Matt's Thoughts In Between - Issue #28

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Dan Wang has a superb new essay on Definite Optimism as Human Capital. If you’re interested in tech, innovation and public policy, I strongly recommend it.

Definite optimism is an idea developed by Peter Thiel in Zero To One. There’s a good summary here, but the basic idea is that societies built on definite optimism believe that (a) the future will be better than the present and (b) it’s possible to build it by developing a vision and taking risks to realise it. This enables faster growth and better outcomes, according to Thiel (and Wang).

Wang’s essay considers the necessary foundations of definite optimism and is dense with non-obvious ideas. Two stand out as particularly interesting. First, that there are large and positive second-order benefits to exposing people to manufacturing and making things; this creates the “improving mindset” that underpins innovation. Second, that the long-run psychological effects of recessions (above all, long-run risk aversion) are underestimated and so we should be even more willing to bear costs to avoid them.

Do read the whole thing. It’s exactly the sort of viewpoint that I hope policymakers are exposed to as they wrestle with the challenges the ways technology is changing the world.

Elon Musk, billionaire founder of PayPal, SpaceX and Tesla, and poster boy for the most extreme form of definite optimism, got in trouble a couple of weeks ago after tweeting about taking Tesla private. This prompted an SEC investigation and this extraordinary interview with the New York Times that in parts seemed like a cry for help.

How should we think about Musk? On the one hand he seems to embody lots of what we valorise in founders: huge ambition, absolute determination and, of course, repeated success. On the other, his behaviour over the last few months has been erratic, bewildering and perhaps even illegal.

The two best takes I’ve seen are from Matt Levine, who says that Musk is incapable of not making life hard for himself, and Morgan Housel, who argues that something like that is unavoidable for the “natural maniacs” who chase the biggest outcomes.

But I’m not sure. Saku rightly points out that this is a classic (and so seductive) narrative. And, as Housel himself notes, we do have very prominent boring billionaires. They’re just less interesting on Twitter.

The always-interesting Felix Salmon yesterday tweeted a link to this 2015 commencement speech at Yale Law School. I’m not usually a fan of the genre, but this speech, by Daniel Markovits is excellent, even three years later (Bonus points for the Prufock references).

Markovits’ thesis is that graduates of elite professional schools like Yale represent a “new aristocracy” - but one with historically unusual characteristics. First, it is (notionally) meritocratic; second, its primary source of income is labour; and third, it has totally removed the social stigma attached to labour that characterised elite attitudes as recently as 200 years ago. Markovits argues that this is a poor equilibrium, not just for society, but for the elites themselves, who despite their privilege are trapped in a world where they are totally defined by and subject to their work.

It’s interesting to consider this argument in the context of universal basic income (see previous TiB discussion), where one of the most common critiques is that delinking income and work will have negative social consequences. But what if the opposite is true? Some radical thinkers on the left have made this argument - e.g. see Nick Srnicek and Alex Williams’ Inventing the Future - and I’m sure it’s a topic we’ll be returning to.

If you enjoyed this, I’d love you to share it. The easiest way is to forward it to someone you think would enjoy it. I’m always pleased to get your thoughts and suggestions - just hit reply.

Until next week,

Matt