Links to Consider, 7/25
Adam Mastroianni on science funding; Andreessen-Horowitz on politics and "little tech."; The Zvi contra A16z; The Political Mortgage Cycle
These projects might be great, they might be important, but they are not even close to “bold” or “radically different.” This is normal research, indistinguishable from the stuff the NSF and NIH fund through their regular channels. Seven of the eight Pioneer Award recipients are affiliated with super-elite universities. Three of them are at Stanford alone! The NIH was like, “let’s do something so crazy that those uptight muckity-mucks at HQ would never go for it” and they came up with, “let’s mail some checks to Stanford.”
This is under a program that claims to fund outside-the-box research.
(By the way, grants like these comprise 0.15% of the NIH external funding budget. So 99.85% of the budget is going to projects that are even lower risk than this.)
If you’re in the mood for a delicious rant, read the rest. I can’t resist one more excerpt.
Governments struggle to do this because governing requires consensus-building, while revolutionary science requires consensus-breaking. Private foundations struggle to do it because—as I’ve heard from people who work for them—even when their stated goal is “change the world,” their actual goal is often, “make our billionaire donor look good.”
Marc Andreessen and Ben Horowitz make the case that little tech is important and needs a victory by Mr. Trump in November. Incidentally, this is the first time I realized that Ben Horowitz is the son of David Horowitz, the notorious commie-to-conservative turncoat.
Andreessen is still a big fan of blockchain. He thinks it can solve the problem of deepfakes, for example. And he sees the Biden Administration as going all out to thwart blockchain, while Mr. Trump supports it, even in the Republican platform that Trump clearly had a hand in writing.
The other technology that they highlight is AI. They see the Biden Administration’s regulatory approach as having the effect of grandfathering the current big players while hamstringing new entrants. They point out that the Republican platform calls for repeal of Mr. Biden’s executive order on AI regulation.
At one point, Horowitz says,
And if you put in a place a law that’s impossible to enforce, then you end up in a state of what, you know, is known as anarcho-tyranny, where you have anarchy for the people who don’t obey the law, they can do whatever they want, and then tyranny for people who are law-abiding citizens because no matter how carefully you try to comply…you’re going to screw something up and get nailed.
That is a very general point. Think of immigration. People who want to become citizens legally face tyranny. People who want to just cross the border face anarchy.
Andreessen and Horowitz come straight out and say that they want Mr. Trump to win.
Trump is strongly pro-crypto, whereas Biden is anti-crypto, and a huge portion of a16z’s portfolio and business model is crypto. And they see Biden’s and the SEC’s anti-crypto moves as against the rule of law, because they think the law should permit crypto and should tell them exactly what they must do to be in compliance with the laws in order to do their regulatory arbitrages, whereas the SEC under Biden is of the legal opinion that crypto mostly is not legal and that they are not under any obligation to spell out exactly what the rules are any more than they do so in other cases.
Substack clocks Zvi’s post as a “1 hour, 9 minute read.” But I can strongly recommend that you skim the whole thing.
Tyler Cowen quotes from a working paper by Atlanta Fed researchers.
We study the effect of Department of Justice lawsuits in the 2010s against large lenders for alleged fraud in the Federal Housing Administration (FHA) mortgage insurance program. The suits led to more than $5 billion in settlements and caused targeted banks and their peers to precipitously exit the FHA market.
Moses Sternstein also remarked on this.
Before 2008, the litigation risk went the other way. That is, if your bank did not have enough loans to borrowers in “under-served” classes, you could face regulatory penalties.
Mortgage underwriting is subject to Type I and Type II errors. Type I is approving a loan that is riskier than you ought to make. Type II is rejecting a loan that is actually reasonably safe. There is always a trade-off between those two types of errors. If you emphasize avoiding Type I’s, then you will make more Type II’s.
Politicians and regulators act as if they do not understand this trade-off. When they observe a few years where defaults are low, they say that lenders are being too strict. Then, after the risky loans they have leaned on lenders to make go sour, they say that lenders were engaged in fraud and abuse.
substacks referenced above:
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The modern American version of the phenomenon of Anarcho-Tyranny was first noticed and written about by Sam Francis - who coined the term - in the old Chronicles Magazine starting way back in late 1992 in the long reflective aftermath of the LA riots. It was a theme he revisited and expounded upon repeatedly in subsequent years, his characteristic wit and attitude revealed in every paragraph, and his important insights into the mechanisms of its origin and various manifestations has been a frequent topic of discussion for the smarter set on the "edgy right" for a long time.
I say 'edgy' and I mean that not in the sense of "irritable", but "having a sharp or biting edge", though that still isn't quite what I'm getting at. I'm not talking about conservative intellectuals with necessarily "far" or "extreme" minority positions, but who have examined and analyzed political observations to see them as instances of broader patterns at higher levels of generality and abstraction, and thus to understand the true, terrifying depth and challenge of the root causes and underlying problems. You might call the set of beliefs shared by these people "structural leftism."
Where other conservatives might be annoyed by some circumstance or policy and make some surface-level complaint and erroneously imagine it could remedied by some equally minor fix or reform, those aware of the deeply entrenched nature of "structural leftism" are liable to respond that the solution to even a seemingly minor annoyance is nevertheless effectively a "regime-change complete problem." And anarchy-tyranny is one of those problems.
"Politicians and regulators act as if they do not understand this trade-off."
This sentence is even more true when reworded to: "Politicians and regulators act as if they do not understand trade-offs."
Apocryphally, Harry Truman said he wanted a one-armed economist. When asked why he said "so they can't tell me something and then say 'on the other hand...'"