The North Star Podcast - David Perell interviewing Patri Friedman. Notes by Will Mannon

  • People could give their votes to a person who bets on their behalf (?!)

  • Most dangerous words in finance = this time is different

  • “This time” both is and isn’t different

  • Explosion of ppl being their own media companies....were losing consensus, looking for new forms of coordination

  • Feeling of weirdness is stronger nowadays

  • Were in a world we’re not as well fitted to...we have to invent as we go along

  • Important connection between media and governance...educate ppl in democracy so they can make better decisions, but higher link between state education and totalitarian regimes

  • Old model = small number of people creator a consensus reality for everyone else

  • Tests = how well do you re-iterate what the teacher said? Now, things are flipping

  • Never a time where intelligence could be as amplified....but it’s also a time when many peoples’ ideas are being replaced

  • Automation is killing human agency

  • New technology both empowers and disables people....it all depends on the people and their area of life

  • Returns to huge success have never been larger....but the challenges to daily life have never been harder(?)...were so misfired to our environments

  • 1000 years ago, do what your parents did = works well; no longer true

  • David: “Some days I consume information 16 hours/day”

  • A country is always fighting the last war; governments are always solving the last crisis.....we need to look ahead and not behind

  • “Listen to your ancestors” makes less sense than ever before

  • **Parents know less than they ever have before**

  • There’s never been a larger inter-generational delta....”that’s a hard world to be in”

  • More people who do things differently = more robust society

  • Taleb - for a system to work well you need lots of individual experimentation/failure (ex: restaurants)

  • Questions: law, culture, role of family, male/female relations, state role, security be privacy.....human desire to find the “right” answer to these, but it’s better to have a bunch of different answers happening in different places....that’s actually much safer

  • Diversity = things being done in significantly different ways; not just variations on a themes (ex China vs US vs Russia)

  • China social credit scores = they’re doing things in substantially different ways

  • More diversity = more big successes + much smaller scale/magnitude of failure (opposite way = Communism....never tested at a small scale)

  • Digital systems work in expansion and contractions

  • Law is an information layer....like a virtual association that can be copied/pasted

  • You can copy/paste laws, but not culture

  • Good legal system = sterilization and Fred structure within which specific experiment can grow

  • Law is almost like DNA - hidden structure

  • Lessons/wisdoms we’ve forgotten can now be grabbed and brought back to the present

  • Society for Creative Anachronism - tries to recreate daily life before 1650 (!!)

  • Historical clothes, recipes, weapons, artwork

    1. Meade-making, fermenting

  • Technology stack humanity is based on all built off past development

  • David: “I see you as someone’s who’s arbitraging time"

  • You borrow lessons of history; recognize we’re already living in the future (although not evenly distributed)

  • Extropians list - libertarians/futurists/transhumanists (!)

  • Extropy = opposite of entropy

    1. Thermodynamic heat death of the universe is inevitable (everything one temp; no changes in heat/info flow)

      1. Part of the system can have increasing order/complexity; mathematically, it has to be exporting more chaos than the order it creates

      2. Core principle of order vs. chaos exists

      3. Dump entropy elsewhere —> create more cohesion/complexity in one place

      4. David: Self-reinforcing systems w/network effects —> virtuous cycle —> increasing extropy

      5. System starts take care of itself

        1. Digital platform - get foundation right + build self-perpetuating systems (ex: WoP)

      6. System that feeds into itself can be so much more complex than one that doesn't

      7. Not A —> B —> C; but loops (A —> B —> A) ——> more complex patterns

        1. WE are loops

          1. We’re recreating that with our technology

      8. Organization’s communications/products always reflect internal structure of that organization

      9. We are doing that now. Humans = repeating pattern (brains/neural networks)

        1. We are now taking those things inside us; making them happen in real world

          1. We are self-replicating machines/neural networks

          2. We could never build machines as complicated as us; now we’re close

          3. One reason things are weird/everyone should read science fiction

    2. Communities trying to invent the future (his dad did this, but also tried to invent the past)

    3. P: “There are times when I feel like I’m from the future; others when I feel like I’m from the past"

Democracy/future of governance

  • Imagine a law - dollar from every person in America; burn 90%; give remaining 10% to Coca-Cola

  • This law will get passed every time

    1. You will never find out about a law that takes $1 out of your pocket

    2. Costs of taking action against it = higher than benefits

    3. For Coca-Cola, it’s worth their time ($30 million upside)

    4. Concentrated interests with low coordination costs beat the dispersed interests with high coordination costs

      1. Bandwidth of a vote is so low

      2. **Every two years we get to send 30 bits of information??** That’s nothing

  • Democracy changes since 1800

  • Similar to aging - atherosclerosis (hardening of arteries)

    1. You can see systems hardening/calcifying

      1. Entrenched interests put up barriers that slow things down, but benefit them

    2. As these accumulate over time, it slows society down; becomes like an aged person; parts stop working; detritus builds up

    3. How do you reset the system

    4. New governance zones

      1. Sunset clauses

      2. Must find a way to keep interests/laws from accumulating

  • Connection to media

  • 1 - many broadcast communication = small set of gatekeepers control communication/messaging; choose what info gets out (US in 20th century)

    1. THAT HAS CHANGED - Trump represents a different way of doing things

      1. John Robb: Trump = “networked insurgent”; different way of doing political battle

    2. Many-to-many communications world —> gatekeepers (“arbiters” of right/wrong) are seeing themselves bar bypassed (!!!)

    3. Our sense making as a society is in disarray

      1. Different sources try to tell us what is/isn’t true; not just pumped out by one machine

    4. David: will be get a pushback of a single authoritarian source to give us collective sense making?

    5. Bloomberg column - autocracies might be more responsive to needs of citizens than democracies (pBlog)

      1. Patri - We don’t know what’ll happen. Possibilities:

      2. “Authoritarian reversion” - simplify down to one narrative; one person in charge (b/c too many voices)

        1. OR - Other ways to coordinate ourselves - manage many-to-many communcation/governance in brand-new way

        2. Heaven or hell?

          1. Beautiful decentralized network of future OR Borg of Star Trek

        3. Back to theme: is this time different or same old bullshit autocratic takeover

    6. David - OR it could be both. Internet crushes “the middle” of media. Two types of media companies (barbell)

    7. 1) Hyper-niche focus; own platforms/unique audiences

      1. 2) Netflix/Buzzfeed/other massive players who all want to merge

      2. **Will you have a similar distribution to the extremes of both sides in governance?**

    8. P - I’m living both past and future of media

    9. Google engineer vs. independent writer/thinker/blogger

      1. I’m simultaneously the massive and the unitary

  • D - What can we copy/paste from Silicon Valley to increase cognitive diversity?

  • Silicon Valley is being exported to rest of world

    1. New tech innovations spreading….tech changes enable social innovations…both feed into each other

    2. BUT - social changes aren’t always good (ex: is Tinder/PornHub good for the world?)

      1. We create technology to meet a need

      2. Vast majority of cases, technolgoy/resources improve the human condition

        1. BUT not always - some inventions are dangerous/harm us

        2. Interplay between tech/social experimentation is important, but scary

  • Digital addiction

  • Becoming a real, real issue

    1. Addicted to drugs = very real-world problem; “Never go within 10 blocks of druggies”; change context

      1. The internet’s context = NO CONTEXT (McLuhan on context)

      2. On internet, you change your context by typing 12 letters into a search bar

      3. Friction to engage in really negative, detrimental habit = much lower than before (worrying)

    2. Changes in our environment make it harder to live normal, good life

    3. WAY more temptations than what we were evolved for

      1. No rules to deal with world of streaming porn; fat/sugar/salt

      2. P - used to more optimistic; now I see a mix of hope and danger; addictions are big dangers

    4. Steps to overcome information addiction? Toward more productive/fulfilling

    5. 3rd Law of Thermodynamics - actions produce a reaction

      1. Tough info environment; BUT, lots of people are trying to figure out these same challenges

      2. You can also context-free go to high-quality inputs and communities

      3. **We’re creating both the poisons and the cures simultaneously**

      4. Huge fan of ppl working to create/spread the cures (we need them)

        1. Scared/worried that it takes so much effort to figure out the cures

    6. What about people who aren’t infovores?

    7. How do you figure out solutions to these addictions if you’re not digitally native?

      1. P - quickly scanning resources, quickly undestanding/synthesizing, choosing strategy = something I’m really good at, and EVEN WITH THAT it’s hard to find the right things to do

      2. What about ppl who are great at building a beautiful table; farming; raising family?

        1. How do all those people deal with finding the right information diet???

    8. D - Homogeneity and diversity seem like opposites; but they actually come together

    9. Monoculture of “infovore-ness” - returns to being invofovre are increasing (homogeneity)

      1. ALSO - crazy fragmentation/pollination of ideas moving through the world

      2. Awesome, insane, rich internet subcultures loaded with meaning

        1. Two things that should be opposite, but aren't

    10. Airspace phenomenon

    11. Trendiest coffee shops all look the same

      1. Internet homogeneity; but also, cross-pollination of super-diversity in different cities

      2. OR - is it monoculture of diversity?

      3. We need to focus on interplay of homogeneity and diversity

    12. Neil Stephenson - Snowcrash

    13. Franchise-owned quasi-national entities

      1. Governance franchises; exact same scattered all over world

      2. Live in “Greater Hong Kong” all over the world

      3. !! Diverse, but also homogenous

      4. Same “Franchise of governance” stamped all over the world (!!!!!!!!)

      5. Cities/zones throughout the world; particular legal system/court operator

      6. Might fly anywhere in the world, and Delaware corporate law in a given jurisdiction, or NHS of Britain

      7. Distinct flavors evolved for a certain place...

    14. P - my ideal world is probably Singapore/HK….but some parts of year, we can go to the “Burning Man” jurisdiction

  • David: Digital technologies are accelerating the experience of the mind much faster than experience of the body (mind-body dualism) (shape the brain-scape)

  • In what ways will geography continue to be important vs. not be important

  • P - Geography less important over time

    1. As technology grows, ratio of what space can do vs. what you can do shifts

    2. We should use geography as a source of diversitry

    3. Locality is important

      1. Intuition of universalism….but connecting everything with everything —> gray; nothingness (bad)

      2. Locality —> valuable, important differences

  • Downside to universalism

  • Mix all paints together —> gray mess

    1. Beauty comes from having different paints at different spots on your canvas

    2. People fight against separation; but, it’s also an important counterbalancing force

    3. Where does creativity come from?

    4. Small clusters of highly-interconnected people

      1. Cluster is totally separate from the world

      2. Like company culture (company myths disconnected from rest of world; see/operate differently)

    5. You must have boundaries/differences

    6. No walls = no distinct cultures

  • “As a nerd back before being a nerd made you rich” (!!!!!) (ideas currency of 21st century)

  • “You made fun of us in high school……now we own your stadiums"

Future of small states vs. big states

  • P - Think of government as an industry; apply same thinking as any other industry

  • Economies of scale

  • You can make a case for large and small

  • Fragmented governance is easier

    1. Managing a huge population is easier

    2. Collect/disseminate so much more info

    3. We’re going to see both

    4. 21st century = the century of China AND the city-state (!)

  • Greek/early Roman period

  • Incredibly rich; invented so much

    1. We’re coming into that kind of renaissance in the 21st century (!!!!!)

    2. City states will be inventing again like that; I’m incredibly excited for that

  • David - what about exit costs?

  • Communist systems = couldn’t leave

    1. Now, exit costs are lower

    2. Analogy: perfect competition vs. monopoly

    3. Big state = monopoly; locked into one thing

      1. Monopolies have advantages AND drawbacks:

        1. Free to do things/experiment because of monopoly profits; verify identity easily

        2. BUT - can also hurt ppl

      2. Perfect competition = many small firms; lots of choice/exit; everyone kept honest

      3. BUT - profit gets eaten away by the competition

    4. Diversity isn’t just different governments at same scale

    5. Part of diversity = scale diversity (!!!)

    6. Should have power law distribution for the size of countries

      1. Some big; a bunch of small

      2. Why aren’t there lots of small countries

      3. **Start-up sector for governance; lets us find new ideas** (!!!!!!)

  • D - bottlenecks/constraints on having small countries?

  • All land owned by existing countries

    1. Starting to happen - Ask Patri about this (!!)

  • Space frontiers

  • Ocean (frontier)

    1. Space

  • Opening a new physical area open space for new virtual area (re: McLuhan)

  • Set of rules that govern physical area

    1. America was that in 1700s

    2. Frontier for European civilization —> founders could experiment with crazy forms of government

    3. ****People DO NOT COMPREHEND how crazy representative democracy was in the 18th century****

      1. People don’t get how revolutionary it was

        1. It was considered a “crazy f*cking idea"

    4. P - “I just want to see that kind of governance innovation happen a lot more"

  • SF is like the final frontier of actual earth

  • Most ambitious, crazy, frontier “let’s go for it” people came to America

    1. The most ambitious/crazy/dreamer of those people went to SF for the Gold Rush

    2. Still to today, SF is one of the frontier places on the entire planet

    3. Because of initial selection effect of who first went there

      1. THEN - it drew more and more people from around the world (ex: people going East across the pacific)

      2. Melding of two —> unique locality of SF

Market for Citizenship

  • Think of yourself as a customer-citizen

  • In past, hunter-gatherer bands could splinter; disgruntled members could leave tribe

  • Right now, there’s no place for ppl to go who want to splinter the tribe

  • “I want to splinter the tribe? Why is there no place to splinter the tribe?"

  • Ability to create new jurisdictions

  • Create startup sector for governance, cities, life

  • Make screenplay/painting/music - we have blank canvases available

  • What if you want to splinter the tribe? New culture/laws over physical locality? No place to do that

    1. That’s what drives push for cybersecurity/crypto/blockchain

    2. Allows us to take this primal action of splintering the tribe

    3. Code it and do it

      1. Form new culture/community

    4. BUT - atoms/meatspace still matter

    5. We need to be able to do that with our cities/governments

  • Relationship between new sovereign startups and leading edge of medicine

  • Small land areas require businesses w/lots of $$ per unit of land usage

    1. Software; cutting edge medicine; NOT big supply chains

    2. Medicine/biotech has been hyper-regulated

  • Relationship between medicine and sea steading?

  • P - Frontier is always a tough, difficult place; must be an economic advantage to go there

    1. Equivalent of fields to be planted/animals to hunt

      1. Must have "high value density”; $/sq foot/day, otherwise, you can’t pay for a sea stead

      2. Medicine is a GREAT example

      3. Overregulated; high value-density

    2. Huge medical treatment/child’s genes edited = super expensive, one time procedure; sea steads will host innovate medical technologies

    3. “I’ve been thinking about these ideas for 15 years; industries most likely to relocate to new zones"

    4. Not just about avoiding taxes…20 no-tax countries already exist (Bahamas)

      1. Must have a higher compelling reason

  • Stagnation and science

  • More and more resources just to keep up; higher investment level each year to keep up w/Moore’s Law

  • Is scientific stagnation caused by regulation?? How much could sea-steading spur tech development/innovation?

  • Every technology uses some property of physical world in clever way to achieve human goal

    1. Not an infinite number of those

      1. How “much" is there to be mined?

      2. (Robin Hanson’s idea)

      3. We’re going to run out at some point

    2. Classic “S-Curve"

    3. Small —> fast —> carrying capacity

      1. Ex: 10% internet users —> 100%; can’t go anywhere beyond that; hit a saturation point

      2. We WILL hit a technology saturation point

      3. We don’t know where we are on that curve because of saturation

      4. Scientific progress slowing b/c we’ve picked low hanging fruit, or because our systems have calcified??

  • Most innovations come at intersections of multiple fields

  • Academic systems aren’t set up to maximize these colliding intersections

    1. INTERNET = PLAYGROUND OF COLLIDING INTERSECTIONS

    2. Ppl get so hooked on cryptocurrencies because it’s a technology with a lot of intersections

    3. Inherently fascinating

    4. Question - will intersecting economics, cryptography, CS, governance —> amazing, or like virtual porn (with no lasting value)

    5. TBD

Hot takes

  • Poker

  • Investing lessons

    1. Psychology of bluffing

    2. Idea of mixed strategies

    3. In evolution, proper thing for populations = don’t always do the same thing

      1. ADHD = very good at creating new things

      2. BUT - we don’t want everybody creating new things

        1. There’s some good percentage for ADHD in a population

      3. Same as bluffing - you have to mix it up

    4. Poker harmed him

    5. Poker = must keep check on emotions; don’t get mad at getting unlucly

      1. This reinforced bad habits of “not feeling my emotions, which I had to unlearn"

  • Read about politics while cutting through the noise

  • Learn signs of partisanship and throw it out

    1. Learn signs of analytical meta-thinking and focus on that

    2. D - we focus too much on policy, not enough on systematic issues?

    3. Three levels of law

      1. Actual law

        1. Legal system that generates law (constitutions; rules to change law)

        2. Ecosystem for competing constitutions

        3. Environment in which systems for changing laws grow/develop/compete

      2. Because far too much on actual law - what is the specific rule?

      3. Instead, we need to focus on what’s the mechanism for changing those rules?

      4. Public choice economics, game theory, mechanism design

        1. People try to figure out how do you design efficient rules?

    4. Most ignored = 3rd level (environment to try out different systems for changing the laws)

    5. Late-stage capitalism or hyper-capitalism?

      1. Both at the same time

        1. Some methods are failing (1 to many; constitutional democracy)

        2. Elsewhere - hyper-competition (ex: online )

  • Where do your ideas come from? How do you foster randomness?

  • Keeping things the same = how you make things different

    1. Structure environment/relationships to be systematic —> more wild ideas (???!!!)

    2. Life systematically (ex: wife, kids) —> wild ideas

  • More stable a base you build, the crazier a jump you can make off it (WOW!!!)

  • Narrow creativity/wildness down to narrow part of your life

    1. Psychedlics/festivals/random cult books —> lots of new ideas, but you won’t do anything

  • David - Friendships = bowling bumpers that are loose/wobbly

  • Absorb craziness; go through into gutter sometimes

    1. Other times - friends must say offensive things; give constructive feedback

      1. “Don’t go there….there’s 10 pins waiting at the end of the lane…go there instead"

    2. P - I haven’t had that friend feedback; made lots of mistakes, learned that way

  • Faster feedback loops —> go crazier; learn sooner you’re going wrong direction

  • More experimentation; penalties for experimenting goes way down

    1. P - YES that’s what I hope to do with government

    2. New experimentation in governance

      1. Evolve our laws at code speed instead of paper speed

  • Family’s influence on thinking

  • Dad’s interest in history influenced him

    1. Huge impact from looking at the past; studying different cultures/ways of doing things

  • ***Ability to look at present world and “question the matrix” comes from having seen other versions of it (history)

  • Also from science fiction; fantasy

    1. Exposure to different worlds —> other possibilities

  • Learning about bitcoin helps you step outside matrix; realize how much of society is put together like a band-aid

  • How to step outside matrix?

  • It’s very strong, but it’s very fragile

    1. Any crack in it/entry point/anything in narrative clearly not true —> question all of it

    2. A promise, and a danger

    3. There’s lots of flaws in the matrix (falseness in the narrative)

    4. BUT - what rules do you live by if you have to question everything (approaches nihilism)

  • Matrix vs. fringe opinions/cultures

  • Some of each are good, depending on person/stage in life/what

    1. Choose which facets of the matrix you examine

    2. Don’t question too many things (diet, religion, job)

      1. I’ve suffered from too many questions…it was brutal

      2. Pick your battles

  • David - once you start questioning, wouldn’t you automatically question everything?

  • Matrix is composed of facets; each facet = answer to basic life question

    1. Generally a decent answer that has worked very well for many people

      1. BUT - doesn’t work for everybody; doesn’t necessarily work in future

    2. Understand these answers came from a process; they’re imperfect

    3. If you’re different from others —> different optimal choices

      1. New/untested —> could be good, could be bad; you’d better check

  • Food is hard b/c of feedback loops

  • Loops kick in over decades

    1. There’s so many variables in our diet

    2. Ex: carbonated beverages

    3. Improve world w/faster feedback loops; better ability to track casualty across multiple variables

    4. It’s a lot of work to track/optimize part of your life