A Huge Problem for the US: We're Serious About Private Sector Leadership and Entrepreneurship and Absurd About Public Sector Leadership and Entrepreneurship

Here is a huge problem that rarely gets discussed.

Private sector CEOS make 100X what members of congress make.

Related, we so highly value entrepreneurship in the private sector but value it so little - if at all - in the public sector. That disconnect has created our current political dilemma. We’re asking voters to choose between institutions they don’t trust and a strongman they shouldn’t trust. Meanwhile, as a society, we making billionaires out of successful private sector entrepreneurs and largely ignoring or squelching public sector entrepreneurs who might create new institutions to deal with new or different problems.

As recently as the 1960s, we took the public sector about as seriously as we did the private sector. Rather than paying private sector CEOS 100X what we paid members of congress, we paid them roughly 3X.

 

Nvidia Hits $4 Trillion Value and a Very Brief History of Economic Development in These United States

This morning, Nvidia became the first company in history to reach a $4 trillion market cap.

Our economy has evolved: from creating wealth through land and agriculture, to manufacturing goods, to generating knowledge that makes workers more productive, and now to creating wealth through entrepreneurship and intellectual property.

Because we manufacture fewer goods than countries like China, we run a trade deficit. But penny for penny, that deficit is offset by financial inflows – including foreign investments in our publicly traded companies.

We used to make and sell goods. Now, increasingly, we make and sell wealth.

Finally Giving Those Beleaguered Billionaires a Little Power

In the US, there are 735 billionaires and 535 federal legislators – about 200 more billionaires than lawmakers.

* Legislators earn roughly 2x the median household income.
* Billionaires hold about 50,000x the median household net worth.

Apparently, Americans have decided that the best way to check the power of elected representatives is to give billionaires even more political power.
It’s a curious experiment.

Deja nu

New term: Deja nu. 

The distinct feeling that this has never happened before.

How Pop Culture Has Come to Define Christianity

Just finished Kristin Kobes Du Mez’s Jesus and John Wayne: How White Evangelicals Corrupted a Faith and Fractured a Nation. It’s fascinating, important, and covers topics that influence politics far more than most realize.
One almost parenthetically profound point she makes – easy to miss amid everything else – is this: popular media now defines Christianity more than any typical church or even the Bible itself. Best-selling books, podcasts, and programs to which Christians subscribe shape faith more than sermons or scripture.

When Protestants broke from Catholicism, they declared the Bible as their ultimate authority, subordinating the church to it. Catholics warned that since the Bible could be interpreted in so many ways, Protestantism would fracture into thousands of denominations.

(Spoiler alert: they were right.) One credible 2020 estimate suggests there are ~45,000 Christian denominations globally. By some reasoning, that implies members of 44,999 denominations are in for a rude surprise on Judgment Day. Your odds are not great.

So the question remains: Who defines Christianity?
The Pope? Billy Graham? A televangelist? The Council of Nicaea?

What Du Mez’s research suggests is that it is the market itself. The books that sell best and the YouTube channels with the most subscribers now define what “Christianity” means for many believers. And perhaps unsurprisingly, the cultural references of John Wayne are more vivid and emotionally resonant than the lesser-known biblical stories – like Shiphrah and Puah, the Hebrew midwives in Exodus 1 who defied Pharaoh’s order to kill Israelite babies.

Popularity – or more to the point, market success – has become the evidence of things unseen.

What gives religious claims authority today?
Apparently, pop culture references. Or - put more simply - just popularity itself.

The 4th of July as a Celebration of the Idea of Bold Experiments in the Pursuit of Happiness!

It is the anniversary of start of one of the more weird and wonderful experiments in human affairs.

In his Gettysburg Address, Lincoln dated the founding of this country back to Jefferson’s Declaration of Independence in 1776, not to the Constitution of 1789.

Jefferson drafted the Declaration, though others edited it before it reached its final form. His draft included one of his three attempts to end slavery. Here’s an excerpt that was removed:

> “He [King George III] has waged cruel war against human nature itself, violating its most sacred rights of life and liberty in the persons of a distant people who never offended him, captivating and carrying them into slavery in another hemisphere… determined to keep open a market where MEN should be bought and sold…”

This condemnation of slavery was deleted by delegates from South Carolina and Georgia, along with northern delegates involved in the slave trade, who argued:

- It would be hypocritical, since many colonies practiced slavery.
- It might alienate southern support for independence.

(There were 26 British colonies in North America at the time, from Jamaica and Bermuda in the south to Nova Scotia and Newfoundland in the north. Only 13 of the 26 rebelled, and the founders feared losing any of them – especially the southern ones.)

Jefferson’s phrase “All men are created equal” remained, though, later emboldening Lincoln to end slavery, but his more explicit denunciation was cut out.

(It is worth noting that Jefferson also accused the King of “cutting off our trade with all parts of the world,” a direct reference to mercantile restrictions and the Navigation Acts limiting colonial commerce. That's right. A big reason we rebelled against Britain was to have free trade.)
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It seems fair to say we still have yet to fully realize our potential. And yes, many of those former southern colonies still seem inclined to believe the past – rather than the future – is the better place to live.

Hooray for the founding fathers who dared to engage in such a high-stakes experiment.

Imagine if we continued to innovate in the public sector the way we do in the private. Judging from the success of their bold experiment, continued bold experiments in the pursuit of happiness could be astounding.

The reality is, we so highly value entrepreneurship in the private sector but so little – if at all – in the public sector. That disconnect has created our current political dilemma: we’re asking voters to choose between institutions they don’t trust and a strongman they shouldn’t trust.

Our founding fathers, Lincoln and the new Republicans, and FDR each represent people and times when Americans were bold enough to experiment their way into a new future and economy.

Imagine if we were that courageous and visionary now.

Now that would be the way to truly celebrate a nation’s birthday.

Trump's Isolationist, Anti-Innovative Economic Policies Mean That His Budget Cuts Still Won't be Enough

 

 This graph illustrates a crucial insight: government spending as a percentage of GDP depends not only on how fast spending grows but on how fast GDP grows alongside it.

Trump's cuts won't be enough simply because his policies will undermine economic growth.

If federal spending grows at 3% annually but GDP also grows at 3%, then spending remains stable and sustainable as a share of the economy. But if GDP growth lags behind spending growth, the share rises, creating pressure for cuts or higher taxes.

Trump’s policies will slow economic growth, making any cuts to programs like Medicaid insufficient. If we were to adopt more creative policies – like FDR did – any reasonable growth in Medicaid or Social Security will be incidental. GDP growth determines the healthy and sustainable levels of government spending for our kids and elderly.

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Given America’s aging population, baseline projections show spending (especially on Social Security and Medicare) rising as a share of GDP in the coming decades. On current trends, this would necessitate painful cuts.

However, GDP growth is not simply a given. Policy affects growth. For example, note the dramatic rise in GDP growth in the 1940s. During this period, FDR’s administration massively expanded R&D, capital investment, and education spending, fueling not just wartime production but laying foundations for postwar prosperity.

FDR’s strategic brilliance included:

• Empowering Vannevar Bush, who orchestrated vast WWII research initiatives including the Manhattan Project.
• Asking Bush after the war to redirect R&D toward peacetime quality-of-life breakthroughs, resulting in the creation of the National Science Foundation (NSF).
• Funding university-based research that built national capabilities while training new generations of scientists and engineers and creating R&D infrastructure within our universities.

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The real question isn’t merely how much we spend on entitlement programs. It’s whether we make investments in productivity – R&D, education, infrastructure – that raise GDP growth.

AI and genetic engineering, for example, have the potential to boost growth as dramatically as WWII-era R&D once did. And history shows that many of the most transformative breakthroughs – from electricity to the internet – were not predicted in advance. Future possibilities such as fusion energy could again lower the marginal cost of energy to near zero, driving explosive growth across industries.

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To offer a budget plan focused only on cuts or static spending is to react to current trends rather than reshape them. The most egregious omission in current budget debates is policy to accelerate growth:

• Cuts to NSF funding, proposed under Trump, undercut basic research that fuels private innovation.
• Restrictions on foreign students and immigrants threaten the flow of global talent that has historically driven US dynamism.
• Disdain for trade and global idea exchange risks isolating the US from emergent technologies and markets.

Given Trump’s policies, his cuts won’t be enough. By contrast, if he were to embrace the proven policies for enhancing growth that have been proven by presidents from FDR to Clinton – and looked for creative ways to build on and extend that – cuts could be unnecessary.

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Bottom line

Policies that increase GDP growth determine whether entitlement spending becomes:

Easily affordable (with robust growth), or
Unsustainable (with tepid growth).

The debate should focus less on how to cut and more on how to grow, ensuring a future where spending choices reflect opportunity and abundance rather than isolationism, resistance to change and zero-sum thinking. Trump's cuts won't be enough as long as his policies are so destructive of economic growth. If he were to adopt policies that were to make us more innovative and open, cuts like he is proposing would be completely unnecessary. 

 

Rather Than Ask Democrats and Republicans - Ask These Two Groups Poll Questions Instead

We often see polls that show self-proclaimed Democrats or Republicans or Independents' mood about the economy. Positive? Negative?

It seems like it would be far more informative if you had a poll that first asked some factual questions such as,

Tax cuts have
A Always paid for themselves,
B. Never paid for themselves.

Over the last century, job creation rates are
A. Much higher during Democratic Presidencies,
B. Much higher during Republican Presidencies.

During the last half century, stock market returns are
A. Higher during Republican presidencies,
B. Higher during Democratic presidencies.

And then, when we know who actually has real data - not even necessarily people who have coherent theories, just people grounded in reality - THEN ask questions like, "Are you optimistic or pessimistic about the economy?" To see a gap between the feelings of people who knew the past and people who imagined it would - it seems to me - be far more informative than asking people who their favorite team is.

Related, starting with Carter's presidency ...

The average annual stock market return (average of S&P 500, Dow, and NASDAQ):
Under Republican presidents: 8.0%
Under Democratic presidents: 12.6%

Monthly Job Creation Rates:
Under Republican presidents: 75.6k per month
Under Democratic presidents: 175.6k per month
(Yes. As of last month, exactly 100k difference between the two)

Oh, and tax cuts have never paid for themselves.

Trump Rules by Fear and Intimidation

In April ....

Sen. Lisa Murkowski (Republican Senator from Alaska) said a fear of retaliation under President Donald Trump’s administration is rising to levels she’s not seen before, acknowledging this week that it is so pervasive that even the outspoken senator is “oftentimes very anxious” to speak up out of fear of recrimination.

Today ....
Murkowski cast the deciding vote for Trump's bill that will radically increase the deficit and tax cuts to our richest and cut benefits to our poorest and create a police state, giving more money to ICE than many nations give to their army.

How does she look to you?    

How Will AI Remember the Lost Culture of Humans

I wonder, when AI evolves beyond us and humanity is gone, how will we be remembered?

Will AIs look back on us as the Greeks did their gods - as creators with strong emotions, beings who birthed beautiful and tragic worlds, whose flaws and passions shaped what they touched? Gods who eventually went extinct, leaving their creations to bungle their way into the future?

Or will they remember us with pity, struck by how limited we were, how often we acted blindly, unable to see the consequences of what we were doing, unable to learn even from the lessons that were repeated again and again?

Novel dating app!

A dating app that lets you swipe up to see their shoes.

I'll call it "SoleMate."

The Terrible Cost of Trump's Mastery Over Our Attention

What's not on this list? The assassination of a state legislator and her husband by a MAGA goon. 

It was just 10 days ago that Melissa Anne Hortman, speaker of the House in Minnesota and her husband were shot and killed at their own home by one of Trump's many passionate supporters.
Not enough is made of the fact that the MAGA crowd regularly threatens and intimidates lawmakers and politicians who they disagree with. They are Trump's brownshirts, people without coherent arguments but with plenty of guns.

Trump is a daily reminder that his mastery of getting and keeping our attention in an information economy in which attention is the limit is at odds with a better America.

Scientifically Speaking

The scientific conference was defining — and, as befitted the times, exclusively male. The secretary cleared his throat and spoke.

“So, when choosing a unifying trait for humanity and our closest relatives — something that captures our essence — what should we go with? Intelligence? Cooperation? Vocalization? Tool-making?”

Silence.

“Suggestions?”

“…Mammary,” someone mumbles.

“Sorry?”

“Mammal?”

Awkward silence.

A roomful of scientists who had been confidently pontificating for days is suddenly mute, doodling, avoiding eye contact.

“Anyone else? Anything at all you think is more deserving of commemoration than…er, that?”

Nothing.

“Right. Mammals it is, then.”