Invest Like the Best with Patrick O'Shaughnessy
00:26:51 · Walter Russell Mead
[00:26:51] S2: I do try to look to historical analogies. There's nothing exactly the same as this. The closest you really can see is to the actual industrial revolution. Interestingly, the country that led the first industrial revolution, Britain then dominated for one hundred and fifty years became a dominant power. History is moving a lot faster now, but I think we absolutely have been in this position of the first to really see and use this potential source of power. I think since the seventeenth century, the key to power in the modern world is which countries can be most effective at developing, harnessing, exploiting the power of new technology without blowing up internally because of the social stress and upheavals that new technology causes. And for a lot of reasons, think first the British and then we were just better at riding that wild horse than other people were. I think that is still true, but you can look at American society today and see the reaction against tech, this sort of anti data center thing, and you've got Trotskyites in the DSA thinking that the most retrograde forms of Marxism are our only salvation in this terrible situation. It's not a given that we will be able to pull it off again. Enormous progress and yet total chaos and dissension. The relationship between achievement and order right now has broken down because we need a different kind of order than we've had because our technology has created a new kind of world. It is changing the way power works, it is changing the nature of power. So far, America is doing what we've been doing for a very long time, which is dominating the cutting edge.
00:28:48 · Patrick O'Shaughnessy, Walter Russell Mead
[00:28:48] S0: So we've developed it. We have the horse. What's the key to riding the wild horse? Because I think everyone in America would say, yeah, hope the next one hundred and fifty years we dominate. And it's because [00:28:59] S2: But in a nice way. That's the kind of people we are. [00:29:02] S0: How would you have us do that? What are the keys to doing that? Well, now that we have the horse.
00:29:07 · Walter Russell Mead
[00:29:07] S2: America's always been an ownership society. Why did a lot of the founders think that The United States could survive as a reasonably democratic republic? And one of the big answers was, instead of being a country of people who lived in cities and basically owned nothing and worked for other people, America was by and large a country of independent farmers who were kind of small business people and who owned their own land, had a stake in the system, and their life experience as an owner teaches them citizenship. So, boy, I really would love to see a new bridge over the stream here. On the other hand, if they build that, they're going to have to raise my taxes. You know, I then calculate in a rational way what I would like to happen, and that is the kind of political education that prepares me to take a thoughtful role in the councils of the country, plus I'm independent. And then with the industrial revolution, can this continue? We're getting the big cities, we're getting industry. Well the first stage we do with the railroads and the Homestead Act, they kind of come in together. The government gives a ton of land in often somewhat corrupt ways to railroads to build transcontinental railroads that turn the country into a national market, but then also gives free land to the American farmer. You go live on your farm for five years and it's yours. Amazing. For the ordinary person, alright, I'm getting a free farm out of the system and I'm a farmer and yet you're doing this in a way that is simultaneously allowing the infrastructure of a new industrial society to take place. Again in the twentieth century, think about how as the family farm begins to decay economically, it can't compete, you have to be very well capitalized to farm under modern conditions and so on. And where people are starting to work in cities and be employees, is this going to endanger the republic? Are we still going to be a free society of free people? Essentially we came up with the idea of the single family home in the suburbs to replace the single family farm.
00:31:27 · Walter Russell Mead, Patrick O'Shaughnessy
A lot of government policy was around, think about not only building the freeways and the highways, but subsidies to the tax code so that municipal bonds are tax free, which means towns can build the infrastructure that you need to attract the developers and the homeowners who will then raise the value of the property and so you can repay the bonds out of the higher property values that the infrastructure has created. So this kind of wealth creating machine. Well, now we seem to be in a place where we're reaching the limits of that wealth creating machine because it's just too expensive for the average person to buy a house and land close enough to where you work so that the commute isn't killing you. You look at why are so many young people really unhappy with the way the economy is working, home ownership is one of the real big problems. IT can kind of address this between remote work and hybrid work and self driving cars. If you only have to go into work once or twice a week or twice a month or whatever, you can work farther out. If you expand the commuting radius, say from 40 miles to 75 miles, the amount of land that is developable for housing goes up with the square of the radius, it's geometric. So you can open information technology appropriately deployed can open up for another two generations this wealth creating machine. [00:32:59] S0: Is there something equivalent to Homestead or the subsidy of homes that could drive this expansion? It seems like a really, really important thing to get right for America.
00:32:59 · Patrick O'Shaughnessy, Walter Russell Mead
[00:32:59] S0: Is there something equivalent to Homestead or the subsidy of homes that could drive this expansion? It seems like a really, really important thing to get right for America. [00:33:07] S2: I think so. I think we should be doing things like encouraging remote and hybrid work. Now there are problems with it. Mentoring, there are benefits, fine. All right? There are problems with every form of technology. How many people has the car killed since we started using cars? How much money has it cost for the highway systems and so on? A new technology just doesn't appear like an angel and grant wishes everywhere. You have to think really hard about how to make it work. I think of this as infrastructure. Infrastructures building the bridges and the physicals. Infrastructures is the institutional, legal, regulatory framework that can allow AI technology to develop, give better results to patients in a hospital. That's actually incredibly complicated, or that could transform the legal system. Very complex stuff. You need a new kind of social imagination for that, which I think we need to develop. But in this housing example, if a company says, Fine, you can stay home 60% of the time, that's less wear and tear on infrastructure, fewer needs for construction. A tax benefit for companies that move toward greater hybrid and remote work is not a net cost for government because in fact you're saving on another part of the budget.
00:34:35 · Patrick O'Shaughnessy
[00:34:35] S0: This technology seems so unique because, I'm and curious where you think about it, in the case of AI, we've seen with China, it seems to be the other great power today that through using our technology that we've invested in, they're able to distill would be the term in the AI world and have fairly comparable systems without the capital investment. Which is very different than like the highway system or the railroads. Like you can't copy those things. You have to do it yourself. And so the economy of scale is easier for me to like get my head around when it's a railroad than when it's, you know, a frontier lab model or something like this. Which makes me wonder about the right kind of foreign policy. And it's a good excuse to talk about your four kinds of American foreign policy historically. Maybe you could just quickly tick through them and outline them as an intro before we talk about that notion of tech Hamiltonians that I thought was quite interesting of yours.