Independence and Integration
Plus Podcast Lessons
In honor of the US national holiday, some reflections on independence. The first part is national (macro) and the second part is personal (micro). Investment implications (subscribers only) come at the end.
Summary:
We are wired to believe people in authority are there because they are wise.
Due to technology, the ability of a few to impact everyone else has increased in the last 100 years while the wisdom of any one person has, on average, not.
Of those in power now, the glaring policy errors include invading Ukraine, zero Covid, erratic central bank policy, outrage amplifying algos and embracing Trump.
Learning to “think for yourself,” isn’t easy; I still find myself needing to pause and make the effort when someone—the Supreme Court, Russian State TV, a bullish analyst—sounds authoritative but is actually illogical.
National Independence
We are wired to, if not respect, at least defer to authority.1 Survival as hunter-gatherer or in agricultural commune required us to work in groups—tasks were too big for an individual—so we learned to instinctively recognize leaders, deference and compromise. For tens of thousands of years, however, individuals in positions of power had relatively limited scope to disrupt the lives of others because technology limited the scale of their actions. Post Hiroshima, that is no longer true. The internet and global trade have further increased the ability of a few to have profound sway over the many. My next book—Master, Minion—is about this.
For instance, the violent fluctuations in the value of money and your wealth are largely the result of three people: Powell, Putin and Xi. The Federal Reserve chief (Powell) sets the price of money not just for the US, but to some degree for the other 6 billion plus people in the world who either save in dollars or have exposure to dollars via their exchange rates and trade. Putin invading Ukraine and Xi locking down China boosted the price of oil, natural gas, wheat and imports, which touch us all.
It is not just government officials that matter. A few CEOs today wield far more power than Kings and Queens used to. By my estimate, Napoleon’s army, considered massive at the time, represented roughly 0.04% of the global population. Tim Cook (Apple CEO) has devices (iPhones) in the hands of roughly 17% of the global population.
The history of people in authority making previous errors in judgement is long. A reader suggested I check out Barbara Tuchman’s The March of Folly. While the book is both a bit dated (1984) and wordy, there is something brilliant in it and I am thankful for the recommendation. Tuchman takes three disparate events—15th century mismanagement of the Catholic Church that provoked Protestant succession, England’s management of the colonies and the US invasion of Vietnam—and shows that the thread going through each of them is terrible human judgement.
The last time I read about things like the 1764 Sugar Act (a tax on molasses), I was…16 years old, in high school US history class, and far more focused on the girl next to me than tax policy. But Tuchman points out how terrible UK management was of the Colonies. At the time, the English Parliament was run by leaders with “no identifiable political principles” who owed their seat to family ties and “bought elections.” Not surprisingly, this crowd completely botched the Colonies (there wasn’t even a department to coordinate) and … 260 years later, US GDP is $22 trillion and UK GDP is $2 trillion. Talk about a missed opportunity!
Typically, leaders stumble when they need to adjust to and integrate change. The UK failed to integrate the Colonies. Today, most countries are struggling to integrate disruptive technological change in a way that strengthens the social fabric. The simplest explanation for the strong swing toward authoritarianism not only in authoritarian countries like Hungary and China, but in pockets (most?) of the US Republican Party is that it is a mis-directed effort to respond to disruptive change, to create order out of disorder.
Because people in authority can commit such grievous misjudgments, to survive one needs to be on the look-out. A key decision is whether or not to leave the jurisdiction you live in. I’ve seen this happen to friends recently in Russia and China and certainly the colonists were thinking the same. Could conditions get so dicey in the country you are reading this in (wherever that is) that is time to go? It’s a scary thought, but it happens again and again and again. Independence Day celebrates one of those breaks.
Individual Independence
On a personal level, these posts are part of my own messy evolution. For forty years, I worked for someone else. Two years ago, I left a job with a nice salary and benefits to write these, air my podcast (I was recording an upcoming guest in Kiev yesterday!) and write book number two. This has forced me to interact with this new world in a very direct way and to think for myself as never before. Some of you reading this are entrepreneurs already and have walked what I’d describe as the foggy path. Most of my heroes—Hemingway, Obama, Dalio—did too, striking out on their own, so I wanted to try it before I die. Here is what I’ve learned so far.
Entrepreneurship is indeed foggy; focus on what serves others. To create something from nothing requires feeling your way down a trail with only dimly visible landmarks; what is indispensably useful is one of those markers.
In a corporation, a (large) part of your mind is taken with negotiating the vortex, the bureaucracies the make these places run. As an entrepreneur, the focus is on creating a great product, day-in, day-out.
Losing a paycheck is anxiety provoking; gaining autonomy forces maturation.
To succeed, requires doing work that is so good someone will tell their friend about it; this requires being completely present.
Maintain high standards; it’s very easy in a start-up to be tempted to cut corners, don’t.
The world changes fast and it’s hard to see how it is changing when you are inside an existing business that has developed a “moat” that protects (blinds?) itself to these shifts.
Learn the power of technology; this is not easy, many of the people that create it—software engineers—don’t fully understand how it works.
Listen to your work; if you stare at the work, there is always a flaw. To push it forward, you need to “listen.”
Listen to others. I get feedback all the time. A lot of times it is not precise, I need to deduce what they are saying. Here are a few of the highlights from podcasts that stuck with me.
Honesty is rare — Jim Comey.
The greatest strategic errors are caused by by lack of humility not lack of intelligence — Jim Himes.
You can do anything you want, as long as you recognize it will end up being very different than what you expected — Paul Fetters.
Sometimes radical change is needed to make personal change — Sue Cheung.
We are a product of all that came before us — Tamara Chubinidze.
Ask for help — Alexander Vanyukov.
We are responsible for others, find out what they need — Roger Johnson.
You only really value something when it is taken away — Gao Xiqing.
Pain is the raw material for learning—Nick Reber.
Life can really hurt, hang tough—Ray Dalio.
Approach work with joy, that will be felt on the other side and, let’s face it, life is a challenge and people need your strength to give them strength.
Investment Implications