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Albert Wenger

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Monday, October 22, 2018 - 12:16pm

NOTE: I have been posting excerpts from my book World After Capital. Today’s section is about technological deflation and how its interaction with UBI enhances economic freedom

Technological Deflation

If you are currently struggling to pay for your basic needs, the world will seem like an expensive place to you. Yet the data shows that a lot of things have become cheaper, and that this trend has been gathering steam for some time now. In the U.S., as the following chart shows, the prices for consumer durables have been falling since the mid 1990s. Not only can we see the decline in the prices for consumer durables; we can also see the rise in the cost of education and healthcare.

What has produced the decline in prices for consumer durables? Once again it is technological progress. We are getting better at making stuff and a big part of that is the ongoing automation of production and distribution. While this progress hurts you if you are losing your job or your salary is remaining stagnant, it helps you if you have money to buy things, and that money goes farther and farther over time. With Universal Basic Income, you will have the money, and over time, it will buy you more and more.

Thanks to the decline in prices for consumer durables, clothing has become easily affordable. Technology also has been driving down the cost of smartphones, which we will be essential to making education and healthcare much more affordable. The price decline in this area will only accelerate as we further increase automation and use technology such as additive manufacturing (also known as “3D Printing”) to manufacture products only when they are needed and close to where they are needed [67].

What about housing? Technology is definitely making it cheaper to put up a building. In early 2017, the first house printed using mobile 3D printing technology was built in Russia in just 24 hours! [69] Another factor making housing more affordable is the more effective sharing of existing housing assets through services such as Airbnb and Couchsurfing. Despite such progress, it still costs a fortune to live in certain places like Manhattan or San Francisco, where the demand for housing exceeds the available supply. Here UBI functions quite differently from other solutions that make housing more affordable, such as government subsidies. With UBI, people can live in parts of the country (or the world) where housing is much more affordable.

The city of Detroit is currently giving away houses as an alternative to tearing them down [70]. Or if you prefer a rural setting, you can buy or rent a home for as little as a couple hundred dollars per month [71]. Right now, many people can’t take advantage of these opportunities, since they can’t find a job in these locations and would be left with no income. By breaking the connection with a job, UBI provides geographic freedom. People would no longer be trapped in expensive locations just so they can meet their basic needs.

Already today, a large group of people is no longer constrained by the need for a job: Retirees. And sure enough, we observe that many retirees move away from expensive cities to places where real estate is much more affordable [72]. When considering the cost of shelter, it would be a mistake to analyze how much people need to live where they may be trapped today. Instead, we should look at the future cost in a world that has UBI. And that cost will be declining because of technology.

As for food, here too technology has massive gains in store for us. While some argue that GMOs hold the key to affordably feeding the planet, other near-term breakthroughs don’t carry some of the potential issues that GMOs pose. Indoor and vertical farming, for instance, allows for a precise delivery of nutrients and light to plants as well as huge increases in seeding and harvesting productivity. It also allows food to be grown much closer to its consumption, reducing the cost associated with transportation including spoilage. All this adds up to a dramatic reduction in the cost to feed a person.

Technology also promises to bring about a dramatic decline in the costs of education. At Union Square Ventures we became interested in education as an investment opportunity in 2009 when we held a one-day conference titled “Hacking Education.” Since then, the universe of online learning resources has grown rapidly, including many free or highly affordable ones, such as Duolingo for language learning (one of our portfolio companies). In addition to formal online courses such as edX or Khan Academy, millions of individual blog posts and even entire series of posts exist to explain a specific topic. And of course, YouTube is bursting with educational videos on subjects as broad as sailing and quantum computing.

Evidence exists that the exorbitant rises in tuition costs over the years in the U.S. are beginning to slow. When analyzing this data, we must remember that a huge amount of inertia exists in our educational system and job market. Many employers still believe they must hire from the best universities. This in turn drives up prices for higher education, with a ripple effect that extends all the way back to private nursery schools. It will be quite some time before most students will turn to free or extremely affordable online resources for all their learning needs. Still, the possibility now exists.

With healthcare, it’s a similar story. Healthcare spending in the United States per capita far exceeds that of other countries, having risen for many years much faster than the rate of inflation—but that hasn’t translated into better care. For instance, Cuba for years has had almost an identical life expectany to the U.S. despite spending less than a tenth on healthcare per capita [73].

Debates have been raging as to whether the Affordable Care Act or other legislative interventions will bring about lower healthcare costs or instead drive up insurance premiums further. Regardless of how this works out, progress with digital technology will push healthcare costs lower for a number of reasons.

First, technology makes prices on medical procedures more transparent, enabling more competitive pressures to exist that can push prices down. Second, to the extent that people better track their own health data through technologies associated with the “quantified self,” we will live healthier lives and require less care, especially over the long term (in the shorter term, folks who already enjoy above average health will most readily employ this technology). And third, technology will make possible faster and better diagnosis and treatment. If you want to feel inspired, just read some of the stories about how Crowdmed has helped people whose conditions went undiagnosed or misdiagnosed for many years. USV portfolio company Human Dx is also working on a system to help with diagnosis, and Figure 1 lets doctors exchange images and other observations. Flatiron Health is pulling together data on oncology patients to enable more targeted treatment. This says nothing of a whole group of companies that is bringing telemedicine into the app era, such as HealthTap, Doctor on Demand, Teladoc, and Nurx (another USV portfolio company). All promise to dramatically reduce the cost of delivering care.

One might object that so much of healthcare cost doesn’t result from doctors’ visits, but from pharmaceuticals. In fact, pharmaceuticals account for only about 10% of total spending [74]. Here too, we will likely see technology drive costs down. One successful pharma entrepreneur I spoke with described the potential for personalized treatment to dramatically improve the effectiveness for a wide range of conditions, including many cancers and even diseases such as ALS and Alzheimers. And on the horizon technologies such as CRISPR will give us unprecedented abilities to fix genetic defects [75] that today result in large ongoing expenses.

But Isn’t Deflation a Bad Thing?

Now, you may find it confusing to hear me describe technological deflation as a good thing. Economists, after all, have painted deflation as an evil to be avoided at all cost. Economists are primarily concerned about growth as measured by GDP, which they argue makes us all better off. Their logic about deflation goes like this: If people anticipate that prices will drop thanks to deflation, they will be less likely to spend money today, which means that output will be lower than it could be. This in turn leads owners of capital to make fewer investments, which results in less innovation and lower employment. That in turn makes people spend even less, thus causing the economy to contract further in a vicious cycle. Economists point to Japan as a country that has been experiencing both deflation and contracting output. To avoid this scenario, they argue for policies designed to achieve some amount of inflation, including the Fed’s so-called quantitative easing (cheap money), which is intended to expand the supply of money.

In a world of technological deflation driven by digital technology this reasoning is flawed though. GDP is increasingly not a good measure of progress because it ignores positive and negative externalities. For instance, everything I’ve said about making education and healthcare dramatically cheaper through free resources would serve to lower GDP while clearly making people much better off. We can also identify a second flaw in economists’ reasoning: It assumes that technological progress is tied to growth in production. But it is possible to achieve technological progress even as economic activity, as measured by GDP, appears stagnant. Increases in economic, informational and psychological freedom allow us to accelerate the Knowledge Loop which is the foundation of all progress. A great example here is open source software, which has driven a lot of technological progress outside of the traditional economic model.

Once we break out of the job loop with the help of UBI, then in fact technological deflation becomes desirable. For individuals it means that they can afford more with the payments they are receiving and for society as a whole it means that UBI is affordable.

Friday, October 12, 2018 - 5:47pm

Nouriel Roubini has done the crypto ecosystem a great service by pulling together pretty much all issues and criticisms in a single document. While he is prone to hyperbole (not unlike some people in crypto) and plays fast and loose with technical issues, everyone who cares about crypto should read the testimony in its entirety. Longterm success will require overcoming all of these objections. While I believe that is doable (at least in principle), it will not be easy and it will take a long time. The last thing anyone in crypto should be doing right now is dismissing Roubini as a crank or resorting to other ad-hominem attacks, instead of engaging at the level of substance. Bonus if you make it to the end of the document: an evisceration of permissioned blockchains (again, over the top but entertaining and as the rest providing important objections).

Wednesday, October 10, 2018 - 6:38pm

People worry about many risks, but generally about the wrong ones. We tend to be obsessed with personal and societal risk that is “fast.” What will the Fed Reserve announce next? Should I trust Tesla’s auto steering? These are risks where outcomes are realized quickly. That’s why I call them fast risks. As it turns out though some of the biggest risks today are slow. Outcomes will not be realized for decades or longer. The impact of nutrition and exercise on health is an example of a slow risk. The mother of all slow risks is climate change.

It has proven difficult, maybe impossible, to get people to care about slow risks. We all wear seatbelts now because being killed in a car accident is a fast risk. But we are blithely heading into a species level catastrophe with climate change. Even as the signs are all around us, they are still too dispersed (other people’s homes are flooded) and too similar to the past (we have always had hurricanes) to spur sufficient action. I don’t see that changing with the latest IPC report which is now arguing that dramatic changes will occur much sooner than previously forecast. But still a decade or two out. Hence still slow risk.

I continue to be amazed by how much fear and anxiety people are experiencing daily based on fast risk. Will I get a good grade on my exam? Will this investment succeed or fail? These risks completely pale compared to the climate change risk of global upheaval of life as we know it, with the potential for tens of millions of human deaths (and that’s being optimistic, the range of possible outcomes likely includes billions of deaths). Ironically, our obsession with fast risks is one of the things that distracts us from taking action on slow risk. We have already spent too much of our energy and attention!

A fair question then is what I am doing personally, if anything, about the slow risk of climate change. The most important thing so far has been to back research into geo-engineering. Because we are so bad with slow risks, I have concluded that we will not get on top of greenhouse gases in time. That means we will need more dramatic interventions to halt a further heating up of the atmosphere. I will write more about that in a separate post.

Monday, October 8, 2018 - 12:25pm

NOTE: I am resuming posting excerpts from my book World After Capital. The last post was the beginning of Part Three of the book. Today’s post is the the introduction to the concept of economic freedom and how universal basic income makes this freedom possible. Unfortunately the current online version is out of sync as I am experiencing issues with gitbook.

Economic Freedom

If you were to quit your job right now, could you still afford to take care of your basic needs? Could you pay for food, shelter, clothing, and so on? If you are retired, what if your company suddenly stopped paying your pension? If you are supported by a spouse or partner, what if you left that person?

If you could no longer meet your basic needs, then you are not economically free. Your decisions on how much of your labor to sell and whom to sell it to, whether to stay with your partner or not, which city or rural area to live in, are not free decisions. Many people in the U.S. today are not free in this fundamental sense.

A recent survey in the U.S. asked respondents if they had enough money to pay for a $1,000 emergency. Over two-thirds said they did not [59]. Other studies have found that about 75% of Americans over 40 are behind on saving for retirement and 31% of all non-retired adults have no savings at all [60] [61].

Crucially, if you are not economically free, you are not free to participate fully in the Knowledge Loop. Hence economic freedom is a cornerstone of the Knowledge Age. We must make people economically free so that they can participate fully in the Knowledge Loop. We want more people to be free to make music and create art that has the power to inspire. And we absolutely need people to have the time to learn new knowledge, from practical skills such as gardening to the latest theoretical physics. We need more people to create new knowledge using what they have learned. And finally we need more people to share their knowledge with the world for others to learn.

We have massive problems, such as climate change, to overcome and we need more participation in the Knowledge Loop than ever. To free us up to do so, we must be able to embrace automation, not fight it for fear of losing our livelihoods.

Universal Basic Income

Economic freedom is a reality today for some—those sufficiently wealthy, tenured professors, retirees with pensions and savings. How can we make it a reality for everyone? The answer is to provide everyone with a guaranteed ongoing income to cover basic needs, including housing, clothing, and food (see earlier chapter on Needs). This income would be unconditional, i.e. it would not depend on whether someone is married or single, employed or unemployed, rich or poor.

At first blush this idea of a so-called Universal Basic Income (or UBI) may seem crazy or outrageous. Getting money for having done nothing? Getting paid simply for being alive? Isn’t that communism? Or socialism? And where would this money come from? Won’t people simply descend into utter laziness and drug addiction? We will look at each of these objections to UBI in turn, but first let’s consider arguments for UBI as a way of achieving economic freedom.

Concerns about economic freedom are by no means new. When the American republic was in its infancy, economic freedom seemed well within everyone’s reach. There was plenty of land to be had (so long, of course, as one was willing to take it by force from Native Americans). As a result, any family could make ends meet by living off the land. Even back then, though, observers such as Thomas Jefferson and Thomas Paine understood that land would some day run out. They raised the specter of a time when citizens might be forced to trade labor to others in order to provide for their basic needs—when they would be economically unfree [62]. All the way back then they concluded that an alternative to land was to give everyone enough money to be free. The idea of a UBI in the U.S. thus goes back to the earliest days of the nation.

If you don’t find this historic argument for UBI compelling, consider the case of air. We all breathe air to solve our basic need for oxygen. We can all afford to breathe air because air is free and well distributed around the globe (important caveat: regulation is required to keep air clean, we had lots of trouble with air pollution during industrialization and in China right now it is estimated that more than one million people die every year from air pollution [63]). Our freedom is not restricted by having to find air. The power of UBI is to make us equally free when it comes to our other basic needs, by making food, housing, clothing (the solutions to our basic needs) affordable and accessible by everyone!

As I argued in the earlier chapter on Capital, as a species, we have developed our technologies enough so that we are now capable of meeting everyone’s basic needs. Farming can generate enough food for everyone. We can easily make enough clothing for the world. We can even provide everyone with shelter. All of this has been made possible by knowledge, the knowledge that humanity has created over millennia. And our technological progress is accelerating while global population growth is slowing down. So from here on out it will only get easier.

The question thus is not whether we have the ability to meet everyone’s basic needs, but rather whether an economy and a society that accomplishes the necessary resource distribution and allocation. That is exactly where UBI comes in. UBI enables the functioning of markets for basic needs such as food, clothing and shelter without forcing people into the Job Loop. UBI lets everyone freely participate in these markets. UBI thus frees up attention, frees up people to live where they want to and with whom they want to.

Industrial society presents us with two fundamentally different ways of distributing and allocating resources. One is individuals meeting their needs by participating in a market economy; the other is government providing solutions for people’s needs directly. Those options form the extreme ends of a spectrum with a variety of “hybrid” arrangements in the middle, such as government subsidized or rent-controlled housing for which people still need to pay some rent. UBI solve the allocation issue while avoiding reliance on an ever-expanding government sector. Put differently, UBI recognizes just how effective markets have been in the allocation of resources, and by contrast, how many distortions are introduced by direct government activity, such as government built housing. UBI is the opposite of communism and socialism in that regard. It is all about reducing the size of government activity.

After World War II in the U.S., only about 5% of people were employed by government, which in turn comprised about 42% of the economy [64] [65] [66]. In the Soviet Union, by contrast, nearly 100% of people were employed by the state, and the state owned close to 100% of the economy. We now know quite well which system was more effective at allocating resources. Nevertheless, the size and scope of government employment and the government sector have gradually expanded here in the U.S. and in Europe. In many European economies, the government sector now accounts for a half or more of the economy.

I have only mentioned food, clothing and shelter when talking about basic needs, but what about education and healthcare? Can UBI cover those as well? That might seem wishful thinking given how quickly education and healthcare costs have risen, especially in the U.S. Yet UBI can cover these basic needs as well, and to understand how, we need to look at how technology is driving down the prices of almost everything. Technology can make education and healthcare far more affordable than they are today.

Friday, October 5, 2018 - 6:11pm

I was in Berlin a couple of weeks ago and there appear to be at least half a dozen bicycle and scooter networks in the city. This makes for a terrible experience because you have to sort of guess which network you might want to use and if that one doesn’t have equipment nearby try another one. It also means that usage of equipment on any one network is far below what it could be resulting in lots of bikes and scooters sitting around on sidewalks.

What should be done instead? Cities should get together and publish an interoperability standard that every bike and scooter sharing company needs to adhere to. Then as an enduser, I could pull up a single app (either by one of the networks or by a third party provider) and see + book all available equipment.

This would mean that equipment providers would have to compete on the quality of their equipment (e.g. comfort, safety) instead of who has raised the most money to build the densest network themselves. It would also allow cities to have an easy birds-eye view of total capacity, utilization, etc. – which is the type of information needed for intelligent planning and regulation (eg where should the city create more bike and scooter lanes).

I believe a similar approach would work well for ridesharing networks, such as Uber, Lyft, myTaxi and others. 

Thursday, October 4, 2018 - 1:06pm

Our most recent read for the USV book club was the Immortalists by Chloe Benjamin. The book chronicles the lives of siblings who as adolescents were foretold the dates of their deaths. One of the key questions we talked about when discussing the book was whether or not one would to know such information. While the case in the book is intentionally extreme, we face similar decisions when it comes to our health. For instance, some people do not want their DNA sequenced for fear of discovering a dangerous mutation.

What does an understanding of uncertainty have to tell us about these kinds of questions? If you have been following continuations for some time you may recall that I had my DNA sequenced. I firmly fall into the it is better to know more camp. At the highest level, more information means reduced uncertainty. This is almost tautological. If your uncertainty is not reduced, you have not in fact received information.

Earlier in Uncertainty Wednesday, I worked through the example of a PSA test that potentially indicates prostate cancer. Prior to taking the test you have a certain probability of having prostate cancer (assuming you are male), that largely depends on your age. Once you get the test result there is a new probability distribution with reduced uncertainty. Depending on the result of the test you are now more or less likely to have prostate cancer than the average male of your aged.

If you were to ask most people if they prefer more or less uncertainty, they will say less. But that includes the people who would rather not sequence their DNA or get the results of their PSA test. So what that subset of people is really saying is that they don’t want to receive bad news. They prefer more uncertainty over less, when the information they would receive might point to a bad outcome.

This of course brings us right back to my prior post about Fear and Acceptance. Not wanting to know is quite likely driven by fear. But today I want to take it into a different direction. What should you do once you receive information that increases the possibility of a bad outcome?

Well, one of the key things about living in a world of pervasive uncertainty is that you should not immediately assume the worst. You should be careful not to overreact. That was the whole point of the many prior posts about Bayesian updating. Most information is quite noisy itself and so the adjustment you should make in your believes needs to reflect that.

Strangely we are now finding ourselves is that doctors are telling people not to have a PSA test (I was literally told this at my last physical) because there has been so much overreaction to test results. People immediately went into aggressive treatment instead of maybe just repeating the test. That over reaction led to a lot of bad outcomes, which then in turn resulted in doctors recommending against doing the test.

Instead of not knowing or overreacting, the key is to use the new information to help you make better decisions. Often that starts with simply verifying the information or using it as the impetus to gather even more information.

Now I am curious to hear from readers what kind of information they would like to know or not know and why. I will then write about some of these in upcoming posts. So please let me know in the comments!

Thursday, September 27, 2018 - 11:35am

Last Uncertainty Wednesday I wrote that “Stuff can and will go wrong, with varying degrees of bad consequences.” One direct corollary of this is that we will all face setbacks in our life. A key question then is what happens next. Do you give up? Or do you learn, persist and try a new approach? That latter requires grit. Grit is a character trait that turns out to be a strong predictor of long term success. In her book “Grit,” Angela Duckworth recounts that tests of grit among Westpoint Academy students were more predictive of their longterm performance than any other test. The book is full of wonderful stories of people who overcame great obstacles to succeed in their respective fields. A great example is Toby Cosgrove, who was initially discouraged by professors from pursuing surgery only to eventually become one of the most accomplished heart surgeons and then the president of the Cleveland Clinic.

If you have not yet read “Grit,” I highly recommend it. The book covers a lot of territory and comes full of terrific advice for raising children to have grit (with apologies to our own children: I wish I had had this book when you were little!), leading teams with grit and developing grit in yourself. One crucial piece of advice relates to goal setting. In order to have more grit, Angela suggests having a hierarchy of goals, in which a long term Northstar goal is supported by intermediate goals which in turn are supported by short term goals. The advantage of such an approach in a world full of uncertainty is powerful. When you fail to achieve one of your short term goals, you can immediately remind yourself of the intermediate goals and the longterm Northstar goal. That makes it much more likely that you will learn and try again and/or try a different way of accomplishing the near term goal rather than giving up.

Having a Northstar goal amounts to having a purpose in life. Something you are looking to accomplish over decades, not days or months. When you have that, you can put up with a lot of setbacks. Finding a purpose is anything but easy. It may take a long time to find one and you may take many detours along the way. It is hard to give ourselves that freedom, especially when we live in a world that glorifies speed to success.

I remember clearly when prior to my undergraduate graduation the economics department at Harvard brought together a bunch of students. Larry Summers, then the head of the department, asked each of us what we were planning to do next. When it was my turn, I answered that I was going to work for a couple of years before deciding on graduate school. Summers said “That’s a terrible idea.” And pointing at another student “Megan (*) will be well on her way to being an economics professor by the time you start.” (*) I don’t recall the name of the student but do remember she was female (I sometimes wonder who she was and what happened to her).

This moment has stuck with me as a clear example of focusing on a short term goal and putting speed above purpose. I am glad I didn’t change my mind then and immediately pursue graduate school. I didn’t have a purpose and therefore it wasn’t clear to me what I should study. I doubt I would have put up well with the challenges of graduate school not knowing how it could support a longer term goal.

Thursday, September 20, 2018 - 6:10pm

Ok, so technically it is Thursday, but here is the latest Uncertainty Wednesday post. Today I want to draw a second important conclusion that follows from the post about the pervasiveness of uncertainty and last week’s post about the fundamental unknowability of your alternative lives: There is no fundamentally safe path through life. Stuff can and will go wrong, with varying degrees of bad consequences (of course, by the same token you can also have upside surprises, but we will leave those for another day).

Some people, over time, build up crippling fears as a result of this realization. For instance, you might become very afraid of touching anything for fear of picking up a deadly germ. Or you might never travel by air for fear of a plane crash. But none of that makes you totally safe. The building you are in might collapse due to an earthquake. Or you might develop a cancer based on some random mutation of one of your trillions of cells.

And it doesn’t have to be an existential risk that becomes a crippling fear. Take something rather mundane such as preparing a presentation. You might be worried about the reaction of the audience. So you try to avoid saying anything that could be controversial. But that runs the risk of giving a really boring presentation. And so you might develop a fear of giving any kind of presentation at all.

It is too facile to dismiss crippling fear as simply irrational. For starters of course most of us have inherited the ability to experience fear as one of the primal emotions as it has served an important evolutionary purpose of self preservation (some people have little or no fear due to a genetic mutation or a brain injury). So saying to someone “oh, don’t worry about that” when there is a real risk, even when that risk is small, ignores fundamentals about the brain.

So what is the alternative? Acceptance. By this I don’t mean being willing to accept any and all risks, no matter how extreme (wing suit flying?). I also don’t mean acceptance of the status quo, no matter how bad. And I don’t mean acceptance in the sense of believing that everything is fate and simply pre-ordained. I simply mean accepting that stuff can and will go wrong, no matter what path you choose.

Acceptance though is a higher level faculty. Unlike fear, it does not “ship” with the brain, but instead has to be practiced. Much of human religion and ritual of course has been designed to try and instill acceptance, but often the wrong type, namely the one that focuses on accepting the status quo. The best practice of acceptance that I have found comes from the Stoics and it focuses on imagining loss as a way of avoiding attachment (which Buddhists correctly identified as the source of suffering). For an introduction, I recommend reading “A Guide to the Good Life: The Ancient Art of Stoic Joy.”

Tuesday, September 18, 2018 - 9:03am

NOTE: The following excerpt is the introduction to the third part of my book World After Capital.

Part Three: Enhancing Freedom

The second major goal of World After Capital is to propose an approach for a transition to the Knowledge Age. The challenge is to overcome the limits of capitalism, by moving past a society centered on the Job Loop towards one embracing the Knowledge Loop. Part Three will propose changes to regulation and self-regulation that increase human freedom and let us unlock the promise of the Digital Knowledge Loop. There are three components to this:

  1. Economic freedom. We must let everyone meet their basic needs without being forced into the Job Loop. With economic freedom, we can embrace automation and enable everyone to participate in and benefit from the Digital Knowledge Loop.

  2. Informational freedom. We must remove barriers from the Digital Knowledge Loop that artificially limit learning from existing knowledge, creating new knowledge based on what we learn and sharing this new knowledge. At the same time must build systems that support the operation of critical inquiry in the Digital Knowledge Loop.

  3. Psychological freedom. We must free ourselves from scarcity thinking and its associated fears and other emotional reactions that impede our participation in the Digital Knowledge Loop. Much of the peril of the Digital Knowledge Loop arises directly from a lack of psychological freedom.

These increased individual freedoms offer the possibility of a peaceful transition from the Industrial Age to the Knowledge Age. A transition that is not dictated top down, but results bottom up from individual choices. There is no guarantee that these changes will be sufficient to avoid a disastrous transition, such as the one from the Agrarian Age to the Industrial Age. But I am convinced that without them we are headed for just that, incurring species level risk for humanity. Later, in Part Four, I will write about values and systems necessary for collective action in a world of increased individual freedom.

Wednesday, September 12, 2018 - 4:33pm

In the last Uncertainty Wednesday, I told three episodes from my life to illustrated just how pervasive uncertainty is in our lives. Today I want to tackle the first and maybe most fundamental implication of that: you cannot know what your life would have been had you made a different decision. This is a fundamental aspect of the human condition. We only observe the one life that was realized, not the many that could have been. This is what Milan Kundera refers to as the “Unbearable Lightness of Being” in his book of the same title.

Now you might object with something along the following lines: “Clearly I would be better off today if I had put money into bitcoin in 2011 and then sold near the peak in 2017.” The fallacy in this type of hindsight analysis is that it holds everything else constant. That is you say “given the path of the world that was realized, if I had picked differently I would be better off.” But the point of pervasive uncertainty is that many paths of the world were possible. Those surely include paths in which Bitcoin doesn’t have some massive runup. And they include paths in which you buy the Bitcoin in 2011 but then sell it at a loss. And even the path where you make a lot of money on Bitcoin then includes new possibilities, such as you fulfilling your lifelong dream of buying a fast car, only to wind up in a terrible accident. So no, you cannot know that you would in fact definitely be better off. 

The alternative life is fundamentally unknowable.

But what does this imply? One conclusion is that we should not second guess the decisions we made. This is time not well spent and can be a source of great misery if one engages in it. Crucially though this is not the same as saying that we cannot get better at decision making. Huh? This would seem to be a direct contradiction to what I just said. This seeming contradiction hinges on separating what actually happened (outcomes) from how we thought about what could happen at the time we made the decision. This will be the subject of many of the posts to come.

Tuesday, September 11, 2018 - 1:27pm

NOTE: I am resuming posting excerpts from my draft book World After Capital. The previous post introduced the Knowledge Loop. Today’s post covers the promise and peril of a Digital Knowledge Loop and also wraps up Part Two of the book.

The Promise and Peril of the Digital Knowledge Loop

The zero marginal cost and universality of digital technologies are already impacting the three phases of learning, creating and sharing, giving rise to a Digital Knowledge Loop. This Digital Knowledge Loop holds both amazing promise and great peril, as can be seen in the example of YouTube.

YouTube has experienced astounding growth since its release in beta form in 2005. People around the world now upload over 100 hours of video content to YouTube every minute. It is difficult to grasp just how much content that is. If you were to spend 100 years watching YouTube twenty-four hours a day, you still wouldn’t be able to watch all the video that people upload in the course of a single week. YouTube contains amazing educational content on topics as diverse as gardening and theoretical math. Many of those videos show the promise of the Digital Knowledge loop. For example, Destin Sandlin, the creator of the Smarter Every Day series of videos. Destin is interested in all things science. When he learns something new, such as the make-up of butterfly wings, he creates a new engaging video sharing that with the world. But the peril of the Digital Knowledge Loop is right there as well: YouTube is also full of videos that peddle conspiracies, spread mis-information, and even incite outright hate.

Both the promise and the peril are made possible by the same characteristics of YouTube: All of the videos are available for free to anyone in the world (except for those countries in which YouTube is blocked). They are also available 24x7. And they become available globally the second someone publishes a new one. Anybody can publish a video. All you need to access these videos is an Internet connection and a smartphone—you don’t even need a laptop or other traditional computer. That means already today two to three billion people, almost half of the world’s population has access to YouTube and can participate in the Digital Knowledge Loop for good and for bad.

These characteristics, which draw on the underlying capabilities of digital technology, are also found in other systems that similarly show the promise and peril of the Digital Knowledge Loop.

Wikipedia, the collectively-produced online encyclopedia is another great example. Here is how it works at its most promising: Someone reads an entry and learns the method used by Pythagoras to approximate the number pi. They then go off and create an animation that illustrates this method. Finally, they share the animation by publishing it back to Wikipedia thus making it easier for more people to learn. Wikipedia entries result from a large collaboration and ongoing revision process, with only a single entry per topic visible at any given time (although you can examine both the history of the page and the conversations about it). What makes this possible is a piece of software known as a wiki that keeps track of all the historical edits [58]. When that process works well it raises the quality of entries over time. But when there is a coordinated effort at manipulation or insufficient editing resources, Wikipedia too can spread misinformation instantly and globally.

Wikipedia illustrates another important aspect of the Digital Knowledge Loop: it allows individuals to participate in extremely small or minor ways. If you wish, you can contribute to Wikipedia by fixing a single typo. In fact, the minimal contribution unit is just one letter! I have not yet contributed anything of length to Wikipedia, but I have fixed probably a dozen or so typos. That doesn’t sound like much, but if you get ten thousand people to fix a typo every day, that’s 3.65 million typos a year. Let’s assume that a single person takes two minutes on average to discover and fix a typo. It would take nearly fifty people working full time for a year (2500 hours) to fix 3.65 million typos.

Small contributions by many that add up are only possible in the Digital Knowledge Loop. The Wikipedia spelling correction example shows the power of such contributions. Their peril can be seen in systems such as Twitter and Facebook, where the smallest contributions are Likes and Retweets or Reposts to one’s friends or followers. While these tiny actions can amplify high quality content, they can just as easily spread mistakes, rumors and propaganda. The impact of these information cascades ranges from viral jokes to swaying the outcomes of elections and has even led to major outbreaks of violence.

Some platforms even make it possible for people to passively contribute to the Digital Knowledge Loop. The app Waze is a good example. The app tracks if you seem to be in a car, and if that car is moving fast or slow. It passes that information back to Waze’s servers, and the company’s algorithms crunch it to figure out where traffic is moving smoothly and where drivers will encounter slowdowns or outright traffic jams. Waze then proposes alternative routes that take traffic flow into account. If you follow a different route proposed by Waze, you again automatically contribute your speed on that potential detour. That is the promise of a lot of passive contribution. To see the peril consider Google’s auto-complete for search queries. These are derived from what people are frequently searching for. As a result, they often reflect existing biases. But more than reflect them, they wind up amplifying them: often instead of typing out their query, users select one of the auto-completes that is presented to them.

The promise of the Digital Knowledge Loop is broad access to a rapidly improving body of knowledge. The peril is a fragmented post-truth society constantly in conflict. Both of these possibilities are enabled by the same fundamental characteristics of digital technologies. And once again we see clearly that technology by itself does not determine the future.

Technology is Not Enough

To achieve the promise of the Digital Knowledge Loop and avoid its peril requires nothing short of a massive societal transition. We need to leave the Industrial Age behind and enter the Knowledge Age. That will be hard.

We have based our economies around the Job Loop, which is trapping a lot of our attention. We have based our laws about information access on locking up information and selling it like industrial products. And we have developed a culture that supports our participation in the industrial economy, both as workers and consumers. Both collectively and individually, we have adopted a range of assumptions and beliefs that enable us to structure our lives around our jobs and to fuel the economy through consumption.

Put differently, the Industrial Age is a system of many interlocking parts. Systems have a lot of inertia and carry on for a long time. Just having digital technology available doesn’t change that. As we saw earlier, digital technology simply harnessed to the existing system results in a huge concentration of power and a massively stretched income and wealth distribution. And worse yet, it tilts the Digital Knowledge Loop away from its promise and towards peril.

What is at stake is nothing short of the survival of the human species. We are facing problems, such as climate change, that can only be surmounted if we make the Digital Knowledge Loop work for us. We must reap its promise and limit its perils. In order to accomplish the necessary transition into the Knowledge Age, we need to make dramatic changes in regulation and self-regulation. These are the subject of Part Three.

Wednesday, September 5, 2018 - 5:58pm

After a six week hiatus I am resuming Uncertainty Wednesday. Much as I have done at varying points with my prior Tech Tuesday series, I have decided to head off in a different direction, at least for some time. Instead of the theoretical approach so far, I will focus more on the philosophy of living in a world full of uncertainty. How should we live our lives, make business and personal decisions, judge performance, etc. given pervasive uncertainty?

My plan is roughly as follows, but I am open to suggestions. First, I intend to write a bit about just how much of our lives is impacted by uncertainty (hint: all of it) despite us largely not acknowledging this reality. Then I plan to look at examples that illustrate how poor our intuitions are when it comes to dealing with uncertainty. With that in place, I will share the answers I have arrived at for myself for how to live with uncertainty.

An interesting exercise is to look back at one’s life and think about how events that had a big impact came about. Here are three examples from my life: the first was my father mentioning rather off-handedly when I was young that a year abroad might be a good idea. Without his comment I might not have applied for a 1-year stay in the United States – none of my childhood friends did anything remotely similar. Yet living with a wonderful host family in Rochester Minnesota when I was sixteen years old was a crucial formative experience in my life.

The second example is meeting Susan, my now wife of 21 years and mother of our three children (and co-founder and CEO of Ziggeo and so much more). I was sitting in a cafe in Paris in the Carrefour Odeon when I heard two non-native French speakers conversing diagonally behind me. As I was in Paris to practice French myself, I decided to turn around and say hello. That’s how I met Susan, who herself was there by chance having abandoned a trip to Belgium to visit a relative of hers in Paris!

My third example is how I wound up at Union Square Ventures. My now partner Brad had been an investor in and board member of an accelerator I had co-founded in 1999. Following the implosion of the dotcom bubble, Brad and I tried to raise a fund (together with another friend) but nobody wanted to invest in Venture Capital in the “nuclear winter” that ensued. I went off to work on another project, which also failed about two years later. By that time Brad and Fred had raised the first Union Square Ventures fund. They asked me to take a look at del.icio.us with them and after the purchase of that company I wound up joining USV as a venture partner.

All three of these events had a massive impact on my life. And yet in each case it is quite clear that there was a huge amount of uncertainty involved, meaning each of these events might also not have happened and my life would be quite different today.

Monday, September 3, 2018 - 5:52pm

We are finding ourselves in a strange place this Labor Day: the impact of AI is simultaneously being overestimated and underestimated. There is still massive hype surrounding self driving cars, which will almost certainly take much longer to arrive than the public appears to believe. At the same time, there is mostly quiet but massive AI progress on tasks such as reading radiology images.

The key thing to understand – if you want to form an opinion on AI progress – is to distinguish between “open” and “closed” domains. The difference revolves around how much knowledge is required in adjacent domains to be effective in the domain itself. In an open domain you need to know a lot about other domains as well. 

Driving is an example of an open domain: to be an effective driver, you don’t just need to know about the road and the car and the physics of acceleration and breaking, but you also need to know about people and their intentions (eg is this person about to cross the road or not?), stuff that can be found lying on a road (eg a plastic bag is nearly weightless and you can drive over it but a piece of metal might puncture your tire). 

Reading a radiology image, by contrast, is an example of a closed domain. The image will have a part of the human body on it and you are supposed to find something that’s wrong, e.g. a broken bone or a tumor. In order to find that you do not need to know anything beyond that; for instance, you do not need to know how the bone was broken or how the tumor might be treated.

AI is making rapid progress on closed domains, such as playing a game or reading a radiology image. As it turns, out much of what humans do in the workplace today operates on closed domains. That’s in fact so by design and has been the hallmark of Industrial Age organization (by this I don’t just mean manufacturing but also services, such as banking, insurance, etc.) We have over a long time carved up jobs through specialization so as to reduce the knowledge required for carrying out the task.

The hype around self-driving cars will likely disappear and that could happen any day. Don’t let that fool you about the prospects of AI to radically change how much and what kind of labor will be required going forward.

Sunday, August 26, 2018 - 10:24am

NOTE: Today’s excerpt from World After Capital is about attention. It argues why attention is scarce in the sense of scarcity introduced earlier in the book. This section sets up the demands on attention and then talks about scarcity of attention for the individual (next time will look at scarcity of attention for society as a whole).

Attention

There is a limited amount of human attention in the world. We have 24 hours in the day and we need to spend some of that time eating and sleeping. For many people in the world much of their waking time is occupied by the job loop (both the earning and the spending parts). That leaves relatively little time for attention that we can freely allocate. This hard limit also exists in the aggregate, since—as I have argued earlier—we are headed for peak population.

At the same time that our attention is limited, we are using the Internet to dramatically increase the amount of available content. The increase in content is well documented to be exponential, which means that most of the content that has ever been produced by humanity has been produced in the last few years [47]. For example, YouTube alone is adding 100 hours of new video content every minute [48].

As a result, it is easy today to be completely overwhelmed by content. Our limited attention can readily be absorbed by ever refreshing content. Humans are maladapted to the information environment we now live in. Our brain evolved in a world where when you saw a cat, there was an actual cat. Now we live in a world of infinite cat pictures. This is analogous to our maladaptation to sugar for an environment that is now sugar rich (largely artificially so). Checking email, Twitter, Instagram, watching yet another YouTube clip or Snapchat story, or episode of one’s favorite show on a streaming service—these all provide quick “information hits” that trigger parts of our brain that evolved to be stimulated by novelty. As of 2017, the average person spends roughly two hours on social media every day [49].

The limited availability of attention has become the key new source of economic rents. Companies such as Google, Facebook and Twitter are valued in no small part based on the amount of attention they have been able to aggregate, some of which they then resell in the form of advertising. As a result they invest heavily in algorithms designed to present ever more captivating content to their end users in order to monopolize their attention. Sites like Buzzfeed and Huffington Post that are nominally news sites do the same.

Now even if you think this is problematic, does it mean attention is scarce in the precise meaning of scarcity that I defined earlier? That would require for us to not have enough attention to meet humanity’s basic needs. Is that really the case?

Individual Attention Scarcity

Let’s first consider attention at the individual level. All over the world people have constructed their identities around work and around firmly held core beliefs, whether religious or worldly. Both of these are undermined by digital technologies. We saw earlier how digital technology is putting pressure on labor. It is also putting pressure though on firmly held beliefs. Content is no longer easily contained in geographic boundaries and people are being exposed, many for the first time, to opinions and behaviors that diverge from their core beliefs.

In combination, this pressure is leading to a large scale crisis of individual identity and rising aggression both online and offline. This crisis takes many different forms, including increased teenage depression, growing adult suicide rates—particularly among middle-aged white males, and drug overdose deaths. In the US, these have increased almost 60 percent, 20 percent and 40 percent, respectively, between 2006 and 2015 [need more up-to-date statistics]:

This is not dissimilar from the beginning of the Industrial Age, when people had to leave the countryside and move to big cities. They were forced to give up identities that had been constructed around land and a historical set of professions. They were confronted with people from other regions who held different beliefs.

Just as with the transition into the Industrial Age it is therefore not surprising that there is a rise in populist leaders with simplistic messages, such as Donald Trump in the United States and Viktor Orban in Hungary. A recent study found that throughout Europe, populist parties are receiving more than double their average share of the vote in national and parliamentary elections compared with the 1960s [50]. People whose identity is shaken want to be reassured. They want to hear that things will be OK and that the way of getting there is simple. “Make America Great Again” is an example of that. So is ISIS. In both cases the message is retrograde. Instead of a new identity that has to be built, requiring time and effort, these backward movements promise an easy return to a glorious identity of the past.

Our attention to our most basic need, the existential need to make sense of the world as an individual by finding a purpose that makes our life meaningful, is scarce. Instead we let our attention be occupied by our job or by yet another video or worse by propaganda. This individual scarcity of attention is not confined to any one demographic. Definitely people who have to work multiple jobs just to make rent and feed their families are impacted. But so are many people in high paying jobs who are often working more hours today than they ever have.

I do a fair bit of counseling for young people who want to work for a technology startup or who want to enter venture capital. Most of them are looking for tactical advice, such as how to apply to a specific position. After discussing that for some time, I usually switch gears and ask them a much more open question. “What do you want from your next position?” That often elicits answers such as learning a new skill, or applying a skill that they have recently learned. Sometimes people answer with a desire to contribute to some cause. I then get to the point by asking directly “What is your purpose?” Shockingly few people have an answer to that.

Purpose is an individual need for which the Industrial Age had little use. Somebody with a strong sense of purpose does not fit readily into the job loop either as a worker or as a consumer. Instead work and consumption have become the de facto purpose for most people. Both the cultural and religious narratives adjusted from the Agrarian Age to the Industrial age to support this re-definition of purpose.

With digital technology we can now exit the job loop and redirect attention to finding other sources of purpose. Instead though we are using digital technology to aggregate attention primarily for resale (advertising) and for entertainment. We do not identify this as a fundamental problem of the largest platforms, focusing instead on areas such as privacy and moderation of speech. That’s because we continue to see the world through the lens of capital scarcity instead of attention scarcity.

Sunday, August 26, 2018 - 10:24am

NOTE: I am continuing to post excerpts from my book World After Capital. The following is on the Knowledge Loop. Unfortunately I am dealing with a gitbook issue, so this revised text is not yet live on the book website.

The Knowledge Loop

Already today knowledge has made possible something extraordinary: by means of the innovations of the Industrial Age we can, in principle, meet everyone’s basic needs. But we cannot stop here. We need to generate additional knowledge to solve the problems we have introduced along the way, such as climate change. Knowledge is powerful, but only if we have enough of it. Where will that additional knowledge come from?

New knowledge does not spring forth in a vacuum. Instead it emerges from what I call the Knowledge Loop. In the Knowledge Loop, someone starts out by learning something, then uses that to create something new, which is then shared which in turn is the basis for more learning. And so on.

The Knowledge Loop is not new. Given my definition of knowledge, it has been around since humans first developed written language, some five thousand years ago. Before that humans were able to use spoken language, but as I have noted previously that puts tight limits on both time and space for learning and sharing. Since the invention of written language we have had breakthroughs that have helped accelerate and broaden access to the Knowledge Loop. Those include moveable type (about one thousand years ago), the printing press (about five hundred years ago), and then more recently the telegraph, radio and television. Now we are in the middle of another fundamental breakthrough: digital technologies, which can connect all of humanity to the Knowledge Loop at zero marginal cost and are allowing machines to participate in the Knowledge Loop.

It is easy to underestimate the potential of digital technologies for further accelerating and broadening access to the Knowledge Loop; to many, it seems as if these innovations have under-delivered. As a line on the Founders Fund website once complained, “We wanted flying cars and all we got was 140 characters.” Since that lament we have made great progress on flying cars in no small part because digital technologies, including the maligned Twitter, have already helped accelerate the Knowledge Loop.

Sunday, August 26, 2018 - 10:24am

NOTE: Today’s excerpt from World After Capital starts to explain why capitalism cannot solve the problem of allocating attention which is scarce at the individual and collective levels.

Limits Of Capitalism

Capitalism has been extraordinarily successful. So much so that even communist countries like China, that had long sought a different path, have embraced it. But capitalism cannot solve the scarcity of attention without significant changes in regulation and self-regulation. That’s due to three important limitations. First, there are prices that will always be missing for things that we should be paying attention to. Second, capitalism to date has limited mechanisms for dealing with the power laws arising from digital technologies. Third, capitalism acts to preserve the interests of capital over those of knowledge. Put differently: we need to make changes now, precisely because capitalism has been so successful. The important problems that are left over are the one’s it cannot solve.

Missing Prices

Why won’t capitalism help us allocate attention? Because the great strength and the great weakness of capitalism is that it relies on prices determined in markets. Prices are amazingly powerful because they efficiently aggregate information on consumer preferences, producer needs, etc. But not everything can be priced. And increasingly the things that cannot be priced are becoming much more important than those that can—think of the benefits from space travel, the cost of climate change, or even an individual’s sense of purpose and meaning.

There are foundational issues that prevent the existence of prices for many things. This is not just a question of a missing market that can magically be created by assigning property rights.

The first foundational issue is zero marginal cost for copies and distribution in the digital realm. From a social perspective, we should make all the world’s knowledge, including all the existing music, videos, educational materials available for free at the margin. That’s not just true for content but also for services that can be provided at essentially zero marginal cost, such as medical diagnoses. As long as we are relying on the price mechanism, we will—by definition—under-produce free resources. Another way to think about this is as follows: the Industrial Age was full of negative externalities, such as pollution, which resulted in over production; the Knowledge Age is full of positive externalities, such as learning, which implies under production. So for instance, relying on the market mechanism we will not pay nearly enough attention to the creation of free educational resources.

The second foundational issue is extreme uncertainty. Because prices aggregate information, they fail when no such information can exist. There are events that are so rare or have not occurred at all yet that we have essentially no information on their frequency or severity. This is especially true around the kind of societal event horizon that we are currently dealing with. Nassim Taleb’s work on tail risk is highly relevant here. The price mechanism cannot work when forecast error is infinite. For instance, large asteroid impacts on Earth occur millions of years apart. There is no price that can help us allocate attention to detecting such asteroids and building systems for deflecting them. As a result we are currently paying a trivial amount of attention to this problem relative to the potential damage to humanity from an impact.

The third foundational issue is new knowledge itself. The further removed the knowledge is from creating a product or service that can be sold, the less the price mechanism is of use. That is quite obvious for basic research, but is even true in applied settings. Consider early aviation pioneers, for example. They did not pursue flight because there was an obvious market with clear prices for air travel. Instead, they were fascinated by solving the challenge of heavier-than-air flight. Take the early days of quantum computing when any actual machine was still decades away. The price mechanism would not allocate attention to quantum computing at that time.

The fourth foundational issue is the deeply personal. For markets and prices to exist there have to be multiple buyers and sellers. So there is no market and hence no price for you to spend time with your children. Or for you to figure out your purpose in life. Ironically, it has been an ad campaign for a commercial product that got this idea right: Master Card’s long running series of “Priceless” ads. In the first of these from 1997 a father takes his son to the ballpark. The text reads “Two tickets, $28; Two hotdogs, two popcorns, two sodas, $18; autographed baseball, $45; real conversation with 11-year old son: priceless, there are some things money can’t buy.” Capitalism and the market mechanism cannot help us allocate attention to anything that is deeply personal.

Sunday, August 26, 2018 - 10:24am

It’s been six weeks since the last Uncertainty Wednesday, so I strongly suggest you go back first and read that post which provides an introduction to the idea of updating. Take your time, this new post won’t go away!

The distribution that we will use for modeling our coin is the Beta distribution. Why choose that one? Because the beta distribution when combined with likelihood function for a coin toss gives us another beta distribution. This is known technically as a so-called conjugate prior. That all sounds very technical but the idea is simple: when our prior is a beta distribution and the observations are of the 0 or 1 (head or tails) variety, then our posterior distribution after updating is once again a beta distribution.

Now the beta distribution has two parameters, which are commonly referred to as α and β. These parameters can take on lots of values, but there is straightforward choice for initial parameters. We will pick α = β = 1 because for those values, the beta distribution coincides with the uniform distribution. All the plots in this post are generated using Wolfram Alpha.

image

As a refresher: the x axis on this chart is the parameter θ for which we are expressing our belief. In the coin toss example θ would be the probability that the coin comes up Heads on any one toss (in which case 1 - θ is the probability that it comes up Tails). We know nothing about the coin right now so that probability θ could be anything between 0 (never see Heads) and 1 (every toss comes up Heads).

At this point you may be thoroughly confused. How do the parameters from the beta distribution relate to the parameter for the coin toss? Sometimes people call the α and β hyper-parameters, but I think a better term would have been meta-parameters or belief-parameters. Put differently α and β determine the shape of our belief about θ.

So now what remains to be done is to figure out how we should update α and β after we have observed some outcomes. We are looking for new values of α and β after we have observed either Heads or Tails. As we will see next Wednesday the updating of these values turns out to be super simple.

Sunday, August 26, 2018 - 10:24am

NOTE: I am resuming publishing excerpts from my draft book World After Capital. Today’s section continues the discussion of why attention is scarce. Since it has been five weeks, I recommend first rereading the prior section which introduces attention scarcity.

Collective Attention Scarcity

At the same time our collective attention is also scarce. How so? Humanity as a whole is not devoting nearly enough attention towards moving knowledge forward with regard to a variety of threats and opportunities.

On the threat side, for example, we are not working nearly hard enough on how to recapture CO2 and other greenhouse gases from the atmosphere. Or on monitoring asteroids that could strike earth, and coming up with ways of deflecting them. Or containing the outbreak of the next avian flu: we should have a lot more collective attention dedicated to early detection and coming up with vaccines and treatments.

Climate change, “death from above,” and pandemics are three examples of species level threats for humans. As I wrote earlier, we can only sustain the present number of humans on this planet due to our technological progress. Each one of these risk categories has the potential to fundamentally disrupt our ability to meet the basic needs of millions, potentially billions and possibly the entire human species. That’s why our collective attention is scarce in the precise sense of scarcity provided earlier.

On the opportunity side, far too little human attention is spent on environmental cleanup, free educational resources, and basic research (including the foundations of science), to name just a few examples. There are so many opportunities we could dedicate attention to that over time have the potential to dramatically improve quality of life here on Earth not just for humans but also for other species.

As in the individual case, much of our collective attention, instead of being applied to these threats and opportunities, is absorbed by having to earn a living, with our leisure time increasingly consumed by watching entertainment on the internet.

The result is that we are not investing nearly enough attention in generating more knowledge. And if we don’t have enough knowledge, we may not be able to solve some of the threats we are currently facing, such as climate change. The climate change threat is not a hypothetical concern, but has repeatedly led to the downfall of prior human civilizations, such as the Rapa Nui or the Mayans. Now, however, we are facing the climate change threat on a truly global scale. We should be using a few percent of all human attention to fight this but I suspect the actual number is two to three orders of magnitude smaller.

I am proposing this as a (possibly new) explanation for the Fermi Paradox, which famously asks why we have not yet detected any signs of intelligent life elsewhere in our rather large universe. We now even know that there are plenty of goldilocks planets available that could harbor life forms similar to those on Earth. Maybe what happens is that all civilizations get far enough to where they generate huge amounts of information, but then they get done in by attention scarcity. They collectively take their eye off the ball of progress and are not prepared when something really bad happens such as a global pandemic.

But why exactly is attention so poorly allocated? One key reason is that we are currently attempting to use the market mechanism to allocate attention. The next chapter explains why that cannot work.

Sunday, August 26, 2018 - 10:24am

After nearly four weeks of not posting due to shoulder surgery I am almost back. I am saying almost because even though I can type very well again, I am spending a fair bit of time every day on physical therapy. That is time I would have spent writing and, well, something has got to give. So for now I am planning on one post per week instead of the usual three, but let’s see where it goes.

In the meantime though I want to thank everyone who kindly reached out, inquired how things were going, and wished me a speedy recovery. I appreciated every note! Hearing from friends and strangers helped a lot, especially in the early days post surgery when I was quite miserable. If you ever consider shoulder surgery for rotator cuff, just mentally prepare yourself for a really rough first week. You may wind up questioning whether it was a good idea, I certainly did. And while I am only four weeks out now I can feel improvements every day which makes me optimistic. 

If you care for a bit more background here is what happened. We went skiing in March to Verbier, Switzerland. On the first day in poor visibility I misjudged the distance from an off-piste run down to a cat track and there were about 5 feet of vertical. I hit the cat track hard, double ejected and pancaked into some very hard packed snow. I could hear a group of people standing near by go “Ouch.” I got up put my skis on an skied off but my left wrist and right shoulder definitely hurt. I skied the rest of the day but got fairly little sleep at night as my shoulder was throbbing. Given the great conditions though, I just took a lot of Advil the next morning and wound up skiing the entire five days we were there.

When I got back to New York my shoulder continued to hurt and I had fairly limited range of motion when trying to lift my right arm. I was hoping the whole thing would just go away with time but after six weeks without improvement I finally caved decided to see a doctor. Easier said then done because my insurance company wanted me to first get an x-ray before approving an MRI. The medical reasons for this are dubious at best and I decided to pay for the MRI out of pocket (you can get a much better rate when paying on the spot, one of the great distortions of our medical system).

With MRI in hand I went to two different doctors and got the same feedback: a mostly torn Supraspinatus tendon and a bunch of damage to the Glenoid labrum. Both required surgery to fix. The procedure itself was done at an outpatient facility and I was able to spend the night in my own bed (mostly not sleeping). Pro-tip: start taking the pain killers right away and don’t wait for the nerve block to wear off. Because of the nerve block you don’t feel any pain but when it wears off the pain is excruciating and pain killers take some time to work (file under: important note to self, should I have to do this again some time).

Now off to do my physical therapy exercises. And: Happy Father’s day to all fathers who made it to the end of this post!

Sunday, August 26, 2018 - 10:24am

No Uncertainty Wednesday today. I had shoulder surgery yesterday to repair a rotator cuff injury. That means I won’t be able to type for quite a few days. I am creating this post using Voice on my Android phone. Impressively I did not have to correct a single word.

Albert Wenger is a partner at Union Square Ventures (USV), a New York-based early stage VC firm focused on investing in disruptive networks. USV portfolio companies include: Twitter, Tumblr, Foursquare, Etsy, Kickstarter and Shapeways. Before joining USV, Albert was the president of del.icio.us through the company’s sale to Yahoo. He previously founded or co-founded five companies, including a management consulting firm (in Germany), a hosted data analytics company, a technology subsidiary for Telebanc (now E*Tradebank), an early stage investment firm, and most recently (with his wife), DailyLit, a service for reading books by email or RSS.