Extreme Epoch

Photo by Greg Rakozy on Unsplash

We’re within striking distance of 2024, a year that already exudes the ominous feeling of one of those historical watersheds — a 1989, a 1968, a 1945. Let’s walk through what we already know is coming.

Politically, major elections will be held in Taiwan (January 13), Indonesia (February 14), Mexico (June 2), the European Parliament (June 6-9), the United States (November 5) as well as likely India and the United Kingdom.

The outcome in Taiwan will determine the future contours of the most scrutinized security flashpoint in the world, while the drawn-out expected rematch between Joe Biden and Donald Trump will intensify America’s vituperative partisan warfare (evidenced by this week’s trailer from movie studio A24 for Civil War, a movie that realizes the theme of the very first “Securities” newsletter from January 2022 on American Civil War 2.0. Coming to theaters April 2024).

Internationally, Ukraine’s fate in its fight against Russia is heading toward a denouement, given the failures this week of both the European Union and the United States to demonstrate unified financial resolve for the defense effort. Israel, pressured this week by the Biden administration to begin limiting its ground campaign in Gaza within weeks, is running against the clock of both domestic and international patience. Both wars will be resolved next year, and likely far earlier than either government would prefer.

Economically, it’s still the tale of two superpowers. In the United States, the stock markets hit record highs this week with an expected 2024 soft landing and Fed interest rate cuts in sight, even as inflation remains elevated above recent norms and no one (or at least me!) can understand how commercial real estate valuations have survived the past few years. With Covid relief funds exhausted and diminishing tax revenues, cities like New York and DC and states like California are now facing nauseating budget deficits, ushering in new fears of “doom loops” through cutbacks to essential services.

Meanwhile in China, the critically-important Central Economic Work Conference released its report this week, offering few signs that Xi Jinping and the CCP’s leadership intend to shore up and stimulate the economy in the face of extraordinary headwinds and a property boom that’s now turned bust. China’s growth rate next year has massive implications for the global economy, and so far, its prospects look grim.

Technologically in 2024, the Apple Vision Pro is scheduled to launch early next year, ushering in what some of my friends and other tech critics have dubbed the first truly breathtaking VR experience. It’s ultra luxe at $3,499 and limited in functionality, but the same qualities were true of the original launch of the iPhone back in 2007. It’s likely to finally dawn on us that top-grade generated VR experiences mediated by artificial intelligence are going to replace in-person human interaction, movie theaters, live performances, and office work, with extensive societal and financial implications.

One of the best aspects of nestling inside a venture firm is getting to explore the future a few years before everyone else gets to. When it comes to artificial intelligence, there’s going to be another big burst of progress on foundation models and applications across all domains, given the available theoretical computer science knowledge circulating in the industry that’s still in the process of being applied to real products. Regulators will respond in kind (as discussed in “Reckless Regulators”), and we’re going to see deepening concerns about AI’s displacement of human creative work, as I wrote about earlier this year in “Garrulous Guerrilla” and "Professional Prerogatives.”

Scientifically, the first CRISPR-based therapeutic was just approved in the United States last week, a symbolic milestone that this decade-old technology is finally delivering clinical results for patients. Expect many more therapeutics to come next year and the decade ahead. Xenotransplantation — using organs from donor animals for human use — is set to make further advances after several modestly successful experiments in 2023. Meanwhile, this year’s radical developments in protein language AI models will undergird a new understanding of the science of life, by giving scientists both biological and computational a much more comprehensive and flexible way of interacting with the kernels of cellular and molecular machinery.

Every year, we make predictions of what’s to come, some of which come to fruition, others not. But 2024 is shaping up to be a year in which the history has already in some ways been written. The seeds of the past are germinating into a world-altering, globe-spanning epochal year. These advances, these products, these elections — all of them are already underway and set to arrive. The open question isn’t the events themselves, but what they will ultimately mean for society going forward.

Watershed years get chapters in the history textbooks not just because of the frenzied activity that transpires during them, but also because they are junctures where the future isn’t just the past plus one, but entirely open to possibility. 2024 offers us dizzying pathways forward. Nearly every aspect of our lives — the way we govern society, the way we interact with people, the way we work and the way we play, the way we make money and the way we treat illness — are balanced on a fulcrum just waiting for a fillip to push it one way or the other. Anything from utopia to dystopia is possible, and the decisions on which direction we head seem to be unusually embedded into a single year.

Some of those decisions will be made by statesmen, but the vast majority of them are going to be determined by us in how we choose to live our lives. As I harped on in “Existential Engineer,” it’s neither optimism nor pessimism that should drive us, but rather agency. Each of us has our own influence over the world that is coming, and the key is to never surrender that agency, in 2024 or ever.

The Warring States Period

Photo by cybrain via iStockPhotos/Getty Images
Photo by cybrain via iStockPhotos/Getty Images

The most important global relationship is between the United States and China. Contradictorily, it doesn’t feel like 2024 is going to be as close to a watershed for the relationship as I’ve noted it will be in many other domains. Both the United States and China look set to continue bickering, but otherwise trying to maintain some semblance of stability in an otherwise fraught and icy détente (Taiwan’s election notwithstanding).

This week had a couple of major news stories I want to highlight. First and most prominently, the House CCP Committee, led by the bipartisan duo of Mike Gallagher (R-WI) and Raja Krishnamoorthi (D-IL), released its comprehensive strategy for improving America’s position in the bilateral. In summary, “… the United States must now chart a new path that puts its national security, economic security, and values at the core of its economic engagement with the PRC and invests in long-term American technological leadership.” (side note: “Securities” enjoys any publication that acknowledges multiple forms of security). The committee dubbed its strategy, “Reset, Prevent, Build.”

Our own Josh Wolfe, who testified in front of the committee back in July, offered and supported several ideas that made it into the final recommendations. "Mr. Josh Wolfe (Co-Founder and Managing Partner of Lux Capital) urged Congress to invest in American technological development and to curtail outbound investment into core sectors in the PRC, warning that U.S. investment in military-use technologies was akin to ‘handing somebody the belt to tie around your neck.’”

Josh also pushed for better immigration policy (“As Mr. Wolfe testified, ‘America should be attracting defectors and accelerating China's brain drain, to our national benefit, by welcoming the best talent on the planet to the U.S.’”) and improving our scientific innovation infrastructure (“As Mr. Wolfe advised in his testimony, the United States should commit to ‘upgrading current funding institutions and building new ones that cultivate long-term horizons of excellence.’”).

Core to the House CCP Committee’s strategy is, namely, pushing American to develop a compressive economic security strategy that counters China’s rising influence across different industrial sectors, global regions and innovation fields. It’s a tall order, but one that the United States must undertake if it is to thrive in the coming years.

Outside of the committee’s report, the pessimistic action-reaction dialectic between the U.S. and China was on full display this week. The Washington Post highlighted China’s growing hacking of critical U.S. infrastructure, offering it a strategic asymmetric toolbox. From the article:

“It is very clear that Chinese attempts to compromise critical infrastructure are in part to pre-position themselves to be able to disrupt or destroy that critical infrastructure in the event of a conflict, to either prevent the United States from being able to project power into Asia or to cause societal chaos inside the United States — to affect our decision-making around a crisis,” said Brandon Wales, executive director of the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA). “That is a significant change from Chinese cyber activity from seven to 10 years ago that was focused primarily on political and economic espionage.”

There was also a major investigation published by a trio of prominent European newspapers this week that showed that China had been paying a Belgian senator to undertake its agenda on the continent. Per The Financial Times: “While most big countries engage in spying, [china’s ministry of state security] operation in Europe highlights one of the defining features of Chinese espionage: widespread influence operations aimed at shaping political debate that span Ottawa, London and Canberra. Washington has also repeatedly warned of covert efforts by Beijing to interfere with elections.”

These threats are challenging and complicated, but America and the West’s counter-intelligence reactions must not harm the openness that makes us the most competitive economies in the world for innovation. In Florida, a new law passed in July has received increased scrutiny for forbidding Chinese grad students from working in public university academic labs without an extensive background screen and state approval (China is one of several 'countries of concern,’ although obviously the most important one). That’s precisely the kind of blinkered policy that will deeply damage America’s progress in the sciences and across the entrepreneurial economy. As Josh put it in July, we need the best minds in the world to make their home in America, and laws like these only help the CCP and its narratives, not diminish them.

The hardest part of any competitive relationship is remaining true to who you are — and not becoming what you despise.

Podcast: Dreaming, AI, and the Future of Education with Erik Hoel

Design by Chris Gates via DALL-E
Design by Chris Gates via DALL-E

If you thought defining consciousness is difficult, it’s even harder defining dreaming. What are dreams, why do we have them, and why have so many organisms evolved the capability to dream?

That’s the start for the second and final part of my conversation with our special guest Erik Hoel of The Intrinsic Perspective newsletter. Josh Wolfe and our scientist-in-residence Sam Arbesman join me to discuss dreams, the overfitting brain hypothesis, what we can learn from beavers as well as humans playing Tetris, and finally, we end up talking about Erik’s essay on “Why we stopped making Einsteins” and the future of education.

🔊 Listen to the episode

Podcast: Eliot Peper's new novel 'Foundry' and the Future

Eliot Peper is our first triple-invited guest of the “Securities” podcast, and for good reason: his novels from Veil to Reap3r to his new work Foundry are the perfect distillation of science, technology, finance and the human condition (which at least in Peper’s authorial world, seems to involve a lot of thrilling stories and adrenaline).

Eliot and I talk about the creative process of writing, the geopolitics of semiconductors that forms the basis for Foundry, why fiction offers a better perspective on technology, and the increasing pessimism of science fiction and what that means for our thinking about the future.

🔊 Listen to the episode

Lux Recommends

  • Sam loved a fun piece in The New York Times about “How NASA Learned to Love 4 Squirmy Letters.” “Last month, NASA welcomed Richard Danne to its headquarters in Washington to celebrate work he had done nearly half a century ago. Mr. Danne never studied the stars. He never built a rocket. But he and his design partner, Bruce Blackburn, came up with one of the most recognizable elements of the space agency: the logo known as the ‘worm,’ with the acronym N-A-S-A spelled out in bold, sinewy, orange-red letterforms.”
  • The Wall Street Journal is after my own heart with a new feature, “California Is Desperate for Affordable Housing But Can’t Stop Getting in Its Own Way.” “In San Jose, Calif., the average cost to build just one unit of low-income housing shot up by 24% in 2022 alone, hitting a new high of $938,700, or roughly what it costs to buy a three-bedroom bungalow there, according to an October report commissioned by the city.”
  • Tess Van Stekelenburg highlighted Niko McCarty’s look on “What Biology Can Learn from Physics.” “AI capabilities are growing rapidly, and now is the time to develop broader predictive models that can provide answers to unanswered questions at every size scale of biology: from molecules, to whole cells, to the behavior of cells at the macroscale. But to make those models a reality, biologists will first need to learn from physics.”
  • The talk of the media town was former NYT opinion editor James Bennet’s lucid deconstruction of the culture of the Gray Lady’s newsroom and politics. Yes, it is lengthy, but it’s exquisite in its precision. “It is hard to imagine a path back to saner American politics that does not traverse a common ground of shared fact. It is equally hard to imagine how America’s diversity can continue to be a source of strength, rather than become a fatal flaw, if Americans are afraid or unwilling to listen to each other. I suppose it is also pretty grandiose to think you might help fix all that. But that hope, to me, is what makes journalism worth doing.”
  • Finally, Tess highlights a blog post from Lux-family company Hugging Face on “Mixture of Experts Explained,” a type of AI transformer that has gained popularity. “Mixture of Experts enable models to be pretrained with far less compute, which means you can dramatically scale up the model or dataset size with the same compute budget as a dense model. In particular, a MoE model should achieve the same quality as its dense counterpart much faster during pretraining.”

That’s it, folks. Have questions, comments, or ideas? This newsletter is sent from my email, so you can just click reply.