Invest Like the Best with Patrick O'Shaughnessy
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.
00:35:22 · Walter Russell Mead, Patrick O'Shaughnessy
[00:35:22] S2: One of the interesting things about America is that our foreign policy arguments are very repetitive. Basically, if something comes up in foreign policy, we'll argue about it in many of the same ways they would have done in George Washington's day. Our views of the country and of foreign policy fairly predictably fall into one of four baskets. One is what I do call Hamiltonian, Alexander Hamilton. What you see is a strong capitalist economy that is trading effectively with the rest of the world, provides the money and the technological progress that holds society together, because people are making money at it and they're happy, and also gives you the strength so that no other country can attack you. We should have a strong federal government that does things like promote infrastructure at home, that sees itself as trying to help major American companies succeed internationally. George H. W. Bush in some ways. Then you have people who say, Ugh, money, that's just so vulgar. What about human rights? And would argue, you know, what causes the threats that America faces? Well, it's bad governance, dictatorships, and democracies don't go to war, dictatorships do. Generals like to fight, moms don't. American foreign policy should be about promoting democracy globally, promoting international institutions, let's get rid of war by getting rid of the causes of war. And that's [00:36:55] S0: a kind of
00:36:55 · Walter Russell Mead
[00:36:55] S2: Wilsonian approach, which we certainly had actually long before Woodrow Wilson. Then you've got people who say, wait a minute, the thing that's great about America is personal liberty. The fact that the government doesn't control us all and isn't taxing us to death. If we get involved, whether it's these Wilsonian's crusades for human rights, or Hamiltonian great power balance of politics, international finance, what we're going to have is a powerful government that has secrets from the American people, runs colossal defense budgets, gets us into endless wars, and that will destroy the liberty. We can conquer the world and lose our freedom at home. What kind of foreign policy is that? And again, we've been having this since the seventeen ninety's, And then finally there's the group I called Jacksonian after Andrew Jackson, who sort of say, Well listen, foreigners, they can be democratic, I don't really care what the foreigners do as long as they don't attack us or impugn our honor. If somebody attacks us, we should just go out and crush them. And laws of war, poof, no, like rats, you should exterminate them and you beat them and pound them and crush them until they understand that the last thing they should ever do is raise their hand against The United States. And Jacksonians often look like Jeffersonians, the isolationists in times of peace, but something happens like Pearl Harbor and nine eleven and suddenly the Jacksonians are activated. So I think we've been having these things for a very long time. We still have them today. I say these are like suits in a deck of cards. Very few of us have just like all 13 Hamiltonian cards. We generally all have a mixed hand, but we tend to have some suits are stronger than others for each