Invest Like the Best with Patrick O'Shaughnessy
· Dan Wang
[00:00:00] S1: I am against fully in control. I want no dictator in China, and so therefore I renounce being dictator of the US. I think what I am really thinking about for this particular book project, as well as my broader writing over the past 10 years on China, is to be less focused on policy prescriptions, fixing statutes, fixing regulations. What I really want to do is to inspire Americans to treat technology as a political project as well as an aesthetic project. I think this is one of the things that China really does well is that it takes manufacturing super seriously, and the US has not taken it super seriously since various points in the 1980s. I'm fond of quoting a former chairman of the economic advisors who said in the 1990s in this glib quip, which is quite funny, but computer chips, potato chips, what's the difference? As if these things could all be fungibly measured in quantities of dollars. And I think there is something qualitatively different between high-end semiconductors as well as a spud. So I think that various parts of the American elite have decided that manufacturing is not so important. We don't need to manufacture socks and T-shirts, fine. We don't need to manufacture televisions. And here’s where I start getting a little bit nervous. We don’t need to start manufacturing iPhones or munitions or all sorts of other goods, and that is where I get really nervous. What I really want is for Americans to feel the importance of having a robust manufacturing base—to feel the need to try to recover some of that and err more on the side of doing more manufacturing rather than less. And so again, I have those great policy prescriptions. I am critical of some of the policies of the present administration. But I think that if we are all much more committed to just building out and recognizing some of these problems that we have, and recognizing China’s trends, then I think the conversation flows much more naturally about what we need to do and which statutes and regulations we need to fix.
· Patrick O'Shaughnessy, Dan Wang
[00:00:00] S0: Can you imagine that happening without some sort of visceral crisis? Can that happen slowly and organically? [00:00:00] S1: In the 1950s—I think it was in 1957—there was the Sputnik moment which is— [00:00:00] S0: Exactly what I’m thinking of.
· Dan Wang
[00:00:00] S1: A toy satellite emerged from the Soviet Union, and essentially, over the last 15 years, the number of politicians citing whatever new breakthrough as a “Sputnik moment” for the U.S.—I once cataloged this. I found a half dozen instances of major figures that included Barack Obama to various other U.S. senators who have cited this thing or that as a Sputnik moment. I think Obama cited high-speed rail in China as the Sputnik moment. Some other senators cited Huawei’s lead in 5G telecommunications equipment. Just two weeks ago, there was a Harvard professor, Stephen Greenblatt, who wrote in The New York Times that Chinese universities are really rising in global rankings, in part because they’re doing better and better science. I am quoting him, essentially: “If that’s not a Sputnik moment, I don’t know what will be.” And what I’m actually kind of afraid of is that the more we use this term “Sputnik moment,” which Americans are using quite often, and the less that it is actually accompanied by real action—as the original moment in the 1950s was—the more that this term is just bandied about. It’s the boy who cried wolf, glibly crying wolf about this or that, and actually there’s no fundamental action. What I’m often really surprised about is just the lack of real sense of crisis among a lot of Americans with the rusting manufacturing base. We’re chatting together in New York City. The Second Avenue subway extension costs about $2 billion per mile. Almost everything in the U.S., in terms of major infrastructure—especially in big cities—ends up being over budget and over time. Voters originally approved the California high-speed rail by referendum in 2008. I think they said this must be finished by 2020. Right now, we’re in 2025. How many people have actually ridden California high-speed rail? The answer is zero, because the first segment is supposed to start operating between 2030 and 2033, between Bakersfield and Merced. So there are just these rampant failures all the time in America, and somehow I don’t really see many heads rolling—from the heads of agencies or U.S. senators stepping down because they failed at a transportation project. That’s something that is more common in Asia. So why is there no sense of crisis? Patrick, riddle me this.
· Patrick O'Shaughnessy, Dan Wang
[00:00:00] S0: I remember this idea from The Hundred Year Marathon—the book about the very long-term planning of China to be resurgent and then dominant—that maybe it’s quite deliberate, that there is some line that operated below which no one notices the compounding that’s happening in China. And with no spikiness above the line to their progress—just smooth and steady—all of a sudden we’re going to wake up in 2050 and be like, “Oh my God, what happened? How did this happen?” And it’s been happening forever, for a hundred years. So what do you think of that—that it’s just been deliberately quiet and below the radar? And that’s a big reason Americans haven’t noticed. They don’t go to China, they don’t visit, they don’t see it, they don’t go around Shenzhen, they don’t go anywhere. So it’s just completely invisible to them, and they’re used to the status quo here. [00:00:00] S1: Well, it sounds like a problem with Americans. [00:00:00] S0: It sure does. [00:00:00] S1: Rather than with the Chinese. I mean, they are really happy to broadcast all of their achievements. Their amazing trains—they love to highlight them. They’re constantly inviting Americans to come check out these glimmering cities. China’s infrastructure gleams, and you only have to go over there to take a look at it. And there are plenty of people ringing the alarm, but it does feel a little bit like the boy who cried wolf. So I think this is not just the sense of crisis with China. There’s also the sense of crisis in California and New York, where even people here just shrug after such obscene cost overruns.
· Dan Wang, Patrick O'Shaughnessy
[00:00:00] S1: Rather than with the Chinese. I mean, they are really happy to broadcast all of their achievements. Their amazing trains—they love to highlight them. They’re constantly inviting Americans to come check out these glimmering cities. China’s infrastructure gleams, and you only have to go over there to take a look at it. And there are plenty of people ringing the alarm, but it does feel a little bit like the boy who cried wolf. So I think this is not just the sense of crisis with China. There’s also the sense of crisis in California and New York, where even people here just shrug after such obscene cost overruns. [00:00:00] S0: What are the highest similarities between the two peoples—between Americans and Chinese? Obviously you talked about some of the differences, but what’s most similar between the two countries?
· Dan Wang
[00:00:00] S1: A lot. What I really enjoy is that I start my book, in my very first paragraph, by saying that Chinese and Americans are more alike than any other people. And I think this is something that people who have spent any time in China always tell me—they’re always congratulating me and saying, “Yeah, that’s exactly right. Chinese and Americans are so alike.” So how are they alike? Well, they’re the two great founts of entrepreneurial dynamism in the world. It is Shenzhen and Silicon Valley that are inventing the future—and not so much Europe and Japan any longer. There’s a hustle, an energy, a hastiness, a sense of taking shortcuts. A lot of that manifests in some things that don’t work very well but just need a lot of hustle and dynamism that you see among these people. Both countries have a sense of the technological sublime. There are these grand projects—like the Golden Gate Bridge, Manhattan, or Apollo—that the Americans have, and the Chinese also share. Both countries are filled with elites and masses that really believe themselves to be important great powers in the world. And if other countries don’t get in line—whether that’s the Philippines or South Korea on that side of the Pacific, or the Canadians or the Danish with Greenland—then they also need to be muscled around a little bit. So I see far more similarities than differences between these two peoples.