Unproductive & Productive Tech Bubbles: BRIEFLY NOTED: For 2023-03-14 Tu

I have very high hopes for Web4: AI Bubble; the astrological chart of SVB; chat-GPT as cognitive DDOS attack on humanity; Dan Davies, Tracy Alloway, & Joe Wiesenthal & Ezra Klein & Dan Wang; Barro...

FOCUS: Unproductive & Productive Tech Bubbles:

Smart things smartly said:

Tim O'Reilly: How to Think About the Future of Technology: ‘For a clear view of broader market trends, one should always distinguish between the real "operating economy" and the financial "betting economy," where speculation often runs amok. Success in business and investing lies in identifying cases where these two domains will become one and the same…. [In] the betting economy… people “invest” in things that people might be able to make, and that others might want to buy and sell…. At the cutting edge of technology, the betting economy can get way ahead of the operating economy, assigning enormous value to unproven technologies and encouraging wild speculation or even fraud. The fate of cryptocurrencies and Web3 is a recent case in point. But as economist Carlota Perez has shown, speculative bubbles have accompanied every transformative technology since the start of the industrial revolution. Thus, the question we need to ask, notes William H. Janeway, is whether a bubble is productive…

A very useful framework: The Web1 tech bubble was very productive indeed. The Web2 tech bubble… it did produce some companies that were very profitable indeed, but the two chief among them—Facebook with its copying of the Fox News terrify-your-users-to-glue-their-eyeballs-to-the-screen, and Google with its change of slogan from “don’t be evil” to “make the world safe for SEO spam!” are of very dubious social utility indeed. The Web3 crypto-blockchain-unicorn bubble… was worse.

And now we are on to number four: AI. AI is, in my view, four things:

1. Better voice and text interfaces to database systems.

2. Sparse very high-dimensional classification and regression-like analyses.

3. Much more sophisticated autocomplete systems.

4. Separating gullible venture capitalists from their money.

(1), (2), and (3) are clearly paths of advance that may well turn out to have very high social utility. And (4) is probably a net positive as well.

I confess I have no idea how the coming AI-bubble will change the world. As Friedrich von Hayek said: predicting the future is only possible if we know what we will discover, and if we know what we will discover we have already discovered it.

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MUST-READ: Only in California:

FLASH: Peace will not guide the planets, and love will not steer the stars:

Starseed Astrology: The Astrology of Silicon Valley Bank's Collapse: ‘SVB which was founded on October 17th, 1983 beneath a Libra Sun. It's of special importance to focus on the Sun, Pluto and Saturn of SVB because these are the precise energy points that were under immense cosmic pressure at the time of its failure. SVB was founded with the Sun at 23° Libra, Saturn at 5° Scorpio and Pluto at 29° Libra. It's also important to note that SVB was founded beneath a Pisces moon. Take a quick moment to acquaint with the fallen stars of SVB…

And: a good competitor for the Stupidest Man Alive:

David Sacks: ‘Yellen was in Kiev last week to reassure Ukraine that US financial aid would continue. But she can't reassure 10,000+ small businesses that their deposits are safe. She says she's "monitoring" the situation. Give me a break…

David Sacks @DavidSacks

Yellen was in Kiev last week to reassure Ukraine that US financial aid would continue. But she can't reassure 10,000+ small businesses that their deposits are safe. She says she's "monitoring" the situation. Give me a break.

No: the SVB bankruptcy is not the fault of the Ukrainians, or of the Biden Administration.

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ONE IMAGE: Is Chat-GPT a Cognitive DDOS Attack on Humanity?

Film at all:

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ONE AUDIO: Dan Davies, Tracy Alloway, & Joe Weisenthal: What Brought Down SVB?:

Silicon Valley bank collapsed at record speed. And the world is still trying to figure out what went wrong? How did a bank with a strong history, a strong brand, and a fairly conservative investment portfolio go belly up so fast? On this episode of the podcast, we speak with Dan Davies, a Managing Director of Frontline Associates, who previously worked as a bank analyst. He explains why the bank's customer base turned out to be so much more flighty than expected, and why the bank reached for yield buying long-dated Treasuries at a time of ultra-low interest rates. We discuss what to watch next, and why he's concerned that the initial salvo to stanch the bank run may not be enough.

<https://overcast.fm/+5AWMvnUEQ>

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ANOTHER AUDIO: Ezra Klein & Dan Wang: How China Went From Economic Superstar to Faltering Giant:

In just a few years, the narrative on China has almost completely flipped… [from] awe, envy and a kind of fear…. into something [viewed as] closer to a plain old autocracy…. Which of these narratives, if any, hold water? Dan Wang is the technology analyst at Gavekal Dragonomics and a visiting scholar at Yale Law School’s Paul Tsai China Center...

<https://overcast.fm/+oiPXc0nT0>

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Very Briefly Noted:

• Tassia Sipahutar: Five Things You Need to Know to Start Your Day: ‘Less than a week after Federal Reserve Chair Jerome Powell opened the door to a re-acceleration in the pace of interest-rate hikes, traders slammed it shut…. Economists led by Jan Hatzius at Goldman Sachs said they no longer expect the Fed to deliver a rate increase next week…

• John Authers: Fed Rate Pivot Is Back in Play: ‘Markets are predicting a change in the course of interest rates now that there is trouble brewing in the banking sector.... The… Bank Term Funding Program… will allow banks to borrow from the Fed using Treasury bonds as collateral and valuing them par. If the problem is solely one of liquidity rather than solvency, this should make a difference...

• Conor Sen: SVB’s Collapse Says a Lot About San Francisco and Seattle: ‘The whirlwind failure of Silicon Valley Bank underscores how uneven an economic recovery will be across the country, even if the Fed achieves a soft landing…

• Tom Chivers: Cyclone Freddy made landfall in Mozambique for the second time: ‘It first developed in the southern Indian Ocean 33 days ago, and is now probably the longest-lasting tropical cyclone in recorded history… Freddy has rapidly intensified seven times, twice reaching Category 5...

• Tom Chivers: ‘Pence said that “history will hold Donald Trump accountable” for the Jan. 6, 2021 riots in Washington...

• Dan Shipper: Where Copilots Work: ‘A simple checklist for builders...

• Matt Levine: ‘The modern bank-regulatory view is that the point of a bank deposit is that you shouldn’t have to worry about it, and that it is a failure of bank regulation if depositors of any size have “to actually give a moment’s thought to the riskiness” of a bank…. It’s a bank account! It’s just supposed to work…

• Steve Clemons: Congress confronts the bank bust: ‘The speaker convened Republican House members…. Republican Study Commission head Kevin Hern… warned, “that members and staff don’t know what’s going on and should stop tweeting / going on tv if they don’t understand”…

• Kristine Aquino: The biggest US banks see a flood of deposits after SVB’s collapse, Moody’s puts six lenders on downgrade watch…. JPMorgan alone received billions of dollars…. Moody’s placed First Republic, Western Alliance, Intrust Financial, UMB Financial, Zions Bancorp and Comerica on review for a downgrade…

• Matthew Yglesias: Don't overthink poverty in the United States: ‘Most things in life require a degree of nuance, but the truth about comparative poverty in the U.S. is genuinely very simple: the absolute poverty rate in the United States is unusually high for a rich country because our welfare state is stingy…. Poverty persists because straightforward, highly effective solutions are politically untenable...

  • Daron Acemoglu & Simon Johnson: How to Fix the Platform Economy: ‘Digital-platform companies could deploy the latest wave of artificial intelligence much more responsibly…. But we also need concerted public-policy action to fix the industry…

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¶s:

Josh Barro: 'Bailout' Is Not a Dirty Word: ‘So why don’t we just admit this was a bailout? It’s because “bailout” is one of these nouns that gets a weird normative layer — the feeling is that “bailouts” are inherently unjustified, and so if something has bailout characteristics but is also the right thing to do, it has to be transmuted into a “not-bailout.” But sometimes, when things go wrong, a bailout is just what the situation calls for. This is the lesson of TARP — a wildly successful program that prevented an even deeper financially driven recession and ultimately turned a profit — and is also, if you pay close attention, the message of the musical Hamilton…. Another weird thing I’ve been hearing over the last few days is that it’s always Wall Street that gets a bailout while ordinary people have to bear the cost of their own troubles. Have people forgotten the last three years of public policy?… The bailouts were the right thing to do…

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Daron Acemoglu: In Search of a New Political Economy: ‘This late twentieth-century consensus rested on two distinct but synergistic pillars: political liberalism and economic liberalism. In the political domain, democratic institutions had the wind behind them and seemed to be taking root inexorably…. Following the exhaustion of the alternatives (absolutism, fascism, communism) in the twentieth century, many Westerners concluded that their model would ultimately triumph everywhere, even in places with little or no democratic history, such as the Middle East. Ordinary people would demand a voice, and even iron-fisted autocrats would not be able to resist the implications of this “Western idea”…

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Matthew Yglesias: Does Joe Biden mean what he says on industrial policy?: ‘I really enjoyed [Steve Cohen and] Brad DeLong’s 2016 book “Concrete Economics,” which made this point about the Clinton/Bush approach to China’s entry into the global trading system. Those administrations believed that free trade is generally beneficial (which is true), and so even though a huge influx of Chinese imports would cost a bunch of people their jobs, it would be better to re-employ those people doing something else. But doing what? If you abstract away from any detailed information about life in the United States of America, you’d point to the booming computer, biotech, and finance industries happening in coastal cities and note that those places ought to be experiencing skyrocketing population growth, with tons of blue-collar job opportunities building housing and infrastructure, and tons of generic service-sector work to complement it all. Letting that process of reallocation play out would be much better than trying to prop up midwestern manufacturing communities. The problem, obviously, is that nothing about the non-trade aspects of American public policy was set up to facilitate a large-scale migration of blue-collar workers to New York, San Francisco, Seattle, Boston, and D.C…. This isn’t to say that increasing tariffs on China to keep their imports out would have been a great idea either. But it is to say that even though policymakers can’t see the future or outsmart financial markets, they also don’t need to act like they have no information about the world. They ought to take stock of the situation and try to shape the future. After all, policymakers were deliberately trying to foster the growth of the American technology sector. They championed tech companies’ interests in trade negotiations, fought against protectionist regulatory impulses in Brussels, invested in broadband infrastructure, encouraged STEM education, and until recently, deliberately took a light-touch regulatory approach to these companies in order to encourage their growth. These things don’t happen just because politicians snap their fingers, but it is true and relevant that the sun of American public policy shone on the tech sector and not on manufacturing…

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Ben Smith: ‘There’s so much in the Fox News disclosures that makes you want to take a shower, but the word that sticks with me is “respect.” Throughout the emails and texts disclosed in the voting machine company Dominion’s lawsuit, network president Suzanne Scott, host Sean Hannity and others talk about the need to “respect” their audience by telling them what they want to hear, even when it’s false. Many in media feel the pressure to pander. Few justify it to themselves quite that smarmily…Dan Wang: China’s Hidden Tech Revolution: ‘In 2007, the year Apple first started making iPhones in China, the country was better known for cheap labor than for technological sophistication…. By the time the iPhone X was released, in 2018, the situation had dramatically changed. Not only were Chinese workers continuing to assemble most iPhones, but Chinese firms were producing many of the sophisticated components inside them, including acoustic parts, charging modules, and battery packs. Having mastered complex technologies, these firms could produce better products than their Asian and European competitors. With the latest generation of iPhones, this pattern has only accelerated. Today, Chinese tech firms account for more than 25 percent of the device’s value-added costs…. In a majority of manufactured goods, Chinese firms have moved beyond assembling foreign-made components to producing their own cutting-edge technologies. Along with its dominance of renewable power equipment, China is now at the forefront of emerging technologies such as artificial intelligence and quantum computing. These successes challenge the notion that scientific leadership inevitably translates into industrial leadership…. China has leveraged its process knowledge—the capacity to scale up whole new industries—to outcompete the United States in a widening array of strategic technologies…

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John Ganz: The ‘Enigma’ of Peter Thiel: ‘Max Chafkin writes, “The Thiel ideology is complicated and, in parts, self-contradictory, and will take many of the pages that follow to explore, but it combines an obsession with technological progress with nationalist politics—a politics that at times has seemingly flirted with white supremacy.” Let’s see, we’ve go some futurism, nationalism, maybe a little bit of racism here and there…hmm, what does that all add up to? What a mystery this guy is!… Thiel’s libertarianism is about freedom—freedom for him and people like him, the entrepreneurial elite of the capitalist class. He’s openly antidemocratic. In an essay for the Cato Institute, Thiel once wrote, “I no longer believe that freedom and democracy are compatible…” Why? Because if you empower the demos, they will eventually vote for restrictions on the power of capitalists. and therefore, restrictions on their “freedom.” He continues, “Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women — two constituencies that are notoriously tough for libertarians — have rendered the notion of ‘capitalist democracy‘ into an oxymoron.” In that 2009 essay, Thiel imagines a kind of futurist program of utopian projects “beyond politics” in cyberspace or “seasteading,” but it’s clear now he’s returned to believing in politics, or at least an anti-political form of politics. The brand of radical libertarianism favored by Thiel and his crony Curtis Yarvin has long preferred crackpot authoritarian solutions that would enhance capitalist domination…. Thiel is a throwback to the era of the fascist industrialist. Some, like Fritz Thyssen, came to regret their association with the regimes they helped bring to power and had to flee, but others stuck around and took advantage of lucrative government contracts and slave labor…