-eight to thirty-two years, it started increasing in the nineteenth century in today’s rich (then, colonizing) countries. Over the twentieth century the average of world life expectancy doubled—and the gains were spread across countries. What is more, the gaps between countries, though still very large, have reduced since 1950. Max Roser notes that “today most people in the world can expect to live as long as those in the very richest countries in 1950.” — Degrowth Is a Distraction. The distribution of gains is more important than GDP. Jayati Ghosh (archive)
Consumption isn’t bad; it’s rampant consumerism that’s bad. They aren’t the same thing. It’s our collective inability to say enough that’s at the root of most modern ills. Consumerism was born from a war on enough. The result was that the ever-elusive ideal of a good life—the one on Instagram and magazine covers—became a benchmark for all of us. You can see this from the fact that the poor want to be rich and the rich want to be happy. At some point in all our lives, we have to change our benchmarks and start to define our own happiness.
We can change. It’s hard, but we can break out of the cycle of pointless consumption by prioritizing things that add value and meaning to life, however you define that. Realizing that we can never outrun our insecurities and feelings of inadequacy, no matter what we buy on Black Friday and Singles Day, is hard. Money and consumerism are cocaine for our insecurities. It’s not going to be easy because we’re up against capitalism, and capitalism is a gorgeous model seducing us with a promise to make us happy (don’t be a pervert; it’s a metaphor). It’s in capital’s interest to leave you with holes that can’t be filled so that you keep shoveling stuff (again, don’t be a pervert).
We’re social animals; we’ll always compare ourselves to others, we’ll always feel inadequate, and we’ll always want more. We will never fill that hole inside of us, even if we spend a decade in a Tibetan monastery, wearing a loincloth, chanting weird things, sitting in an eternal selfie pose, and banging brass plates. We’re all damned by a customized version of the Sisyphean curse. The trick is to get to a place where you grunt instead of yelling “you piece of shit” when you wake up and look yourself in the mirror. I hope to get there one day.
Trigger alert, but here’s another gem from old George:
Then you have advertising. Advertising is the businessman’s cheaply dressed two-dollar blow job. Advertising sells you things you don’t need and can’t afford that are overpriced and don’t work, and they do it by exploiting your fears and insecurities. If you don’t have any, they’ll be glad to give you a few by showing you a nice picture of a woman with big tits.
I don’t know if Chuck Palahniuk was inspired by George Carlin or the Dalai Lama, but here’s a banger from the movie Fight Club, based on the book of the same title:
Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don’t need. We’re the middle children of history, man. No purpose or place. We have no Great War. No Great Depression. Our Great War’s a spiritual war… our Great Depression is our lives. We’ve all been raised on television to believe that one day we’d all be millionaires, and movie gods, and rock stars. But we won’t. And we’re slowly learning that fact. And we’re very, very pissed off.
I asked you to remember the g-string chaddi. Here’s why:
This is the cruel and twisted consumerist world in which we are living. Less coverage area around your Latin American region is more costly than more coverage.
Reading and watching recommendations
The Boston Review published an amazing series of articles on hedonism in 2022. The lead article in the series is by philosopher Kate Soper (archive). It’s a brilliant article in which she paints a depressing picture of the emptiness of modern life in capitalist societies and suggests ways to get off the consumerist treadmill and embrace simpler and more fulfilling lifestyles. Sustainable lifestyles in which happiness doesn’t come from buying useless shit but from being part of local communities, social enterprises, and the knowledge that one’s lifestyle isn’t destroying the only home we have.
I first read the piece at the beginning of the year, and I keep rereading it every now and then. The article left a deep imprint on me and forced me to question many things about my life. There are responses to Kate Soper’s exhortation from a variety of equally brilliant thinkers, the links to which are on the right side and at the end of this article.
For a long time, scaled consumer marketing has created status roles where none used to exist, and amplified division and class as a way to create insufficiency and generate sales.
But what we see when we look at the media or at a stack of resumes doesn’t accurately represent the world as it is.
This is a fascinating article on the impossibility of figuring out what factors cause and trigger cancer. I kinda felt depressed when I learned that we’re all filled with cancerous cells just waiting to be triggered by something like air pollution or inflammation.
The fact that, in almost one in ten cases, we can’t identify a clear mechanism for the development of lung cancer even in smokers gives us all the more reason to think that we may be missing a plenitude of cancer-causing agents. The multi-hit model tells us about what’s happening within a cell, but Balmain knew that a cell is not an isolated spaceship floating between planets. That’s why he came to suspect that some of the “hits” have to do not with the cancer cell but with the tissue milieu in which the cancer cell finds itself. The snake, venomous as it is, must still be whipped to provoke its attack; the hound must be painted _and_ set to roam the moor.
Hill, Lim, and Weeden aren’t the only researchers to have found potentially cancerous cells lying dormant in tissues. In 2015, a team of scientists studied cells from the eyelid, an area of skin routinely exposed to UV light. (The tissue came from patients who’d had “eyelid lift” surgery.) Roughly a fifth to a third of the cells carried skin-cancer-driving mutations, and clones carrying some of these mutations had expanded, suggesting positive selection. Yet none of these patients had overt skin cancer. Such research suggests that healthy people may have a cadre of potentially cancerous clones.
Derek Thompson perfectly captures the essence of something that I’ve been thinking about for a long time: depression and anxiety have become sexy. I want to be clear: I don’t mean people aren’t anxious or depressed. I’m saying a lot of people are confusing the realities of life for mental health issues. Perversely, this makes life difficult for people who are actually suffering from anxiety and depression.
Darby Saxbe, a clinical psychologist at the University of Southern California and a mother to a high schooler, told me she has come to think that, for many young people, claiming an anxiety crisis or post-traumatic stress disorder has become like a status symbol. “I worry that for some people, it’s become an identity marker that makes people feel special and unique,” Saxbe said. “That’s a big problem because this modern idea that anxiety is an identity gives people a fixed mindset, telling them this is who they are and will be in the future.” On the contrary, she said, therapy works best when patients come into sessions believing that they can get better. That means believing that anxiety is treatable, modifiable, and malleable—all the things a fixed identity is not.
But the context collapse that made Twitter so dangerous and so reductive was also what made it thrilling — your feed could contain everything from tech executives to Beyoncé fans to the president, and anyone’s tweets could be quote-tweeted and sent to viral heaven at any time, rocketing people into 15 minutes of deeply fucked-up fame.
People on Wall Street love — truly, love — talking trash about their competitors, but when I researched this article, I found surprising respect for JPMorgan. A board member of a rival bank marveled at how the bank’s employees all seem “to row in the same direction.” One hedge-fund manager told me that JPMorgan’s research and trade execution is generally the best of the banks he deals with — as are the ethics of JPMorgan employees, who lack the “spiciness” of other bankers. (And this guy once sued JPMorgan over the terms of a credit-default swap!) Another customer told me that JPMorgan’s commercial banker had an intellectual depth and command of the details above other bankers and a long-term relationship focus that eschewed many of the ticky-tacky fees banks annoy their customers with. JPMorgan has achieved this through a GE-style focus on culling underperformers and an ability — thanks to its profitability — to retain long-tenured employees. It never hurts on Wall Street when you can pay people more.
Coinbase’s ad is not the first time that a crypto company has aired ads focused on exploiting economic insecurities. In 2022, FTX launched a Super Bowl ad starring actor Larry David. The ad shows David expressing skepticism about famous inventions throughout history, such as the wheel and the lightbulb, and arguing that they would not catch on. At the end of the ad, someone tells David about investing in crypto through FTX. “I don’t think so, and I’m never wrong about this stuff. Never,” David responds. The tagline of the video, “Don’t Miss Out,” insinuates that the invention of crypto investments is akin to the invention of coffee, forks, and toilets and that people who do not invest will miss out on a lucrative opportunity.
While any deal on funding for climate disaster damages was sure to be portrayed as a historic win, further investigation suggests that it should be welcomed with hesitation and scrutiny.
First, the fund contains no specifics on scale, financial targets or how it will be funded. Instead, the decision merely “invites” developed nations to “take the lead” in providing finance and support and encourages commitments from other parties. It also fails to detail which countries will be eligible to receive funding and vaguely states it would be for “economic and non-economic loss and damage associated with the adverse effects of climate change, including extreme weather events and slow onset events.”
Stop buying things online and start feeling miserable a little—it’s for the planet. We only have one earth, and there are no returns.
Look, I know it’s fashionable to rant about the “algorithms” and how they are brainwashing us by feeding us pointless nonsense. Experts peoples tell me that by giving us what we want, the “algorithms” are turning our brains into mush. It’s a ploy by the overlords that control these algorithms to make us docile enough to control us , like puppets. In our anthropomorphized descriptions of algorithms, they are akin to Darth Vader and Moriarty. But damnit, once in a while, the algorithms feed us something really good.
The good thing the algorithms fed me this week was this wonderful conversation between the amazing John Cleese and the incredible Stephen Fry. I loved it. Maybe it’s because they are British, and there’s something about British accents—they seduce you, titillate you intellectually, and make you mentally moist.
John Cleese and Stephen Fry talk about many things, from cricket, money, and work to artificial intelligence. But the part of the conversation that I loved the most was about money—it was beautiful. There was nothing in it that you and I didn’t know about, but sometimes it takes a British accent to make us think that the obvious is profound.
Like most Indians, I grew up in a family that swung between abject poverty and a luxurious lower-middle-class lifestyle. The thing about childhood experiences is that they leave a deep imprint on us. In my journey of learning about money, a revelatory moment was when I learned that our lived experiences tend to leave long-lasting scars, thanks to Ulrike Malmendier, a professor of economics and finance at the University of California, Berkeley. Our lived experiences shape everything, from how people perceive risk to their job choices, consumption patterns, and more. It sounds obvious, but sometimes the obvious things sound like profound realizations because we ignore them because they’re obvious. I wrote a little about the long lasting scars that early experiences leave on us a few months ago when Silicon Valley Bank committed hara-kiri. A couple of weeks ago, I learned about the neurobiological basis for why early experiences leave a lasting imprint on us, thanks to neuroscience professor Robert Sapolsky.
Early experiences have lifelong and even multi-generational effects. It’s essential to understand that an individual’s environment doesn’t start at birth; a significant portion of it is shaped during the prenatal period. The impact of early-life experiences can be enduring, stretching across generations, and this is especially true for early childhood adversity. While some of its effects can be mitigated through adult intervention, the longer one waits to address them, the more challenging it becomes to reverse their impact.
Your early experience is going to cause lifelong changes in your brain, which will make you more likely to reproduce the same early experience for your offspring.
Coming back to the point about money, it’s a peculiar object. In a utilitarian sense, it’s the single most uncomplicated object in life: money is a means to an end. But emotionally, boy, oh boy, is it complicated! Money can evoke a million emotions, from love, hate, and envy to shame, disgust, and misery. I can’t think of any other object or experience that can conjure up such a bhelpuri of emotions—not even the first memory of your lover’s kiss or the classical Greek sculpture of a naked rhinoceros.
Coming back to the previous point about early experiences, we are all forever tainted by the beliefs of your family and friends about money. Beliefs about money are like social pathogens. They infect our minds when we are growing up because we are blank slates. No matter what we do or how old we become, we’ll never get rid of the pathogens—there’s no vaccine. Like addicts battling addiction, we’ll have a lifelong struggle with what money means to us. Our own beliefs about money will always be anchored to those of the people around us growing up, and most of us won’t even realize it.
One reason I loved this conversation is because Stephen Fry was honest about how he thinks about money. Like most people, I have a complicated relationship with money, and listening to the conversation was a reminder to keep reminding myself about what’s important and what’s not.
The other reason I wanted to share this is because money is the single biggest cause of stress among people. Just because our beliefs about money are shaped by so many things and people doesn’t mean we accept them. We may never have the perfect relationship with money. I don’t think so, because it’s so interwoven across all facets of our lives. Money is a part of most of our life decisions; it’s everywhere, like dark matter causing a tug in our behavior.
But.
You can get to a place where you have a functional relationship with money. It’s like if you are addicted to weed, you don’t keep it at your house but at your friend’s place. You just go there and smoke once a week. You figure out ways to deal with the nauseating and dizzying range of emotions that money causes. Even Robert Sapolsky, who thinks we have no free will, says we can change:
All of this can instill a wonderfully positive belief: that change can occur, even in the face of trauma or the most challenging circumstances. It reminds us that change is possible, that things can evolve. We should not adopt a fatalistic mindset or believe that, because we are mechanistic biological beings without free will, we cannot change ourselves. Instead, we can be transformed by our circumstances.
So, while we acknowledge that change can be incredibly difficult or seemingly impossible and that circumstances can change us, striving to be better human beings remains a worthwhile pursuit. The key is recognizing that change can happen within the framework of our mechanistic neurobiology, making us more receptive to optimism and less susceptible to discouragement.
To change, you need to ask the right questions, and for that, you have to read, listen to other people’s experiences, and think.
Stephen Fry: We’re none of us entirely wide-eyed and naive about the world; we know that about the world, and it has always been the case that money talks and that everybody has a price to some extent.
John Cleese: Do you know what Napoleon said?
Stephen Fry: No, go on.
John Cleese: He said the surprising thing is not that every man has his price but how low it is. I think that’s hilarious.
Stephen Fry: I’ve always thought the greatest power a human being can have in negotiations, whether it’s as an actor in a film as minor as that or in a huge, boardroom way, is the power to walk away. Yeah, just to be able to say, Oh no, this is not for me, and go.
John Cleese: Have you ever understood why people want to be so rich? We all want to be able to have a better bottle of wine, or we all want to have a nice car, or maybe a slightly bigger house, but I think the point of being very rich is to be able to tell people that you are very rich.
Stephen Fry: Essentially, I think it is a display. It’s very fashionable these days to look into genetics and ancestry and to picture our ancestors in a cave or in a field, you know, hunting and gathering, and we know that some part of being human is acquisition, is territorial acquisition, and whether it’s land, building a castle like this, as a display as well as a defense, and money is a defense as well as a display. It protects you from everything in the world.
John Cleese: Why such huge sums of it?
Stephen Fry: You join a sort of club in which, you know, people in the suburbs might say they’ve got a better lawnmower than I have. I’m going to have to upgrade my lawnmower. I’m going to have to upgrade my strimmer. All the sort of suburban things, keeping up with the Joneses, we call it. It’s a very…we’ve talked about that all our lives. We know it as a phenomenon. But you scale it up. You simply scale it up. And we know this is true. I mean, I can still picture the moment when I was nine and I found an old Macintosh, an old raincoat people used to wear them, and it had a 10 Shilling note in it, and the joy, yeah, the absolute joy. Now what you can’t do is scale that joy up. If I then found £100,000 in a coat, I would be astonished. I would go, “Wow,” but I wouldn’t be…um…well, 10 Shillings is, you know, half a pound, so I wouldn’t be 200,000 times happier than when I found that 1 note.
John Cleese: But people think more is better, don’t they? I mean, alcoholics think more is better.
Stephen Fry: There are many aspects of humanity where we are bound, if we’re honest, to inspect ourselves and say, “I get that. I feel like that.” But also, “I don’t feel like that.” I’ve always been very lucky with alcohol, for example. I do like a drink. I like wine. But I know I could never be an alcoholic. I just don’t like it enough. I don’t like feeling sick. I don’t like having to cope with the responsibility of apologizing the next day if I’ve been drunk. I don’t like the fact I might get a bit argumentative. So I just, you know, could never be an alcoholic. But I could be lots of other things that I do recognize faults in. Andsimilarly with money. I mean, I like having enough money. I’ll be honest to turn left on an airplane. I think it’s the most…I still get excited by it. I still think, “Oh my goodness, I’m going first class,” and I love it. I mean, I just love it, and it’s a disgrace, and I know I shouldn’t. And I try and do this keyword carbon offsetting.
John Cleese: You used the keyword “enough.” So these very rich people have no sense of enough. Can you understand it? I mean, it’s an illness.
Stephen Fry: It is an illness.
Stephen Fry: I was born in the same year as Sugar Puffs, the cereal, right? So I… I should never forget. Yeah, I was of a generation for whom television advertising was first directed towards me when I was young, to eat Sugar Puffs and Rice Krispies and Frosties and sugary things. And I went to a school which had a Tuck Shop, you know, a little boarding school, and there were things like sherbet fountains with sherbet in it, white powder that you… you sucked in through a licorice straw. And they even extraordinarily had Spanish gallant rolling tobacco, which was coconut shreds, but it was done exactly like a rolling tobacco packet that you’d see grown-ups using, and you would have a pipe made of licorice, uh, and you would have cigarettes with red tips on the end, which were candy cigarettes. Do you remember all these sweets?
Well, you’re probably a generation older. You didn’t have quite… No, there was a… But they were so… You were being prepared for cocaine and tobacco, essentially. You were given white powder and tobacco, and I never could eat enough of that, and I would break out of school bans, go to the village shop, and buy all the fruit salads and Black Jacks and foamy shrimps and little rice paper flying saucers, and I stuffed myself. I couldn’t eat them. I… I got teeth missing here because of it.
So I… I had this empty hole in me, this vast empty hole that said, “Feed me. I need this sugar. I need it.” And then when it wasn’t sugar, it became tobacco, and I smoked. And then in my 20s, it became cocaine. I just… And I couldn’t sit still without going, you know, and it’s that addictive impulse that many people, many people watching will know what I mean. And many people won’t because this is the important thing to remember. I said, “Not everybody has this.” And it’s a kind of addictive gene. And I guess the money people have it for money. There’s this hole in them they have to acquire and they have to own.
John Cleese: They don’t know how to fill it, no. And they think if I had another 500 million, I’d be happier.
Stephen Fry: One of the things that always maddened me about self-help books and books on there is the ones that start off with “Goal orientation, set yourself goals.” And I think it’s the most dangerous and despicable, inimical thing imaginable because I don’t know a human being who, when they reach a goal they’ve set themselves, isn’t dissatisfied. Absolutely always an anticlimax.
The other thing I remembered as I was writing this was the book Balance. It’s a wonderful book about personal finance that I read recently. I had written a small review of the book as well. The key message of the book is to think about your personal finances holistically; in other words, it’s just about money. Here’s an excerpt from the book:
Plenty of people seek success, but they don’t define it holistically. To many, like my students, success means money in the bank, a great career, or a big house on the hill. How often have you heard (or even said) something like, “That woman is so successful. She owns a massive house, a BMW, and her own law firm” Unfortunately, this picture defines only one element of success: monetary. As I see it, there are four quadrants to a successful life:
Having enough money
Maintaining strong relationships
Maximizing your physical and mental health
Living with a sense of purpose
Think of success as a four-legged table, with each leg representing a quadrant. Each quadrant depends on the other. If they don’t all play their part equally, the table collapses. If one leg is spindly or cracked, it’s tough to maximize your life satisfaction, no matter how solid you might be in the other three quadrants.
Unfortunately, when defining success, we often focus too much on the money leg.
Getting to a place where you can say “enough” is a superpower. I hope to get there.
Live players
Since I wrote about the death of social media platforms last week, I gots to address the deranged ketamine-laden elephant in the room: our lord and savior, Elon Musk. Our Lord made an appearance at the New York Times DealBook Summit, and this happened when Andrew Sorkin asked him about his recent trip to Israel:
Andrew Sorkin: What was that trip like? Obviously, you know that there’s a public perception that, and you’re clarifying this now. But there is a public perception that that was but part of a so-called apology tour. If you will, this had been said online, there was all of the criticism, there were advertisers leaving, and we talked to Bob Iger.
Elon Musk: I hope they stop you.
Andrew Sorkin: You don’t want them to advertise?
Elon Musk: No.
Andrew Sorkin: What do you mean?
Elon Musk: If somebody could try to blackmail me with advertising and blackmail me with money, go fuck yourself. Go fuck yourself. Is that clear? I hope it is. Hey, Bob. If you’re in the audience.
Andrew Sorkin: Well, let me ask you then about the economics of X if part of the underlying model, at least today, and maybe it needs to shift. Maybe the answer is it needs to shift away from advertising. If you believe that this is the one part of your business where you will be beholden to those who have this view. What do you do? Linda Yaccarino is right here, and she’s got to sell advertising.
Elon Musk: What this advertising boycott is is going to do is it’s going to kill the company. And the whole world will know that those advertisers killed the company, and we will document it in great detail.
And then this also happened:
Elon Musk: Jonathan, the only reason I’m here is because you are a friend. What was my speaking fee?
Andrew Sorkin: I’m Andrew.
I mean, a lot has been said about this weird conversation. The way I would describe it, is a masterclass in blowing $44 billion. I don’t want to waste my time rehashing it. Also, I’m not an Elon fanboy, and I don’t care much about what he says or does. I care to the extent that he owns Twitter. I care because it’s the platform where I keep track of amazing thinkers, the latest research, and discover most of the things I read. Despite it stinking more than the open-door toilet near the majestic busstand, as someone once said, Twitter is like having the smartest people in your pocket.
It’s not a great mystery that X is in trouble. In Elon’s defense, it was decaying before his arrival, but he may have accelerated the process. Not everybody agrees; some believe Elon will magically pull a rabbit out of the hat and make Twitter better. I’m not so sanguine about that possibility, but my crystal ball is as cloudy as the next person’s.
At some level, maybe we have to care a little about what Elon does. He’s the CEO of one of the largest electric vehicle companies in the world, a rocket company, a satellite internet company, and the public toilet of the internet—Twitter (X). He’s also on a mission to spread his seed, as if he’s delivering newspapers and wants to take us to Mars after his planting season is done. So you gotta pay some attention to him—he needs it too.
Now, given his silly antics, antisemitism, and right-wing kookiness, it’s easy to dismiss him as another nutjob billionaire. But at the same time, he heads some of the most important and civilization-defining companies in the world. If you are jobless in life to worry about the contradictions and cognitive dissonance caused by our Lord and Savior, Elon, here’s a frame of thinking that may help. I recently heard political analyst Samo Burja on a podcast. He talks about the idea of live players and dead players, which I think is an interesting way to think about smart but crazy people.
Here’s what a live player is:
The most basic observation is that nearly everyone is following conventions right? You follow conventions and pre-designed scripts in your life – be it through the educational process, be it following the standards of your industry – and for the most part these conventions are in place for good reasons. Right? You don’t necessarily want, uh, your doctor improvising your treatment. Well, that is until you do – until you do have a rare condition that’s not common and that’s not well covered by the literature.
So the vast majority of society, uh, is not, uh, improvising. Right? They’re not very good at coming up with new, uh, processes, new ways of doing things on the fly. Honestly, they’re not even that good at evaluating evidence. There’s plenty of empirical evidence for this poor quality of our ability to evaluate evidence on the fly – massive literature, uh, you know, some of it even replicates in the cognitive science field and the biases literature, and so on. Uh, but also just, you know, day-to-day experience.
So why, you know, live players – right? – people who actually are always thinking from first principles. They’re remarkably rare in society. Um, but one of the best ways to sort of spot such individuals is people who easily and successfully jump multiple domains through the course of their life.
I don’t think Elon’s even listening. I think that Elon’s perspective is so first principles-driven that while he does recognize what is popular and what is not and can work with it, his decisions as to what to do next are not tied at all to the mainstream but are following, I don’t know, like, a technology tree chart derived from basic physics or his favorite science fiction story. Let’s expand through the universe; let’s have AI not kill us; let’s actually reach a new Destiny.
Samo calls Elon a live player
Live players are basically just people who can respond to circumstances as they arise, rethinking things from first principles or just a really well-known intuition.
Dead players are people who follow a preset script. It can even be a very high-quality script, so one can easily be a dead player and still be a top performer.
Why do I frame them in terms of players? Well, because you have to think about a game. Live versus dead players is a lens that helps you think through a game. You imagine a political setting, economic setting, right? Two companies competing. Uh, who’s going to win? Well identify who’s the live player and who’s the dead player. Why? Because you know the live player can always read the dead player’s rule book and then just do something more. The dead player can’t really predict what the live player will do.
In fact, live players cannot predict what live players will do. All they can do is proactively, dynamically respond to it. So if you have a competition of dead players, you look at all of their fundamentals and you bet on the one with the best fundamentals. If it’s countries competing, the biggest army, the most natural resources, whatever. As soon as you introduce a live player, they might still lose, right? There’s nothing really, you know, they might get taken out too early in the game.
But if you have like a fairly reasonable contender and they’re a live player, the advantage is so outsized it’s it’s just not even, it’s not even funny. I think it usually, you know, either economically, politically or in any other domain, you kind of need a live player to beat a live player and a dead player will just tend to lose.
Now this is not to say that live and dead players exist only in a zero-sum context.
I gotta agree with this brilliant piece. There’ can never be a “good “social media site. Bhuvan’s law: Human nature ensures that anything that can go to shit, will eventually.
Spinning up new social media websites mimics this, except what you are trying to outrun is human nature. No design of social media can get rid of what I like to call the “semantic nadir,” which is what you’ll inevitably experience if your tweet ever goes viral, wherein eventually someone will take your tweet in literally the worst possible way (there’s some classic examples of this, as generally if you say “I love cheesecake” it won’t be long before someone reaches to “Oh, so you hate regular cake”—that’s the semantic nadir).
There’s rampant inequality. No, there isn’t. Yes, there is.
In a development that surprised everyone in the universe, from earthlings on Earth to Cyberton, Arakkis, Vogsphere, and Tatooine, economists are fighting again. Thomas Piketty, Emmanuel Saez, and Gabriel Zucman became superstars for their work showing that income inequality has exploded across much of the world.
But in 2018, economists Gerald Auten and David Splinter published a new paper using the same data as Piketty, Saez, and Zucman and came to the opposite conclusion that inequality has not exploded. Their paper was recently accepted in the Journal of Political Economy (JPE) and sparked a debate on Twitter.
So, what’s happening?
This isn’t a new debate. Piketty, Saez, and Zucman have long been accused (archive) of poor methodological choices since 2014 (archive). In their defense, they’ve engaged with the critics. But let me tell you something shocking: assessing inequality trends is hard. A lot of the arguments boil down to methodological choices and data sources because good data just isn’t available. These debates are good because they can attract other researchers to look at their issues with a fresh set of eyes and improve our understanding.
I’m not the most qualified person to assess these decisions. But there are a ton of weird decisions and adjustments regarding profits and business income that are super consequential for the conclusions drawn by AS.
You might think that analysing trends in income inequality would be straightforward. Don’t people’s tax returns tell researchers all they need to know? But although tax returns are useful, they can mislead. Americans who are partners in a company, or hold investments, often have enough trouble estimating their own income. Now imagine trying to estimate the incomes of millions of people over several decades, accounting for overhauls to the tax code. Researchers then need to account for the 30-40% of national income that is not even reported on tax returns—including some employer-provided benefits and government welfare. Researchers’ methodological choices have huge effects on the results. — Why economists are at war over inequality (archive)
I have been researching economic violence in India, where it surged during periods of social distancing and lockdowns. This not only resulted in the reduction of safe spaces for women and girls, but also trapped them in a space where they were more easily economically exploited. My research suggests that the COVID lockdowns spawned a whole new class of economic abuse of women in India.
Outside economics, Milei has also voiced support for liberalizing gun laws and greenlighting the sale of organs. Years ago, he floated a “free market” for the sale of babies, an idea he has since distanced himself from. In line with his anarcho-capitalist beliefs, Milei has pledged to cut 10 federal ministries, privatize state industries, and dismantle the public health care system in favor of private alternatives. Foreign policy wouldn’t be spared from major changes, either: Milei has suggested he would distance Argentina from Brazil and China, the country’s two biggest trading partners, and align closely with the United States and Israel.
These three cases—the commodification of books, the privatization of prisons, the commercialization of governments and universities—illustrate one of the most powerful social and political tendencies of our time, namely the extension of markets and of market-oriented thinking to spheres of life once thought to lie beyond their reach.
This economistic view of virtue fuels the faith in markets and propels their reach into places they don’t belong. But the metaphor is misleading. Altruism, generosity, solidarity, and civic spirit are not like commodities that are depleted with use. They are more like muscles that grow stronger with exercise. One of the defects of a market-driven society is that it lets these virtues languish. To renew our public life we need to exercise them more strenuously.
From fluffy interviews on YouTube podcasts with millions of subscribers to subliminal attacks on Instagram Reels, the political parties in India are betting big on influencers to swing voting patterns, manage crises, and help them secure power as the world’s largest democracy gears up for state elections this month, and a national election in 2024. It’s a strategy that makes sense—622 million Indians are online, and with the cost of internet access falling, people from India’s harder-to-reach hinterlands are coming online fast. Two-thirds of the population lives in these areas, giving them enormous power to sway the results of national elections. And while the symbiotic relationship between political campaigns and influencers has allowed politicians to reach the electorate in new ways, and to influence how they vote, it’s also helped them to dodge media scrutiny during public engagement and to challenge the integrity of elections in I had written about the scourge of influencers in the content of finance.
As the Biden administration has doubled down on the surge of additional U.S. arms and forces to the Middle East, however, it is not clear that U.S. policymakers have thought through the second- and third-order effects of amplifying the United States’ security role in the region and how it will be perceived by adversaries and allies alike. Specifically, there are three risks that the Biden administration must acknowledge and address: escalation, backlash, and overstretch.
Opec’s market-share strategy last time round helped discipline America’s oil producers, pushing them to become more efficient and therefore more resistant to future squeezes. JPMorgan Chase, a bank, reckons that the cost of getting oil out of the American ground has declined by more than one-third since 2014. The country’s oilmen have found methods to fracture rocks that produce more fissures, easing the extraction of oil, and now drill deeper wells that have longer lifespans.
The UAE guys must have seen Glengarry Glen Ross.
The United Arab Emirates’ team organizing the COP28 climate talks that begin this week was planning to use its position as host of the summit to strike new oil and gas deals with foreign governments, a cache of leaked documents shows. — CNN
This article is a transcript of a discussion on the energy transition. I’ve yet to watch the video, but I read the transcript, and it’s fascinating.
A few highlights:
Oil has become less inelastic thanks to new technologies and electric vehicles.
We may not face shortages of critical commodities required for energy transition as many people assume. Also, they are less bad than the oil industry would like us to believe. Like Indian found a massive lithium deposit, “commodities have a way of showing up when somebody needs them.”
We’re in an era of “actor less threats” like the COVID pandemic and climate change.
The world economy may be entering this mid-transition, unstable phase. This is happening even as climate impacts and other impacts of the polycrisis worsen. In this context, there’s a real risk of the world economy being increasingly exposed to cross-border risks of an economic and financial nature, which would deepen fragmentation.
In my view, the focus on winners and losers is missing a very big blind spot, which is that we’re facing a huge collective action trap related to political economy. Neither the middle classes in high-income economies nor the majority of developing economies have the means in the current international institutional configuration to achieve the transition. We are seeing the simultaneous occurrence of significant costs related to climate policies and rules of the game that prevent many countries from achieving a rapid transition. The risk is that this could give rise to a significant political backlash.
That’s why I think there’s a blind spot on this discussion about winners and losers—because we will all be losers, in an absolute sense, if the current configuration persists. That is because we are likely to see these very significant binding constraints materialize both on resources and supply chains.
There’s also the issue with China—much like a lot of other countries and particularly the US—where it is a large domestic producer of a lot of fossil commodities, but also newer energy products. This, of course, has very big macro implications for anyone who trades with China in commodities.
We see the risk of a trap because of numerous cross-border feedback loops. To give you one example, the materialization of physical climate risks hit hydropower in Latin America, directly leading to a buildup of fossil infrastructure to offset that. Multiple countries face sovereign debt crises arising from different sources, which have led to an inflow of foreign direct investment into extractive sectors to address these countries’ foreign currency needs. There are also huge gas projects in Argentina. The climate crisis will continue to be fueled by all this.
China has been building up its petroleum reserves like crazy during COVID. As soon as they stopped, the market kind of fell out of bed. In a weird way, China’s been acting like a covert central bank of oil
I think about all these discussions in terms of priorities. There’s almost no country in the world where climate change is an actual political and social priority. And if you don’t have something prioritized then you’re not going to get very much done about it.
If EVs are not affordable, you can’t leave a big chunk of the US middle class without freedom to move around.
I liked what Alex said about this convergence of interests. That’s why you see the military in the US talking about climate and security. And what Amy said—of course, it’s exactly right that you asked, what will it take to take climate seriously? War is one thing. But to go back to my point, we can use things people really care about—like security, like air and water pollution, and like economic development—as prime motivators that will help the climate as well. You can get some of these happy coalitions. But if you insist on transacting everything through a climate lens, it is, in my view, not the most powerful nor the most effective way to make those transitions.
Does reducing CO2 emissions mean sacrificing economic growth? Or can we “decouple” the two, by both growing the economy and reducing emissions?
The answer is yes: many countries have managed to achieve economic growth while reducing emissions.
You can see several examples in the chart: it shows the change in annual CO2 emissions and GDP per capita since 1990. In these countries, GDP has increased over the last 30 years while emissions have fallen. You can also see the data without per capita adjustments.
But is this all due to offshoring production overseas — transferring emissions to manufacturing economies such as China and India?
In the chart, we see that consumption-based CO2 emissions — which adjust for emissions from goods that are imported or exported — have also fallen. It’s true that some emissions have been offshored overseas, but that is not the only driver of the decline.
I’ve been fascinated by behavioral economics for a long time. As presumptuous as it may sound, understanding how people behave adds an important dimension to the understanding of markets. It certainly has for me. In fact, the book I recommend the most when people ask me for finance book recommendations is The Behavioral Investorby Daniel Crosby.
When I first discovered behavioral economics, I was stunned at the pathetic creatures we humans are. I memorized a laundry list of biases and made arrogant proclamations that people are stupid, much like everyone else. But the more I read, the more apparent it became that this truism that people are biased and irrational is incomplete.
The development of behavioral economics was a paradigm shift in the history of modern finance, but then it kinda started losing its way. Many behavioral researchers became more preoccupied with discovering supposed biases, finding cute little effects, and party tricks. Over time, the sheen around behavioral economics started wearing off. First, the field has been facing a massive replication crisis [1, 2, 3] as study after study failed to replicate in different settings. As if that wasn’t bad enough, there have been massive scandals. A few months ago, two superstars of the field who studied dishonesty were accused of being, wait for it, dishonest!
Despite all this, I’m in the camp that behavioral economics can be useful. It’s a valuable tool in the toolkit of investors, regulators, policymakers, and governments. But coming back to the point, as I read more about behavioral economics, it started becoming obvious that there’s more to the notion that people are biased and irrational, but I didn’t know what it was. The aha moment for me was when I discovered this paper a few years ago.
In sum, the notion that human judgment is fundamentally flawed appears to have been flawed itself. When we observe humans in adaptively relevant environments, we can observe impressive design of human judgment that is free of irrational biases. Because of trade-offs in error costs, true biases might also prove to be more functional than one would think at first. Some genuine cognitive biases might be functional features designed by the wisdom of natural selection.
The premise of the paper was that the so-called biases are not flaws but rather evolutionary adaptations that helped humans survive for over 200,000–300,000 years. If we were so useless, how did we make it to the 21st century? Of course, this isn’t a novel argument, but I was too dumb and slow to discover it. Evolutionary theorists have been making these arguments since the 1950s and 1960s. Gerd Gigerenzer has been a vocal critic of mainstream behavioral economics and has been making the case that many of the so-called biases are not irrational but ecologically rational for decades. But I hadn’t explored the literature on evolutionary rationality in detail.
A week ago, I started writing an article, and I had to dive deeper into the evolution of human rationality. While I was exploring the evolutionary literature, I came across this talk by the erudite and famed neuroscientist Robert Sapolsky. I knew of him because I had bought his book Behave, which has been lying unread on my bookshelf for a while now. The talk was just wonderful. Listening to Robert Sapolsky was like listening to a scintillating poem about the biology of the human brain. I hadn’t heard anything that left such a deep imprint on me in a long time.
I want to highlight a few wonderful parts from the video:
The single strangest example of violence I’ve ever heard of—and this is one having to do with Indonesia in the 1960s—is when a coup overthrew the government and instituted a right-wing military dictatorship for the next thirty years. In the year afterward, approximately half a million Indonesians were killed by right-wing death squads. The writer V.S. Naipaul was traveling through Indonesia at the time and kept hearing this crazy story about how sometimes these death squads would show up at a village to kill everyone and bring along a traditional Indonesian gamelan orchestra. One day, he runs across one of these old, grizzled veterans of one of these death squads. He’s talking to the guy, who is proud to brag about all the villagers and civilians he killed, claiming he was saving the nation. Naipaul finally said, ‘You know this crazy thing about how sometimes you people would bring like gamelan orchestras to these massacres?’ The guy said, ‘Oh yes, yes, whenever we could, we would bring an orchestra along.’ Naipaul said, ‘Why would you do that?’ In one sentence, the guy looked puzzled and encapsulated everything that’s weird about our violence. He said, ‘To make it more beautiful, of course.’
The duality of human nature:
There is no other primate on Earth that could make sense of our violence when we’re bringing along orchestras to make it more beautiful. Now, the single most complicated thing about us as this miserably violent species is that, at the same time, we’re the most altruistic, most cooperative, and most empathetic species on Earth. And we’re getting better at it. Consider that every single thing up here was invented in the last century – all these ways in which we are extending a sort of umbrella of empathy and protection in all sorts of unlikely directions. How do we begin to possibly make sense of the biology of us at our best and worst?
This is my favorite part of the video on what it takes to understand human behavior:
Now, one of the things that is absolutely clear with that is that you’re going to get nowhere in understanding these features of our behavior if you decide that here is the part of the brain that explains everything that’s going on or here is the hormone, or the gene, or the childhood experience, or the anything, or the whatever that explains everything. Instead, if we’re going to make any sense of these complex, context-dependent behaviors of ours, we have to look at many layers. So, one of these behaviors happens – it’s wonderful, it’s appalling, it’s ambiguously somewhere in between. And we ask the biological question: why did that behavior just happen? And when we do that, we’re actually asking a whole array of questions: what went on one second before in that person’s nervous system that instructed those muscles to do that good, bad, or in-between behavior? But we’re also asking what was going on seconds to minutes before in the sensory world that triggered those neurons, and we’re also asking what was going on with hormone levels hours to two days before that made that organism more or less sensitive to certain sensory stimuli that caused that. And then back to adolescence and childhood, in fetal life, and back to when you were just a fertilized egg, and then back to what sort of culture your ancestors came up with, and what sort of ecosystems, and what evolutionary forces sculpted all of that. If you want to get a sense of it, you’re going to have to ask that question on all of these levels.
A few other interesting highlights, that blew my mind:
Dopamine is about reward, but even more so, it’s about the anticipation of reward. Remarkably, if you block the rise of dopamine, the organism doesn’t press the lever. It’s about the goal-directed behavior. It’s about the pursuit of reward rather than about reward itself.
Testosterone does not invent aggression; it exaggerates existing social patterns of aggression. It turns out that testosterone does something even more subtle than that. People are beginning to realize that what testosterone really does is make you do whatever you need to do to maintain your status when it is being challenged. For example, you can have an economic game where people get status by making generous offers and give people testosterone and they become more generous in the game. In other words, if you shot up a whole bunch of Buddhist monks with testosterone, they would run amok doing random acts of kindness all over the place.
Oxytocin doesn’t make us more pro-social and makes us more pro-social to people who feel like in us. If it’s a them, it makes us crappier and more xenophobic to them.
Your genes shape everything that happens in you, and the thing is your genes have no idea what they’re doing. Saying that a gene knows, for example, when it is going to regulate cell biology, saying that a gene knows what it’s doing is like saying that a cake recipe knows when you’re going to make the cake or decides when you were going to make the cake. Genes don’t regulate themselves; what regulates genes environment does.
What if the value of your money decayed over time, like potatoes? A fascinating history of a radical proposal for money that had an expiration date
Is his idea of an expiring currency any more absurd than the status quo we inherited? Perhaps his greatest contribution is to remind us that the rules of money can be reinvented, as indeed they always have. Money is a construct of our collective imagination, subject to our complacency, yes, but also to our inquiry, values and highest ambitions.
The Dutch dairy industry is a significant contributor to nitrogen pollution, which is harming natural habitats. The government wants to combat nitrogen emissions by shutting down dairy farms and asking farmers to downsize their herds. To none’s’s shock, the farmers don’t like the idea of losing their livelihoods. The country has been rocked by massive protests by dairy farmers. The far-right politicians have co-opted the protests to peddle conspiracy theories and xenophobia. Climate change is a societal problem as much as it is an existential one.
There may be no proposal that will satisfy dairy farmers. Any solution for reducing emissions will require either fewer farms, or existing farms to function differently, or both. No solution can guarantee that incomes will be unaffected. As environmental protections become more urgent, it is likely that some people will simply have to change the way they work, just as others might be forced to change how they travel or cook.
“The vast majority of content we consume when we’re on social media is by amateurs as opposed to professionals, and that’s a dramatic shift in terms of how we’ve gotten our media content over the years,” he says. “The notion of the amateur is that they’re doing it for love and not for money; they enjoy the creative expression, they have no ulterior motives. That has created the expectation in audiences that these folks are trustworthy, and that’s exactly what makes them valuable to then sell on behalf of marketers and corporations.”
To feed its manufacturing industry, and economic development more broadly, China became the world’s largest importer of fossil fuels and minerals. The black curves in Figure 1 clearly illustrates the relentless rise of Chinese manufacturing in terms of both exports of final goods and imports of inputs. Also visible in the figure is another, less publicised shock to the global economy: after joining the WTO in 2001, China quickly went from being a net exporter of agricultural products to being the world’s largest importer. China currently imports more than 10% of all internationally traded agricultural goods, and more than 5% of global agricultural production.
Now look: none of this seems to have resulted in actual cancellations. Yet. Netflix hit 247 million subscribers worldwide at the end of the last quarter, at least in part thanks to a crackdown in password sharing prompting new signups. But first-mover advantage only really holds so long as people don’t start questioning the value of their subscription. And with more price hikes, a greater effort to shift customers to ad-supported tiers, a notable slowing in the creation of viral phenomena like Stranger Things and Tiger King, and the rise of cheaper services like Peacock and AppleTV+ alongside the so-called FAST (free ad-supported streamers) channels, Netflix is, for the first time in its history as the streaming leader, facing real questions of whether or not it is worth what it costs to subscribe.
Reading requires a lot of effort and practice. Hearing language versus reading it engages different mental processes. Reading forces you to move more slowly. If an author explains an idea to you, the constraints of natural conversation mean that you can’t just pause for 10 minutes while you think deeply about what he or she just said and then subsequently resume the discussion. Books enable you to do that. Of course, you can pause on audiobook and think about what the author just said. Often, though, listening to audiobooks is accompanied by other tasks, making it harder to devote 100% of your attention to the ideas being discussed or the story being told.
This post is more a stream of consciousness than a thoughtful take. So don’t be a judgmental prick.
Laughter is a weird expression. We laugh when we’re happy, and we don’t want to be sad. We cry when something is funny beyond your expectations. We chuckle when we’re understood, and we laugh out loud when we’re misunderstood. We laugh to cope with the absurdity of life and the crushing weight of the unbearable. Laughter is a release valve for our deep-seated thoughts and an escape hatch from reality. You can inspire people, give them courage, and give them hope, all with a smile. Are there any other human expressions or emotions that can help us convey so many things?
We seem to have had the ability to laugh as far back as 14 million years. That means we learned to laugh before we could speak. Even human development follows the same pattern; babies first learn to laugh when they are about 3 months old, even if they are deaf and blind. There also seem to be brain structures and genetic components to laughter. In other words, laughter is the result of natural selection. Laughter is universal, and it has been observed across different cultures and even species.
When tickled, the higher primates (humans, chimpanzees, gorillas and orangutans) all display a laughter-like behaviour (Caron, 2002; Fry, 1994). Fry dates the “rudimentary elements of contemporary humor” to 6.5 million years ago — a figure representing the last common ancestor of Homo sapiens and chimpanzees. However, it appears that Fry inadvertently misses the last common ancestor of humans and orangutans, which is approximately 14 millions old (Dawkins, 2004). This means that the rudimentary origins of laughter could be at least 14 million years old. — The First Joke: Exploring the Evolutionary Origins of Humor
Humor provides a variety of physiological, psychological, social, and economic benefits. Experiencing humor boosts positive emotions while mitigating the perceived intensity of negative life events, helps people cope with stress and anxiety, makes utilitarian pursuits more enjoyable, improves creativity and aspects of mental health, and helps people manage relationships. Similarly, people who are good at making others laugh have an easier time attracting romantic partners, making favorable impressions on others, and navigating potentially contentious social interactions, such as negotiations and Thanksgiving dinners.
A bunch of academics actually looked for the world’s oldest jokes. Here are some that they found:
The world’s oldest joke is revealed to be an ancient Sumerian proverb dating back to 1900 BC – Something which has never occurred since time immemorial; a young woman did not fart in her husband’s lap. The Sumerian version of this joke occurs in tablets dating to the Old Babylonian period and possibly even dates back to 2,300 BC. The study notes that this joke is almost the ancient equivalent of a well known quip by the actor John Barrymore – “Love is the delightful interval between meeting a beautiful girl and discovering that she looks like a haddock.”
Other jokes that also make it onto the world’s oldest list include a more conventional gag from 1600 BC – how do you entertain a bored pharaoh? You sail a boatload of young women dressed only in fishing nets down the Nile and urge the pharaoh to go catch a fish. This is featured on the Westcar Papyrus and is said to be about King Snorfru.
This begs the question: Why do we laugh?
It turns out that the answer is complicated. Philosophers, psychologists, and biologists have been writing about laughter for thousands of years, but there’s no universal theory of laughter. The OG Greek philosopher and stud Plato hated laughter. He considered laughter evil, a vice, and said that important people should never laugh—I’m sure he was a riot at parties with his stone face and foaming mouth. Epicetus, another stoic Greek nerd, allegedly never laughed once in his life. But, others say, he’s misunderstood, and he periodically dropped some bangers such as this:
I have to die. If it is now, well then I die now; if later, then now I will take my lunch, since the hour for lunch has arrived – and dying I will tend to later. — Epicetus
Aristotle, one of the most popular philosophers with six-pack abs and a student of the hilarious Plato, had a more measured view of laughter. He considered wit an essential part of life but then argued that some forms of “jesting” should be outlawed—what a grump!
Aristotle was ripped—look at them abs. Maybe it was because he had to constantly hold his laughter, and his core got a brutal workout. Given that you have to clench your hind parts to stop laughing, I’m sure his butt was toned as well.
But not all philosophers were miserable pricks. With time, philosophers became less unfunny. Immanuel Kant was one of the first to explain why we laughed:
“In everything that is to excite a lively laugh there must be something absurd (in which the understanding, therefore, can find no satisfaction). Laughter is an affection arising from the sudden transformation of a strained expectation into nothing”
The French philosopher Henri Bergson said:
Laughter is a social sanction against inflexible behavior, which requires a momentary anaestheia of the heart.
Bertrand Russell would’ve sold out stadiums if he were alive today. The man dropped some real bangers:
“The fundamental cause of the trouble is that in the modern world the stupid are cocksure while the intelligent are full of doubt.”
“There are two motives for reading a book; one, that you enjoy it; the other, that you can boast about it.”
“I would never die for my beliefs because I might be wrong.”
“And if there were a God, I think it very unlikely that He would have such an uneasy vanity as to be offended by those who doubt His existence”
“Most people would sooner die than think; in fact, they do so.”
Fast forward to modern times, and we can laugh without risking the wrath of philosopher curmudgeons. So people have had the luxury of thinking more about why we laugh. There are many theories, but here are some popular ones:
1) humor reflects a set of incongruous conceptualizations, 2) humor involves repressed sexual or aggressive feelings, and 3) humor elevates social status by demonstrating superiority or saving face. These ideas reflect separate cognitive domains and therefore are not necessarily mutually exclusive.
1) We laugh when we think we are superior to others or at the misfortune of others.
2) Laughter is an outlet to release pent-up nervous energy. Sigmund Freud thought that humor allowed an outlet for suppressed or taboo views like sex and violence.
3) We find incongruent things funny. In other words, laughter is the result of a violation of our view of reality, and we laugh when this incongruity is resolved. This is how a joke works: there’s a setup and a punchline.
“The way a joke typically works is as a setup which leads your mind in one particular direction, and there’s a punch line which goes off in a totally different direction, and then there’s a resolution that happens in the brain, and this brings the two things which are incongruous together, and if the incongruity and the surprise is sufficient then that triggers laughter, a sense of amusement, or both.” — Jonathan Silvertown
I was watching an interview with George Carlin, and he shared a joke from his brother that perfectly illustrates the idea of incongruity resolution:
What we should do is take all the mentally defective people in this country, give them government jobs and just sit back and watch things improve.
Man, my parents were strict. Mom and dad were strict. My mom and dad once made me smoke an entire pack of cigarettes. An entire pack of cigarettes in one sitting. Just to teach me an important lesson about brand loyalty.
I’m not an environmental person. Sometimes I let the water run for 45 minutes before I hop in the shower just to do it. It keeps running; it won’t stop running. It feels, you feel all… It makes me feel like the Poseidon of my apartment building—let the water flow. It just keeps running. So wasteful but it feels awesome. You never know, I might be saving somebody. Say some dude is drowning in a lake or the river or whatever; he’s drowning, but the water only comes up to right there because I decided to play a game of Madden before I hopped in the shower. I’m a hero; my methods are just different than yours.
As I finished writing the previous sentence, I discovered this interview where he talked specifically about the topic of incongruity in comedy:
You talked about how comedy’s all about incongruities, contrasts, exaggeration. Do you think about those techniques or those principles of humor consciously?
It happens automatically. Sometimes there’s a conscious heightening, you’ll recognize you’ve just chosen an image to make a point. Then your mind will just suddenly throw something at you that’s stronger—a heightening, to raise the stakes, a stronger word, a more visceral image, something that lights up the imagination, much better than the original thought. So you’re aware that you’re heightening and exaggerating further but you don’t use the word exaggeration or anything like that. All that stuff is just happening. And sometimes, afterward, I’ll look at something and say, “If I were giving a comedy lecture, that would be a good example.” I often think in those terms.
Don’t take the word of cranky philosophers and academics; listen to a comedian itself on why we laugh:
Paul Provenza: Jimmy has a book coming out. You have a theory about why we even have comedy.
Jimmy Carr: It’s a little bit pretentious. Are you sure you wanna hear it cuz it’s pretentious? Okay, so I was trying to think about why actually why do we laugh. Why is there an advantage in an evolutionary sense and a Darwinian sense to laughing? I think when you hear a joke, basically when you notice something that is out of place.
Tim Mimchin: Incongruent.
Jimmy Carr: Right, something is incongruent. I’m saying that the “haha moment” of a joke is very similar to the “aha moment” of ah I’ve had an idea, so you’re rewarding noticing difference and linguistic ability, and those are the two things that have led to our increased development over the last 4,000 years. Humanity, when we started, we were wandering around in the Savannah and you would look at a field and you would see a lion in it you’d notice that difference.
Chris Harddwick: Not bullshit! God put us here; he made us out of clay in a fucking garden and he ripped out one them goddamn ribs and made a pussy.
Jimmy Carr: He makes a very strong point. I would counter, but I just I think there is a I think there is an advantage. I think our culture has done very well out of laughter out of humor out of seeing something a little bit differently and I think you know the last couple hundred years.
Tim Michin: What do we still have to buy the book?
Jimmy Carr: We release endorphins when we laugh and then people come to comedy shows it is to it there’s a release of endorphins in your you’re happy.
Chris Hardwick: Endorphins is another word for brain cum basically.
Jimmy Carr: Brain cum, you release brain cum, that is what I meant to say.
Why write this post?
Last year, Brian Gallagher wrote a wonderful post in Nautilus magazine on why we laugh. I had read the piece but had forgotten about it. I rediscovered the piece again a few weeks ago, thanks to some algorithms—see, they aren’t all bad—and the timing couldn’t have been better.
In the last month or so, I’ve been bingeing on interviews with comedians. I don’t recall when I discovered stand-up comedy, but I’ve been a comedy nerd ever since. The only bright side of having to cross Silk Board every day is that you get a good chunk of time to do something useful in life as a Bengalurian. I loved listening to comedians so much that half the specials I’ve heard (not seen) were on my daily commutes, braving Bangalore traffic. I’ve gotten many perplexed stares at traffic signals as I laughed like an idiot.
Why?
To me, there are no better observers of the human condition than comedians. They are the sharpest observers of the absurdities of the world. You can learn more about the world and life from a brilliant comedian than from most news shows. The best comedians are good at shifting perspectives and framing things. They make you go, Hmm, I hadn’t thought of it that way. They push the envelope on the thorny issues of the day. The most subversive power that comedians wield is their ability to give people the luxury of talking about touchy topics because they push the limits of what is acceptable and what is not. Of course, not all comics are good at it, but the best ones are.
Roy Wood Jr: The best jokes land in one of two places. It’s either the audience absorbs it as “wow, I didn’t know that” or “I didn’t look at it like that,” or it’s “that’s what I’ve been trying to say.” — Ted
The best comedians not only make us laugh but also think, and we are better off as a species because of that. Jimmy Carr nailed it when he said this on the Modern Wisdom podcast:
Jimmy Carr: For me, comedy has a function in society that no one is calling, which is we’re pushing the Overton window. We we’re always at the edge of what is and what isn’t acceptable. Like, I’m not just talking about like I happen to tell edgy jokes, that’s not what this is. It’s I’m seeing things as they are but kind of with new eyes. That’s sort of what Comics do – even the most kind of mainstream observational comedy have done well. You’re sort of questioning the reality, you’re saying ‘well this is, this is uh this is not normal, this is not how things should be, this is weird am I the only one thinking this is it just me that’ kind of Trope of comedy and it pushes what we what we think about the world, it pushes what’s acceptable.”
Chris Williamson: You said that comedians are often ahead of the curve on social issues.
Jimmy Carr: I think they are. I think like comedians really do kind of it’s the canary in the mine. It’s the sort of test in the air of what you can say and you know politics lags behind.
Chris Williamson: So does culture, you know. If you want to know what are going to be the biggest talking points amongst normal people in about 18 months time, look at the jokes that comedians are making today.
Jimmy Carr: Well I think there’s a there’s a there’s a argument to be said that comedy lives in sort of a space between public and private discourse, and it strikes me that there’s never been a wider gap between public and private discourse – what people are saying in bars and homes and on social media to their friends and and what the party line, you know, you sort of the party line’s pretty strong at the moment on what you can and what you can’t say. You know if you want to see where power really lives, what can’t you say? It’s interesting right. What can’t you say in a society? What isn’t acceptable in the world? You get into very interesting topics.
I think the best comedians are modern-day philosophers. I’ve been telling my friends and colleagues that George Carlin is a modern-day Aristotle for years now. It’s not just me; here’s Morgan Housel speaking to Tim Ferriss:
Tim Ferriss: Could you just define that term so we understand what we’re talking about? The the term is “happiness”.
Morgan Housel: I would say happiness is you wake up grinning ear to ear. Happiness is you’re out at a bar with your friends. Happiness is you hear the funniest joke you’ve ever heard, and that’s what I think people strive for and they think that money’s going to give to them and it won’t. But I think contentment is you just wake up with a low or virtually no level of anxiety. You’re like, I’m good. I’m pretty happy — I’m pretty satisfied with my career. I’m satisfied with my relationships. I’m satisfied with the house that I live in. That’s not happiness though. I think money can reduce the number of sad days that you have, but it’s probably not going to increase the number of happy days that you have. Now, that’s awesome. If you can do that, that’s a huge life improvement, but it’s not happiness.
Tim Ferriss: Unless you have standup comedy budget and you go to more standup comedy shows.
Morgan Housel: See, that’s actually a great point.
Tim Ferriss: I’m not really kidding. That’s something that I do quite a lot of.
Morgan Housel: I’ve been on such a comedy binge lately, just Netflix specials. And I’ve said this many times, but I think comedians are the only good thought leaders because when you listen to good comedy —
Tim Ferriss: They’re the only practical philosophers left.
Morgan Housel: Exactly. And not only do you laugh, but you get smarter. I think George Carlin was a bonafide genius. I think Bill Burr is a genius. Those guys understand human behavior better than any psychology PhD does.
This Will Durant quote on the link between comedy and philosophy is on the money:
“A sense of humor, being born of perspective, bears a near kinship to philosophy; each is the soul of the other.” ― Will Durant, The Story of Philosophy
The comedian Tim Dillon was once asked about Jocko Willink’s book, Discipline Equals Freedom. The interviewer wanted to know if Tim thought that discipline was important to cultivate, and if it was a key ingredient to his success.
To that, Tim quipped, “Hey, how about freedom equals freedom? Has he ever thought of that?”
Comedians are the great philosophers of our day, primarily because humor is all about framing wisdom in an absurd way. And Tim’s response is a great example of this dynamic in action.
Of course, it goes without saying that I am projecting my views on the comedians that they probably don’t agree with. This act of imposing your hopes and beliefs on people, especially comedians, reminds me of a few things. One is this post on Reddit from a guy who hates it when people call comedians philosophers.
Look, I love George Carlin, Bill Hicks, and Stewart Lee, but I’m really hesitant to call them philosophers. Carlin was the closest in that category, and he certainly had philosophical insights, but he was by no means a philosopher. Most comedians raise insights, but they don’t give any answers, which is half the job of a philosopher. That and most of them aren’t as inclined to inform, as they are to entertain.
This person has a point about entertainment vs. insight. This reminds me of an episode on The Green Room with Paul Provenza, a talk show with a panel of comedians involving Jimmy Carr:
Tim Minchin: I don’t do comedy about politics in the domestic politics sense. The reason I do comedy about logic, religion and belief systems is because I feel like I can go ‘well, that’s fucking wrong’ and ‘this is why that’s fucking wrong.’ And that’s why I avoid politics cuz I cannot ‘well but again, I get what’s right and wrong about it.'”
Jimmy Carr: It’s a different thing for me as a comedian. I’m purely an entertainer. I’ve got no message at all. All I’m doing is trying to make people laugh. I’ve got no… I don’t think anyone should be listening to me, particularly.
“I thought I became a comedian because I loved comedy and I liked making people laugh,” Burr says. “But I became a comedian because by the time I was 23, I was so walled-off and fucked-up that doing stand-up was the easiest way to go into a room full of strangers and make them like me so that no one would hurt me. I was onstage with the mindset of a 6-year-old from 23 to about 37.”
John Stewart: When you were a kid growing up, yeah, you wanted to be Danny Kaye, he and Bob Hope. So, look, how do you think this thing is working out so far?
George Carlin: Well, I knew I wanted to stand up, and you know, I’d be silly and have people say, ‘ain’t he cute and clever,’ and that’s all it was, a reward, a psychic reward, you know? When you’re a kid, and you find out that you can get the attention of adults, approval, and a little bit of respect, and you just hunger for it, you keep going back for it.
When you’re a comedian, they expect you to know things nowadays. You know what I mean? It didn’t used to be like that. Like during the Vietnam War, they wouldn’t go, “I wonder what Red Skeleton thinks on this?” But nowadays, like I’ve heard they go, “A comedian is the modern-day philosopher, you know?” Which first of all, it always makes me feel sad for the actual modern-day philosophers who exist, you know?
Every comedian is different.
Legends like Lenny Bruce and George Carlin despised the limits on free speech and reveled in rebelling against the hypocrisy of society at great personal risk. Both were arrested numerous times for violating obscenity laws that were prevalent across America. They took aim at the notion that profane words would somehow corrupt society and destroy social values. They inspired a generation of comedians to express themselves freely.
“I want to help you if you have a dirty-word problem. There are none, and I’ll spell it out logically to you. Here is a toilet. Specifically-that’s all we’re concerned with, specifics-if I can tell you a dirty toilet joke, we must have a dirty toilet. That’s what we’re all talking about, a toilet. If we take this toilet and boil it and it’s clean, I can never tell you specifically a dirty toilet joke about this toilet. I can tell you a dirty toilet joke in the Milner Hotel, or something like that, but this toilet is a clean toilet now. Obscenity is a human manifestation. This toilet has no central nervous system, no level of consciousness. It is not aware; it is a dumb toilet; it cannot be obscene; it’s impossible. If it could be obscene, it could be cranky, it could be a Communist toilet, a traitorous toilet. It can do none of these things. This is a dirty toilet here. Nobody can offend you by telling a dirty toilet story. They can offend you because it’s trite; you’ve heard it many, many times.” ― Lenny Bruce, How to Talk Dirty and Influence People
Richard Pryor, one of the greatest comedians ever, was the son of a prostitute and a pimp and had a hellish childhood. He lived his nightmares and dealt with his demons on stage, and in doing so, he shone the light on what it meant to be a black man in America. Dave Chappelle, Eddie Murphy, Chris Rock, and others followed in his footsteps and became geniuses in their own right for their searing dissections of American social and cultural mores.
Jerry Seinfeld, as Ricky Gervais put it, is “the purest observational comic.” Don Rickles is one of the greatest insult comics ever, and he never wrote down anything. Everything was off-the-cuff.
Today’s comedians are different, and of course, comedy itself is never one thing. It mutates and changes like a virus as it interacts with society, lived experiences, culture, and money. Today’s comedy is arguably more political than ever. It’s funny when you consider the fact that more people watched Jon Stewart for their news than real news shows; he was the most popular fake newsman in America. John Oliver, who got his start under Jon Stewart, continued the tradition. You can see this need to be political among Indian comics as well. It’s a weird thing to see them talk about the absurdities of politics while they go to great lengths to tell us they are not experts.
Maybe people like me are living vicariously by projecting our ideals onto comedians. Maybe there are very few comedians who consider themselves social justice warriors or psychologists without credentials. Maybe by building them up into something they are not, we can express our deep-seated beliefs and frustrations. It’s just like imbuing useless objects with meaning through stories, religion, and just plain time—a musician’s underwear + 50 years = a collectible.
But hey, what do I know?
But whatever the case, comedians are incredibly insightful. Every time you listen to them, you can pick up a thing or two. For example, the last time I heard Bill Burr, I wrote a post on a few things about money I learned from him.
I’ve been listening to long-form interviews with comedians for the past month or so, and I can’t get enough. They’re wired differently, and their views on work, life, and love are fascinating. I loved this quote from Jimmy Carr that perfectly captures what makes comedians special:
As British comedian Jimmy Carr and writer Lucy Greeves put it in their book, Only Joking: What’s So Funny About Making People Laugh?, “Stand-up comedy is a peculiar performance art form. In a room filled with people, the comedian is the only one facing the wrong way. He’s also the only one who isn’t laughing. For normal people that’s a nightmare, not a career aspiration.”
We are honoring this, this time around, an icon, a fellow who has really changed comedy as we know it. Literally, he’s celebrating 50 years of entertainment this year. He’s gone through more changes than most people do in a lifetime, and he’s invited us along on those changes. And sort of like the Beatles, we’ve gone through those changes with him. And he spent 50 years, think about that, 50 years making us laugh and, more importantly in some people’s opinion, he spent 50 years making us think. As you welcome, please, Mr. George Carlin.
A thing is funny when—in some way that is not actually offensive or frightening—it upsets the established order. Every joke is a tiny revolution. If you had to define humour in a single phrase, you might define it as dignity sitting on a tin-tack. Whatever destroys dignity, and brings down the mighty from their seats, preferably with a bump, is funny. And the bigger the fall, the bigger the joke. — George Orwell
Happy Diwali, folks, and go crack some inappropriate jokes about Diwali food-induced farts killing the cracker industry and leading to the unemployment of millions of minors.
Ok, here’s what I found on the dumpster fire that is the interweb this week:
Alain de Botton on a healthy mind.
The end of open social media.
Out the money reads: Did SEO ruin the internet, future of NGOs, climate change impact in poor countries, downside of EVs and more.
Raghuram Rajan on the 2008 crisis, central banking, inequality, unconventional monetary policy, and more.
Bond markets are going electronic in Europe.
In the money reads: emerging markets resilience, performance chasing, college wage premium, personality traits, career success, and more.
A few good thoughts
I came across writer Alain de Botton’s beautiful post on the wondrous human mind, thanks to The Marginalian. Here are a few evocative excerpts:
So efficient and hushed are our brains in their day to day operations, we are apt to miss what an extraordinary and complicated achievement it is to feel mentally well. A mind in a healthy state is, in the background, continually performing a near-miraculous set of manoeuvres that underpin our moods of clear-sightedness and purpose.
A healthy mind knows how to hope; it identifies and then hangs on tenaciously to a few reasons to keep going. Grounds for despair, anger and sadness are, of course, all around. But the healthy mind knows how to bracket negativity in the name of endurance. It clings to evidence of what is still beautiful and kind. It remembers to appreciate; it can – despite everything – still look forward to a hot bath, some dried fruit or dark chocolate, a chat with a friend, or a satisfying day of work. It refuses to let itself be silenced by all the many sensible arguments in favour of rage and despondency.
“The mind is its own place, and in itself can make a heaven of hell, a hell of heaven..”
―John Milton
Rummaging through quotes on Goodreads has become a new pastime for me. I’ve heard a version of this quote from other accomplished and smart people that I look up to as well:
“For me, I am driven by two main philosophies: know more today about the world than I knew yesterday and lessen the suffering of others. You’d be surprised how far that gets you.”
― Neil deGrasse Tyson
“Sometimes, carrying on, just carrying on, is the superhuman achievement.”
The first popular social network in my circle was Orkut by Google. I don’t have a good recollection of what I used to do on the platform; it couldn’t have been anything useful. Soon, Orkut withered as Facebook became popular. I have fairly good memories of the dumb things I used to do on it. The earliest memory I have of Facebook is using the poke feature. Remember that? It’s something you did to annoy your friends.
These were good times. Social platforms were still called social networks, not social media. You checked in with distant friends, shared memories, rediscovered old acquaintances, found your soulmates, and sometimes even did accidentally useful things. Fun times. Hundreds of social media platforms came and went, but Facebook, Twitter, and Instagram remained popular. They became part of our daily lives. Without realizing it, we were getting hooked on the tiny dopamine hits of likes, pokes, shares, and retweets. But it was still okay; we were just having innocent fun.
Somewhere along the way, social networks became social media, and it all went to shit. The trouble started when social platforms started pushing news and branded content compared to updates from friends. Instead of poking each other, we started arguing about politics and other divisive topics. The platforms wanted engagement, and what better way than to enrage people? This strategy started to backfire starting around 2015.
Platforms had started to go to shit long before, but the 2016 US election, in which Donald Trump won, was the moment when the developed world went, “Oh shit, we have a problem.” Trump brought out the worst in people, and political polarization exploded. Social platforms became outlets for people to express their politically motivated hatred and animosity. The incentives of the platform to peddle extreme stuff further inflamed the situation. It wasn’t just the US; partisanship and polarization rose in several countries across the world, and platforms were at the heart of the issue. Social networks not only became places where you bickered and argued over pointless shit with people you otherwise liked but also with random people from Albania and Montenegro.
The platforms—Facebook in particular—did a sharp U-turn around 2017–18 as they deprioritized news content, but it was too late. There was a time when the narrative about social platforms was that they would connect people and even make the world a better place. Remember the Facebook and Twitter revolutions in Middle Eastern countries like Tunisia, Iran, and Egypt? Of course, the role of platforms in popular uprisings was vastly overstated. This period marked the end of the fun era of social networks. The shift from “social networks” to “social media” was complete.
It’s just stunning that the narrative about social networks went from them being saviors of democracy to destroyers of civilization. Today, social media platforms are charged with abetting genocide, dividing people, tearing apart the social fabric, and unleashing a global mental health crisis among young people.
After their divorce with news, the priorities of the platforms changed. They no longer cared about pointless shit like connecting people and making the world a better place. Platforms are businesses, and business interests dictate the direction they take—it’s shareholder capitalism, baby. The shareholders and venture capital investors were clear on what they wanted—they wanted moar growth, more clicks, moar engagement, and moar money. Moar more!
Unlike most other businesses on Earth that live and die by their customers’ demands, social media services are caught trying to satisfy both their users and the people actually paying for it all: investors and advertisers.
The needs of these groups are dramatically different. Users want what the platform was originally for — be it ephemeral messaging, sharing photos, or otherwise. Surprising, energized spaces to connect with friends in a new way. But these use cases inevitably have a limit. You can only post so many photos. You only have so many friends to message. And for investors and advertisers, that’s a problem. So each social network has to find ways to make you send another photo, or it has to deploy a brand-new feature and encourage you to use that, too. More usage, more space for ads, more money for investors. — Ellis Hamburger
Platforms get all the blame, but it’s not like the users were innocent. It takes two to tango. The engagement-engagement loop disfigured the platforms. The platforms were influencing us, and our behavior was influencing them. I want to be clear that it’s easy to paint platforms as technological manifestations of Darth Vader. Are they responsible for all the ills that plague society? The research is unclear on that, but they had arole,e and that much is clear.
When I spoke with Nyhan, he told me much the same thing: “The most credible research is way out of line with the takes.” He noted, of extremist content and misinformation, that reliable research that “measures exposure to these things finds that the people consuming this content are small minorities who have extreme views already.” The problem with the bulk of the earlier research, Nyhan told me, is that it’s almost all correlational. “Many of these studies will find polarization on social media,” he said. “But that might just be the society we live in reflected on social media!” He hastened to add, “Not that this is untroubling, and none of this is to let these companies, which are exercising a lot of power with very little scrutiny, off the hook. But a lot of the criticisms of them are very poorly founded. . . . The expansion of Internet access coincides with fifteen other trends over time, and separating them is very difficult. The lack of good data is a huge problem insofar as it lets people project their own fears into this area.” He told me, “It’s hard to weigh in on the side of ‘We don’t know, the evidence is weak,’ because those points are always going to be drowned out in our discourse. But these arguments are systematically underprovided in the public domain.”
How the hell did we think that bringing the entire world online and letting everyone talk to each other would end well?
A global broadcast network where anyone can say anything to anyone else as often as possible, and where such people have come to think they deserve such a capacity, or even that withholding it amounts to censorship or suppression—that’s just a terrible idea from the outset. And it’s a terrible idea that is entirely and completely bound up with the concept of social media itself: systems erected and used exclusively to deliver an endless stream of content.
But now, perhaps, it can also end. The possible downfall of Facebook and Twitter (and others) is an opportunity—not to shift to some equivalent platform, but to embrace their ruination, something previously unthinkable. Ian Bogost, The Atlantic
Fast forward to 2023. Social media platforms feel like landfills. Gone are the days when embarrassing pictures of your friends and family used to fill our feeds. Now they are full of branded bullshit, exaggerated nonsense, engagement bait, hustle porn, and endless regurgitation of content that people steal from each other or, worse yet, copy from Wikipedia. Every day, tons and tons of fresh garbage are delivered to landfills. We don’t even care about the stench anymore because we’re used to it.
Then there are those short videos. People have become zombies as they watch one short video after another. Talking to another human being, staring at the birds in the distance, or, god forbid, stepping outside into the real world has become unimaginable. Swiping to find the next 60-second video is preferable compared to the agony of living. An entire generation of brain-dead people just hunched over and swiping up, desperate to escape life.
Add it all up, and the social web is changing in three crucial ways: It’s going from public to private; it’s shifting from growth and engagement, which broadly involves building good products that people like, to increasing revenue no matter the tradeoff; and it’s turning into an entertainment business. It turns out there’s no money in connecting people to each other, but there’s a fortune in putting ads between vertically scrolling videos that lots of people watch. So the “social media” era is giving way to the “media with a comments section” era, and everything is an entertainment platform now. Or, I guess, trying to do payments. Sometimes both. It gets weird. — David Pierce, editor-at-large of The Verge
In 2023, one thing that seems clear is that the era of open social media is over. Social networks just stopped being fun. We’re no longer social media “users”, we’re performers. Platforms have become performative hellscapes where people have to debase themselves to make a buck. People are twerking for Zuckbucks, Elonbucks, and YouTube bucks. In response to the fickle whims of the social algorithmic overlords, people, sorry “creators,” are having to demean themselves even more by escalating their ridiculousness.
Elon Musk woke up and asked him the question: What’s the best way to blow $44 billion? His answer was to buy an ossified social media platform and make it even worse than it was before. Zuck wanted to liberate humans from the tyranny of Silk Board and move us to the metaverse, but he’s taking a liking to the real world again. LinkedIn has become a parody of real life. A weird platform where even the most banal things are exaggerated. Things like “I farted in the elevator, and it changed my outlook about how to be professional, here are 5 things I learned.”
TikTok has become a cultural juggernaut in the US but faces an uncertain future after being banned in a large part of the world. For now, it’s the home of awkward and anxious teens craving the attention and validation of strangers in hopes that it will cure their acne outbreak. Instagram is no longer a cozy platform for amateur narcissists and terrible photographers. It’s filled with people peddling all sorts of nonsense, from magical jade stones that cure baldness if you put them in your butt to get-rich schemes. It’s a grifter’s paradise.
What comes next?
I’ve no idea, but here are some trends to watch out for.
Twitter seems to be circling the drain as high-profile users leave the platform and other users reduce their activity. Elon’s new rightward turn and the boosting of right-wing nutcasesares turning the platform into a wasteland.
The future of social media may be a lot less social. There’s growing evidence to show that people are moving to privateplaces like WhatsApp, Discord, Telegram, Instagram DMs, etc.
Decentralized social networks like Mastadon and Bluesky are growing but are still light years away from the scale of centralized platforms.
What Orwell feared were those who would ban books. What Huxley feared was that there would be no reason to ban a book, for there would be no one who wanted to read one. Orwell feared those who would deprive us of information. Huxley feared those who would give us so much that we would be reduced to passivity and egoism. Orwell feared that the truth would be concealed from us. Huxley feared the truth would be drowned in a sea of irrelevance. Orwell feared we would become a captive culture. Huxley feared we would become a trivial culture, preoccupied with some equivalent of the feelies, the orgy porgy, and the centrifugal bumblepuppy. As Huxley remarked in Brave New World Revisited, the civil libertarians and rationalists who are ever on the alert to oppose tyranny “failed to take into account man’s almost infinite appetite for distractions.” In 1984, Orwell added, people are controlled by inflicting pain. In Brave New World, they are controlled by inflicting pleasure. In short, Orwell feared that what we fear will ruin us. Huxley feared that what we desire will ruin us.
This book is about the possibility that Huxley, not Orwell, was right.”
“When a population becomes distracted by trivia, when cultural life is redefined as a perpetual round of entertainments, when serious public conversation becomes a form of baby-talk, when, in short, a people become an audience, and their public business a vaudeville act, then a nation finds itself at risk; culture-death is a clear possibility.”
In my own experience, apart from the occasional shitposting, my social media posting activity had gone down. I doomscroll on Twitter because that’s where all the smart people are. It’s the only way I know of discovering the best articles, research, etc.
In the past couple of months, I’ve been increasingly using the Substack app. The explore feed is remarkably good, and the Substack algorithm is doing a good job of surfacing well-written perspectives. I haven’t found Substack Notes, a Twitter replacement, all that useful yet. The idea of this website was also, in a way, a reaction to the shittiness of social media platforms. I wanted to build a simple site where I could collect and organize some of the best things on the internet instead of dancing like a monkey to the whims of the platforms. Having said that, I may have to dance a little because I share the links to the posts on this website on the same platforms.
“All the assholes that are out there paying shitty link-building companies to build shitty articles,” he said, “now they can go and use the free version of GPT.” Soon, he said, Google results would be even worse, dominated entirely by AI-generated crap designed to please the algorithms, produced and published at volumes far beyond anything humans could create, far beyond anything we’d ever seen before.
“They’re not gonna be able to stop the onslaught of it,” he said. Then he laughed and laughed, thinking about how puny and irrelevant Google seemed in comparison to the next generation of automated SEO. “You can’t stop it!”
The Oxfam scandal wasn’t the first of its kind. As far back as 2002, a report conducted by the UN Refugee Agency and Save the Children UK in west Africa found that agency workers from local and international NGOs, as well as UN agencies, were among the “prime sexual exploiters of refugee children”. Aid workers were accused of “using the very humanitarian assistance and services intended to benefit refugees as a tool of exploitation.”
The report, which included allegations against employees of some of the world’s biggest aid agencies, led only to patchy efforts to address the problem.
A gut wrenching story of how climate change is devastating the poorest regions on the planet.
Her entire days are “devoted to the lilies,” she said, and collecting them has proved so punishing — two-hour walks, hours more in the water, lugging them back home — that she’s developed chronic coughs, regular fevers, and found herself many mornings asking if she could bear to return to the water. “As long as my children are alive,” she’s told herself, “I’ll keep going.”
Electric vehicles are not an unalloyed good. A cautionary tale of Norway, where over 80% of cars sold are electric.
So I flew across the Atlantic to see what the fuss was about. I discovered a Norwegian EV bonanza that has indeed reduced emissions — but at the expense of compromising vital societal goals. Eye-popping EV subsidies have flowed largely to the affluent, contributing to the gap between rich and poor in a country proud of its egalitarian social policies.
Worse, the EV boom has hobbled Norwegian cities’ efforts to untether themselves from the automobile and enable residents to instead travel by transit or bicycle, decisions that do more to reduce emissions, enhance road safety, and enliven urban life than swapping a gas-powered car for an electric one.
I loved the wonderful framing of how technologies evolve.
But I’m also personally a big believer in the idea that once you have a name for something happening online it’s already over. Whether it’s a meme or a trend or, in this case, a general vibe, the minute there’s a consensus as to what it is, it’s already its over to some degree. Which means I sort of think whatever that new status quo is, it’s already arrived and that the rut we feel like we’re in is possibly already over. Somewhere, at least. And while I share the affliction that all tech writers have, in that I crave applying some kind of order to the chaos of how technology evolves, the truth is that it just does a lot of the time. And there is some pocket of the web out there that has already defined our digital future. We just haven’t noticed it yet. (Though, it’s probably whatever furries are doing right now.)
I loved this post. Reading without purpose is a habit I’ve been deliberately trying to cultivate. This blog is based on the same premise—read without a purpose and share the good things.
At one point, Grant asked Nolan how he finds something that he’s passionate about. Nolan responded, in part:
“For me, it’s all about trying new things. If you’re going to write, you want to read a lot before you write, without any purpose. I love watching TV, love watching movies, preferably with no sense of purpose. Just being open to things that might inspire you—and staying open.”
Nolan reads “without any purpose.” I would argue, though, that there is a purpose in that: to find something that stimulates you but that you couldn’t have known to look for. I often wander bookstores, which I think of as places to find interests that I didn’t know I had.
In the money
Raghuram Rajan
Former RBI governor Raghuram Rajan is not a popular figure in certain Indian political circles. Whether you agree or disagree with him, he’s still one of the sharpest thinkers on issues of monetary policy and financial stability. He recently appeared on The Joe Walker Podcast, a favorite of mine, and I enjoyed listening to the conversation.
A few highlights from the conversation:
On his famous 2005 speech
In 2005, he gave a speech at the Jackson Hole symposium warning of hidden risks to the global financial system arising from distorted incentives. The event was supposed to be a celebration of the legacy of Alan Greenspan.
I remember leaving home and telling my wife, “This speech will either make or break me,” because I had an inkling that I was saying something important.
But I also knew that I was going out on a limb because I would look really stupid if I’d said, “Look, there are these risks building” and nothing actually happened. And, interestingly, at the end of the speech I went up to say hello to Chairman Greenspan and he was obviously not pleased. What was interesting was there were two private-sector people also there who were telling him, “Look, you’ve got to stop us from taking these risks.” And what was interesting was, that was the missing piece that somehow we had all convinced ourselves that the smartest guys in the room would have figured out how to manage the risks.
On his “let them eat credit” view
Well, there was a sense – which, again, like all ideas, there’s an element of good intent and truth to it – the sense that if we make credit easier, if we allow people to buy houses, for example, and they can ride the house appreciation, that’s good for their wealth, that’s good for their portfolios, but it also can take some of their worries away, including worries that they don’t have good jobs, they don’t have adequate human capital, et cetera.
Too much credit pushed too easily can actually do harm and even the people who get the credit can be harmed because they can get it at the wrong time. As prices are really going up they may not be able to afford the houses, they may not be able to afford the consumption that it made possible, they drew down on their home equity lines, and then found that house prices collapsed and there’s no equity anymore, in fact they were deeply in debt.
On the perils of pushing easy access to credit as means to financial inclusion
And so, there is more of a sense now that public policy plus the private sector may make it too easy to access for the disadvantaged to access credit, and they themselves may not have the capacity to understand what is reasonable. In fact, they’ll take whatever comes because their discounting of the future is much higher – “Sick child today. Let me try and get the child to a hospital. What if I have to borrow.” But then the loan has to be paid tomorrow. That’s when the lenders start hounding this person. I myself, while I was in India, was much more focused on pushing payments and other services as the lead into inclusion, rather than pushing credit as the first thing. Because it struck me that the problem with pushing credit was that before people know how to manage their finances, if they get easy credit, there’s a likelihood they will overborrow and then face problems down the line.
On central bank independence
I do think that central banking is a very political job. It may seem technocratic and, yeah, you think about what R-star is and you set interest rates with that in mind.
Where you think R-star is completely political. I shouldn’t say completely political; it cannot be devoid of politics. But your language, your persuasion, the extent of hostility that you face – all that is political
I don’t think they are. Technically, as a central bank chief, some countries will make it very hard to fire you. Does that mean that you can do what you want? No.
I don’t think it’s wise to completely put the central bank outside of any kind of control. I think unelected officials should have some oversight by the elected representatives of the people. I think there’s an optimal point where you respect them and you try not go too far away from what is politically acceptable. But there are times when there is something you need to do which will cause pain, which somebody who wanted to be elected in the next election would perhaps not espouse, but which you think is needed not just for the next election cycle, but for many election cycles down the line.
That’s when, if you have enough independence as a central bank, you can make the tough choice. But to completely ignore the elected representatives of the people all the time? Well, sometimes they actually have sensible ideas which you should be paying more attention to.
On incentives
The Goldman Sachses of the world – why would they go out on a limb? Why would they risk their firm’s capital? The missing piece, which to some extent I alluded to in the paper, was distorted incentives in the financial system – and that led to the tail risk-taking. The smartest guys were not immune to bad incentives.
On why just lowering interest rates after the 2008 crisis didn’t work
In other words, you had to do structural reforms. And this sounds like the annoying sort of old geezer who says whenever things are slowing down, “All you young pups, you always want to stimulate. You actually need to fix the underlying problems. Structural reforms.” But I do think, as a number of people have suggested, one of the problems with the low demand in industrial countries stems from inequality that the lower end could consume more, would consume more, but doesn’t have the incomes. But how do you generate more incomes at the lower end? You have to make them more capable of getting good jobs, which means focus on capabilities, skill building et cetera. And for all the talk about the China effect on the US, I think the reality is the US has a lousy system of training people in response to trade shocks. The trade adjustment mechanisms simply don’t work.
Tangential rabbit holes
Incentives and self-delusions
As I was writing this post, I came across psychologist Adam Mastroianni’s brilliant post on Goodharting ourselves, a reference to Goodhart’s law and how it applies to individuals as well.
“When a measure becomes a target, it ceases to be a good measure”
Dr. Rajan’s observation on incentives reminded me of this passage from Mastroianni’s post:
It’s not just me, of course. I’ve seen people melt down over lots of dumb games: Monopoly, Scrabble, Mario Kart, mini golf, charades, bowling, trivia, and croquet. Losing your cool after losing a game is mildly mortifying, but if 15 minutes of struggling for made-up points is enough to turn you into a howling, friendship-shredding monster, imagine how low you can sink when there’s actual money and prestige on the line. If you take a high-paying job to “provide for your family” and then you never see that family and they end up hating you, if you claw your way to the top only to find that you still feel as empty up there as you did at the bottom, if you get so obsessed with success that you lie and cheat to get it, then guess what: you got Goodharted.
Dive deeper into the history of the 2008 global financial crisis.
I’ve been fascinated by the 2008 financial crisis for a long time, and I had written about it a little in an old post as well. One of the definitive books on the crisis is Crashedby historian Adam Tooze. I highly recommend the book, but if you want a quick summary, you can watch this video as well. Adam Tooze is an information monster. He has the remarkable ability to consume a torrent of information and spit out accessible summaries and explanations of complex phenomena. I highly recommend reading anything he writes, including his Substack. He’s a regular on panels and podcasts, talking about a wide range of important economic developments. In the upcoming editions, I will try to summarize some of his talks.
He also hosts a weekly podcast that I recommend listening to.
European bond markets are going electronic
I have some experience trading bonds in India. It’s a market that’s stuck in time, where everything happens over calls and WhatsApp messages. Despite all the regulatory moves to increase liquidity in bonds on the exchanges, things haven’t changed much. All the bond trading has now been pushed to request for quote’ (RFQ) platforms on the exchanges, but the price negotiations still happen on calls. The trades are executed on RFQ instead of off-market transfers.
Bonds will never trade like equities in exchanges; it’s not the nature of the instrument, and it’s a global thing. Most retail investors are also better off not buying single-name papers and should stick to bond mutual funds. Which means on-market liquidity will always be limited.
But while algorithms work well on the small trades that account for 60 per cent of European bond market activity, they’re not yet trusted with big and complicated stuff. Only liquid, recently issued bonds with a large outstanding basis and a high credit rating are considered sufficiently low-touch to be fed into the system. So while the median European trade is now electronic the category still only accounts for 30 per cent of total volume, Barclays finds.
But the single biggest factor behind emerging markets’ resilience has been the increased focus on central-bank independence. Once an obscure academic notion, the concept has evolved into a global norm over the past two decades. This approach, which is often referred to as “inflation targeting,” has enabled emerging-market central banks to assert their autonomy, even though they frequently place greater weight on exchange rates than any inflation-targeting model would suggest.
The red line in the chart indicates that fund managers have about five years before their investors turn their backs on them. After five years of underperformance, there is no stopping disappointed investors from leaving the fund. My personal experience with investors is that five years is a long time. Most investors will get nervous after six to twelve months of underperformance and leave you after two to three years of underperformance.
Yet, this research points to a simple investment strategy for fund selectors. Look at funds that underperformed in years six to ten before today. These are the funds that tend to follow styles that are likely to come back into favour in the next five years. And that may have a better chance of outperforming going forward than the funds that did well in the last five years or so.
What this chart is showing is that as each wave of graduates has entered the UK’s jobs market, on average they’re finding lower-grade jobs than the last, whereas in the US, each new wave of grads is met by a new wave of well-paid graduate jobs.
Other countries have the same rise in graduate numbers without the same decline in graduate earnings, because they’ve created good jobs. When people say Britain sends too many people to uni, they’re saying we’re not a country where skilled people can expect to find skilled jobs.
Short-changed graduates are just another symptom of the British economic disease. If you have low investment and low or zero productivity growth, then when your grads enter the job market, they’ll have fewer and weaker opportunities than grads in a country that had higher growth
In this research, we examined whether personality changes from adolescence to young adulthood predicted five early career outcomes: degree attainment, income, occupational prestige, career satisfaction, and job satisfaction. The study used two representative samples of Icelandic youth (Sample 1: n = 485, Sample 2: n = 1,290) and measured personality traits over 12 years (ages ~17 to 29 years). Results revealed that certain patterns of personality growth predicted career outcomes over and above adolescent trait levels and crystallized ability. Across both samples, the strongest effects were found for growth in emotional stability (income and career satisfaction), conscientiousness (career satisfaction), and extraversion (career satisfaction and job satisfaction). Initial trait levels also predicted career success, highlighting the long-term predictive power of personality. Overall, our findings show that personality has important effects on early career outcomes—both through stable trait levels and how people change over time. We discuss implications for public policy, for theoretical principles of personality development, and for young people making career decisions.
That’s it for this week. Lift your head up from those screens, go smell the fresh polluted air of Bangalore, meditate about life at silk Board, and enjoy a long silent stroll on the main roads of Bangalore (becos we no footpath have).
“It is forbidden to kill; therefore all murderers are punished unless they kill in large numbers and to the sound of trumpets.” ― Voltaire
“What difference does it make to the dead, the orphans and the homeless, whether the mad destruction is wrought under the name of totalitarianism or in the holy name of liberty or democracy?” ― Mahatma Gandhi
“Everyone believes in the atrocities of the enemy and disbelieves in those of his own side, without ever bothering to examine the evidence.” ― George Orwell
There’s senseless bloodshed again. In trying to make sense of things, I visited The Marginalian by Maria Popova. The site is a priceless repository of the collective wisdom of some of the brightest and most gifted thinkers to have walked the face of the earth. I was searching for this post about hope and despair by Rebecca Solnit that I had read a while ago. As I was searching for the post, I came across the Nobel acceptance speech of Elie Wiesel, an American writer, professor, political activist, Nobel laureate, and Holocaust survivor. The speech is from 1986, but it might as well be about today. Here’s a poignant excerpt:
I remember: it happened yesterday or eternities ago. A young Jewish boy discovered the kingdom of night. I remember his bewilderment, I remember his anguish. It all happened so fast. The ghetto. The deportation. The sealed cattle car. The fiery altar upon which the history of our people and the future of mankind were meant to be sacrificed.
I remember: he asked his father: “Can this be true?” This is the twentieth century, not the Middle Ages. Who would allow such crimes to be committed? How could the world remain silent?
And now the boy is turning to me: “Tell me,” he asks. “What have you done with my future? What have you done with your life?”
And I tell him that I have tried. That I have tried to keep memory alive, that I have tried to fight those who would forget. Because if we forget, we are guilty, we are accomplices. We could not prevent their deaths the first time, but if we forget them they will be killed a second time. And this time, it will be our responsibility.
And then I explained to him how naive we were, that the world did know and remain silent. And that is why I swore never to be silent whenever and wherever human beings endure suffering and humiliation. We must always take sides. Neutrality helps the oppressor, never the victim. Silence encourages the tormentor, never the tormented. Sometimes we must interfere. When human lives are endangered, when human dignity is in jeopardy, national borders and sensitivities become irrelevant. Wherever men or women are persecuted because of their race, religion, or political views, that place must – at that moment – become the center of the universe.
Of course, since I am a Jew profoundly rooted in my peoples’ memory and tradition, my first response is to Jewish fears, Jewish needs, Jewish crises. For I belong to a traumatized generation, one that experienced the abandonment and solitude of our people. It would be unnatural for me not to make Jewish priorities my own: Israel, Soviet Jewry, Jews in Arab lands … But there are others as important to me. Apartheid is, in my view, as abhorrent as anti-Semitism. To me, Andrei Sakharov‘s isolation is as much of a disgrace as Josef Biegun’s imprisonment. As is the denial of Solidarity and its leader Lech Walesa‘s right to dissent. And Nelson Mandela‘s interminable imprisonment.
There is so much injustice and suffering crying out for our attention: victims of hunger, of racism, and political persecution, writers and poets, prisoners in so many lands governed by the Left and by the Right. Human rights are being violated on every continent. More people are oppressed than free. And then, too, there are the Palestinians to whose plight I am sensitive but whose methods I deplore. Violence and terrorism are not the answer. Something must be done about their suffering, and soon. I trust Israel, for I have faith in the Jewish people. Let Israel be given a chance, let hatred and danger be removed from her horizons, and there will be peace in and around the Holy Land.
I’ve been reading and listening to make sense of the Israel-Palestine conflict. Here are some things worth reading and listening to get a sense of this devastating moment.
This conversation between Derek Thompson and Dan Raviv, who’s written several books about Israel, was really good. It’s a good place to start if you want to get the historical context that led to the recent barbarity.
Wow, I came across this video of Arnold Schwarzenegger thanks to Josh Wolfe. What a powerful and evocative message about not giving into hate.
Let me tell you something: when I walked through that camp in Auschwitz and I put myself in the shoes of those people herded into those gas chambers, it was horrifying, one of the darkest moments of my life. But in that darkness, a woman who survived the horrors of Auschwitz helped me find the light. I spent some time with her, had a wonderful conversation with her. She told me that the Nazis could conquer cities and countries, they could take her freedom, her friends, her family, even her life, but they could never conquer her mind. What strength that woman had! Wow! So, the bottom line is, I don’t care how many hateful things you may have written online. I don’t care how often you have marched carrying that hateful flag or what hateful things you may have said in anger. There’s still hope for you. There’s still time for you. Choose strength, choose life, conquer your mind. You can do it!
I think the best comedians are philosophers. In my book, George Carlin is a modern-day Aristotle. Comedians are like a mirror; they show the contradictions, idiosyncrasies, and absurdities of life and the human condition like no other. Comedians are also humans, like all of us. They deal with the horrors of life on stage. In doing so, they help us deal with the terrible things in life and give us permission to laugh. Pete Davidson showed this last week as he delivered a moving monologue on SNL on the Israel tragedy:
I saw so many terrible pictures this week of children suffering – Israeli children and Palestinian children – and it took me back to a really horrible, horrible place. No one in this world deserves to suffer, especially not kids.
After my dad died, my mom tried pretty much everything she could do to cheer me up. I remember one day when I was eight, she got me what she thought was a Disney movie but it was actually the Eddie Murphy stand up special, “Delirious.” We played it in the car on the way home and when she heard the things that Eddie Murphy was saying, she tried to take it away. But then she noticed something, for the first time in a long time I was laughing again.
I don’t understand it. I really don’t. I never will. But sometimes comedy is really the only way forward from tragedy.
My heart is with everyone whose lives have been destroyed this week. But tonight I’m going to do what I’ve always done in the face of tragedy and that’s try to be funny. Remember, I said try
In the same vein, Ricky Gervais on the healing power of comedy:
Ricky Gervais: That’s what humor’s for, to get us over bad things. That’s exactly what evolutionarily speaking, humor is. it gets us over bad shit. If you can’t joke about bad shit, there’s no point joking about good shit. We don’t need it.Laughter is this drug that cures bad shit.
Here’s a a drug is a drug here it cures good shit. I don’t want that. I like good shit. I want something that cures bad shit. Well, laughter’s the best medicine, thank you very much.
In the money
The good side of low interest rates and bubbles
In the last couple of years, the phrase “it was a ZIRP (zero interest rate policy) thing” has become popular. It’s a catchall phrase to dunk on something as the result of low interest rates and not the result of sound fundamentals. The low interest rate phenomenon over the last decade has become a universal pejorative—it wasn’t brains, it was low interest rates. But are low interest rates all that bad?
Not really.
The reality is 38 shades of gray. Yueran Ma and Kaspar Zimmermann published a fascinating paper looking at the impact of rising interest rates on innovation. They found that interest rate hikes lead to less spending on R&D, a drop in tech patents, and a decline in venture capital investments.
We observe meaningful changes in innovation activities in the years following monetary policy shocks. First, investment in intellectual property products (IPP) in the national accounts (NIPA) declines by about 1 percent. The magnitude is comparable to the decline in traditional investment in physical assets. R&D spending in Compustat data for public firms declines by about 3 percent. Second, VC investment is more volatile, and declines by as much as 25 percent at a horizon of 1 to 3 years after the monetary policy shock. Third, patenting in important technologies measured by Bloom et al. (2023) declines by up to 9 percent 2 to 4 years after the shock. Interestingly, patenting in other technologies declines by less than patenting in important technologies.
Although the data suggest that monetary tightening reduces innovation activities, it is possible that downturns also have cleansing effects by eliminating weak companies (Schumpeter, 1942; Caballero 4 and Hammour, 1994; Foster, Grim, and Haltiwanger, 2016). To the extent that such companies are likely to be technologically underdeveloped and less innovative, the innovation measures above may not capture these potential cleansing effects. Gopinath et al. (2017) suggest that low interest rates worsened misallocation in Southern Europe as capital investment by large firms with high net worth increased by more, due to size-dependent borrowing constraints.
This reminds me of another brilliant post by the amazing Byrne Hobart on bubbles. The right kind of bubbles can lead to a lot of positive spillovers.
But even though the term “bubble” is usually pejorative, the right kind of bubble, at the right time, can exert a powerful positive effect on the world. A bubble is an objectively irrational shared belief in a better potential future … but that doesn’t just describe someone bidding up asset prices; it also describes anyone who chooses to build that kind of future. (And it’s not a coincidence that the other social sense of “bubble” is a filter bubble — a fact- and criticism-proof barrier that keeps a set of people convinced against all external evidence that they’re right.)
Bubbles can be directly beneficial, or at least lead to positive spillover effects: The telecom bubble in the ’90s created cheap fiber, and when the world was ready for YouTube, that fiber made it more viable. Even the housing bubble had some upside: It created more housing inventory, and since the new houses were quite standardized, that made it great training data for “iBuying” algorithms — the rare case where the bubble is low-tech but the consequences are higher-tech. But, even so, there’s always the question of price: how can you tell when it’s worth the hype?
Takeaway: Most things in life are 87 shades of gray. While having absolute views and passing judgment is easy, reality is always nuanced.
ETFs have grown so large that there are active debates about their impact on market microstructure. A few papers and articles come to mind. In his brilliant paper liquidity cascades, Corey Hoffstein had a fascinating section on the destabilizing effects of basket trading:
Flow traded to track a basket is incentivized not to identify the right value for a given security, but to minimize the impact of that flow in the market and execute the trade as efficiently as possible.
This distinction is important because in the latter case, the authorized participant knows the price of everything but the value of nothing. And as a larger percentage of market flow is directed towards basket trades, it may create a destabilizing influence upon markets. For example, studies show that baskets can lead to “information linkages” between securities in the same basket. This can lead to persistent distortions from fundamental value for individual securities, as “market makers cannot perfectly distinguish between price changes caused by factors pertinent to their assets, and other factors irrelevant to them.”
Further, market makers may not be able to instantaneously synchronize their prices, which may lead to further price distortion. In fact, stocks with higher ETF ownership display significantly higher volatility, higher trading costs, higher “return synchronicity,” a decline in “future earnings response,” a decline in analyst coverage, and evidence even suggests that ETFs may even introduce a new source of noise to markets.
In a paper last year, Koont et al. argued that bond ETFs boost liquidity in normal times, but in turbulent market phases like the COVID crash, they reduce the liquidity of the underlying bonds.
ETFs’ efforts to improve the liquidity of their shares have consequences for the liquidity of the underlying securities. We find that a bond’s inclusion in an ETF basket has a significant state-dependent effect on the bond’s liquidity. This effect is positive in normal times but negative in periods of large imbalance between creations and redemptions. A salient example occurred in the spring of 2020. The COVID-19 crisis witnessed acute selling pressure in the bond market, which led to net redemptions from bond ETFs, which in turn strained the liquidity of the bonds concentrated in RD baskets. Given the growing role of ETFs in liquidity transformation, future episodes of ETF-induced liquidity strains seem likely
“The illiquidity is causing the issuer to put it in a more concentrated weight in the basket to try and either get us to take it from them or find a price,” said Izzo, who argued that the rise of ETFs had actually increased liquidity during periods of market stress.
Rather than exposing a flaw in the ETF structure, these discounts highlighted how fixed income ETF prices can provide a window into underlying market conditions, transmitting real-time information and providing price discovery for market participants. Bonds that trade infrequently may not have current market sentiment fully embedded in their prices, which means end-of-day NAVs may not represent up-to-date market levels. ETF market prices adjust quickly in rapidly changing markets, so the trading price of the ETF can be a source of price discovery of where investors are valuing the underlying portfolio of bonds.
The discontents of being rich
The inimitable Morgan Housel published a brilliant post on the downsides of being rich. I have chosen to worry about these after being rich.
Magic pills
Obesity is a real killer. It kills more people than car crashes and terrorism combined and the rates continue to climb around the world. The lack of physical activity isn’t the only cause.
What if there was a miracle pill that could cure obesity?
We have one, and it’s called semaglutide. The injectable drug is sold under brand names like Ozempic and Wegovy. Semaglutide was developed to treat type 2 diabetes. The drug works by making you feel fuller for longer, so you end up eating less. Soon, people discovered that it only helped manage diabetes, but one of the side effects was drastic weight loss.
The drug exploded in popularity almost overnight, leading to massive shortages. The demand sparked a gold rush, leading to the development of an alternate marketplace where people sell off-brand formulations of the drug. Pharma companies have also jumped on the bandwagon, developing several alternate formulations that seem to deliver better results than Ozempic and Wegovy.
Novo Nordisk, the Danish pharma company that manufactures Ozempic and Wegovy, is raking it in.
It seems like the drug’s miraculous effects aren’t limited to diabetes and weight loss. If you go by anecdotes, it seems to be helping with addiction and other compulsive behaviors.
As semaglutide has skyrocketed in popularity, patients have been sharing curious effects that go beyond just appetite suppression. They have reported losing interest in a whole range of addictive and compulsive behaviors: drinking, smoking, shopping, biting nails, picking at skin. Not everyone on the drug experiences these positive effects, to be clear, but enough that addiction researchers are paying attention. And the spate of anecdotes might really be onto something. For years now, scientists have been testing whether drugs similar to semaglutide can curb the use of alcohol, cocaine, nicotine, and opioids in lab animals—to promising results.
7/ How many American industries have been propped up for the last 50 years by the poor impulse control of a small cohort of people with eating problems, drinking problems, and gambling problems? Guess we’ll find out in a year
Can these drugs break the economy? What happens if people stop smoking, gambling, and eating? Josh Barro argues that such behavioral shifts will be good for the economy at large:
It is theoretically possible that a major positive social and public health change could lead to reduced economic output — American consumers could take all their savings from eating less and drinking less and making fewer impulsive shopping decisions, and put them toward a reduction in work hours and earlier retirement — but that is not usually how these things work.
Consider an area where we’ve had a lot of success fighting addiction over the last few decades: reduced smoking rates. You could tell a story where reduced spending on cigarettes depresses corporate profits and GDP — that ex-smokers spend less, and this allows them to work less and retire earlier. But that seems obviously wrong — ex-smokers work more than still-smokers because they are less burdened by disease and disability. What are those ex-smokers doing with the proceeds of their greater productivity?
Presumably, they’re taking their earnings and spending more than they otherwise would have on non-cigarette products and services. And even if their financial gains from not smoking are going into savings instead of consumption, that is still fueling economic activity — a positive shock to the savings rate pushes interest rates down and makes it easier for businesses to invest and individuals to consume, even if those individuals never smoked.
Last week, Walmart’s chief executive John Furner said that customer data, which compares people’s prescription history against their food shopping patterns, suggested those taking the obesity drugs were buying less food. “We definitely do see a slight change compared to the total population — we do see a slight pullback in the overall basket,” he said.
The sell side guys always come up with the best takes:
CITI’S TAKE It is possible that increased use of Ozempic, Wegovy and related weight loss/diabetes treatments could materially contribute to weight loss efforts of its users in the United States. However, digging through some of our recent work on A320 flight capabilities, the potential payload benefit from transporting lighter passengers is negligible, especially on shorter-distance flights. Use of these treatments would seem to have to be far more widespread to have any meaningful impact on A320 mission capabilities. Citi maintains Buy ratings on Delta, Copa, United, Air France/KLM, Volaris and Azul, among others.
I give it three weeks until Morgan Stanley counts the number of farts and shows how semaglutide can solve climate change by reducing farts.
While these drugs do help reduce weight, they have plenty of side effects. The amazing Izabell Kaminska, formerly of FT Alphaville, shares her experience with semaglutide:
About a year later, someone told me that the drug was now available in weekly form. Convinced I had messed things up because of erratic dosing, I decided to give it another go. This time the immediate effects were negligible. I didn’t get my ego-boosting first-week mega loss. And overall, if the drug did anything, it suspended my continuing and ongoing weight gain rather than helped me to lose more. Nor did the weekly injections prevent the nausea or brain fog.
The negatives weren’t quite as bad, but the upsides were far more limited. Utterly underwhelmed and disillusioned, especially since the price of the pens remained prohibitively expensive, I gave up again. And again, I ballooned after doing so.
Meera Subramanian published a brilliant post about the Pavagada Ultra Mega Solar Park in Tumkur, Karnataka. The post chronicles the side effects of the push to decarbonize on local communities, marginalized groups, biodiversity, and rural economies.
“Solar people are building schools in all the villages, building roads,” Varshitha Gopala, an eighteen-year-old who lives in Vollur, told me. “For people, they haven’t done anything.” Gopala’s family lives in a Dalit-majority area, and her mother, Alvelamma, told me that Dalits were given farmland to work generations back. Before solar came, all women who could work did work, she said, whether on their own lands or as laborers for their landowning neighbors. But this arrangement had never come with a deed, which meant that Dalits were ineligible for a lease agreement and lost access to the land. Their landed neighbors now earn lease income, but the jobs are gone.
Clean-energy projects risk gaining a reputation for being extractive, in the same way that many fossil-fuel projects are. “Transformations are happening at this scale without any democratic process,” Saldanha said.
That’s it for this week. There were a few more interesting rabbit holes I went down, but in the interest of brevity, let me stop here. Now eat Lays chips, fart and make someone laugh.
I’m trying something new, something I always wanted to do—collect interesting things and share them with the world. I’ve always done that in one way or another, but I’m being deliberate this time. I’m lucky that I grew up with the internet. I’ve always consumed random things for as long as I can remember. Whenever I wanted to consume something, I had a list of people whom I could rely on to supply the most interesting things on the internet. These are curators (not a fan of the word) who have the amazing ability to find hidden gems in the raging dumpster fire that is the interweb.
