excerpt of an April newsletter

As I walk down the empty streets of San Francisco I can't help but feel somewhat relieved. The rush, and anxiety of the average Monday to Friday has disappeared. Where has it all gone?

While it seems obvious to some, it's worth pointing out that humanity has not experienced an existential threat outside itself for a number of years. As a result it is rightfully scared with the novel coronavirus outbreak. Security and self preservation are, after all, basic individual values that contribute to the construction of a social hierarchy. But what is the significance of what is happening at the moment? To me, there appears three fairly unique themes we can pull from the pandemic.

The Humility of Biology

The first is the biological theme about humility and what will hopefully be a catalyst for more R&D outside of the narrow field of computing. It is a realization of just how opaque the landscape of biology is and how fragile homo sapiens are as a species within it. Computing (the star child of current culture) has a body of knowledge that appears to have been constructed in an emergent way - like a commercial building. The concrete foundation of number theory and discrete mathematics were poured, and then the framing of information theory, hardware, and software were quickly constructed on top of it.

Acquisition of knowledge in the biological domain, on the other hand, seems to be gained through an antithetical deconstructive process. Rather than building up, we take apart. Instead of a commercial building, it is St Peter's Basilica. And instead of the trusty mathematical hammers and drills we've become accustomed to, we are learning the postulates of architecture with a lantern and notepad as we deconstruct. That is, each strut, weight bearing wall, and archway must be isolated and analyzed to uncover its significance, properties and the responsibilities in the cathedral of biology.

The conflict comes about when a civilization becomes overconfident with its competency based on systems of emergent knowledge. When such a civilization is introduced to a novel problem completely outside of its grasp, humility ensues. From this situation, maybe we will learn the importance of mapping, understanding and incentivizing R&D in the world of atoms, not just bits. Otherwise, continued concentration into the single domain of computing will provide future examples of why this is a bad idea.

The micro specializes to survive, but the macro must generalize.

The Thwarting of Economic Rebalancing

The second theme is of an economic variety. I was floored by the precision of a tweet I read that went something like:
The largest concern of the coronavirus is not the virus itself, but, rather that the entire world economy comes to a halt if commerce ceases for 2 weeks.

How could an economy become so frail in the face of turbulence? As unpredictable as a mass secession of commercial activity is, it seems bizarre that large corporations like the Cheese Cake Factory lack enough redundancy to survive 1-4 months – let alone in one of the greatest bull markets of all time. When the tide pulled out it seems many large businesses have been left without shorts, and yet it is the public and SMBs who are burdening the charge. Why so little redundancy and catastrophe planning?

On a macro level, public markets, as selective environments, prioritize ruthless efficiencies in companies. These improved efficiencies typically manifest as companies decreasing redundancy, e.g. firing staff, minimizing excess inventory, off-shoring processes; or companies improve efficiency through innovation, e.g. improved resource utilization through a technology that outputs more with equal or less input. In lieu of real innovation (which is hard), incentivized market participants degrade natural redundancies to prioritize short term returns (e.g. their equity appreciation) versus long term survival (e.g. stable business, fair dividends or profit sharing, reinvestment in R&D, etc).

The demand for reducing redundancies can typically be staved off by growth. However, real growth depends on participants creating value through goods or services, or improved use of resources through technology. It seems that both of these are untrue in the face of recent growth which has been fuelled by irresponsible capital allocation and cheap debt. But is redundancy really that important? How does our view change when going down the pyramid?

On the micro level we observe a different set of trends. Day to day selection dictates that redundancies are beneficial, e.g. we have two kidneys, in an epidemic having lots of canned goods is a good idea, and our cognitive machinery is always catastrophe planning through a pathway called "worrying". On the micro, we also appear to feign innovation without necessity - “If it ain't broke don’t fix it”.

Obviously the economy is an emergent phenomenon scaled up from individual actors and it is naive to think the macro should represent a shade of the micro (despite the opposite appearing in physics). However, the concern is not accurate transfer of micro to macro representations, but rather how that larger ecology impacts the individual organisms survival. The economy is homo sapiens new natural ecosystem whether it realizes it or not, and when we observe natural ecological systems, we see that Nature has a superb capacity to regulate itself. Moreover, when these efforts are thwarted, like a roaring river mistakenly dammed, the end result is much more violent.

So is the disagreement between our micro and macro incentives around redundancy a concern? Possibly. While nature does not care about the single gazelle just like the economy does not care about the single failed entrepreneur - both phenomenons need them to exist. So perhaps we shouldn't spin our wheels at the morality of the ecosystems but point our worries toward three questions:

1. Why does the natural rebalancing continue to be thwarted?

2. How does that thwarting compounds risk of extinction or more violent rebalancing?; and

3. How does one get out of its way?

I do not think increased government regulation and oversight will not be the answer. The fallacy of central planning has demonstrated this too many times in my narrow view of history. In some narrow scope, the continued inflation of the money supply to bailout economic actors without correct penalization of said actors may have set the kindling for the current economic flame. Chamath P had an interesting take on this  a recent podcast episode . Perhaps there needs to be proper repercussions through legal, economic or political means. I'm uninformed in most of those domains, so I won't try to predict. However, on a micro-level I can ask myself what things can I do to improve the likelihood of survival.

The hypothesis seems to remain the same: technology, invention and real growth are the only known way to combat deficits and continue the complex coordination of homo sapiens’ economic habitat. Maintenance and reasonable growth of the phenomenon is critical for an advanced civilization to remain functional and sedate mimetic desire.

How does this continue? Unsure. I've been impressed with the notion of "skin in the game" as a means to self correct hazardous behaviour. Maybe after things have subsided we may see more individuals building "long-term stock exchanges" with artificial selective pressures baked in. Perhaps cryptocurrency may arise as a more popular alternative for wealth, payments or A&B monetary policy testing. Who knows, it's all a guess.

Concern of Precedent

A third consideration which has me worried is the less discussed potential for degradation of privacy, freedom and rights of individuals. As described in Nassim Taleb's wonderful Incerto essays: in immediate cases of survival it is a higher payoff to overreact rather than under react (e.g. mistaking a stick for a snake is better than a snake for a stick). The minor negative feelings experienced over a number of instances pays out explosively when you are right.

Under this idea the high level of powers granted to certain countries seem justified. After all, it makes sense to overreact like an immune response and curb the invasion of a novel threat. However, the concern is that unlike an immune response which quickly mounts and disarms, social systems layer via sticky legal and political precedents. Instead of removal there is continual addition creating increasing levels of justification. As precedences become more firmly embedded in the collective knowledge base they lie in wait for re-escalation.

Has history or literature provided warnings for this before? Is a question that I wonder about often.

I'd like to frame the quiet streets of San Francisco as involuntary, but necessary, reassessment of where humanity is, how it got here and what changes we can make to support long range survival. This is in preference to the alternate view which is fear of St. John's Chapter 15 Revelations, but, only time will tell I guess. I am an arm chair commentator after all.

Until then, I find joy and meaning in the soulful choir of Supreme Jubilee's "It'll All Be Over" hoping soon too it will all be over and these times a distant memory in the summer afternoon sky.


Kind thanks to Simon Blyberg for the cover image