27 January 2021

Biden's Climate Change Proposal That Could Have the Longest Lasting Impact

Biden is making sweeping proposals for dealing with climate change. One element of his proposal is to make the federal government a big consumer of alternative energy.

The US government has helped to accelerate a couple of major developments.

One was the standardization of parts. In the Revolutionary War, Eli Whitney was given a lot of money to develop interchangeable parts. The contract didn't work out but it helped advance this goal. Later, in the Civil War, the north churned out 1.5 million rifles with interchangeable parts and the tooling, processes and skills for that quickly translated into the post-Civil War boom of new products and factories that so transformed daily life.

Kennedy's space effort similarly funded research and development efforts that spilled into the private sector. By the end of the 60s, the space race employed 400,000 people - many wearing pocket protectors and learning how to work on and manage large, technically challenging projects. Projects like these spilled into the Cold War and billions were spent to develop weapons and communications technology. And those efforts - from technology to skills developed in engineering and project management - in turn spilled into the private sector.

It's worth remembering that the Berlin Wall fell in November of 1989. The 1990s turned into a dot-com boom. Many engineers and software developers who had developed skills under government contracts for DoD became part of the new IT industry. A friend of mine - an engineer from a defense firm - went on to co-found a few companies after the fall of the Berlin Wall.

One of the things that gets easily lost in the talk of technical innovation is this: it takes a long time and is very risky. If you're going to develop a new technology or method, you need years. Interchangeable parts took decades to develop.

What the government provides that is fabulous for the development of new technologies is a steady, patient customer with deep pockets. It is hard to overestimate the long term impact of giving promising contractors enough time to develop deep skills and technology that could ripple into the future for generations.

What Biden is doing is not new. Funding the development of important technology literally dates back to the days before we had won our war of independence. What he's doing isn't new but it could result in new technologies, processes, and value.

26 January 2021

How to Make Unemployment Fall and Wages Rise After the Pandemic

The oughts - the decade from 2000 to 2009 - were awful. After having created 18 to 22 million jobs per decade in the last three decades of the 20th century, the American economy destroyed one million jobs in the oughts.





Starting the new century with an excess pool of 20 million employees meant wage growth collapsed.

During the 1990s, median weekly wages grew $23.
4Q 1990: $312
4Q 1999: $335

Over the next fifteen years, weekly wages grew by just $1.
4Q 1999: $335
4Q 2014: $336

The oughts began and ended with a recession. After the 2008-9 crash, congress was pretty timid about deficit spending and the recovery was gradual. 

In the first half of the 2010s, unemployment came down; in the second half of the 2010s, wages began to rise. For the first time since 2000, unemployment fell below 4% and – as they had in the late 1990s - wages began to rise. They rose $31.
4Q 2014: $336
1Q 2020: $367



What do I make that mean?
1. When the unemployment rate is high, wage growth is low. You don’t have to offer good wages to hire people off the street.  When the unemployment rate is low, wage growth is high. You do have to offer good wages to people working at another company.

2. You can legislate a higher minimum wage. To raise the median wage, you need to aggressively lower unemployment.

Lowering unemployment in the 2020s is going to be tricky, though. Or, rather, the old tricks are going to be a problem.

Lowering interest rates encourages people and businesses to borrow (people borrow to shop and companies to hire). The problem now is that real interest rates are already negative. It’s easier to lower interest rates from 4% to 2% than it is to lower them from -1% to -3%. Monetary policy is getting more creative but it's harder to do in this age of negative interest rates.

Fiscal policy - running a deficit by lowering taxes and spending more - is also a proven way to lower unemployment. That’s easier to do when your deficit is $300 billion than when it is $3 trillion (as it was last year). Again, tricky.

The good news is that the expected drop in COVID cases and deaths this year should naturally lower unemployment. To get back to an unemployment of 4% or lower though – a rate that seems to effectively drive up real wages – could take some novel policies. 

Faithful readers will be unsurprised to hear me say that my recommendation is to pump billions and billions into startups. There are a variety of ways to do this but if we do, we will make workers scarce and jobs plentiful. What happens to the price of something scarce? It goes up.

25 January 2021

The History and Future of Venture Capital (and what might be possible with truly large amounts of venture capital)

Venture capitalists offer knowledge, connections and - of course - capital. 

The initial American model for venture capital was whaling. The average voyage was about 4 years and that venture was expensive. The returns to whaling ventures look very similar to modern day venture capital returns. This graph from Tom Nicholas' VC: An American History compares returns to modern venture capital to returns to 19-century whaling ventures. For instance, about 2.5% of whaling ventures and about 1.2% of modern VC funded startups yielded returns worse than negative 25%. 1.0% of whaling ventures and 1.2% of VC backed ventures yield returns between 81% and 100%. 19th century whaling and 21st century startups have fairly similar risk - return profiles.



The classic American novel Moby Dick was published in 1851. By the end of that decade, oil had been discovered in Pennsylvania and this new kind of oil eventually replaced whale oil as lubricant, source of illumination and (once the car had been invented and they finally had a use for the gasoline that had long been a waste product in oil refining) energy.

As the oil industry shifted from whale oil to crude oil, the families who had made fortunes in whaling, had already been investing their money in textiles. New Bedford had been a whaling town; the returns from whaling were then used to fund a new kind of high-risk, high-return venture: New Bedford became a manufacturing town.

Northern California - home to the gold rush a decade before oil was discovered in Pennsylvania - also had experience in high-risk, high-return ventures. Most gold mines failed but some made you rich. And the net effect of mining was transformative: in 1846, San Francisco's population was only 200; by 1852 it was 36,000 and tens of billions in gold had been mined in California. San Francisco was founded on a boom economy and the notion of high-risk, high-return was in its DNA.

Leland Stanford made his fortune building a railroad to California. When he founded Stanford University in the Bay Area, he stipulated that the land around campus could never be sold. And it was a lot of land. Stanford has more acreage than all but one other university in the world. Eventually, university administrators realized they could sublet land on campus. Fred Terman - the visionary professor and then dean who introduced his students Hewlett and Packard to each other with the suggestion that they start a business together - realized that Sand Hill Road could be sublet to venture capitalists who might fund startups led by Stanford graduates. At that time there were very few venture capitalists anywhere in the world, much less on university campus. Sand Hill Road is now to venture capital what Wall Street is to stocks.

In 1979, a new law was passed that essentially said it was prudent for investors to put some portion of their portfolio money into venture capital. Suddenly, capital from pension funds flooded into the venture capital industry which greatly expanded and the Bay Area along with it. This venture capital has changed American business.

In his 2019 book Secrets of Sand Hill Road, Scott Kupor claims that since 1974, "42% of public companies are venture backed, representing 63% of market capitalization. These companies account for 35 percent of total employment and 85 percent of total research and development spending."
Which, he points out, is "pretty good for an industry that invests about 0.4 percent of the US GDP.

Apple is the most dramatic example of how much value venture capital can create. Between 1978 and 1980, Apple raised about $3.5 million in capital. In 2018, Apple's market capitalization hit $1 trillion; last year it hit $2 trillion. (Things had become more expensive than when Hewlett and Packard started their business in a Palo Alto garage with $595.)

Now we're at a curious point. In the 1970s, aspiring entrepreneurs competed for startup capital from venture capitalists. Today, venture capitalists compete to invest in entrepreneurs. 

Capital used to be scarce. Now it is entrepreneurship. The limit has shifted. In 2020, 287 funds raised $69 billion, up from $56 billion in 2019.

$69 billion is a paltry sum. Household net worth is about $125 trillion.

We have funding enough to risk on any number of startups that could create an abundance of wealth and jobs. Capital is not the limit: entrepreneurship is. 
And if we were successful at producing a growing number of aspiring entrepreneurs, billions and billions more could come into VC funds. 

Venture capital has shown us how much impact a small amount of capital can have; imagine what we could do with a large amount of it. 

23 January 2021

Why Conspiracy Theories Have Become the Drug of Choice for Trump Supporters (and what this has to do with a new aristocracy of education)

In his inaugural speech, Joe Biden referred to "this uncivil war."

One of the weirdest things about today's conflict is the role of conspiratorial beliefs. It is not enough to refute global warming; Trump supporters believe that Chinese troops are in Canada and Mexico, poised to invade the US, that the military is actually running the country now and Biden is simply a figurehead, that COVID is not real or if it is real it is the product of a global conspiracy to dethrone Trump and that the world is run by pedophiles. As it turns out, global warming denial was simply the gateway drug to a vast web of odd conspiracy theories that millions find compelling. It makes you wonder what kind of republic we can sustain when millions reject facts and embrace conspiracies.

I have a suspicion about one reason this has happened.

In 1860, we had an aristocracy of race in this country. Blacks and natives had fewer rights than European immigrants - and in some cases had no rights. It's complicated and drawn out and was tragically derailed by Lincoln's assassination but the Civil War was about ending this aristocracy of race just as the American Revolution a century earlier was about ending the aristocracy of royalty.

Today we have an aristocracy of education, of intellect. (And yes – still a strong residue of the aristocracy of race.) We are in an information economy and the people who can transform data into economic value have power in it. And as with the aristocracies of royalty and race, it is unfair and largely determinant by an early age.

By second grade, there is a gap of four years between the top and bottom students. Years ago, we had darling family spend a few days here. He's an MIT grad. She's a graduate of our California university system. Their preschooler was already hungry for - and fairy adept at - academic exercises of various kinds. My daughter was chuckling the other day about a video call they'd had with a family with children 4 and 2. The dad is a physician and the mom a clinical psychologist. The 4-year-old was obsessed with the latest word he'd learned: supercalifragilisticexpialidocious, the very definition of polysyllabic. The 2-year old's favorite word is ukulele. Meanwhile, my wife who teaches in a neighborhood with many poorer families in San Diego has kids show up for class who've clearly been talked to rarely, for whom language is more of a mystery than a familiar comfort, who’ve experienced little that could be classified as academic prep. By second grade, some kids are two grades behind and others two grades ahead, a gap of four years in second grade.

As Alfie Kohn (author of No Contest and Punished by Rewards) points out, teachers have this tendency to throw out questions designed to provoke competition. "Who can tell me ...?" "How would we approach this problem ..." And by no later than fourth grade, the kids in the class know which two or three kids have the best shot at providing the answer that will make the teacher happy. School is about grading kids, about sorting them into different lanes. And then we invest differently in those kids, admitting some into UC Berkeley and admitting others into community college, both community investments but of very different magnitudes.

And the whole time we are telling all the kids, "If you want to get ahead you had best go to college. Get into a good university and do well in school and you'll do well in your career." That would be a more inspiring message if the kids in class didn’t already know which kids had a shot at that future and which did not.

The most academic kids may get a tuition-free education at the state's top school. The least academic kids - who have heard the same "go to college if you want to do well" admonitions - may not get into a state university at all. If they take the advice to get a college education to heart, they might find themselves spending a lot of money at a private school that doesn't have the same, tough admissions requirements. As it turns out, the admissions requirements are partly about predicting which kids will actually be able to complete the degree. Without meeting those admission requirements, a lot of kids get into college programs but don't complete them. So, these kids who've never excelled in school and have been turned away from the government subsidized universities have spent thousands pursuing a degree that eludes them. They're left with the worst of all worlds: carrying a heavy load of student debt while making no more than they likely would have without taking college classes. Even more frustrating is the plight of the kids who doggedly completed their degrees while taking on a lot of debt only to find that their job options haven't changed given the nature of their degree or the college they got it from.

Meanwhile, those who graduated from the best schools and with the best educations are thriving. They are working a lot of hours but are engaged in meaningful work that pays incredibly well. More than 166,000 Americans collect wages of more than a million dollars per year - more than 650,000 who make more than $500,000. Thomas Jefferson believed that the natural aristocracy was composed of smart people. That aristocracy now runs our country.

So, we've created a new, information economy in which we reward bright, educated workers. What might we expect of the folks excluded from this economy, folks who literally were not invited into its entryway through university education?

Can we be surprised that in the face of experts telling them about the long-term consequences of a reliance on fossil fuels, explaining how masks, seat belts, and cutting back on red meat and cigarettes saves lives they might find YouTube videos alluring when those videos tell them that all those experts are deluded? Those kids who have been made to feel worse about themselves since fourth grade now feel enlightened. The conspiracy theories give them a sense of superiority that public school never did.

There is a tangle of problem-solving to get us past the point that a reality TV star can convince millions that experts are wrong. I think that one big shift has to be creating an economy less dependent on the academic success that is largely predictable by age 7, of doing away with this aristocracy of intellect and education.

22 January 2021

Capital Automates Jobs - Entrepreneurship Creates Them

I was in Hanoi in the 1990s as part of a group that put together a trade show featuring American companies. I was told that it was the first time that American and Vietnamese flags had flown side by side in Hanoi.

As we walked into the convention hall each day, I wondered about the grounds. The grass was long and straggly. Then, just a couple of days before we were to open, at least half a dozen Vietnamese women in those conical hats they call a non la were sitting around in small groups using instruments not much larger than scissors to cut the grass. They were happily working together and chatting and within a couple of days the grounds were beautifully groomed. At this time, Vietnam had almost no capital and per capita income was hundreds of dollars per year. It may have taken a couple of hours for one lawnmower to do the work that took these women a couple of days, but capital was expensive and labor was cheap.

Years later, I was with a client at a mine in Michigan. The pit was enormous and massive, heavily loaded trucks were slowly driving up the steep walls. The trucks carried 350 tons of ore. The executives I was working with told me that when their careers began decades earlier, the biggest trucks hauled only 25 tons. One driver in these new trucks was more productive than a dozen drivers had been decades earlier.

Capital obsoletes manual labor. It always has. It always will. And of course this is obscured by the fact that capital enables us to do tasks that we could not do without it. Or more precisely, it makes certain tasks affordable and thus something we're able to do for middle class clients and not just rich ones. Capital enables a flurry of market expansion, innovation and entrepreneurship that creates jobs but capital also ruthlessly eliminates jobs through automation.

Detroit's population has halved since the 1970s. Politicians like Sanders and Trump will tell you that jobs in the auto factories have gone to places like Mexico and China. The facts contradict their claims. 85% of jobs lost in manufacturing since 1980 have been lost to automation and only 15% have been lost to places like Mexico and China.

Meanwhile, Elon Musk is now worth about $180 billion, wealth largely created through Tesla - a car company. Detroit used to be home to the auto industry but they continued to believe the game was running a company rather than creating them, focusing on operational excellence rather than entrepreneurship. Detroit could have become a hub for entrepreneurship and innovation that would have created the wealth that Musk instead created on the other side of the continent. Think about what would have been possible if Detroit had created mechanisms for its employees to create wealth, not just drive down costs but drive value up. Because Musk didn't go to Detroit where the world's leading automobile minds once lived; he founded Tesla in San Carlos - between Palo Alto and San Francisco. Why? This was the area most experienced with and able to support entrepreneurship. When you're innovating, it isn't necessarily the old models you need to master; it is entrepreneurship itself. And if you're working around Google's campus in that same general area, you will see a constant stream of Google's self-driving cars with guys sitting behind the steering wheel conspicuously holding clipboards (that is how they are capturing data? Really?) rather than steering wheels. (They are tiny cars. I think they are powered by search engines, driven by the quest for knowledge. But I digress.) Apple is also developing self-driving cars nearby. In a parallel universe, the big breakthrough came in self-driving technology before the break in electric car technology and Google and Apple are where Tesla now is in regards to market share and capitalization. But in that universe, too, Detroit didn't lose its jobs to foreign factories; it lost its jobs to domestic innovation and entrepreneurship.

Capital has always steadily automated jobs. When our economy is creating jobs at a great pace as it did from about 2010 to 2019, it creates about 2.2 million jobs each month and destroys about 2 million jobs each month. Because of automation, bankruptcies, layoffs, people quitting, getting fired or retiring, the economy sheds about 2 million jobs a month. Meanwhile, because of entrepreneurship and growth, the economy creates about 2.2 million jobs per month. The net is an average of about 200,000 new jobs monthly.

Putting aside periodic recessions, a loss of jobs is never because of the 2 million jobs the economy is destroying each month. That's a constant. If on net we lose hundreds of thousands of jobs in a month, it means that our levels of job creation did not stay ahead of our levels of job automation and destruction.

The answer to full employment is not protection from trade or capital. The answer is more entrepreneurship and innovation.

How Farming - and Work More Broadly - Changes as the Economy Shifts from an Agricultural to Industrial to Information Economy

To say that we've moved from an agricultural to industrial or industrial to information economy is not to say that we didn't still have farmers in the industrial economy or factories in the information economy.

One, when the economy shifts the source of new jobs and wealth shifts. Are you creating new jobs and wealth in farming, factories or cubicles?

So the first question in regards to policy is, Where are we creating new jobs and wealth? In the early 1800s, the answer to that question was in land-based industries like farming, forestry, fishing (including whaling) and mining. In the early 1900s, the answer was in manufacturing and retail (to sell those mass manufactured goods). It's a waste of money to resist these shifts; by contrast, you get a huge return on money by investing in these shifts.

Two, there is the question of how anyone in any sector works. A farmer in 1820 worked very differently than a farmer in 1920 who worked very differently than how one worked in 2020.

One of the many reasons agriculture employs only 1 or 2% of the workforce now is that it has been transformed twice: by the capital of the industrial economy and by the IT of the information economy.

The average farmer today has about a half million in capital for tractors and machinery. That would sound like crazy talk to farmers in 1820.



A few years ago, a young guy from northern Saskatchewan spent a couple of nights with us. He had acreage and had done really well the previous year. Some extreme weather event (I can't remember if it was drought or flood) had screwed up India's crops. As he was planning what to plant, he could easily see this news and what it meant for the global market price for chickpeas, so planted those and was able to sell them at a good price.

Now think about how extraordinary this would seem to a farmer in 1920. He is sitting in northern Saskatchewan yet knew about the crop failures in India about as quickly as anyone in India. Not only that but he's able to find a market for whatever seed and knowledge he needs about the timing of planting, any special fertilizers, etc. He might be farming but he's part of the information economy. We still call it farming but it has almost nothing to do with the job of a farmer in 1920, much less 1820.

Similarly, about 20% of today's factory workers are engaged in jobs like programming robots; we still count them as factory workers but the folks punching timeclocks in 1940 would not recognize what they're doing as factory work and the other jobs have greatly changed as well.

The popularization of entrepreneurship will change work again. It already is. As machinery automated more manual work, more workers were free to (forced to?) move into knowledge work. As AI automates more knowledge work, more workers will be free to (forced to?) move into more entrepreneurial activities. Just as the industrial economy meant that nearly everyone was using unprecedented amounts of capital and the information economy meant that nearly everyone is using unprecedented amounts of information technology, the entrepreneurial economy will mean that everyone will be more involved in the creation of new systems, new products, new markets and new wealth. And depending on how we classify their jobs, we may even still call them farmers, factory workers and knowledge workers.



21 January 2021

How Pragmatism Transformed American Culture and Politics

Watching the folks who stormed the capitol stand before the Senate floor and denounce communists and globalists in early January I thought, "Those poor guys. They can't even eat spaghetti or ramen. Rejecting products and culture that isn't 'American' must make it so tough on them. So many globalist temptations to avoid, from Korean-made TVs and Chinese computers to Jewish delis and Mexican taco trucks. Imagine having to construct your own smart phone out of American pine."

Pragmatism became the worldview of the many knowledge workers who define the new information economy in the 20th century. (And most Americans will tell you that they're pragmatic without even realizing that they are describing a philosophy. You know it is a dominant philosophy when folks cite it in the same way that they'd say, I'm just being realistic.) Less obviously, pragmatism became a challenge to the universal culture assumed by Enlightenment thinkers. The shift from Enlightenment thinking to Pragmatism did not just change how people worked; it changed the notion of realities more broadly, from culture to community and nation. Some people still haven't gotten over that.

The culture inherited from the founding fathers was thought of as White, Anglo-Saxon and Protestant, or WASP. That simple vision was partly broken down by mass immigration and partly by the widespread adoption of pragmatism.

The pragmatist William James wrote of a universe of eaches. Clark Kerr, who helped to define and lead the University of California system, argued that it was better to think of California’s college and university system as a multiversity rather than a university. Embedded in each was this notion of specificity that defied generalities.

Pragmatism did not just create a world full of knowledge workers, a wide variety of specialists. It created - or probably more accurately - gave license to - multicultural America. (One of the more curious measures by which our culture has changed is simply this: the Supreme Court of this country founded by WASPs now does not have a single Protestant on it; the court has 7 Catholics and 2 Jews.)

Little Italy and Chinatown are areas in a number of cities around the country. Spaghetti became popular around 1900 as more Italian immigrants came to the US. Sushi began to be served about the same time (but didn't become really popular until the 1970s). 185 different languages are spoken at home in Los Angeles.

The US still has no official language. The question of what language ends up on billboards is - of course - a pragmatic one. In sections of San Diego with more Hispanics, some of the billboards are in Spanish. If you want to sell to a group, you want to make it easy for them to hear about your product.

It's funny how nothing is ever completely settled. You might think it obvious that this country of immigrants is clearly multicultural but there are still people who debate this, who think that there is something called American culture. The universal truths that Enlightenment thinkers conceived of as ideal have broken down into more pragmatic solutions of local cultures, some of which spread and some of which die out.

Pragmatism was handmaiden to specialization and multiculturalism. The first transformed the American economy. The second transformed its politics. What we have seen in the last four years in the Trump presidency is a reaction to that, and attempt to reject what is already deeply embedded.

How Pragmatism Changed the World and Why It's No Longer Enough

A really good worldview is nearly invisible to us. We look through glasses, not at them. A worldview that a community has adopted is similarly both invisible to us and yet shapes what we see.

The US was founded by Enlightenment thinkers. The epitome of this was Isaac Newton's conception of the universe. The apple that falls from the tree, the moon that orbits the earth and the earth that orbits the sun? They are all governed by a universal law of gravity that applies in your orchard, in the orbit of the earth or sun or in any part of the universe.

As it turns out, though, universal truths are hard to conjure up. Plus they are pretty cool but not always practical. For most of what is going on in our lives, local truths are sufficient. It is more pragmatic to simply find a solution to this problem I now face than it is to search for universal truths. To be pragmatic is now so … well, pragmatic that we don’t even think of it as a worldview. It is just the way things are. Which is one way you know that it's a philosophy we use rather than examine.

A philosophy is never just a way we see the world. It’s how we shape it. Enlightenment thinkers overthrew the old world of priests and kings and replaced it with scientists and democracy. Pragmatists didn’t just say, “Well, don’t try to solve all the world’s problems, just focus on this problem here.” They created universities that had majors and areas of focus that didn’t pretend to be inclusive of all problems and solutions but instead focused on one area. Don’t look at all of science; focus on biology. Don’t study all of biology: choose either microbiology or macro-biology. Pragmatists didn’t just focus on the problem at hand. They focused on one small area of the world’s problems and reality. And we created the institutions to support that sort of focus, that sort of fragmentation of the world, that sort of specialization.

Louis Menand defines pragmatism as the belief that beliefs are instruments that we use to get what we want out of the world and not absolute abstractions that are out there somewhere that we have to discover. A belief is like a fork. It works or it doesn't. It doesn't exist as an abstraction floating out in space with Newton's law of gravity.

The word pragmatism wasn't found in print until 1898. William James, Oliver Wendell Holmes, Charles Pierce, and John Dewey did the most to define pragmatism. Pierce was perhaps the first person in the world to testify in court on probability - statistics and probability being the tools for making sense of a world with uncertainty. Unlike Newton's universal laws that held in all instances, pragmatists embraced the notion of probability. Oliver Wendell Holmes described himself as a betabilitarian - willing to make bets on particular beliefs. These beliefs didn't have to always be true, much less universal. It was enough that acting on them would enhance your probability of being right. James wrote about the cash value of an idea, what it was worth to hold it. It's no wonder that corporations were soon filled with pragmatists.

The modern university was the first obvious place where pragmatism emerged. William James was at Harvard and helped to change education in a way that that quickly spread beyond Harvard, it becoming an idealized model of higher education that universities everywhere try to emulate to this day. Corporations, too, became places that employed graduates from the universities and specialization became more important as R&D became more important. Edison was of the generation that could tinker their way into inventions like lightbulbs. The generation of inventors at Bell Labs around the time of WWII were among the first who had to know scientific principles before they could make products like satellites, laser beams and transistors. This required an odd tension between general principles and local problem solving. Their products became so sophisticated that what was true of one generation of computer chip, say, might not be true of the next. Different materials meant different design requirements and nobody stopped to develop a universal design but instead focused on getting a new or next generation product out. Ideas - like products - could be successful at one point and obsolete the next.

Pragmatism is the philosophy of knowledge workers. Like Enlightenment thinking before it, it won’t be replaced. It’s a fabulously effective worldview. It’s just not enough. It won’t be replaced but it will have to be supplemented.

One of the key differences between how a knowledge worker thinks and how an entrepreneur thinks is this. A knowledge worker asks, “How do I do this?” An entrepreneur asks, “Who could do this?” If you’re trying to create some whole – a product, a company, a market – you can’t possibly know all that is involved. You have to bring together a collection of people and coordinate their actions into some larger whole. They might be pragmatists but you have to think about the system you’re creating. And we’ve seen that in the entrepreneurship of the 20th century, this emergence of more people gaining ever bigger rewards for creating systems (companies) that employed teams of knowledge workers.

What might be different in the 21st century? The teams the entrepreneur is assembling have to – themselves – adopt systems thinking, look at emergent phenomena, interactions, and the unintended consequences that emerge from best efforts. Systems dynamics are too complex to yield to the analysis of one person. One of the many things that it’ll mean to popularize entrepreneurship? We’ll need to popularize systems thinking, using it to supplement pragmatism for entire teams



20 January 2021

The Move From Scarcity to Abundance: The Shift in Thinking from the Founding of the United States to Today

The simplest expression of zero sum thinking is "There is only so much."

From its founding until the rise of Abraham Lincoln and the Republican Party, the US was largely defined by zero-sum thinking. Land was the focus of policy and we engaged in continual warfare against the first nations of people who were here, fighting them and the British and the French and the Spanish for the land of this continent. War, genocide, and slavery were natural consequences of this focus on land and zero-sum thinking.

How did Republicans end that? Well, not abruptly. But they did shift the focus of progress from land to capital. There was in this still plenty of residual acting that came from a zero-sum thinking, but capital meant that one had more options than simply fighting over acreage, gold mines and oil wells. One could also create new products, factories and markets. Gradually a variable-sum, a win-win thinking came to shape more of the economy, more of our behavior.

By the middle of the 20th century, a new kind of economy was clearly emerging. This was an information economy based on knowledge, knowledge workers and their information technology. Again, this did not mean an eradication of win-lose, or zero-sum thinking. It did mean that we increasingly had options, though, to think differently, to act differently, to jointly create value rather than fight over value discovered on the continent in the form of forests, farmland, mines and oil deposits.

Knowledge work at its best generates lots of options, an abundance of possibilities and potential solutions. The big pharma clients I've worked with who develop new drugs may literally start with thousands of possible molecules. They have a target site in the body - a region of brain or kidney, the blood or nerves. And they first generate models of the molecules that might become a drug to predict how it'll interact with a particular form of cancer or virus, say. And they gradually downsize this abundance of molecules into a few through simulations and models and then begin to manufacture and test some. It takes about a decade from the time they start this process until they have a drug you can pick up at CVS but it starts with abundance and ends with some exotic drug name for a condition that they have not long understood and finally have some way to ameliorate. You start by generating thousands of options and end by finding one solution that is safe and effective.

Zero-sum thinking is best expressed with the phrase,
"There is only so much."

Variable-sum thinking, win-win thinking starts with the same phrase but jettisons the "only," leaving the expression as simply,
"There is so much."

If zero-sum were reality, the fact of the global population being 7 billion more than it was in 1500 would mean that we'd be more impoverished than at any time in history. Instead, humanity enjoys more prosperity than any generation before. What is reality? Variable sum. We can act in ways that create abundance for all or just a few or poverty for all or just a few.

Getting rid of the only means being open to different approaches, different philosophies, different goals. The US and Canada are the most diverse communities on earth by some measures. Farmers from various regions ended up as neighbors and shared techniques and ideas from the countries they'd come from and out of that developed new methods. Now their great grandkids collaborate in office parks or zoom calls. Out of that constant interplay of generating an abundance of possibilities from which they shape a workable solution comes new products, new companies and industries and new wealth and jobs.

"There is only so much" or "There is so much?"

Which one becomes your reality depends on whether or not you can get rid of the only, how open you are to the influence of data, other's ideas, possibilities and a willingness to discard your hypotheses once they shipwreck on the shore of reality.

Reification as an Act of Leadership: How Coming from A Small State Could Enhance Biden's Presidency

Biden is the first president from Delaware. I had a client there and had to fly into Philadelphia, Pennsylvania or Baltimore, Maryland and then drive to Wilmington. Delaware is apparently too small to fit a runway long enough for anything more than a Cessna.

On one of my first trips driving from Philadelphia to Wilmington, I not only missed my exit but drove straight through the state and into Maryland before I realized what was happening. It only takes about 20 minutes to drive through the state on the 95.

Here in California, we have two senators and 53 members of the House. Delaware's population is so small that they have two senators and only one House member. It's actually easier to get elected to the Senate than the House in Delaware.

I imagine that knowing nearly one percent of the state's population by first name would make a difference in your style of leadership.

Someone used the word reify the other day. I had to look it up. It refers to the act of making something abstract more concrete. I suspect that seeing his state's population as real people will help Biden to reify policies, helping him to think about how this policy might affect that life. This might even be one way to define good management: the ability to zoom into individual lives and back out to large communities, to at turns get abstract and then personal, reification as important to leadership as vision and execution.

19 January 2021

Muslim Grandmas Could Be Reunited With Their Grandchildren in 2021

I was working with a team in Silicon Valley that was developing a surgical robot in 2016. As is typical of teams full of specialists, it had folks from all over the globe.

An Italian on the team told me one day at lunch, "I kind of don't want Trump to win but I kind of do want Trump to win."
"Why?"
"Well, if you elect Trump it will make us Italians look less ridiculous for electing Berlusconi."

One of the robotic arms specialists was from Iran. Trump's Muslim ban meant that his mother could not come to visit his children. I said, "I feel like at least one American should apologize to you for this. I'm embarrassed at Trump's ban. I don't even see how it is constitutional. I'm sorry."
He was a gentle guy and he shrugged and said, "Well, we've had crazy leaders too."

Tomorrow Trump's Muslim ban ends, which was - among other things - another type of family separation program. There will be thousands of women from Muslim countries who will be able to visit their American grandchildren before the year is over.

And it will probably be awhile before we roll our eyes again at Italian voters.

Some curious facts about inaugurations

44 men have been president.
27 of them had died before they reached Joe Biden's age.


****

The country has had four baby boomers in a row serve as president. Clinton, W. Bush and Trump were born within 66 days of each other. (Obama is about 15 years younger than them but still a Baby Boomer.) Curiously, rather than move forward to one of the next generations like Gen X or millennials, we've elected the first (and certainly the last) member of the Silent Generation (born between 1927 and 1946).


****

Trump was the first president in history to use these words in an inauguration speech:
ignored,
tombstones,
rusted-out,
carnage,
robbed,
stolen,
stealing,
ravages,
bleed
If only he'd given us some kind of clue about the sort of presidency he had planned.


****


George Washington was sworn into office wearing a sword (but fortunately he did not have to use it).

Thomas Jefferson was the first president sworn in who did not wear a powdered wig.

John Quincy Adams was the first to wear pants when being sworn in. (I'm tempted to leave it at that but it may be worth clarifying that the presidents before him wore knee breeches, the capri pants of 18th and early 19th century gentlemen.)

Teddy Roosevelt - inaugurated in 1901 - was the first to wear the modern tie. (And the first president to have his voice recorded.)


****

Calvin Coolidge - who presided over a chunk of the roaring twenties - was the first president to have his inauguration broadcast over radio.

Bill Clinton - in 1997 in the midst of the dot-com boom - was the first to have his inauguration streamed online.

New media seems to augur well for the economy.


****

The musical artists who performed at Obama's inauguration included Springsteen, Stevie Wonder, Beyonce, Shakira, Garth Brooks, Herbie Hancock, Usher, and U2.


The musical artists who performed at Trump's inauguration included Toby Keith, Lee Greenwood, 3 Doors Down, The Piano Guys, DJ RaviDrum and The Frontmen of Country featuring Tim Rushlow, Larry Stewart and Richie McDonald.

17 January 2021

Managing Desire - Creating the 20th Century Consumer to Support 20th Century Productivity

In 1754, Rousseau wrote of the French,
"You aren't so rich that you have become numb to true happiness because of the distractions of luxury nor poor enough to need any financial help."

Rousseau thought French incomes at the dawn of the Industrial Revolution were at a Goldilocks' "just right" level. 

Per capita GDP in France in inflation adjusted dollars?
1750: $1,766
2016: $37,124.

The 18th century French would have to work all year to make as much as the present day French make in 2 or 3 weeks. Rousseau thought the French were perfectly satisfied; we would think of them as impoverished.

Obviously we had to create modern factories to live like we do today. Less obviously, we had to create modern consumers to live like this.

John D. Rockefeller's wife once shocked a friend by opining that a woman only needed two dresses in her wardrobe. The children wore hand me downs and John Rockefeller Jr. once reported that with three older sisters, he wore dresses until he was 8. Even the world's richest man thought it unseemly to spend money freely.


Attitudes like Rockefeller's were a big problem in the early 20th century. It was not enough to create factories that made more. You had to create consumers who bought more.

I often talk about how the information economy is characterized by knowledge workers who use their brains to manipulate the symbols of things rather than their brawn to manipulate actual things. But information technology has as much to do with advertising - alerting us to what is missing in our life - as knowledge work. Facebook and Google have created vast wealth by selling ads, ads that remind us that we do not, as yet, have everything we need. If we all suddenly believed Rousseau and thought that we needed to spend only $1,766 a year, the economy would collapse.

And that actually happened after the roaring twenties. The causes of the Great Depression were complicated but a big obstacle to recovery was stimulating enough demand to create jobs for everyone. It took a world war to create enough demand to reach full employment. After the war, the factories that had produced tanks and planes at record numbers to fight fascism were transformed to produce cars and TVs at record numbers. Consumption was helped a great deal by TVs, a device upon which you could advertise TVs (and so many other products).

Once American producers and Federal Reserve Chairs learned how to stimulate demand to keep pace with rising productivity, the economy became less dangerous. Unlike Rockefeller, we've made our peace with consumption now, finishing each year with a holiday inspired flurry of consumption (the mas' in Christmas apparently now referring to mass manufacturing and mass consumption rather than traditional Mass). Between 1900 and 1933, the American economy was in recession 48% of the time. Since 1933, it has been in recession only 14% of the time. We've learned a lot about how to manage factories, financial markets and economies. We've also learned a lot about how to manage and stimulate demand or - as medieval clerics would say - desire.

The High Value of Working Online From Home in the 1870s

Working online from home?

John Davison Rockefeller installed a telegraph line between his office and home when he was in his 30s (in 1870s). He worked from home ~3 afternoons a wk.

It didn't hurt his productivity. Net worth the same % of GDP as Rockefeller's today would be about $400 billion.

COVID's Exponential Spread in the Spring of 2020 Will Become an Exponential Contraction in the Spring of 2021

Persian new year is the first day of Spring. For 2021, it will seem like the Persians have it right.

Currently, we're losing about 3,000 per day to COVID. That is forecast to rise by the end of January to somewhere between 2,500 to 4,500 per day. The vaccine rollout will radically change things within a few months.

By the last day of February, daily deaths will fall to about 1,500 to 2,000. The death rate will halve in February. By the last day of March, daily deaths should fall to about 500 to 800 per day, falling to nearly a third of what it was a month prior. And by May 1st daily deaths should be about 200 per day, again falling to about a third of its rate from a month before. (And with universal masks and even more rapid vaccine rollouts, we could be down to 100 deaths per day.)

COVID exponentially spread in 2020. It should exponentially contract in 2021. By Spring, it'll feel like a new year.

Numbers come from here:

https://covid19.healthdata.org/united-states-of-america?view=daily-deaths&tab=trend

15 January 2021

How Education Is Likely to Change In the Next Decade or Two

One simple difference between a functional and dysfunctional society is how effectively it raises children to be productive adults. You have to evolve your education to keep up with the economy. Ideally, that education doesn't just keep up with but actually drives economic progress.

Two things that make this more challenging than ever are increases in life expectancy and the rate of economic change. 

10 year old kids are in fifth grade. Their peak earning will probably be in about 40 years. So we have about 7 to 15 years to prepare them to be productive in the year 2060. That's kind of ludicrous. The longer we live, the farther out is the target we're shooting at in terms of preparation.

Meanwhile, economic change is accelerating. One of the great things about globalization is that we now have 7.5 billion people engaged in invention and entrepreneurship. One of the bad things about globalization is that the odds that the technology we're using this year, the company we're working for this year, the processes we're using this year ... are still the company, technology and processes we're using in a decade are incredibly low. 

We're not just shooting at a target 40 years out. That target is moving faster than ever.
I suspect that two of the dimensions to how we'll change education to accommodate this reality will be this. 

1. We will eventually adopt a model of lifetime education. 10 year old kids will already be spending 5 to 15% of their time at "work." They won't just learn principles. They will begin applying those to the creation of value for their community. 60 year old people will be spending 5 to 15% of their time in "school." They won't just be applying old principles. They'll be learning new ones.

2. We will teach entrepreneurship and innovation. Stanford has Sand Hill Road on its campus. Sand Hill Road is to venture capital what Wall Street is to stocks. That combination of education and financing helped to create Silicon Valley. (Terman, one of the visionaries who saw Silicon Valley before it existed, introduced two of his students who he thought should collaborate to create a business. The students? Bill Hewlett and David Packard.) The notion that schools will be launching pads for new businesses (and new government agencies and schools and social inventions we have yet to think of) will become common. Skills and ability for technological and social invention are something that will still be valuable in the year 2060 even if AI has automated the jobs of driving trucks or programming, say. 
And making school and work coincident means that both will evolve more quickly to keep pace with the progress we're trying to drive.

14 January 2021

Kamala Harris - Another Californian Who Could Signal a Shift in American Politics

Kamala Harris will represent so many firsts when she’s sworn in next week as Vice President. First woman. First Asian. First Black. She will not, however, be the first Californian sworn in as VP. Richard Nixon won that honor in 1953.

Between 1933 and 1969, Democrats had the White House and a majority of the House and Senate 72% of the time. Two Californians ended that dominance. Nixon in 1968 and 1972 and Reagan in 1980 and 1984 won the presidency in landslide victories. Nixon brought the Dixiecrats –southerners who left the Democratic party after Johnson signed Civil Rights legislation ending segregation – into the party of Lincoln. Reagan was big government’s most charismatic critic. They so shifted American politics that Democrats did not win back the White House until they ran Bill Clinton – a southerner who as president declared, “the era of big government is over.”

Blue jeans, Hollywood, Silicon Valley and the late-20th century conservative movement of Nixon and Reagan came out of California. Kamala Harris could easily represent the next wave to come out of the state.

California is now no place for Republicans. As the Republican Party has become more anti-immigrant and pro-conspiracy theory, it has lost support in the state.

California lets the top two candidates in a primary race run against each other in the general election. It doesn’t matter if one is Republican and another is Democratic or both are Democrats (as happened in seven House races in 2020). In 2016, Kamala Harris ran for senate against a fellow Democrat. Democrats won 27 House seats by more than a two to one vote in 2020. (And another 15 by smaller margins.) 27 is the same number of representatives that New York and Florida send to Congress. Republicans represent only 11 of the state’s 53 districts.

Why have Republicans done so poorly in California? California has built an economy dependent on education, research, immigrants and access to foreign markets.

In 1960, California governor Pat Brown signed legislation that made California the only state in the nation to offer free education from kindergarten through grad school. Clark Kerr – who headed the committee that drafted the plan Brown turned into law – was head of the University of California and had a theory about economic progress. In the same way that the railroad in the late 1800s and the automobile in the early 1900s had reshaped the economy, he thought that the late 1900s would be transformed by knowledge workers; Kerr’s education plan was designed to produce them.
Kamala Harris was born of Clark Kerr’s vision to create a world-class university system. Her mother came from India and father came from Jamaica, two grad students who met at UC Berkeley, fell in love, and had two children, Kamala and her little sister Maya. (Kamala’s mother insisted on giving her daughters names from Hindu mythology stating that, “a culture that worships goddesses produces strong women.”) Kamala wasn’t the only birth resulting from Kerr’s vision.

California became home to Silicon Valley. Intel was founded in 1968, Apple in 1976, and Google in 1998. California’s early investment in education paid off with millions of high-paying jobs and trillions of dollars in new wealth. The late 1900s – as Kerr predicted - was transformed by the knowledge economy. His plan had prepared California for this new reality.

One of the best predictors of how a community will vote has become levels of education. Harris split her childhood between two Bay Area counties; 77% of adults in those counties have a BA. That education ties to income; median household income in the two counties where Harris grew up is $119,00 a year. The Bay Area is defined by returns to intellectual – not industrial - capital. On two campuses six miles apart – Google and Facebook – median employee pay is $200,000 and $240,000. Billionaires get a lot of attention but stock options have made multi-millionaires out of thousands of west coast employees.

In the California counties where Harris spent her childhood, Trump won only 17%. In California, Trump’s campaign promises sounded like threats. Trade wars with China? A wall to keep immigrants out? It is connection to and not protection from the rest of the world that has helped California to thrive. A regional Hollywood is a playhouse. A regional Google search engine is the yellow pages. Silicon Valley is capital of the worldwide – not the nationwide - web.

It seems safe to bet that the country will follow Silicon Valley into a more entrepreneurial, information economy dependent on knowledge workers and global markets rather than follow Mitch McConnell’s Kentucky into coal mines, “protecting” workers and consumers from trade and immigration. That is, it seems safe to bet that Kamala Harris – like Nixon and Reagan before her – represents a set of policies and philosophy that will shape national politics for a generation.

12 January 2021

Militias - Obsolete Products of Our Violent Past

It makes perfect sense that you would refuse to marry a guy who acts like a two-year old. It makes no sense that you would refuse to marry a guy because once upon a time - back when he was two - he acted like a two-year-old.

Which brings me to our violent past. The US was founded by white supremacists. The militia mentioned in the 2nd amendment were armed groups that were sort of government, sort of not government groups who captured and returned escaped slaves and drove indigenous people off their homeland through genocide. Killing indigenous women and children - which militia regularly did - was something the federal government preferred to do through militia rather than official troops, an apparent quest for plausible deniability. (Although by the time of Andrew Jackson - himself a violent Indian fighter - the federal government no longer worried about distancing itself from these policies.)

We are supposedly no longer governed by racists. Militia supposedly do not officially coordinate with the US military to intimidate, incarcerate or kill minorities. And yet we have more guns than people and within the next week or two militias will take up arms against democratically elected officials, will storm capitol buildings across the country in defiance of the will of the people who regularly vote for our politicians and policies.

Even if militias were the Model T of their time (the Model T was an amazing product but no one wants to drive one today), we need to revisit this odd notion encoded into our constitution. One of the reasons that government generally gets a worse Yelp rating than business in this country is that people never deify Model Ts and insist that we all should drive them in deference to the divinely inspired Henry Ford. Products continually evolve and old models are discarded. In government? We're still left with the deification of militias.

We're no longer two. We're over two hundred. It's time to get intentional about the future we want to create with less reverence for the past that earlier generations created. As Paul wrote in his first letter to the Corinthians, "When I was a child, I spake as a child, I understood as a child, I thought as a child: but when I became a man, I put away childish things." Armed militias accountable to no one seems like an idea we should have grown out of by now. But they'll have a chance to prove me an alarmist in the next little while; I certainly hope they do.

11 January 2021

Riding the Tiger: 2021 and Trump's Dismount

In his inaugural address, John Kennedy used the line, "those who foolishly sought power by riding the back of the tiger ended up inside."

Riding the tiger is an apt phrase to describe an abuse of power. The good thing is that anyone coming after you risks getting destroyed. The bad thing is that if you try to dismount from the tiger, you risk getting destroyed.

Saddam Hussein and Muammar Gaddafi are two of the more recent rulers who lost their life shortly after losing power. Benito Mussolini first popularized the term fascist and after ruling with an iron hand was killed by a mob as Italy fell to Allied forces.

Julius Caesar was famously assassinated by senators defending the Roman Republic from coming under the rule of a tyrant. Julius died violently but so did the centuries-old Republic, giving way to a Roman Empire that would be ruled by a series of emperors, each adopting the title Caesar.

Trump is desperate to hang onto power. All indications are that he's broken a series of laws both before taking office and once in office, his inciting a mob to attack the legislative branch as it finalized the democratic vote for his opponent only the most recent and egregious of these violations. He's been riding the tiger, from the time he first insulted former prisoner of war John McCain ("I like heroes who weren't captured," said the man with bone spurs) to his order to the Proud Boys to, "stand by," to thousands of petty and major lies and insults to law, propriety and friends and foes. Out of office, he will have to refinance hundreds of millions in debt, and likely faces a series of legal challenges that could mean endless trials with criminal and civil consequences. Desperate, he would have happily toppled the republic to avoid all that.

He's had quite the ride on this tiger. The dismount is going to be a spectacle.

09 January 2021

More Us and Less Them - a guide to peace, prosperity and progress for thousands of years

More us and less them.

Even before tribes there were bands, very small groups of people who banded together for survival and companionship.

Freud says that civilization began when the first person threw an insult rather than a rock. Once upon a time, two bands encountered one another. Likely adrenalin levels spiked. They prepared for a conflict. Someone, though, made a gesture of conciliation. Maybe they offered food. Or a gift.

We are fiercely reciprocal creatures and this reality is a foundation upon which any social construct rests. Salespeople know that our feelings of reciprocity are so strong that if they offer you a free meal and night's lodging, you'll feel obliged to buy one week per year of a timeshare for life. That gesture of giving triggered the other band to offer something in exchange just as surely as landing a blow would have resulted in a fight. From that day on, these two little bands would periodically meet and make exchanges.

One may have had a unique fruit from a tree in their area. Another may have had some fibers they'd learned to weave into a garment. As they began to trade things ideas came along with them. "No," they would say in words or demonstration. "You don't eat the fruit like that. You first open it like this." Or they laughed and said, "No, this is not a hat. It is a loincloth." Or maybe in that moment of confusion they realized it could be a hat and that could solve the problem of cold heads. And the exchange of goods became the exchange of ideas that work like genes, mingling to become something and someone new.

The two bands learned from each other and traded the excess of one for the excess of the other (the 100th orange from my tree has less value to me than my first apple from your tree; I will happily trade you my 100th orange for your 100th apple). They also began to exchange ideas and goods that could be combined to create new ideas and goods.

Progress comes from more us and less them. "They" are a group who may steal our apples. "We" are a group who may trade apples for oranges. Trade networks didn't just enrich lives by exchanging goods and ideas. It also made their world safer. If something happens to the tree in my little patch of the world, I don't automatically starve. After trade comes finance: you can loan me oranges now until my apple tree is again producing. And then comes investment: I will set aside some grapes to turn into wine that we won't drink for months or years and eat your apples in the interim.

Arrangements break down. Businesses dissolve. Groups go to war. But progress is the steady expansion of us, a richer group with whom to exchange and to be inspired by.

More us generally means more options and more prosperity. Less them means fewer enemies, fewer people excluded from the process of negotiating and defining our shared world. This is the route to peace and prosperity however unwieldly it may be.

By contrast, more them means more enemies, more people from whom to feel estranged, to see as vile or unworthy. Fewer us means fewer people with whom we can trade, inspire, borrow or lend. This is the route to conflict and impoverishment.

More us and less them. It has been a useful guide for peace and prosperity for thousands of years. It still is.

08 January 2021

A Third Wave of Feminism and the Social Inventions It Will Depend Upon

Everything is made up but the consequences are very real.

Something like public schools is obviously a social invention. One generation a child’s parents teach him or her what she needs to know about farming or cooking or sewing. Another generation has dozens of teachers during about a dozen years and learns math, reading and writing, history, etc. Both are just made up and both have very real consequences, at turns enabling, hindering or neglecting the work of the child to become an adult able to create a life they and their community value and find joy in.

Less obviously, even what it means to be a woman is a social invention. And given our growing mastery of surgery and genetics, even the givens that past generations never imagined could be made up are – increasingly – made up. (For instance, in the 1960s, the average bra size was 34B. Today it is 34DD.)

100 years ago, women got the right to vote. That was totally made up and it has very real consequences. Had only women voted, Biden would have won by 12.2 million votes. Had only men voted, Trump would have won by 5.9 million, a swing of more than 18 million votes. Women have changed politics.

Why did women not have the vote before 1920? Did a male-dominated society suddenly decide to treat women as equals? Maybe. Or maybe technology allowed women to shift their attention outside the home. In 1900, a woman would carry about 10 tons of fuel (wood and coal) and 40 tons of water in and out of the house each year. Running water and electricity came to most homes by 1920 and women could literally shift their energy from inside the home to outside. They became political.

In the 1960s and 1970s, women began to gain an equal role with men in education and finance. In 1969, Yale made its undergraduate program coed. In 1969, Hillary Clinton graduated from Wellesley – an all-woman’s university – and began study at Yale law school. In 1975, women (some of them fresh graduates from the universities that had just let them begin studying there 5 years earlier) could open a checking account without their husband’s signature.

Again, this was coincident with new technology. The pill was approved in 1960 and within years millions of women were on it. Birth control technology gave women the ability to plan their families, deferring children until after they’d finished university and began the better paying careers that made banks being to treat them as equals to men.

Progress is never over, though. We don’t simply hit a median income of $20,000 a year and say, “Hooray! We’re economically advanced now.” We don’t finally get Model T cars and stop improving on the design and manufacture of cars. And we don’t just point to a 21-year-old woman in 1975 and say, “We’re done! She has all she needs to now realize her potential.” And to my mind, a big change that will be on par with the right to vote and equal access to educational and financial opportunities will mean social invention that again changes our institutions to accommodate the reality and potential of women.

For now, the biological reality is that it’s tough to be pregnant and have a young child and have as much energy and attention to put into work as man who gets to share in the most euphoric 15 minutes of a pregnancy. And yet a community has a real interest in their best and brightest young women not feeling penalized for deciding to perpetuate the species. Women having babies is a huge benefit for a community but we still charge women disproportionately to have those babies.

Right now, with the incentives and penalties in place with the current design of work, a record percentage of babies are born to the lowest income and least educated women in our community. For them, the opportunity cost of having children is lower. Curiously, the opportunity cost of having children rises along with education and work opportunities. One, we need to do more to support the poorer women having babies. Two, we need to lower the penalty to better educated women for choosing to have a child or three.

I’m not sure of the details of how we’ll stop penalizing women who could be working to stop or cut back on work enough to have and raise children without undue stress. I do know that everything is made up even though the consequences are real, though. Designing work so that women could more easily have and raise children should not be as complicated as designing a new drug or rocket. And I’m sure that women would have all kinds of design suggestions for work that stops pretending that there is no difference between men and women in terms of the demands that pregnancy, babies and small children place upon them.

We’ve benefitted enormously from making up new norms and technologies that enable women to join men in politics, in education, in work and finance. It is well within our ability to change those institutions so that they allow half the population to fully realize their potential. We just have to make it up – even though the consequences will be very real.

07 January 2021

Why Melania Will Quickly Divorce Donald

You know Melania is going to quickly divorce Trump but not for the reasons you might think. Now kicked off of Twitter and Facebook, his audience gone, he's going to be texting her nonsense 40X a day.

"I WON GEORGIA! IT WAS A LANDSLIDE!"

'GROWN MEN COME UP TO ME AND CRY!'

"WHERE IS MY DIET COKE!'

"Donald!," she will cry. "Text someone else!"

"But no one texts me back. Everyone used to pay attention to everything I said. Now? No one. Nothing. You need to listen to ME!"

"I will not listen. And I refuse to role play and dress up with you. We're not playing Trump rally anymore. I'm done wearing that stupid hat and chanting 'Build that wall!' for you. I'm done!"

"MELANIA! PLEASE!"
"Stop texting me!"

Trump's Instinct for Arousing Tribal Impulses

Tribal impulses are at odds with the modern world. Stirring up tribal impulses is Trump's particular gift and his instinct for doing that was always at odds with the institutional norms and structures we depend on to sustain our quality of life in the modern world.

The Hatfield and McCoys were mountain people in the US who kept up a feud between each other for generations, the epitome of backwoods, backwards Americans. They showed up at the capitol yesterday.

The Dunbar number is 150. This is the number of people our brains can manage in terms of not only knowing who someone is but who they are friends or foe with, whether they'd be a reliable ally or a probable competitor, etc. Robin Dunbar argues that our brains first evolved to navigate the natural world around us and then - as that world became increasingly social - our brains evolved to navigate the social reality around us. We are social creatures and woefully unable to make it alone. Social reality is our reality and the Dunbar number defines the number in the natural tribe we're wired to feel part of.

There is a problem with a group of 150, though. It simply isn't a large enough group to allow us to live above a level of what we'd now call subsistence. 150 doesn't allow much in the way of specialization. You want the benefit of a stent that would keep your arteries open and you alive another 5 to 25 years? The team to design, test, make and sell that will involve thousands of people. When I began working with teams developing those kinds of products more than 20 years ago, typically about 10 to 20% of their work was done by another company; today it is pretty normal that about 20% to 40% is. What does this mean? Even a single step within the production of a modern product is often done by an outside company and not just a person within a company. A single step in a production process might take the knowledge and resources of an entire company, itself defined by dozens or thousands of people. Even a product as simple as a number two pencil is made with resources from multiple continents. No one company has the skills, knowledge and resources to make a product as seemingly simple as a computer mouse from raw materials. Our modern world is full of products, processes and services that depend on a vast, vast network of strangers. Our lifestyle depends on an invisible network of people, technologies, knowledge and processes that no one group of 150 could ever replicate. The Dunbar number may describe a social reality for which our brains are wired; it no longer describes our economic and political reality. This is a vulnerability we too rarely talk about.

Here is the deal, though. We are wired for 150. We all have tribal instincts. We are wired to become Hatfield or McCoy clans, wired to become a group of us who see them and square off against them. Whoever them is. And we're all as susceptible to tribal impulses as we are susceptible to the lure of alcohol, drugs, ice cream, sex, and naps. It's a very normal instinct and one easily aroused. In fact, professional sports is literally -and not symbolically - dependent on these feelings. (I was working at a big company in San Diego the year the San Diego Chargers went to the Super Bowl. One I day I heard a manager talking about guys within the company at the director and VP level as "They," and then another manager talking about the Chargers as "We," as in, "We are going to the Super Bowl!" I thought, "You work with the 'they' guys. You have never even met the 'we' guys. How weird is that?" I don't think any business has more effectively hacked our tribal instincts than has sports. But I digress. Sort of.)

Trump's appeal was simple. He hacked directly into tribal instincts. There is always a "They" available to make us feel like a special "We." They are the Chinese. Big city liberals. Muslims. Mitt Romney Republicans. And you can win elections or fans by tapping directly into that tribal impulse. The danger is, if you don't have a clue what you're doing, you go as far as Trump. How far is that? Well, you decry trade and immigration as "They" are taking "Our" jobs. That right there makes "us" smaller, diminishing our economic possibilities. You attack "blue" states that are still a part of the United States of which you're supposedly president. You attack any institution - whether the UN or even a court of law - as an abstract "they," that is not on our team. First it is court cases that are suspect (who are "they" to judge us?) and then entire elections. You continually undermine the very institutions on which our modern world depends because they - too - are peopled by strangers who think or live differently.

The good news is that selling a message of Us! and Them! has a big and easily excitable market. The bad news is that it leads to the erosion of - often an attack on - the very institutions upon which we depend for our quality of life. It is no coincidence that so many of Trump's supporters are the survivalists who love the notion of surviving in a post-apocalyptic world in which all those institutions and norms have broken down. The modern world is too abstract for them; by contrast, this world of tribes actually makes sense.

Yesterday the Hatfields and McCoys stormed Congress. These were the mountain people who love the way that Trump awakens the tribal instincts that make a confusing, abstract world real and visceral.

Trump ability to arouse tribal instincts and his disdain for institutions is the exact opposite of the skills that have taken us from the feuds and poverty of isolated mountain people to the peace and prosperity of modern city folks. Progress comes from the ability in entrepreneurs and political leaders to create a bigger us, to make us part of a vast network of people, processes and knowledge that dwarfs what any group of 150 could accomplish. We know what the America Trump is trying to create looks like: it looks like the unruly mob who yesterday attacked the institution that struggles to create the laws and agreements that makes us part of a country with 330 million others (millions and millions of whom are VERY different from us) - part of a world of 7.5 billion people. That world is an endless struggle to maintain, manage and expand. It is vulnerable in so many ways and yet our quality of life depends on sustaining and even expanding that world of abstractions and institutions, laws and processes. (And my writing about abstractions and institutions makes your eyes glaze over in ways that appealing to tribal impulses never does.) And among its various vulnerabilities, perhaps the most obvious and scary is the one Trump represents: an appeal to tribal instincts that sees as foreign the odd and abstract institutions that allow us to collaborate with strangers to create peace and prosperity.

We are not out of the woods yet - there is still a chance that we could descend fully back into the world of the Hatfields and Mccoys - but with Trump gone in a couple of weeks, we might yet avoid becoming the poor white trash of the developed world.

06 January 2021

One Seemingly Subtle But Huge Benefit That Could Come from Having Lived Through a Pandemic

Folks do a terrible job of projecting anything exponential. I wrote a post early last year about how stupid it was that officials were recommending such dramatic action in response to COVID when it had affected so few. Friends smarter than me politely corrected me and when I computed the numbers, I was reformed. 

We don't have good intuition for things that grow exponentially.

Last year at this time we hadn't heard of COVID. It may kill 500,000 Americans. Exponential growth is huge.

The good news is that exponential numbers work to our favor as well. Assuming we manage the rollout effectively and actually vaccinate people at the rate justified, the spread of immunity through our community (particularly for our most vulnerable) will eventually cause as dramatic a drop in the rate of infections and death as the rise we saw last year.

I'm vulnerable to bouts of wild optimism. One weird bit of optimism I have about post-pandemic life? Having been immersed in the effects of rapid compounding of growth, we will get more serious about investments that bump GDP growth by 1/4% to 2% per year, knowing that the affect on the incomes of the next generation will be huge.

Given current income, a difference of half a percentage point in growth rates means a difference of $10,000 in median income in a generation; a difference of 1.5% would mean a difference of $35,000.

A difference of half a percent compounded over a generation sounds trivial. And maybe the average voter will always treat it as such. But if the exponential spread of a pandemic leaves us with a keener sense of the cumulative effect of small, compounding changes it would be huge. I mean, once compounded over time.

04 January 2021

Why The Washington Football Team Has a New Name (no explanation for how a 7-9 team made it to the playoffs, though)

Trigger alert: this has a gruesome punchline.

The Washington Football team made it to the playoffs with a record of 7-9.

In the early 1600s, the English conquered Ireland and announced half a million acres in the north open to settlement. As you might imagine, the Irish resisted. The English had never before had to remove so many indigenous people to replace with settlers. They even tried a "wild Irish" reservation for a time.

Sir Humphrey Gilbert was made the governor of this Irish province and he paid a bounty for Irish heads. Over time, the bounty was simply paid for scalps. Gilbert moved to America and brought this practice with him. In America, officials privatized genocide, a war within this new land against indigenous people by paying for scalps.

Roxanne Dunbar-Ortiz writes in An Indigenous Peoples' History of the United States, "The settlers gave a name to the mutilated and bloody corpses they left in the wake of scalp-hunts: redskins."

In 2020, after 87 years, the Washington Football team has dropped that name in response to protests from first nations' people.

02 January 2021

A Revolutionary University, the Natural World and the Policy Focus for Our Founding Fathers

Jefferson asked that his three proudest accomplishments be captured on his tombstone. President was notably absent, while "father of the University of Virginia" was included.

To me, the most remarkable thing about this new university was simply this: it was the first university in the history of the West that was not originally founded as a school of divinity.

The United States' first president had been a land surveyor. Jefferson's university was designed to focus students on the natural - and not the supernatural - world. The founding fathers were Enlightenment thinkers who sought to observe and explain the natural world. Land - this world - was their focus.
Americans went to war with the British for a host of reasons but a big and often overlooked reason was that the British in 1763 forbade colonial settlement west of the Alleghanies. Land speculators like George Washington weren't terribly excited about this. Throwing off British rule was one way to expand holdings further west.

As president, Jefferson funded Lewis and Clark's expedition to explore this vast continent. It is easy to gloss over the fact that this new country initially hugged a strip of land along the Atlantic ocean that was about one quarter of the land mass the US now occupies. As proof that Jefferson's interest in the continent was not just academic, he spent a sum double the new country's federal budget to make the Louisiana Purchase. By the time Lincoln took office, the "lower 48" defined this country.

What defined policy from the presidency of Washington the land speculator to the presidency of Lincoln the inventor? (Abe is still the only president to hold a patent.) Land. It's exploration, conquest and monetization. (Farming and gold were obvious ways but by no means the only. By the end of the 1800s, Michigan's lumber industry would have created a billion dollars more in value than the California gold rush. This new continent was rich in opportunities to become rich.)

European serfs were legally bound to the land, unable to move. They didn't own land; land owned them. This new country offered possibilities of ownership that had literally been outlawed for their parents.
The serfs were freed gradually throughout Europe but serfdom was not completely ended until terribly late. The last of the serfs in Scotland were freed in 1799, the last in France in 1789, in Germany in 1830. Chinese immigrants (by 1870, they made up 9% of California's population) fled similarly bleak prospects for this new land of opportunity. It was truly revolutionary for these former serfs and sons of serfs to come to the US to own land and a flood of immigrants came; the population Lincoln governed was six times larger than the one Jefferson presided over. Land was the magnet that drew these immigrants.

With the ascent of Lincoln and his new Republican Party, a new force would shape and be shaped by Americans but most of what you need to know about the policy and politics that succeeded from the founding of the country to the founding of the Republican party could be answered by the question of what got the country more land or extracted more value from that land. It was both that simple and that complicated (and messy and violent).

Thomas Jefferson's Tragic Conflict He Left the Country to Violently Reconcile

Thomas Jefferson was still in his thirties when his wife Martha died. As she lay on her deathbed, grieved at the thought of some other woman raising her children as her own, Martha made Thomas promise that he would not remarry. The way that Jefferson kept that promise illustrated the odd conflict between his - and this new nation's - philosophy and practice.

The man who penned the revolutionary words, "that all men are created equal," and also owned slaves offers us a weird choice. If we take him seriously - honoring his words - we can't take him seriously as a man who was a slaveholder. If we discount him, we're left without the words that have gradually eroded the institutionalized forms of racism and misogyny that make the US of 2021 so different from the US of 1789. His words did inspire a better world. His life, not so much.

Sally Hemings was Martha Jefferson's half-sister. It's not clear whether this was something clearly acknowledged between them or by anyone else but Hemings was the daughter of John Wayles and the slave Betty Hemings. John Wayles was also Martha's father. In marrying Martha Wayles, Jefferson also acquired her slave (and half-sister) Sally.

Modern DNA testing has confirmed old rumors that Jefferson went on to father six children with Sally Hemings after Martha died.

Hemings came to Paris when Jefferson served as ambassador to France. France had abolished slavery so there she was free. Before they left France to return to the US (she could have stayed and remained free), she made Jefferson promise that their children would not be slaves. They all lived free and all but one lived as white.

But think of how odd this was. Your father was one of the founding fathers, third president, first secretary of state, author of the Declaration of Independence and ... you couldn't tell people. What would most define anyone else in the country was instead something you could not tell people..

Some day future generations will vilify us for our carbon footprint, how casually we would drive places on a whim, the coal we would burn to generate the electricity used to power our virtual worlds. No generation immediately moves into the world they imagine or set as an ideal. But there seems to me something particularly tragic about Jefferson as this man who so brilliantly built on the ideas of Enlightenment philosophers like John Locke to co-create a new government - and man whose own children were born into slavery. Perhaps the oddest thing about it is that we have so little remaining evidence of this prompting Jefferson to feel at all torn at the gap between the world he'd penned and the world he lived in. He was one of the most inspirational revolutionaries in the history of the world and his own children were born into slavery. Closing the gap between Jefferson's ideals and his reality would take a violent civil war. He never properly reconciled the gap and left that for a future generation, an entire nation to reconcile.