Remastering the elements of modern life
If the story of civilization is the mastery of the four elements of earth, fire, air and water, then the story of modern life is the miraculously thin line between mobilized states and chaos. Entropy is ever present, maintenance is a daily necessity, and the only thing holding all of us together is our ability to connect with each other, build community and governance, and labor on the project of keeping all of this
This week, we saw a few mobilized states and just where they stand in the throes of elemental history. The reality isn’t pretty.
Starting with the earth element, we witnessed the horrific deaths of now more than 22,000 people from the Kahramanmaras earthquake that devastated Turkey and Syria on Monday and will devastate wider Anatolia for years to come. Turkey reported nearly 19,000 casualties, and Syria identified slightly more than 3,000 as of this writing.
How high will the numbers go, and will we ever get an accurate count? With state capacity limited in northern Syria after years of fighting between the country’s president Bashar al-Assad and a variety of groups with claims on the region, conducting a census was near impossible before, and is truly impossible to comprehend now. If the basic functions of a modern state is a count of population (a census) and a mapping of territory (a cadastral survey), Syrians will be waiting for years to answer both of those fundamental questions.
Search and rescue has been a slapdash affair on both sides of the border but particularly in Syria, which was pummeled by heavy snow and cold shortly after the earthquake struck, complicating emergency operations. On the horizon is the arduous long-term humanitarian response required to protect the tens of thousands of people displaced by this calamity. Their prognosis is not good. Yesterday, the United Nations delivered the first aid shipment to Syria, but a lack of safety and basic infrastructure limits the resources that are deliverable. From CNN:
“We’ve got major disruptions to basic water supplies, we’ve got major disruption to fuel, electricity supplies, communication supplies, the basics of life,” [WHO incident response manager Robert Holden] said. “We are in real danger of seeing a secondary disaster which may cause harm to more people than the initial disaster if we don’t move with the same pace and intensity as we are doing on the search and rescue side,” Holden added.
Syria (and by some extension eastern Turkey) are sites where elemental entropy has triumphed over human institutions and our mastery of the environment. This is a region that has been tyrannized the past decade by a succession of war, genocide, famine and now the very earth the region stands on. It’s hard for the state (or even “a” state) to help people when the state doesn’t exist in the first place.
Switching from earth to the elemental power of “fire”, a simmering crisis over the past few months (and over many years) has now reached a roaring boil in South Africa, where constant and expanding rolling blackouts have threatened to hurl sub-Saharan Africa’s leading economy into the abyss. President Cyril Ramaphosa yesterday declared a national state of emergency and said that the country’s worsening power failures were “an existential threat to our economy and our social fabric.”
The corrosion of South Africa’s state capacity has been caused by that caustic universal governance solvent: corruption. The most prominent display of the problem in the last few years was the Gupta family’s intimate ties with former president Jacob Zuma, in which the Guptas are accused of jaw-dropping levels of influence peddling and the mass siphoning of public coffers to the tune of billions of dollars. Two members of the family were arrested in the United Arab Emirates last year and are awaiting extradition.
The Guptas were heavily involved with Eskom, South Africa’s state-owned power company, as was McKinsey, which faced an extensive scandal in 2018 after signing its largest-ever contract in Africa with the utility and becoming embroiled in the sprawling Gupta affair.
The most recent beat in this story happened over the holidays, when Eskom CEO Andre de Ruyter filed a police report demanding an investigation into his potential assassination by cyanide-laced coffee.
South Africa’s energy crisis has many layers. There are the decades of mismanagement and corruption at Eskom which led to crippling piles of debt even as the power company failed to deliver basic services. More recently, there has been a decline in the country’s basic law and order, with coal deliveries to Eskom being outright stolen in transit while its power plants are sabotaged by thieves who strip them for valuable parts and resources. In December, South Africa’s army was deployed to protect functioning power plants from being targeted.
Here is one of the most important economies in Africa disintegrating before our very eyes, a lack of state capacity and sustainable long-term infrastructure forcing a robust economy into its grave. Can the right institutions be organized to provide basic power services without the attended corruption? Can state capacity be built up once again? The future is grim if not hopeless.
Let’s switch from fire to air as we approach my least favorite story this past week: the balloon. There’s not much to say about the Chinese spy balloon that hasn’t been said across thousands of articles and tens of thousands of tweets the past week. But I will say this: for a country with the state (military) capacity of America, the peculiar ineptitude of the whole affair is unsettling.
I’m with several senators asking why the balloon wasn’t shot down over rural Alaska or even as it first crossed the Bering Strait (as I write this, the U.S. just shot down an object at this location late Friday afternoon). Did we just not see it? A Pentagon official claimed during a Congressional hearing that defense leaders waited for the balloon to cross the entirety of the United States in order to recover the balloon in shallower and warmer South Carolina waters. But then there were all the previous spy balloons that have flown over the United States that weren’t shot down at all.
We know that officials are dissembling when the basic logic of facts and statements don’t add up. Which is frustrating, since as I wrote back in “Dissonant Loops” last year:
State capacity demands basic truth from us. It requires consensus on what reality is. It requires consensus around what the strategy of how to handle that reality and how to transform a nation’s potential into stability and power. And then it requires consensus on the means for enabling that action. That’s the “what”, “why” and “how” of basic governance.
Clearly we can’t answer those questions. At least we know “where” the balloon was, I guess.
Finally, let’s head over to our final element, water, and the looming specter of glacial flooding. A warming Earth is accelerating glacier melt, and that surge of water could trigger sudden and rapid sea level rises that new studies predict could instantly threaten 15 million or more people. Glacial water drains into glacial lakes, which can swell in the right conditions and potentially overflow dams, dykes, and other infrastructure designed to contain them.
Here we have an example of our capability to solve future problems with our current state capacity. We can model these glaciers, track the movement of water, and predict — with reasonable certainty — who is at risk and who is not. But can we mobilize the resources right now to solve a looming problem that hasn’t happened yet? It’s the Catch-22 I described in “Uncertain Risks”:
Uncertainty, on the other hand, comes from future events where the frequency and cost cannot be estimated. Unmeasurable, these events cannot be insured, since there is no efficient market price to offer.
Mobilizing the state to solve problems and not just respond to them is the most important benchmark for economic growth and national sustainability. Turkey, already wrecked by the inflationary macroeconomic policies of President Recep Tayyip Erdoğan, now faces a calamitous economic and social crisis in its East. South Africa’s stumbling economy will find that there are few routes out of its self-induced crisis, while America’s sovereignty will increasingly be dented by a rising China. Meanwhile, everyone, everywhere needs to approach the coming climate emergency all at once.
At one point, we had mastered earth, fire, air and water. We will have to mobilize again to master them once more, since the world didn’t become safer and larger, but rather harsher and closer. It’s just the next chapter in the long story of civilization, and it’s time we understood our agency and write the coming plot for ourselves.
A Postscript: Nickel and crimed
I’ve previously recommended Bloomberg’s great piece from last year on “The 18 Minutes of Trading Chaos That Broke the Nickel Market. But what happens if you order a pile of nickel and get … rocks instead?
This week, commodity trader Transfigura disclosed that it faces losses nearing $600 million from a nickel fraud that saw the company receiving boxes of carbon steel and other cheaper substitutes instead of the high-priced nickel that it was expecting. From the Wall Street Journal:
Cargoes purportedly containing nickel were taking longer to arrive at their destination than expected, a spokesperson said. They were also stopping off at more ports en route than expected, the spokesperson said, and the companies stalled on showing documentation.
Commodities are a key aspect of security of course, and we’ve previously discussed food trading on the "Securities” podcast in “The geopolitics and digital future of agricultural commodities” in the context of Lux’s portfolio company Vosbor. For trading houses, it's worth not just asking, "Where's the beef?” but also apparently, "Where's the nickel?” (At least, that’s my five cents.)
“That’s 100% what keeps me up at night”: Gary Marcus on AI and ChatGPT
ChatGPT is arguably the fastest growing app in history, reaching 100 million global users in just a handful of weeks. It’s hit the cultural zeitgeist and has also passed the grandparent test (the time it takes for a new technology to be mentioned by your grandparents). It’s extraordinarily new, and so understandably, we are just getting a sense of the power and limitations of this wondrous technology.
One critic of its power is Gary Marcus, an emeritus professor of psychology at New York University who has critiqued the wild-eyed dreams of AI engineers through books like Rebooting AI: Building Artificial Intelligence We Can Trust, which he co-wrote with Ernest Davis.
On the “Securities” podcast this week, Marcus joins me and Josh Wolfe to talk about the challenges of truth and veracity in the context of fake content driven by tools like Galactica; pose the first ChatGPT-written question to Marcus; talk about how much we can rely on AI generated answers; discuss the future of artificial general intelligence (AGI); and finally, understand why Marcus thinks AI is not going to be a universal solvent for all human problems.
- Shaq Vayda recommended Samuel G Rodriques’s piece A Catalog of Big Visions for Biology, which argues that we need to inspire a new generation of bioengineers with bold dreams about what the field can accomplish. “I think it is hard to inspire most 20-year-olds and 30-year-olds with the promise of curing diseases that will not affect them for 40 years. If we want to maintain the pipeline of brilliant people entering biology, they need to be driven by something bigger than curing a disease they have never heard of.”
- Long-time China watcher Andrew Batson has a short look at how to interpret China’s recent policy reversals on Covid-19 and the economy, arguing that "Perhaps the man at the top recognized that the center’s ability to enforce compliance with its dictates was at risk, and if the gap between rhetoric and reality became too wide it would expose dangerous weakness.”
- Grace Isford recommends “Securities”-favorite Semianalysis writerDylan Patel’s look at “How Nvidia’s CUDA Monopoly In Machine Learning Is Breaking”. "The 1,000-foot summary is that the default software stack for machine learning models will no longer be Nvidia’s closed-source CUDA. The ball was in Nvidia’s court, and they let OpenAI and Meta take control of the software stack.”
- I enjoyed a compelling and human portrait from Joshua Yaffa in The New Yorker on Ukrainians caught up in the blurry space between living their lives in Russian-occupied territory and being accused of collaborating with the enemy. “During Izyum’s occupation, he said, ‘I imagined that our guys would come and I could finally exhale. Things turned out more complicated than that.’”
- Speaking of Ukraine, the Financial Times has put together a great overview of the supply chains for Javelin missiles and Himars to explain why America’s defense industrial base is struggling to keep up with demand for these critical munitions.
- Meanwhile in decaying Britain, Simon Tilford argues in Foreign Policy that Britain was never as bad in the 1970s as it is today, and that the narrative of ‘70s historical malaise needs to be put to rest given the country’s living standards crisis today.
- Finally, I mostly avoid all discussions of “wokeism” out of polarized tedium, but I did enjoy Thomas Chatterton Williams’s meditative look at how the French are facing up to the complications of American-style identity politics in The Atlantic. “The key to healthy and sustainable social progress is understanding to what extent a potentially useful idea can be pursued before tipping over into self-defeating extremism.”
That’s it, folks. Have questions, comments, or ideas? This newsletter is sent from my email, so you can just click reply.