Keeping up with the FITs, 2-15

Tyler Cowen and Sebastian Mallaby; Scott Alexander on charitable dilemmas; Tyler Cowen on Canadian truckers; Russ Roberts interviews an Israeli VC

Tyler Cowen interviews Sebastian Mallaby, who says,

I think there’s a deep structural shift, which is really important. That is that intangible capital has become more and more important in our economy. The nature of intangible capital is that it’s hard to measure it in financial reports.

To understand whether a particular software investment, for example, is worth a huge amount or, really, nothing, you need to understand what that software development within the company is doing. You need to be hands-on. You need to have the technical skills to evaluate that software project. The more that intangible capital rises as a share of new GDP creation, the more this venture-style hands-on expert investing is going to be valuable.

The topic is venture capital, and its role in the economy. Tyler asks a lot of Devil’s Advocate questions. Mallaby’s new book, The Power Law, is very entertaining, although as far as I know he does not break any new stories.

Scott Alexander tried giving away money in what he hoped was a rational way. He concludes,

if you’re wondering whether or not to start a grants program, the most honest answer I can give is “I tried this once, and now I’m hoping to invent an entirely new type of philanthropic institution just to avoid doing it again.”

He wants an institution that addresses the problem of uncertainty about the outcome of charitable giving.

The basic idea would be: you all send in your grant proposals as usual. I (and any other interested funders) pledge some amount of money (let’s say $250K) to be distributed to successful projects one year later, ie after they’ve succeeded and made a difference. Then some group of savvy investors (or people who think they’re savvy investors) commit the same amount of their money (so $250K in our example) to buying grants, ie fully funding them in exchange for a meaningless certificate saying they “own” the grant - if people wanted, this could be an NFT, since that technology excels in producing meaningless certificates. At the end of some period, maybe a year, I would come in with my $250K and “give it” to the successful projects, by which I mean to whoever owned their impact certificates. Think of it as kind of like a prediction market for which grants will do well.

Actually, the most reliable institution for generating social benefits that are rigorously calculated is a profit-seeking firm. This is hard for people to believe, even though I think that the economic argument for it is quite sound. I spelled it out a bit more here.

Moshe Koppel and I had a bit of a back-and-forth about his distinction between beliefs and opinions. One way I think of that distinction is that you can have an opinion that you don’t really believe. For example, I give money to charity, even though my opinion is that profit-seeking enterprises do more good than non-profits. So you could argue that my opinion about non-profits is one that I don’t really believe.

Tyler Cowen writes,

When I hear that a particular group defends liberty, such as the Ottawa truckers’ convoy, while this is partially true it makes me nervous.  As a whole, they also seem to believe a lot of nonsense and to be, in procedural terms, not exactly where I would want them on scientific method and the like.  Fair numbers of them seem to hold offensive beliefs as well.  Whine about The Guardian if you like, but I haven’t seen any rebuttal of this portrait of the views of their leaders.  Ugh.

Fair enough. Compare his evaluation of Black Lives Matter.

“Black Lives Matter” is a large movement, if that is the proper word for it, and you can find many objectionable statements, alliances, and political views within it.  I don’t mean to endorse those, but at its essence I see this as a libertarian idea to be admired and promoted.

[Note: Tyler notes that he “wrote those BLM remarks...before a lot of other things happened...”. It was several years ago]

Young black men and Canadian truckers both deserve respect. There are some impulses in both movements that could be called libertarian. But those are not necessarily reliable, and there are other impulses in both movements that are ugly.

I am more sympathetic to police than I am to Canadian health officials. What Tyler calls “mood affiliation” would lead me to arrive at a position that is more in sympathy with the truckers and less with BLM than Tyler’s apparent [initial] views.

But I agree that a heuristic of looking for rigorous thinking is worth using. A shorthand way of saying it is “Show your work.” I think that if you are looking for clear, rigorous thinking, don’t look to any 21st-century mass movement. As Martin Gurri points out (and Canada is having a classic Martin Gurri moment, both in the nature of the protest and the nature of the elite reaction), protests coordinated over the Internet generally contain strong elements of nihilism. Earlier movements tended to have more organizational coherence, including leadership and programs.

The clear-thinking heuristic steers me away from much more than Internet-arranged populist movements. Every once in a while, an economist will forward to me a petition. Even if I basically support the substance of the petition, I won’t sign. When I take a position on something, I like to show my work, and petitions won’t let me do that. People who want to model clear thinking show their work.

In an interview with Russ Roberts, Michael Eisenberg says,

Government right now, both because of the fractiousness of politics and because its operating system is still the Pony Express, can't keep up and therefore the friction created by it, not just from an economic perspective, but from a management perspective. . .we need rebuilding American resilience to come from entrepreneurs.

Look, America's in the space race today because of Elon Musk. Period. Full stop. America hasn't delivered a meaningful program like the New Deal or the Apollo in 50 years. Country has gotten bigger, government's gotten more out of touch and more overwhelmed by technology. Again, they have an operating system like the Pony Express. So, to the extent that we want resilience and dynamism, and to the extent that we want humanity to get better, we need to rely on entrepreneurship, innovation, and business. . .I don't think for the Progressives, they stand a chance of having the state doing any of this, because it's too unwieldy and operations on the Pony Express operating system.

Progressivism vs. Dynamism, as it were.