Riskgaming

Maybe the world is effing amazing and I am just reading the wrong things

Description

“Securities” podcast host Danny Crichton and producer Chris Gates talk about the last two weeks of “Securities” newsletters.

The first, from July 9th called “Dissonant Loops”, discussed the chaos and crises plaguing the world today and why our state capacity to respond to them is so limited. The second, from July 16th entitled “Scientific Sublime”, was a palette cleanser of sorts focused on the human achievement of the James Webb Space Telescope and how this accomplishment can be shared by everyone on Earth.

We’ve got the lows and the highs, and then we talk about a few of the top Lux Recommends selections from the two issues, including: “Postcards from A World on Fire” from The New York Times last year showing the scale and diversity of climate devastation IEEE’s overview of the daunting data challenges that come from transmitting those gorgeous images to Earth CLIPasso, a Best Paper awardee at SIGGRAPH 2022, which uses machine learning to abstract complex photography into simpler sketches “Building an Open Representation for Biological Protocols” Daniel Oberhaus’s book Extraterrestrial Languages, which asks two provocative questions, “If we send a message into space, will extraterrestrial beings receive it? Will they understand?” Finally, Kit Wilson’s analysis in The New Atlantis on “Reading Ourselves to Death”

Transcript

This is a human-generated transcript, however, it has not been verified for accuracy.

Danny Crichton:
We're still recording over here. You wanted to talk about the Securities' newsletter for the last two weeks.

Chris Gates:
The New Apex of Antropic Apex.

Danny Crichton:
Yeah.

Chris Gates:
I had to read it twice.

Danny Crichton:
Yeah, that's a tough one.

Chris Gates:
That was like, "Oh, it's a callback to the previous post." And you're like, "That was the apex, and now we are at a new apex."

Danny Crichton:
Yes, we're apexing the apex. I know, I know. Well, let's set out. So as we're recording this right now, we just found out that the Italian Prime Minister Mario Draghi is resigning and his resignation, unlike it was a week ago or a couple days ago, has been accepted by Italy's president, which means that likely Italy's going to head towards early elections, leaving it into a horrific state. It's going to be a little bit of a [inaudible 00:00:49] case. Well, Draghi was focused on getting an IMF bailout and sort of cleaning up a lot of the finances around Italy. They're not going to clean them up now. And Italy is a big economy, and that's a huge disaster for the European Union. And that relates back to the post we did two weeks ago on, The New Apex of Antropic Apex, which was... We're at this time in which there are so many challenging situations going on.

When I read the newsletter, Shinzo Abe had just been shot in this shocking, particularly in Japan, but this shocking attack while campaigning before the upper house elections for the House of Counselors in Japan. You had huge protests in Sri Lanka. This week we found out that the very unpopular prime minister who has been Prime Minister six times was elected as president by the ministers in parliament, which itself is going to create a huge amount of additional challenges in that country. Meanwhile, the economy is collapsing in Ghana. There's serious concerns about economic collapse in Pakistan. Food prices are jumping up. The only positive news a little bit that has sort of ameliorated in the last two weeks was actually oil prices. Oil prices have actually declined literally because investors think the recession is so likely that oil prices are going down. And so when we were writing the piece, we were referring back to Lux's, I think it was the Q1 limited partner letter, which we had to clear through legal, but we eventually posted to the internet.

And the theme of that was Antropic Apex, and the idea of at a time when there's so much chaos and disorder and thoughts and models of how we approach the economy are changing. Both it's the toughest time to invest, but it's also when the most money is made. And so you have to stay glued basically to the wires. You have to follow all this news. You basically have to keep engorging on the fire hose of information because you got to know what's going on. And we were focused on the fact that a couple months after that letter, it feels like we're hitting that new apex, that things are just crescendoing to a point where right now in Europe alone, you have the British Prime Minister going through this huge reelection. And as we're recording the show, Liz Truss and Rishi Sunak are sort of the two finalists, both of which are somewhat unpopular across the country.

And so even though they're going to take over, they're only going to take over for a limited period of time. Emmanuel Macron in France is suffering from a lack of a parliamentary majority. So if you look at these core economies, France, Germany, and Italy in the EU officially. And then with Brexit now, Britain is separate, but obviously interconnected, also a [inaudible 00:03:09] case. The list of [inaudible 00:03:11] case countries just in is increasing and increasing. But it does feel like we're sort of getting to the top of the rollercoaster ride. This is the top of...

Chris Gates:
Really? Are you sure? Danny, I read your posts. No, I see it. I read your post and it seems like we are on the precipice of things just getting really a lot worse. Look, there is so much news in so many bad things happening. We don't have time for this. I need your analysis on what all that stuff means, but we're taking it as a whole. What is the gestalt of what's happening?

Danny Crichton:
I think why... I was joking in the piece in the newsletter that the economist could go from a weekly to a daily and still be just as long and it would probably not be able to catch up with all the crazy stuff that's going on these days. I think you have to go back to fundamentals, which is if you go back to food and fuel as the two core ingredients to civilization, both of these have been endangered deeply over the last three months due to the Russia's war on Ukraine, due to the recession, due to after effects and aftershocks of COVID. And so you have extremely expensive food prices going on across the world. Meat prices are going up because the feed stock that you need in order to feed cows and pigs are also jumping. So pork and beef are at all time highs.

And then you look at fuel and as I said earlier, fuel prices have ameliorated a little bit the last two weeks as investors have sort of predicted over recession is imminent, but they hit all time highs in Europe. And as we're recording the show, Britain for the first time ever experienced 40 degrees celsius heat. It is the hottest it has ever been on the British Isles. They're normally like San Francisco temperatures and they're in the hundreds. This is not a country that has air conditioning by and large. So you're looking at huge waves of potential fatalities, extraordinarily tough damage to the infrastructure there. The tube doesn't have air conditioning. It's like 120 in some parts of the tube system in London. And that heat wave also extends to Spain and to France and to Italy. And so part of my thesis was A, you have this huge challenge around food and fuel. And normally you would expect the government to step in and say, "God, we're going to go solve this. We're going to go and respond in some way."

And the second half of that piece was really focused on why is our state capacity so limited? Why can we just do nothing? And what's happened over I think the last couple of decades, particularly in the West, is we've lost quote on quote, "The ability to build." And secondarily, the ability to build quickly, efficiently in rapid response to changing events that are going on around the world. So you look at fuel prices, part of that was triggered over the last decade from disinvestment in nuclear or disinvestment in oil and gas, which while they have huge climate change, properties are still going to be around for many decades. And particularly in industries like agriculture where you need petrochemicals in order to actually build fertilizers, it's not going anywhere. And so the lack of investment over the last decade has really hollowed out our ability to be resilient and to respond.

And then second is sort of this speed issue, which is the permitting process, the challenges of getting approvals, the ability to plan these things. Like when we start to plan a new plant or offshore drilling or any part of the energy ecosystem, we're talking like a decade for anything to actually happen. The only thing that President Biden has been able to do, which he has under his authority, is to release oil from the strategic petroleum reserve. That he can do, and he did and millions of barrels were sort of released and that was sort of a little bit of a cushioning effect. But obviously that's a short term gap measure to try to fix the problem. I've been looking at this question of where did our state capacity go? We used to be able to build the Hoover Dam. I don't think we were able to build dams at all today.

That's actually a huge issue as thousands of dams are actually up on their end of usable lives. So I don't have a positive answer to that other than without the ability to build, to build factories, to build new infrastructure, to replace infrastructure, you can't respond to the changing geopolitical dynamics going on in the world. Europe right now wants to basically cut off oil and gas supplies from Russia, which obviously makes sense. They could have planned that over the last 10 years. That was obvious. Okay, now you kind of know the reality. But given the speed at which Europe is able to respond to these things, we're talking years for them to wean themselves entirely off Russian gas supplies. And that's just not good enough at a time when people are suffering and you need things to happen today.

Chris Gates:
Yeah, well nothing ever really happens until people are uncomfortable. And so does it just have to get to a point where people are suffering more or the people who need to make the decisions are the ones dealing with the pain of what's happening for there actually be the will to get through that complication?

Danny Crichton:
I think one of the challenges with most disasters, and actually I believe, I haven't written the newsletter, but it'll be the topic of this week's newsletter, is there's a divide between risk and uncertainty. And risk is stuff that you can quantify. An uncertainty is what you cannot quantify. So you can quantify the risk of a heart attack because across millions of people, we know that... I'm making up a number, 500 people are going to have a heart attack this year. If you're an insurer, you can ensure that pool of risk and say, "I don't know which of you will have a heart attack, but I know across this population, 500 of you will. I know what the cost of that heart attack is going to be to me as an insurance company, and therefore I'm able to price a premium. You're able to buy it and we all have insurance." You go over to natural disasters or some of these kind of geopolitical disasters like war in Ukraine and there's no way to predict this.

Obviously Russia could have invaded Ukraine anytime in the last decade arguably. They could also have not invaded this year. They could have gone next year, it could have been 10 years from now. We see the same sort of question around China and Taiwan. There's always seems this fear that it's going to happen, but we don't know, is it tomorrow, five years, 10 years, 30 years, 50 years? And what that means is if you're a policymaker, it's very hard to say, "Look, we got to be completely protective. We got to spend a ton of money to prepare for this when it may not even happen." And there's a lot of things that may never happen. I randomly, I don't know if it's because I'm such a negative person these days, but Twitter was recommending me an article about how asteroids are likely to crash into the earth and kill everyone. That's his ad. That's what I get advertised, is everyone is going to be dead. So I guess they have really good AI detection software these days,-

Chris Gates:
They do.

Danny Crichton:
... Because they know exactly who to target for this stuff. But nonetheless, how do you... Let's say asteroid crashing into earth, should we prepare for that? Should we spend billions of dollars preparing ourselves with rockets to be able to move the asteroid with satellite systems that are scanning space, looking for things that might hit the earth, that create resilience for all these houses? And what do we do? Create genetic libraries for all the plants and species on the planet so we have those saved? I guess we're already kind of doing that.

Chris Gates:
I mean at the end of your piece, and then I want to move on to the more hopeful one, but it seemed like you were frustrated that a lot of this could have been prevented. And that was the note that you left everyone with was, "Look, we could have prevented all this stuff, but there's not the will to do it."

Danny Crichton:
Yeah, I think I ended on the note of, a lot of this is just a choice. And when you think about disaster planning or resilience or stay capacity, yes, there are a lot of rules. Yes, there's a lot of complexity, but it doesn't have to be complex. It doesn't have to take a long time. It doesn't have to. These are all decisions. We choose to make it complex and to take a long time and to be impossible to build or to get stuff done. And it's not the case that it has to be that way. And so I ended up with a Jean-Paul Sartre quote, which is what every political piece should eventually quote at some point. I love to throw and Sartre every once in a while and go to the bookshelf and pull it out. But I did this quote and he's talking about it.

This was in his lecture, Existentialism as a Humanism, but he said, "Quietism is the attitude of people who say others can do what I cannot do. The doctrine that I am presenting to you, which is existentialism, is precisely the opposite of quietism since it declares that reality exists only in action. It ventures even further than that since it adds man is nothing than other than his own project. He exists only to the extent that he realizes himself. Therefore, he has nothing more than the sum of his actions, nothing more than his life. ... In life, a man commits himself and draws his own portrait outside of which is nothing." And in Sartre's world, when he talks about existentialism, we basically don't exist until we do actions. And what that means is like, look, if... He has this whole analogy in here, he's like, "There's these painters who say they can't paint because of whatever reason. All these other people can paint, I cannot paint."

And his point is you're not a painter because you're not painting. And you can't say, well, "I'm a painter who doesn't know how to paint." Or, "I'm a painter and I can't get anything done." By definition of the fact that you're not painting, you're not a painter. And so reversing that, he's like, "But if you're painting, then you are a painter. And therefore, you are now in this world and you're in this action." So my take on that is if you're a country that wants to be known as a building dynamic, progressive place, you actually have to do the action to prove. That you can't say that the infrastructure is great if you're also not building it. That's where this divide is. And so to me, I just think that we have to keep going back to, it's voluntary. It is by choice. We pick this world, we have immense amount of control over what takes place, and we have chosen this outcome.

And so as depressing as it is, it is the outcome we chose. And I don't know if that's uplifting or declining, but I tend to believe it's actually uplifting. This can be different. And that means that all of us can get involved and make a change going on here.

Chris Gates:
Okay, well I think that's a good place to transition to the most current post, which is going from inaction to action.

Danny Crichton:
We obviously had a very negative piece two weeks ago. So I was like, "We need to cleanse." The opposite of amuse-bouche. So I wanted to do something positive. And something positive did happen last week, which was the first photo shot by the James Webb Space Telescope were released by NASA. And they were incredible. They were sublime. They really showed I think the potential of technology to transcend national borders, our own kind of internecine warfare, all that strife that happens in the news every single day. And then you look at awe and you're like, look at all these galaxies. All those galaxies are made of thousands and thousands and thousands of planets. And we're this useless stupid speck in which we don't get anything done. Everything's negative, and no one in the universe effing cares. And so what I loved about this story was A, I really felt it was a sublime experience. It was a spiritual experience. It was his ability to look at the quality of greatness and say, "A humanity can do this."

And the best part was it was that a group of, I want to say a dozen nations, Canada, parts of Europe, came together to build this. It was an international consortium. And then on top of that, you start to think about all the immigrants who came to the United States who are in our science and technology professions who work at NASA on this project over the last 20 years to launch James Webb into orbit and get it into place. And it's like this is just humanity at its best. It's people with different backgrounds, different communities, different cultures, different religions, coming together to build something of incredible excellence, allowing us to peer into things no human eye could ever possibly do. And we did that. Now granted it took 20 years, so there's a little bit of a negative story, which I didn't put in the newsletter because I was like, "Ah." But I think that it shows that when you actually set your mind to saying, "We can do better as a species", we did it. What an accomplishment.

Chris Gates:
Because when I read about what it took to get it up there, all the challenges, there's so many things they had to overcome and the complications that they had to anticipate. And it all worked. And there were so many things that could have gone wrong. And it's amazing that it actually happens. So I'm with you on it being a glimmer of hope. So I've listened to Science Friday. Since joining Lux, I've been doing a lot of Science Friday listening and just listening to some of the scientists that were working on it and interpreting the photos of them just being like, "Yeah, I saw that", and I cried. Just how moved they were by the photos and the information in the furthering of their research that is now possible because of this thing really did GI give hope. And I think it was, and you pointed this out, that it was an experience that maybe was shared amongst a large portion of the world.

Danny Crichton:
Yeah, I mean the photos were on the front page of a lot of newspapers all around the world. And it's one of these things where obviously I think a lot of folks saw them on Twitter or other social media, and that's great. I wish that everyone could just... This is where a museum works so well. I wish you could get a sense of just how much it took to get this photo. I just wish people would really step back and appreciate. This was an immense achievement. And so I felt like that was the right kind of cleanser after a week of total chaos. And the chaos, as I said, [inaudible 00:16:12] case. Now that's new since the last time we talked in Italy. Certainly not an unimportant country. But we have the ability to do this. We have the ability to build huge teams to solve incredibly hard and technically challenging problems.

And a lot of the problems that we have to solve, housing, infrastructure, are easy. The other side of it is housing is not complicated in the same way. It still requires people, but it's not like we had to invent whole new areas of physics in order to be able to do this. So to me, it's always the enemy that I always have is why can't we do the easy stuff? I don't know. It seems like we can do the hard stuff. And it reminds me, and I'll end here, it reminds me, I believe it was Larry Page, it might be Serge Brand. One of the [inaudible 00:16:57] founders, has this quote that oftentimes it's easier to do the moonshot than the easier project, because the moonshot gets people galvanized and excited and mission oriented and they get super gung ho about it. And the easier project, even though it might be equally valuable or just as important, just doesn't galvanize people the same way. They're not going to put the time in, the motivation isn't going to be there, the momentum doesn't build. And so that ends up being harder.

So he's like, "It's way easier to build a flying car than it is to build a safer vehicle, because the flying car is going to get you the best talent, people are going to go bold on that. But you want a safer car, it's like, "Oh, okay. Well yeah, sure, I'll work on that next week.""

Chris Gates:
We only have a couple minutes. We have two minutes here. I just want to leave people with what we're recommending to take a look at.

Danny Crichton:
Yes, we had a couple of Lux recommends. Peter recommended a graph that showed the top 10 websites over the last three decades and how they've changed and just how many have dropped out of the top 10, things you've never even heard of. But even recently they've changed. And so super fascinating graph. One of our summer associates recommended a New York Times feature called Postcards from a World On Fire, which showed obviously a lot of devastation. So this was the negative side of that newsletter, but it was like, but how devastation is different country to country. So you got wildfires and droughts and flooding and it's different from place to place. Very excellent piece. We had a couple of pieces from Dina and one of our associates Will McCready on all the daunting data challenges out of the James Webb Space Telescope. And then Sam [inaudible 00:18:23], our scientists and residents recommended, I'm going to call it CLI Paso, which was the best paper award. [inaudible 00:18:28] SIGGRAPH 2022, one of the most prominent computer science conferences. It's an AI algorithm and machine learning model that's designed to take an abstract complex photo. So think you take a photo of a medieval night wearing a sword in front of a Roman amphitheater or something like that. And the model will actually simplify it and abstract out its core features to create an expressionist painting. And so the way to think about this is abstraction is probably the hardest thing to do in AI, because you've got to get the right brushstrokes. What is important in this really complex photo that will allow you to basically understand what's going on, but with much less detail? So think what basically every artist does. And abstraction is the core of visual arts. And so it won a huge award at SIGGRAPH because it's pretty damn good. You look at some of these pictures and what it's able to do, and it's abstracting in a way that I think no one ever thought anyone other than an artist could be able to pull off.

So that was an amazing both demo as well as paper to take a look at that. Shaq recommended a piece on the open representation of biological protocols. This is actually from one of our companies Strateos, and it looks at how to basically create interconnections between different bio companies. So most of them are very siloed. So how do you create sort of open source representations of bio data so that any company can use them. And then lastly, Sam, and I love this because we were talking about the James Web Telescope, recommended an MIT book on extraterrestrial languages. So if you were to think about how aliens would speak, what would that look like and how would we interact with it? That's the book for you. And in a world in which we're talking about space and we're looking at all these galaxies, I just thought extraterrestrial languages, that's what we're going to need going forward.

Chris Gates:
A hundred percent. So I will put those in the show notes, or you can go to the securities newsletter and get everything there, it's all collected there. You don't have any recommendations for the world is ending posts? There is nothing like doom and gloom in that one?

Danny Crichton:
There are a lot of good recommendations. I mean, I recommended a piece called Reading Ourselves to Death, and I extracted this quote. "When we put the two accounts of abstraction together, we begin to see a problem. Every time we read, we inevitably conceptualize the world in perhaps an ever increasingly abstract way. And it's conceivable that we may reach a point where those abstracting effects go too far." And so the point of this whole piece is basically you're overwhelmed with data and information and models and frameworks and thinking that it occludes your ability to even process what's really going on in reality. The substitute, all these books and all these readings are substituting for the actual reality of the world. And saying as someone who reads constantly about how terrible the world is, maybe the world is really just effing an amazing, and I'm just reading the wrong things. The piece I'd pull out from two weeks ago.

Chris Gates:
Okay, perfect. All right. Thanks so much Danny.

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