ion drive

ISSUE 13: The Depth of the Riches

Good evening. My apologies for a few quiet weeks since the last update. A lot has been happening at work and in family life. Vaccination in the United States continues apace and work travel looks to resume, at least partially, as early as this month. As a result, for this spring and summer, I expect to publish once every three to four weeks. The new cadence is in part to ensure the quality of each update measures up to your expectations. Popular among many writers today is the importance of publishing frequently. I am not one to argue a general case against that, but do believe that, if a trade-off is inevitable, quality must precede quantity, as fewer issues at a consistent quality would be a better mark of respect for the reader’s time than more issues of varying constitution. On the other hand, a more measured cadence is only fair to my family, who have been cheering me on with nary a scratch on the chin since I embarked on this project at the beginning of the year. I look forward to filing dispatches from the road in the near future and introducing the voices of some of my friends to you in future issues. Now onto the update. 1. If you wanted to look into the eyes of someone who takes immense pride in their professional expertise yet is hurt deeply by accusations of the contrary, you only need turn to the Netflix documentary Made You Look: A True Story About Fake Art [https://www.netflix.com/title/81406333]. In it, Ann Freedman is the hapless director of an old and respected gallery in New York that was involved in one of the largest forgery scandals in recent history. From 1994 to 2009, eighty million dollars changed hands, endorsed and brokered by Freedman, before the purported works of American maestros such as Mark Rothko and Jackson Pollock were unmasked as scams. Though several art industry insiders and observers in the documentary accuse Freedman of deliberate and criminal fraud, the FBI notably did not pursue prosecution, citing lack of evidence to prove guilt beyond reasonable doubt. But perhaps the FBI also noticed a parallel between Freedman and another hapless expert, Abraham Bredius. Nicknamed “the pope” by his contemporaries, Bredius was the leading world expert on the works of the Dutch master Johannes Vemeer. A wealthy and venerable retiree in Monaco by 1937, Bredius disastrously misidentified a forgery as a newly discovered Vemeer when a well-meaning friend brought a painting to him in an effort to raise money for the anti-fascist Italian resistance. British economist Tim Harford gives a fascinating full account of the story in his book How to Make the World Add Up [https://timharford.com/books/worldaddup/], but in brief, Bredius seemed to have harbored a personal pet theory that a period of Vemeer’s work was missing, and the forgery played into the unfounded theory perfectly. As Harford notes: When Bredius saw the picture, he didn’t just see a painting. He saw proof that he had been right all along. 2. It’s tempting to sneer at the blunders of Freedman and Bredius. They certainly seem to be the mistakes of a self-important and self-assured elite on niche subjects entirely irrelevant to the well-being of society at large. But that would be wrong. In 2006, Professors Charles S. Taber and Milton Lodge of Stony Brook University published a study in the American Journal of Political Science entitled Motivated Skepticism in the Evaluation of Political Beliefs [https://www.jstor.org/stable/3694247]. In the study, the authors presented participants with both pro and con arguments on the topics of affirmative action and gun control. The authors then measured whether participants in the study were influenced by their prior beliefs. They were. Not only did the participants rate arguments that confirmed their prior beliefs more favorably, they also registered a level of animosity against conflicting arguments beyond what could be supported by logic. Deconfirmation bias and confirmation bias coexisted. More dispiritingly, even when given total choice over which arguments to consume, most participants willfully shunned information that contradicted their prior attitudes and beliefs. That choice, by the way, is called freedom of information in an open society. As Taber and Lodge lay out the implications in their paper: Our studies show that people are often unable to escape the pull of their prior attitudes and beliefs, which guide the processing of new information in predictable and sometimes insidious ways…Skepticism is valuable and attitudes should have inertia. But skepticism becomes bias when it becomes unreasonably resistant to change and especially when it leads one to avoid information as with the confirmation bias. And polarization seems to us difficult to square with a normatively acceptable model (especially since the supporters and opponents in the policy debate will diverge after processing exactly the same information). Moreover, up to some tipping point for persuasion, our model predicts polarization even from unbalanced and counterattitudinal streams of information. In other words, if you find our societies so irreconcilable even when people are presented with the same information, it’s because it is our nature to hang on to our pre-existing views, to willfully ignore conflicting arguments, and to engage in motivated skepticism. As proposed by Israeli psychologist Ziva Kundra: all reasoning is motivated reasoning. 3. In the world of economics and finance, a cornerstone theory is the Efficient Market Hypothesis (EMH). The idea is that at any given point in time, the price of an asset reflects all there is to know about the asset. Consequently, it’s impossible for an investor to consistently generate alpha, or, excess return above the market. In an earlier era of modern finance, the prototypical protagonist, however tortured, was undoubtedly Gordon Gekko. A character in Oliver Stone’s 1987 film Wall Street, Gekko was sharp, ruthless, and amoral when it suited him. In popular imagination, Gekko epitomized the active investor with the uncanny ability to generate superior returns. Ironically, thirteen years before the film debuted, real-life economist and Nobel Prize laureate Paul Samuelson had published an essay, Challenge to Judgment [https://jpm.pm-research.com/content/1/1/17], in which he argued that, over the long run, the active investor performed no better, if not worse, than the market. A year after Samuelson’s essay, entrepreneur John C. Bogle acted on the essay’s findings and created the world’s first index fund through his company the Vanguard Group. Though this first fund failed, Bogle kept the faith and his subsequent funds not only succeeded immensely but started a passive investment orthodoxy that persists even today. Yet not all is well in passive investment land. A recently published paper in the Quarterly Journal of Finance [https://privpapers.ssrn.com/sol3/papers.cfm?abstract_id=3716401] looked at fund performance data and whether the fund’s manager was exposed to EMH in school. It turns out that managers who attended schools that taught EMH were more likely to manage index funds. When they did manage active funds, they held portfolios with larger numbers of stocks and deviated less from their investment benchmarks, meaning these active funds in fact looked more like index funds. And how did these EMH managers do? The paper deploys five models in its answer. First, the net returns (first column in the table below) of exposed managers from the authors’ data set were higher, but the difference is statistically insignificant as shown by a p-value of 0.8510. Expense ratios (the last column) of exposed managers, however, are lower on a statistically significant level at a p-value of 0.0006. However, it is the middle two models that were the most damaging to EMH. In short, they show that on a risk-adjusted basis, managers exposed to EMH performed worse on a statistically significant level. Note that the paper’s conclusions may not contradict Samuelson and Bogle as strongly as the above analysis might imply. As the authors of the paper note: These [passive] managers do not generate superior performance, but the funds charge lower fees and generate higher fund flows. And in Samuelson’s original essay, his verbatim argument was not that passive managers would do better, but that active managers don’t, at least not over the long run: Perhaps there really are managers who can outperform the market consistently — logic would suggest that they exist. But they are remarkably well-hidden. However, what is most interesting and hopeful for me in this whole debate on active vs. passive investing styles is a growing awareness from both sides on the unintended consequences of passive investing. Namely, because a passive investing style tracks the market instead of attempting to beat it, on a market-wide basis there is a lower level of informed scrutiny to try to separate well-managed companies from the rest. From the perspective of the companies in the market, passive investors also means management no longer enjoys the level of reward for a job done better. Over the long run, it is not hard to see wealth creation suffer for society as a whole. Shortly before he passed on in 2019, Bogle himself called attention to the potential gravity of the matter: If historical trends continue, a handful of giant institutional investors will one day hold voting control of virtually every large U.S. corporation. Public policy cannot ignore this growing dominance, and consider its impact on the financial markets, corporate governance, and regulation…It seems only a matter of time until index mutual funds cross the 50% mark. If that were to happen, the “Big Three” might own 30% or more of the U.S. stock market—effective control. I do not believe that such concentration would serve the national interest. And so it would seem that while evidence exists in both academic research and the real world that motivated reasoning — or, said more harshly, wishful thinking — continues to trouble individuals and societies alike, in plumbing the depths of the riches in high finance and wealth creation, counterexamples of rational, open minds do not elude us either. If you’ve enjoyed this update, consider forwarding to a friend and asking them to subscribe by pressing the button below. Thank you for your support. From Aspen, Colorado Victor This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit iondrive.substack.com [https://iondrive.substack.com?utm_medium=podcast&utm_campaign=CTA_1]

ISSUE 12: Among Whispering Pines

Good evening. 1. When I was 12, I got a job as student reporter for my school paper. To file my first report, one of my cousins, a civil engineer, took me to her work so I could observe engineers install a new railroad track that would pass not far from the school. On that sunny summer day in the back canyons of north San Diego County, I was mesmerized. The first step in laying down a track isn’t obvious. It happens below the surface. Like drainage systems on a farm [https://www.youtube.com/watch?v=fxqSWRrKOMY], the ground is first graded then pipes laid in to ensure water never logs below the grade that could cause erosion or degradation. Next, a layer of coarse sand creates a slightly malleable but firm ballast to which crossties can be secured. Crossties can be of timber or concrete, and it’s important to align the center of the ties to the center of the tracks. If not, the ties will tilt. Now the rails are lowered and bolted onto the ties. More calibrations happen at this stage to ensure a precise alignment. It used to be that the rails were joined with fishplates, metal bars with tapered ends. Now it’s common to weld the rails, as technology improves to ensure ambient temperature fluctuations don’t expand or contract the rail. At this point another layer of ballast is applied, consisting of small, irregular rocks. Under gravity, they bunch up and tighten the hold of the track system as a whole. After some trains pass, a third layer of ballast can be applied as the weight and vibration of the trains shake up the rocks, helping them find odd, loose spaces to fill and making the base even stronger. While on break, one of the engineers asked me if I knew how wide the rails were spaced apart. I did not. Four feet and eight-and-a-half inches exactly. And how was this distance, also know as the standard gauge, determined? More popular than fact was a debunked myth that Colonial America engineers selected the gauge in honor of the Imperial Roman chariot, which just about accommodated two horses cantering forth side-by-side. While the measurements do roughly match, historical records [https://www.civilwaracademy.com/confederate-railroads] show it was less the result of a singular, conscious, and affirmative decision than coincidences of history and a self-reinforcing socioeconomic phenomenon called path dependence. 2. At the heart of physics is the study of a system’s behavior in terms of its motion as a function of time. Expressed in equations of motion, behaviors can be modeled mathematically, which could then be used for predictions. One such behavior is called holonomy. In a holonomic system, as long as we know the position of an object, we know its state. It doesn’t matter what path or how long the object takes to get to that position. A nonholonomic system, by logic, is then any system where the state of an object depends on the path it takes to get to its position. An example of a nonholonomic system is a model globe on a desk. Imagine the globe at rest and on the surface of the globe currently in contact with the desk is the country of Malaysia. Now roll the globe along any continuous path on the desk but return it to its original location without slipping, twisting, or picking it up. It’s unlikely the part touching the original spot on the desk is still Malaysia. The state of the globe depends on the path it takes. Path dependence, when extended into social sciences, partially explains why the standard gauge in the United States today approximates that of the Imperial Roman chariot. As painstakingly documented by economist Douglas Puffert in his book Tracks Across Continents, Paths Through History [https://press.uchicago.edu/ucp/books/book/chicago/T/bo6038566.html], the standard gauge was an early beneficiary of what we today call the network effect. When early vehicles were designed, tools were created to make and repair them. The more these tools were adopted, the more it made sense to keep making vehicles according to specifications these tools were designed to work with, even as new vehicle technologies emerged. But powerful they may be, network effects aren’t sufficient to explain entirely the survival of the gauge. Coincidences of history also played a role. Before the start of the American Civil War, for example, there were nine regional rail networks and each had to determine which gauge to adopt. Professor Puffert notes: [T]he process was path dependent, in that later outcomes depended on the specific course of preceding events rather than simply on such a priori factors as technology, tastes, or factor endowments. Further, engineers didn’t base their decision on the most widely used gauge in the nation as a whole, but whatever was adjacent to their region. This was borne out by data showing that, despite the supposedly standard gauge of four feet and eight-and-a-half inches representing 80% of all rails in the 1830s, it dropped to merely 55% by the 1860s. What reversed the decline was historical coincidence: Northern generals and military planners happened to recognize and take advantage of the superior logistics of railroads before their Southern counterparts. In the Atlanta campaign, for example, Major General William T. Sherman used rail to not only increase speed but also scale. According to military historian Christopher Gabel in his book Railroad Generalship: Foundations Of Civil War Strategy [https://www.amazon.com/Railroad-Generalship-Foundations-Strategy-Illustrated-ebook/dp/B06XGQR5X2]: In previous North American wars, armies of 30,000 taxed the limits of wagon-haul logistics and local requisition. But in 1864, Sherman waged an offensive campaign with an army of 100,000 men and 35,000 animals. His supply line consisted of a single-track railroad extending 473 miles from Atlanta to his main supply base at Louisville. Sherman estimated that this rail line did the work of 36,800 wagons and 220,800 mules! It shouldn’t be surprising that after the Union had won the war, the gauge used by the Union became the national standard, and that gauge was: four feet and eight-and-a-half inches. In other words, history matters. Had the Union lost the war, it’s far from clear what our railroad gauge would be today. 3. While path dependence is an excellent descriptive framework to analyze nature and socioeconomic events, its utility as a normative framework for the entrepreneur is even greater. On the one hand, the network effect element of path dependence feeds much of the business literature today, as social media networks and gig economy marketplaces exploit the self-reinforcing forces of two-sided demand and supply. On the other hand, path dependence could also lull established players into complacency. With success, entrepreneurs begin to look for formulae to replicate. Instructive rules are articulated on analyst calls and in employee handbooks. Investors, pundits, and publishers propagate a sense of infallibility. Soon, board strategy meetings center around a schematic of the company’s flywheel. Investments are weighed based on their ability to take advantage of or strengthen the flywheel. I want to be clear. Learning from past actions and elevating the quality of thinking are absolutely critical to long-term entrepreneurial success. It’s that often the conventional tools of strategic analysis implicitly assume a static landscape in which past success can be replicated with the same actions that led to it. But as the late Professor Clayton Christensen of Harvard Business School explains in the innovator’s dilemma, established players fail not because they lose their edge in what they do well but because what they do well becomes less relevant in the face of a disruptor. Path dependence is fundamentally a mindset of conservatism, solving for the optimal equilibrium between innovation risk and short-term profit. Guide investments by the flywheel by all means, but the greater long-term threat to the entrepreneur isn’t investing outside the flywheel but that someone else develops a different flywheel with better product-market fit. As to commentators and analysts, the frame of path dependence offers a lesson for our craft as well. In 1927, Austrian journalist and biographer Stefan Zweig published a celebrated book, Sternstunden der Menschheit [https://www.fischerverlage.de/buch/stefan-zweig-sternstunden-der-menschheit-9783100025401] (Stellar Moments in Mankind), in which individual historical characters were given significant credit for particular courses of history. As is with pundits in general, Zweig excelled at gathering information, striking up useful friendships, and reconstructing a scene of significance. But in searching for a moment that was not only significant but also dramatic to retell, analysts fall victim to exaggerating its significance. And as Sternstunden der Menschheit gained widespread readership not only in Continental Europe but also the United States and Latin America, it became a mold plate of sorts for many subsequent historical analyses based on biographies. Ironically, Zweig gives a half-warning against this approach in his book: When it looks at great accomplishments, the world, bent on simplifying its images, likes best to look at the dramatic, picturesque moments experienced by its heroes.... But the no less creative years of preparation remain in the shadow. In physics, a system may be falsely identified as nonholonomic if adding a parameter, also known as raising the dimension of the space, allows the system to satisfy holonomic constraints. Using the model globe example, if the globe must return to its original position on the desk by precisely retracing its path, then the country of Malaysia would once again make contact with the desk when the globe returns. The last year has upended and subverted not only the lives of too many of us, but our beliefs. Our world may or may not be a nonholonomic system at a higher dimension, but we are unlikely to return to the world that was. Perhaps the lesson here then is to beware of both the power and the constraints of path dependence, and in building a more resilient future for ourselves and others, we look for ways to free ourselves of the burden of our success, even as we build upon it. If you’ve enjoyed this update, please consider forwarding to a friend or subscribing below. Thank you for your support. From Aspen, Colorado Victor This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit iondrive.substack.com [https://iondrive.substack.com?utm_medium=podcast&utm_campaign=CTA_1]

ISSUE 11: Wreckers of Outworn Empires

Good evening. 1. At the end of last week’s update I touched on legibility, the human inclination to simplify complex systems so as to impose control over them. Treated extensively in the 1990s by political scientist and anthropologist James C. Scott of Yale University in his book Seeing Like a State [https://yalebooks.yale.edu/book/9780300078152/seeing-state], legibility is an intellectual cousin to high modernism, which exudes unwavering confidence in the potential of science and technology to master nature, including human nature, to meet human needs. The Bauhaus movement is perhaps legibility’s most beloved transatlantic celebrity. On the hilly banks of the Roaring Fork River, where I’ve been bolted down for much of the pandemic, the vision of Austrian émigré and Bauhaus instructor Herbert Bayer has left its imprint all over the valley. Inside the ruminative Aspen Institute, expert curators staff a dedicated gallery [https://www.aspeninstitute.org/bauhaus-100th-anniversary/]. But elsewhere too has modernism exerted its hold. When an elite group of European planners met in Athens in 1933 to proclaim a new vision for cities, they called themselves modernists. The Athens Charter, as the vision came to be known, cherished legibility and advocated freestanding, monofunctional buildings laid out neatly on a grid but surrounded by vaguely-defined no man’s land, and it has proliferated on a global scale since. In 2019, architect and leading researcher at the Royal Danish Academy of Fine Arts Jan Gehl refuted in a new book foreword [https://gehlpeople.com/announcement/soft-city-book-out-august-20/]: All in all, these new [modernist] principles represented the most radical course change in the history of human settlement. And, by and large, there was never a proper assessment of whether these changes actually worked for mankind. They, in fact, did not…as exemplified by the widespread discontent... 2. In 2010, the United States National Aeronautics and Space Administration (NASA) and the University of Alabama in Huntsville (UAH) co-founded a consortium to investigate systems engineering and to advance its discipline. It turns out one of the pre-dominant issues confronting large-scale systems engineering is that of system complexity. In the consortium’s seminal publication Engineering Elegant Systems: Theory of Systems Engineering [https://www.nasa.gov/sites/default/files/atoms/files/nasa_tp_20205003644_interactive2.pdf], the co-authors explain: System complexity is defined as a measure of a system’s intricacy and comprehensibleness in interactions within itself and with its environment. This definition points to two factors in complexity: (1) Physical/logical intricacy and (2) human cognitive comprehension. Note that last bit on the human element. We’ll come back to it a few more times in this update. The consortium goes on to provide a granular table of properties of a complex system: What’s remarkable is that of the five properties, two, emergence and nonlinearity, aren’t even internal to the system but stem from the limitations of the human mind. In social sciences too have these properties amply manifested. Nineteenth-century French economist, journalist, and member of L'Assemblée nationale Frédéric Bastiat wrote in his 1850 pamphlet That Which is Seen, and That Which is Not Seen [http://bastiat.org/fr/cqovecqonvp.html]: In the sphere of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause — it is seen. The others unfold in succession — they are not seen: it is well for us, if they are foreseen. Between a good and a bad economist this constitutes the whole difference — the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee. Across the English Channel in 1691, John Locke successfully argued [https://la.utexas.edu/users/hcleaver/368/368LockeSomeConsiderationsAlltable.pdf] that the government ought not to cap interest rates, because lenders would find ways to evade the law and pass the cost of evasion to “widows, orphans and all those who have their estates in money”. Those the government intended to protect would perversely end up with higher liability. The reasoning has withstood the test of time, as central bankers and economists even today [https://www.federalreserve.gov/econres/notes/feds-notes/federal-funds-rate-control-with-voluntary-reserve-targets-20190826.htm] acknowledge and try to mitigate the same concern in major interest rate and price control policies. 3. At the moment, space is again in the headlines. Thanks to a handful of space cadet billionaires but also the current pandemic alerting us to the monstrously tragic consequences of tail risk, expansion of human presence into space has taken on greater moral meaning and urgency. This space expansionist view rests not only on a wealth of science fiction by generations of influential writers such as Jules Verne and H.G. Wells, but also substantial work produced by serious scientists, engineers, military planners, and an informed, diverse, global space intelligentsia. Indeed the name of this newsletter, the Ion Drive, takes inspiration from the eponymous electric propulsion system for spacefaring. In ISSUE 3: The Case for Space [https://iondrive.substack.com/p/issue-3-the-case-for-space], I borrow the words of Mark Hopkins, an economist and board member of the National Space Society [https://space.nss.org/]: The vast majority of resources in the solar system lies in space rather than on the Earth. This is true of both materials and energy… The sun produces ten trillion times more energy than what is currently used by the human race. If we could bring just a small percentage of that to Earth, we will have all the energy we need, and it’s a clean, inexhaustible resource. There is vast potential for increasing the size of the human economy by tapping into these resources... Space makes possible a prosperous and hopeful future for all of humanity. But in examining the folly of legibility in forestry last week, I couldn’t help asking whether full-throated space expansionism has also fallen prey to a failure to appreciate complexity. After all, despite widely different rationales and even heated disagreement among space advocates, all take for granted expansion to space is a Good Thing. Where is the debate on the unintended consequences? On Bastiat’s that which is not seen? It helps here to pinpoint an essential physical property of space little discussed in popular media. Although at first the void between stars and planets may seem like a wide open commons in which spacecraft can sail in any direction, the existence of gravitational wells makes specific lanes of travel more fuel-economical. Meanwhile, radiation belts and other natural phenomena lethal to machines and human life render certain zones highly undesirable. For example, the Earth’s massive gravity well means it takes more energy to travel from the Earth to the Moon than from the Moon to Mars. Linear distance matters less than fuel economy, and the void of space consists of unseen celestial, energetic mountains, valleys, deserts, and seas. Associate Professor Everett Dolman of the School of Advanced Airpower Studies at Maxwell Air Force Base, Alabama illustrates in his 2002 book Astropolitik, Classical Geopolitics in the Space Age [https://www.routledge.com/Astropolitik-Classical-Geopolitics-in-the-Space-Age/Dolman/p/book/9780714681979]: Perhaps the most intriguing point locations useful for strategic or commercial bases in Earth-Moon space are the gravitational anomalies known as Lagrange Libration Points, named for the eighteenth-century French mathematician… Lagrange calculated that there were five specific points in space where the gravitational effects of the Earth and Moon would cancel each other out… An object fixed at one of these points (or more accurately stated, in tight orbit around one of these points) would remain permanently stable, with no expenditure of fuel… The occupation and control of these points is of such vital importance that an advocacy group called the L-5 Society was formed to influence national policymakers. Dolman compares these advantageous points in space topology to choke points in conventional military planning. Their importance is that they dictate specific tactics and rationale for not only efficient exploitation but optimal control of space. So the uncomfortable truth, perhaps why it’s hardly spoken of by non-military space advocates, is that, much like conflicts on Earth, when we go to space we bring our problems with us, except with the practically infinite resource of the Solar System we can wreak destruction infinitely more terrible on each other. But even assuming we somehow overcome our Cainitic tendencies, the techno-geographic comparison of space to an open frontier seems inaccurate at best. Daniel Deudney, professor of political science and international relations at Johns Hopkins University elaborates in his 2020 book Dark Skies, Space Expansionism, Planetary Geopolitics, and the Ends of Humanity [https://global.oup.com/academic/product/dark-skies-9780190903343?cc=us&lang=en&]: The technologies of access to space may improve in the future, but until they do very significantly, the sky literally is the limit for nearly all human activities… The existence of a formidable barrier-boundary between the terrestrial Earth and the astrosphere also means that all the growth of human numbers and interactions is occurring within an effectively closed space… Thinking accurately about the geography of the planet strongly confounds the claim that expansion into space has reduced the closure produced by the expansion of machine civilization within the finite confines of the terrestrial Earth. Space activities are bringing parts of the Earth into much closer interaction than reducing their interaction through spatial interaction… [W]e should expect that a significant opening of the astrosphere as a full frontier will quickly produce an extreme density of interaction, interdependence, and degradation. In other words, Deudney cautions us that there is great discontinuity going from a vibrant human presence on Earth to a vibrant human presence in space, and such discontinuity could be fatal. I rather like Deudney’s visualization, reproduced below with slight edits. Arrows represent movement of people. Professor Deudney’s entire book is like an oversized gem, almost overwhelming in contrarian insight and every chapter a worthwhile endeavor to examine up-close. As a real science-based and realpolitik book, Dark Skies steps up toe-to-toe in intellectual heft with an equally haunting work of science fiction, the Hugo Award-winning Three Body Problem [https://us.macmillan.com/books/9780765382030] trilogy by Liu Cixin. Both warn against space exploration, though the authors advocate diametrically opposed political systems in their works. I am skeptical of the feasibility of Deudney’s recommendation to reverse, regulate, and relinquish broad groupings of current and aspirational space programs. Among Deudney’s wish list are large earth orbital infrastructures, colonization of Mars and asteroids, national or private enterprise asteroid orbit alteration, and ballistic missiles and orbital weapons. For although Deudney provides well-reasoned rationale, he leaves out prescription on how key policymakers and public support might be rallied domestically or treaty discussions coordinated internationally. That said, readers should hardly place the burden on Deudney, or any one person for that matter. This is literally the problem of solving for planetary, perhaps even Solar Systemic, peace. In the end, I also believe that the human longing to explore new worlds will simply be too great to tame for long. Better we accept it as fact and solve for its dangers than hope for space-abstinent future generations. 4. Let us return then to the NASA-UAH consortium, which definitionally includes the limits of human cognition in describing system complexity. Humans learn as we are presented with new information. Recent research, such as studies mentioned in a 2016 Scientific American [https://blogs.scientificamerican.com/cross-check/are-brains-bayesian/] article, postulates that the human brain may operate in a probabilistic mode, accepting only tentatively what it believes to be true, and updating such belief as new information emerges. For example, we see a bike across the street and decide it’s pink but remain open-minded that it’s really red because of the angle of the sunlight. This very human cognitive computation is encapsulated in a mathematical equation: Bayes’ Theorem. The theorem’s simplest form states that the probability of A being true given B equals the probability of B being true given A multiplied by the unconditional probability of A and divided by the unconditional probability of B. If this is a mouthful and the bicycle example above hasn’t shed enough light, consider the following post by science humor Twitter account IFLScience: Stories fill another book [https://yalebooks.yale.edu/book/9780300188226/theory-would-not-die] of how the Reverend Thomas Bayes discovered the theorem in 1740 and why it suffered nearly two centuries of scorn before acceptance by mainstream science, but at the core of Bayes’ Theorem was acknowledgement that the search for truth must not be all objectivity and precision — that modern science must not be wholly legible. Today, the theorem has been credited, among countless examples, with cracking the Enigma Code, powering search engines and speech recognition, rate-setting at central banks, and creating a new field in high-energy astrophysics such as the discovery of the Higgs-Boson particle. So where do we go from here? I am no scientist nor astro-geopolitical strategist. Any discussion on the subject immediately strains the intellectual credibility of this newsletter. As an analyst of economics and design, I find the only call to action I can credibly extend is that my fellow commentators adopt a Bayesian framework in our discourse of space exploration. Rather than unqualified endorsement of a public program or private venture just because it relates to space, ask what our Bayesian priors would be, and how the new initiative might affect the posterior probability distribution of our knowledge. In the introduction to her book on Bayes, author Sharon Bertsch McGrayne summarizes: [Bayes’s rule] is a logic for reasoning about the broad spectrum of life that lies in the gray areas between absolute truth and total uncertainty… Bayes has provided a way of thinking rationally about the world around us…[a]nd it says that we can learn even from missing and inadequate data, from approximations, and from ignorance. Perhaps given a choice between passion and passionate reason, the latter poses the greater danger, and a Bayesian approach to space exploration is vital if we were to avoid wrecking our already outworn home. If you’ve enjoyed this update, please consider forwarding to a friend or subscribing below. Thank you for your support. From Aspen, Colorado Victor This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit iondrive.substack.com [https://iondrive.substack.com?utm_medium=podcast&utm_campaign=CTA_1]

ISSUE 10: Places Where Ancient Groves Remain

Good evening. Before we get into this week’s update, I wanted to thank readers who wrote in or spoke to me after last month’s Issue 2: Portugal is the New West Coast [https://iondrive.substack.com/p/portugal-is-the-new-west-coast]. While most were kind in agreement and glad to see more attention on Portugal, a few pointed out additional considerations on the ground. First, despite publicly stated intentions at the top for an entrepreneur-friendly environment, not everyone in the government seems to have gotten the memo. Bureaucracy doesn’t always match the rhetoric. A reader pointed me to this recent tweet by Cloudflare CEO Matthew Prince: Prince submits for evidence demand by Portuguese agencies that Cloudflare create more than a hundred high-paying engineering jobs in Portugal in 12 months from scratch in the middle of the pandemic. I’ve built many technical teams in my career, and this seems a frustratingly tall order indeed. Another reader pointed out that taxes were exorbitant regardless of a business’s profitability. And, the abstruseness of the tax code adds further burden to the entrepreneur. That said, somewhat unexpectedly, readers who were small business owners did not mind at all lobbying by large multinational companies. That’s because rather than individually negotiated concessions, the lobbying efforts have aimed at improving the rules to benefit everyone. Yet another reader, based in Berlin, summarized the dissenting sentiment best: Portugal’s brand for startups may have peaked. I appreciate the sentiment based on the level of concerns I’ve heard, but believe we are actually still on the front end of how Portugal will shape up itself. Taking European geography and demography into account, there isn’t much elsewhere in Western Europe to go where startups can still find high-quality, English-speaking talent and where the cost of living is significantly lower. That said, facts on the ground, as always, are more nuanced and Portuguese policy makers do seem to have much work cut out still. Here, the Singapore Economic Development Board [https://www.edb.gov.sg/], enthusiastically embraced and applauded by foreign investors in the city-state, may provide a helpful reference point for their Portuguese counterparts. Lastly, a reader based in Lisbon wanted it be known that in the midst of the pandemic, Portugal was kind and protective of its residents, regardless of their citizenship. Bureaucracy is painful here but if a real emergency happens it is nice to know that the government will try to help the people who are here. I cannot express enough how grateful I am for these reader comments, and I look forward to our future exchanges. Now, onto today’s update. 1. For those that work with wood, especially by hand, the name George Nakashima [https://nakashimawoodworkers.com/] (中島勝寿) evokes a special kind of reverence. Born in Spokane, Washington in 1905, Nakashima embodied rugged American ingenuity and master craftsmanship. He lived an understated yet illustrious life that started by the mountainous timberlines of the Pacific Northwest. His studies and apprenticeships took him to Paris, Tokyo, and Pondicherry. Later he planted roots in Pennsylvania and there built a home, studio, and workshop that would become a mecca of contemporary American design. As an Asian American, I see in Nakashima an earlier generation of elders who, embracing both their American identity and Old World heritage, were bound by neither and became something more. Nakashima’s Bucks County estate has been designated a National Historic Landmark and listed on the U.S. National Register of Historic Places. In 1983 he received the Order of the Sacred Treasure from the Emperor of Japan. Today Nakashima is widely considered a father of the American Craft movement and one of Twentieth Century’s most important furniture designers. But Nakashima also likely shared sidewalks and restaurants with his fellow Americans in post-World War I France such as F. Scott Fitzgerald, Ezra Pound, and Gertrude Stein. Arriving in Paris for his university studies in 1928, Nakashima’s best friend was a Russian composer and aristocrat, yet he admired the simplicity and sedulousness of the French workmen. As a French speaker, I was delighted that Nakashima was also and that he took quiet pride in his linguistic command to “almost joke like a native.” He was mesmerized when his menial theatre job brought him in close personal contact with grand European singers at the time such as Raquel Miller and Josephine Baker, who were the toast of Paris. Like many Japanese Americans of his generation, during World War II he was imprisoned, along with his wife and newborn daughter, in an Idaho concentration camp. A stoic patriot, Nakashima spent hardly half a page on his time in Idaho in his 1981 autobiography The Soul of a Tree, and even then, he focused on his work: [I]n Idaho I met a fine Japanese carpenter trained in Japan along traditional lines…We worked well together, scrounging in scrap woodpiles for bits of lumber. Sometimes we received permission to go out into the desert of central Idaho to find bits of bitterbrush, a brave shrub of great character which grows only a few feet in a hundred years. I learned a great deal from this man, through his hundreds of small acts of perfections. He helped me with many of the basic woodworking skills — for instance the correct sharpening of a chisel. We used a traditional Japanese waterstone, which if handled well can produce the finest of edges... He also taught me to sharpen a Japanese handsaw with its very deep gullet. The Japanese saw not only has saw teeth, but below each tooth, a further deep recess which takes away the sawdust without clogging. 2. In this week’s Wall Street Journal, a headline caught my attention: Lumber Prices Are Soaring. Why Are Tree Growers Miserable? [https://www.wsj.com/articles/lumber-prices-are-soaring-tree-growers-miserable-11614177282?mod=searchresults_pos7&page=1] The context is the current remodeling and construction boom. More people are working and schooling children from home, and restaurants are building new outdoor spaces to adapt to the pandemic. But it turns out tree growers aren’t benefiting from this demand surge. That’s because before the trees can be used by construction workers, they first must be processed by sawmills, which are at full capacity. Doubling the woes is a poorly-timed oversupply of trees in the market. So even as builders pay top dollar for wood, sawmills are buying trees at historic low prices. The Wall Street Journal report estimates that log prices, after adjusting for inflation, are at their lowest in more than 50 years. For an investor, the first and most obvious lesson is the importance of industry-level value chain analysis. To the uninitiated analyst, it is all too easy to conclude that strong demand for “wood” would drive up prices, tempered by ample supply. This would have been a boring, and wrong, assessment of value creation in the forestry sector: a critical segment in the industry value chain, the preparation of log so it becomes lumber, is missing. But sharpen our chisel and we find hidden lessons to be joined. For example, how did the sawmills garner so much market power? The first-order answer is that a few sawmills have consolidated most of the capacity, but what made it economically attractive for them to do so in the first place? In Nakashima’s time, logging down a tree, examining it, and deciding its cut was a spiritual journey. In Nakashima’s words: There are so few who listen to the inner voice. In ages past, it would have been easy to join a crusade, to become a member of a community dedicated to building a great cathedral, to hew the great timbered doors, to carve a spirit in stone to grace the glorious façade. But one must work alone, building objects of wood. With a mendicant’s eye, a sadhu’s perception, a ragpicker’s sense, I poke my way through the valley of the fallen giants, finding here and there fragments which will be given a second life. While few commercial mills practiced Nakashima’s philosophy even during his time, the process to prep logs into commercial lumber was, for a long while, mostly the same regardless of the size of the tree. As such, older trees fetched top prices as their girth made possible wider panels that looked magnificent alone or joined by butterfly locks. But automation advanced, and fitting the machine to the most common girth not only brought down the unit cost but made older trees undesirable. From the Wall Street Journal article: When Interfor arrived, it studied the surrounding trees, noting ages and diameters, then calibrated mills to accommodate the most common-sized trunks.. There aren’t enough of the oldest, thickest trees to justify scaling mills for them. Many of the biggest trees went from fetching top dollar to being mashed into paper and cardboard for much less money. Something else also happened: Because of trees bred to become planks and the computerization of mills, well-managed timberland produces about 50% more wood than it did a generation ago… In other words, through product standardization the mills commoditized logs even further. It mattered not where trees came from. No, these planks would never attain the exquisiteness of parcels expertly air-dried and handpicked by Nakashima and his compatriots, but mills competed even less than before on supply and instead on the buyer experience. For example, Canfor, one of the major mill operators mentioned in the Wall Street Journal, has invested heavily in digital transformation with a focus on real-time supply chain visibility for the customer. In his 2003 book The Innovator’s Solution, Harvard Business School professor Clayton Christensen anticipated the above shift: Formally, the law of conservation of attractive profits states that…when modularity and commoditization cause attractive profits to disappear at one stage in the value chain, the opportunity to earn attractive profits with proprietary products will usually emerge at an adjacent stage. Said plainly, what’s happening in forestry is no different than that in publishing. Much as Google and Facebook commoditized content and disaggregated writers and publishers from the audience, advanced automation and standardized plank production allowed mills to disproportionately disrupt the economics of forestry. But the story doesn’t end here, at least not if you care about the longer-term outlook of all this technological change and economic activity. 3. Thea Snow, Director at the Centre for Public Impact, Australia and New Zealand, recently penned a column calling for governments [https://medium.com/centre-for-public-impact/the-il-logic-of-legibility-why-governments-should-stop-simplifying-complex-systems-f8822752d753] to engage with the complexity in our natural world and think more systematically when making policy. By way of example, it turns out the modern tree grower’s decision to plant neat rows of one species of fast-growing trees severely misunderstands the mycorrhizal effect, among other relationships, between trees and the forest floor. For the first generation of trees, the agriculturalists achieved higher yields, and there was much celebration and self-congratulation. But, after about a century, the problems of the ecosystem collapse started to reveal themselves. In imposing a logic of order and control, scientific forestry destroyed the complex, invisible, and unknowable network of relationships between plants, animals and people, which are necessary for a forest to thrive. ESG measurements (environmental, social, and corporate governance) are rapidly gaining currency today because in a post-COVID world investors better appreciate the importance of a company’s sustainability and societal impact in determining the company’s financial future. Yet one must resist the urge to find quick, seemingly scientific answers. In his book Analogia: the Emergence of Technology Beyond Programmable Control, historian George Dyson proposes that any system simple enough to be understandable will not be complicated enough to behave intelligently, while any system complicated enough to behave intelligently will be too complicated to understand. Such stipulation is reason enough to operate as if our current knowledge were wrong, and to view our journey to better understand sustainability as trying to be less wrong. In the epilogue of his autobiography, Nakashima demurs: In a personal way my family and I have gone underground, since we have little relationship to contemporary mores, institutions, economy or systems. As COVID has taught that we tend to underestimate tail risk and misinterpret false simplification of a complex world for the world itself, let us hope Nakashima’s humbler and more spiritual approach makes a return and helps guide our pursuit for a prosperous yet ever more enlightened human existence. If you enjoyed this update, please consider forwarding to a friend or subscribing by clicking on the button below. Thank you for your support. From Aspen, Colorado 🇺🇸 Victor This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit iondrive.substack.com [https://iondrive.substack.com?utm_medium=podcast&utm_campaign=CTA_1]

ISSUE 9: No Man Clever Enough to Know All the Evil He Does

Good evening. 1. It used to be that when a person of influence passed on, eulogists and biographers would offer an assessment of the person’s life and its significance. More recently, it seems, the honor can be accorded in advance, when such person is alive and well and has simply alighted from their most visible perch. Not a day after Jeff Bezos announced his exit as Amazon CEO (though he remains Executive Chairman) did The Guardian dispatch a column entitled ‘A managerial Mephistopheles’: inside the mind of Jeff Bezos [https://www.theguardian.com/technology/2021/feb/03/jeff-bezos-and-the-world-amazon-made] by journalist and essayist Mark O’Connell. I quite enjoyed O’Connell’s framing, and thought he commanded clarity despite the length of his case. O’Connell starts strong with a personal thought bubble: If a thing is available for purchase, and I want to buy it, I know for a near certainty that I will be able to get it on Amazon, and that I will in all likelihood be able to get it quicker and cheaper than I would elsewhere… I’d like to be able to tell you how much it would have cost me to get this book from another online seller, and how long it would have taken. But the truth is I don’t know, and I don’t know because it would have been a hassle to find out. A basically negligible hassle, maybe, but the point is that we live in a culture in which even negligible hassle amounts to a deal-breaker. It is a culture which Amazon helped to create and has come to exemplify, and of which I, as a consumer, am both beneficiary and product. He then sets up the Faustian question: But I am not merely a consumer…I am also a person with political beliefs, and moral principles. There is a distinction between having those beliefs and principles and acting in a way that is consistent with them – and this distinction is, I think, crucial to understanding the meaning of Amazon. What would it mean to resolve this contradiction – between my conception of myself as a person, and my Amazon purchase history? Next, O’Connell ups the stake: But the idea of “boycotting Amazon” arises out of a misreading of what Amazon actually is, and of its position in the contemporary marketplace. Amazon is not, and has not been for many years, merely a gigantic online shop that you can choose either to patronise or not. It is also, increasingly, the infrastructure undergirding the internet itself. Even if my task here was to convince you, the reader, that Amazon was bad and that you should boycott it – which we both know it is, and that you should – we would both of us still, in a strictly technical sense, be using Amazon. (Another, perhaps more accurate way of putting this would be to say that Amazon would still be using us.) Amazon Web Services (AWS), which launched in 2006 and is now the largest cloud computing platform in the world, provides hosting for the Guardian, and for tech mainstays such as Netflix and Twitter, as well as for industrial giants such as General Electric and Unilever. While researching this piece, I watched Amazon Empire: the Rise and Reign of Jeff Bezos, a highly informative – and highly critical – documentary, put out last year by the US non-profit public broadcaster PBS, which itself relies on Amazon’s cloud platform. In 2013, Amazon signed a $600m deal with the US government to host the top-secret workloads of its various intelligence agencies, including the CIA and NSA, via AWS’s Thomas Pynchon-ishly named Secret Region. Here, O’Connell’s case reaches a weak point, where he argues even space ambitions have been framed by Bezos primarily as a way to solve problems a dying planet could present to online shopping. But the column finishes on a clear note: And here we come to the core of the problem: Amazon works too well. Its success and ubiquity as a consumer phenomenon makes a mockery of my ethical objections to its existence… We live in a world where the satisfaction of quotidian desires is the work of mere moments. Whatever you want (and can afford) can be brought to you, cheaply and with vanishingly minimal effort on your part. We know that this form of satisfaction doesn’t make us any happier, and in fact only damages the world we live in, but even so we continue pursuing it – perhaps because it’s in our nature, or perhaps because almost every element of the culture we exist in is calibrated to make us do so. And so the problem, as such, is one of desire. It’s not that Amazon gives me what I want; it’s that it gives me what I don’t want to want. I want the convenience and speed and efficiency that Amazon offers, but I’d rather not want it if it entails all the bad things that go with it. 2. If Mark O’Connell and The Guardian exemplify a begrudging acknowledgment but ultimately critical view of Bezos’s societal impact, then Walter Isaacson is an unapologetic booster. In an introduction to a collection of Bezos’s writings entitled Invent & Wander, which was actually published 3 months before Bezos announced his retirement, Isaacson lavishes: I am often asked who, of the people living today, I would consider to be in the same league as those I have written about as a biographer: Leonardo da Vinci, Benjamin Franklin, Ada Lovelace, Steve Jobs, and Albert Einstein. All were very smart. But that’s not what made them special. Smart people are a dime a dozen and often don’t amount to much. What counts is being creative and imaginative. That’s what makes someone a true innovator. And that’s why my answer to the question is Jeff Bezos. Isaacson justifies his praise with what he considers to be four key ingredients: * To be passionately curious. * To love and to connect the arts and sciences…to be excited by all disciplines. * To have a reality-distortion field and to think different. * To retain a childlike sense of wonder. And yet Isaacson’s case falls flat almost immediately, as he cites non sequitur anecdotes either banal or so commonplace as to apply not only to Bezos but a whole demographic, such as love of Star Trek and having Thomas Edison and Walt Disney as childhood heroes. By the end of his introduction, Isaacson intones: But he still has many chapters to write in his story. He has always been public spirited, but I suspect in the coming years he will do more with philanthropy. Adoring this sentiment may sound, it unwittingly confesses the premature nature of any superlative assessment of the legacy of a person still living. And one is left with the sense that what is unsaid but ultimately a more credible, though crude, justification to compare Bezos to icons of the Renaissance and the American Revolution is simply that Bezos, at the time the book went to press, was the richest man in the world. 3. At this point, it’s tempting to take the position that Bezos is a bit of both, a Mephistopheles and an uncrowned prince of modern-day renaissance. But that too should be embraced only as a tentative, transient view. Before I offer my alternative, it’s important we now hear from Bezos in his own words, rather than the words of others on his. In reading Invent & Wander, I thought the following excerpts stood out as not only genuine but also practical. On making decisions: Many of the important decisions we make at Amazon.com can be made with data. There is a right answer or a wrong answer, and math tells us which is which. These are our favorite kinds of decisions… As you would expect, however, not all of our important decisions can be made in this enviable, math-based way. Sometimes we have little or no historical data to guide us and proactive experimentation is impossible, impractical, or tantamount to a decision to proceed. Though data, analysis, and math play a role, the prime ingredient in these decisions is judgment… Math-based decisions command wide agreement, whereas judgment-based decisions are rightly debated and often controversial, at least until put into practice and demonstrated. Any institution unwilling to endure controversy must limit itself to decisions of the first type. In our view, doing so would not only limit controversy — it would also significantly limit innovation and long-term value creation. On investing: A dreamy business offering has at least four characteristics. Customers love it, it can grow to very large size, it has strong returns on capital, and it’s durable in time — with the potential to endure for decades. When you find one of these, don’t just swipe right, get married. On forging culture: [A]re high standards intrinsic or teachable? If you take me on your basketball team, you can teach me many things, but you can’t teach me to be taller. Do we first and foremost need to select for “high standards” people? If so, this letter would need to be mostly about hiring practices, but I don’t think so. I believe high standards are teachable. In fact, people are pretty good at learning high standards simply through exposure. High standards are contagious. Bring a new person onto a high standards team, and they’ll quickly adapt. The opposite is also true. On managing oneself: I like to putter in the morning. I get up early. I go to bed early. I like to read the newspaper. I like to have coffee. I like to have breakfast with my kids before they go to school. So my puttering time is very important to me. That’s why I set my first meeting for ten o’clock. I like to do my high-IQ meetings before lunch… As a senior executive, what do you really get paid to do? You get paid to make a small number of high-quality decisions. Your job is not to make thousands of decisions every day… If I make, like, three good decisions a day, that’s enough, and they should just be as high quality as I can make them. Warren Buffet says he’s good if he makes three good decisions a year, and I really believe that. On reframing the unknown so it becomes the familiar: My friend Don Graham, whom I’ve known for over twenty years, approached me through an intermediary and wanted to know if I would be interested in buying the Washington Post. I sent back word that I would not because I didn’t really know anything about newspapers… Don, however, over a series of conversations, convinced me that was unimportant because the Washington Post already had so much internal talent who understood newspapers. What they needed was somebody who had an understanding of the internet, and so that was the first thing. Lastly, on financial management, as I quote in last week’s Ion Drive: Our ultimate financial measure, and the one we most want to drive over the long-term, is free cash flow per share. Why not focus first and foremost, as many do, on earnings, earnings per share or earnings growth? The simple answer is that earnings don’t directly translate into cash flows, and shares are worth only the present value of their future cash flows, not the present value of their future earnings. What emerges for me from these writings, filtered by neither booster nor detractor, is straight-forward, at times even technical, business advice. While Bezos does philosophize on his space ambitions or the importance of entrepreneurialism in rebuilding better from the pandemic, to me he comes across as neither evangelical nor conspiratorial, though certainly not without ego. 4. In this month’s London Review of Books, Professor Kieran Setiya of MIT writes: Picture, if you can, a single person with the talents of Keats, Schubert and Seurat: an inspired poet, a prodigious composer, a revolutionary painter, a figure of unlimited promise who died, like them, in his youthful prime. If you replace poetry, music and painting with mathematics, economics and philosophy, the person you end up with is Frank Plumpton Ramsey. A fellow of King’s College, Cambridge, Ramsey was born in 1903 and died before he turned 27, having done extraordinary work in all three fields. He is revered by academics, his influence evinced by the almost comical range of ideas named after him. In mathematics: Ramsey theory, Ramsey’s theorem and Ramsey numbers. In economics: Ramsey pricing, Ramsey problems and two rules, one Ramsey’s, one shared with Keynes. In philosophy: Ramsey sentences, the Ramsey test, the Ramsey-Lewis theory of reference, and the Mill-Ramsey-Lewis account of natural laws. Many of his ideas were so groundbreaking that they were taken up in earnest only decades later. This phenomenon has also been named after him: the Ramsey effect is what happens when you find your apparently novel insight anticipated, more elegantly, by Frank Ramsey. Indeed, for all of Mr. O’Connell’s handwringing about Amazon’s moral threat to a sustainable Earth or Mr. Isaacson’s confidence in Bezos’s mantle as benefactor for future generations, Frank Ramsey may have framed such thoughts in a technical concept termed “social discount rate” that could then be applied to analysis. Again, Professor Setiya: Ramsey was a pragmatist not just in theory but in practice…And he went on to write two of the most influential papers in 20th-century economics, one on optimal taxation, the other on optimal savings. The second paper, in particular, is worth revisiting. Its question was how much a society should save, and how much it should consume, so as to maximise aggregate wellbeing for the indefinite future. Ramsey’s apparatus is now central to discussions of the long-term economics of climate change. How much should we invest in abating carbon emissions, consuming less for the sake of future generations? A key variable in the mathematics is the ‘social discount rate’: the rate at which we discount the wellbeing of future generations, giving their lives less weight in our calculations as time goes on… Because they compound over time, differences in the social discount rate have an enormous impact on policy. They are responsible for the wildly disparate recommendations of economists such as William Nordhaus and Nicholas Stern… Although his paper explored the mathematics of temporal discounting, Ramsey agreed with Stern: the idea that future generations count for less ‘is ethically indefensible and arises merely from a weakness of the imagination’. Ramsey would have been a climate hawk. In a different context, he was more open to attitudes that discount the future…I understand the urge to read into Ramsey’s words, but he doesn’t point here to a theory of ethics and it would be an implausible theory if he had. You can’t assess the truth of someone’s ethical beliefs – for instance, the belief that it’s ethically indefensible to discount the wellbeing of future people – by the effects on them of holding that belief. There are inconvenient truths.  That last bit underlines my problem with Mr. O’Connell’s argument that Bezos merely thinks of space as a way to expand Amazon’s addressable market. The effect of a space economy making Bezos even richer does not make it false that he could also be genuinely concerned about the future wellbeing of human kind. So where does this leave us? For readers who work in tech or business, Bezos looms large and that he commands outsized mindshare is undeniable. Yet the example of Ramsey illustrates what Charlie Munger calls the availability bias. Yes Bezos clearly has impacted hundreds of millions of lives and amassed unfathomable personal wealth, but it’s far from clear whether the cumulative impact he has had on society is greater than that of Ramsey’s, whose thoughts have joined the foundation of a century of economic and political policymaking and scientific discoveries, and who may even offer from the grave a way to assess Bezos’s impact holistically. Perhaps an unsatisfactorily indefinite but intellectually most tenable answer is to simply take Bezos at face value: for now, an extraordinarily successful business leader who is trying to make more meaning of his success while living his best life and offering advice when feeling like it. Nothing more, nothing less…until such time future generations can look back with the benefit of hindsight, as we do now at Frank Ramsey. If you enjoyed this update, please consider forwarding to a friend and asking them to sign up by clicking on the button below. Thank you for your support. From Aspen, Colorado Victor This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit iondrive.substack.com [https://iondrive.substack.com?utm_medium=podcast&utm_campaign=CTA_1]