Andy Kessler

WSJ: Why Is Anxiety Rising?

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https://www.wsj.com/articles/why-is-anxiety-rising-covid-climate-social-politics-mental-health-5f033f53

“Olivia expressed despair due to climate change.” “Badge is anxious when he thinks about the future.” In August, a Montana court ruled that these and other youth plaintiffs “have a fundamental constitutional right to a clean and healthful environment, which includes climate.”

Anxiety is on the rise and, rightly or wrongly, is blamed for everything. A recent federal survey reports 27% of respondents had symptoms of an anxiety disorder, up from 8% in 2019. That’s scary. Youth emergency-room visits for mental health have gone up significantly.

Do you suffer from anxiety? The Mayo Clinic’s list of signs and symptoms includes feeling nervous, feeling a sense of impending danger or panic, increased heart rate, rapid breathing, sweating and trouble concentrating. Apart from those with nerves of steel, I’ll bet we’ve all had at least one of these symptoms. A survey by KFF suggests that half of 18- to 24-year-olds report anxiety or depression symptoms. Not everyone can deal with them.

Gymnast Simone Biles and tennis player Naomi Osaka have withdrawn from competitions because of anxiety. PGA Tour commissioner Jay Monahan took a leave of absence for anxiety right after the merger announcement with Saudi-backed LIV Golf.

This is mostly a U.S. problem—affluenza?—which I’ve seen blamed on social media, poor sleep and previous underreporting. Yes, Instagram-inflamed narcissism is a problem, but I think the rise of anxiety is about more than that. So what is it?

• Extinction anxiety. Daily news reports question the ability of humans to survive in the near future. AI experts warn about human extinction.

 

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WSJ: Schumer Wants a Cut of AI

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https://www.wsj.com/articles/schumer-wants-a-cut-of-ai-musk-chaptgpt-economic-growth-regulation-4d8c73f5

Sen. Chuck Schumer, who’s never seen a camera he didn’t want to jump in front of, held a closed-door meeting last week on artificial intelligence. What? Closed? To me, it suggests an agenda beyond paving the path to a fantastic future. At the meeting, Elon Musk warned that AI is a “civilization risk.” Mr. Schumer declared, “We can’t be like ostriches and put our heads in the sand.” They sound more like dodo birds.

One clue to the hidden agenda: Besides Mr. Musk and Meta CEO Mark Zuckerberg, OpenAI’s CEO and other techies, the attendees included union leaders such as Randi Weingarten of the American Federation of Teachers, Liz Shuler of the AFL-CIO, Meredith Stiehm of the Writers Guild and two tech critics with “Humane” in their company names. Ugh. It looked like the ghosts of economics past had come to spook the spirit of economics future.

So of course it was held behind closed doors. It was as if the nascent AI companies were called into a meeting with a tough guy named Spike who listens and then says, “You wouldn’t want anything to happen to your nice companies there, would you?” Or as if the union representatives of the horse-drawn-trolley conductors, rail-gauge manufacturers and manure sweepers were sitting in car-design meetings, demanding full employment for their guilds.

Henry Ford once said, “If I had asked people what they wanted, they would have said faster horses.” Politicians might have demanded to tax horses based on speed. Back then, no one appreciated the potential for those rickety automobiles to transform the economy. We’re at the same juncture with AI today.

When politicians get involved, their agenda for any business is to slow it, tax it, regulate it, harness it, redistribute it or just plain kill it. Mr. Schumer clearly forgets, if he ever even knew, what drives economic growth.

Unions control the Biden agenda. See auto strike. It is always status quo over progress.

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WSJ: Makers vs. Taylor Swift Shakers

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https://www.wsj.com/articles/makers-vs-taylor-swift-shakers-economy-tesla-abundance-bce0bbd8

“I think Taylor Swift is great for the soft landing,” Columbia Business School economist Brett House declared in the New York Times. Not wanting a recession, I almost rushed out and bought $1,000 tickets and $25.99 friendship bracelets, but then I remembered that isn’t how the economy works. There are two sides of the economy: the productive side and the spend side. You can create wealth by learning or you can spend it. We have makers and, appropriate to Swifties, shakers.

In April, Bernard Arnault, chairman of luxury goods maker LVMH Moët Hennessy Louis Vuitton, briefly became the world’s richest man as Tesla’s stock was temporarily in the dumpster. Now Elon Musk is back. Bloomberg tracks the wealthiest daily. After Messrs. Musk and Arnault are Amazon’s Jeff Bezos, Oracle’s Larry Ellison and Microsoft’s Bill Gates. Françoise Bettencourt Meyers of cosmetics company L’Oréal, at No. 13, is the world’s richest woman. The list intertwines tech, luxury, energy and retail.

Most of those near the top of the list are makers. They do more with less, while the spending side, such as Mr. Arnault’s brands, sells less for more. This is the difference between mass production and custom products. Let’s face it, a $4,650 Louis Vuitton “khaki and beige empreinte calfskin leather with polished brass” tote has the same utility as a paper bag from Safeway. That isn’t productivity. On the flip side, Amazon can deliver you a handbag tomorrow. Manufacturing and retail logistics run cheaper every year because of Amazon, Microsoft and Oracle data centers. This is how wealth is created now. Louis Vuitton is how it’s spent. See the difference?

Tesla straddles both sides. Investors are betting, heck, praying, that Teslas, basically low-margin cars, become productive autonomous machines, and they might if their Full Self-Driving mode stops running stop signs.

The economy needs both sides. But here’s something to think about: Both bring joy, but only one drives progress. We all consume, but progress happens when we postpone consumption and invest. Produce first; spend later. Consumption informs the supply side, which is where learning and societal wealth creation take place. Concert tickets and fashion reduce savings and investment. Production learns; consumption burns.

Yes, we need basic essentials. Maslow’s hierarchy of needs:

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WSJ: The Climate-Change ‘Emergency’ Is Coming for You

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https://www.wsj.com/articles/real-climate-change-catastrophism-hasnt-been-tried-biden-emergency-global-warming-environment-b485421a

Two years ago during Covid lockdowns, I wrote about climate control freaks, facetiously anticipating a future headline: “Bad CO2 Day, Lockdowns Enforced.” A joke that would never happen, right? Well . . .

Last month President Biden was asked on the Weather Channel if he was ready to declare a national climate emergency and responded, “We’ve already done that.” Asked again if he declared a climate emergency, he said, “Practically speaking, yes.” There is no official emergency, but the president certainly thinks we need one.

The fawning press gave him a break—he didn’t really mean that, did he? But the notion of a national emergency today isn’t farfetched. The United Nations website blares: “What you need to know about the Climate Emergency.” The European Parliament has declared one. So have hundreds of jurisdictions in at least 39 countries, including the U.K., Canada, Japan and Bangladesh. Climate-activist teenager Greta Thunberg gave away the game in 2019 when she said, “I want you to panic,” and, “I want you to act as if you would in a crisis.” Emergencies are an excuse to do whatever you want.

U.S. presidents can declare national emergencies, as spelled out in the 1976 National Emergencies Act, but they must be explicit: “When the President declares a national emergency, no powers or authorities made available by statute for use in the event of an emergency shall be exercised unless and until the President specifies the provisions of law under which he proposes that he, or other officers will act.” I’ve searched far and wide for such provisions and can’t find them.

No matter, we’re living as if we’re already under emergency conditions. As of Aug. 1, the Biden administration has halted the sale of lightbulbs with less than 45 lumens of brightness per watt. Incandescent bulbs don’t make the cut and are now banned. Thomas Alva Edison is rolling over in his grave. Will electricity be rationed next?

Oops, too late.

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WSJ: Little to Like on the Prefix Menu

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https://www.wsj.com/articles/little-to-like-on-the-prefix-menu-late-stage-capitalism-language-neo-mid-444c6dac

Why the posthaste to use “post”? A post-truth world, post-gender society, postliberal order. I recently read of a post-prestige TV era. Since “Mister Ed,” has it ever been prestigious? Or postmodernism. Shouldn’t modernism always be current? That’s as illogical as post-apocalyptic. But my favorite post is post-rationalists—known on Twitter as “postrats”—kind of a beyond-truth troop. Irrational but fitting.

Don’t get me started about “late” as in late-stage capitalism. How many times have you heard pretentious poseur know-it-alls talking to their post-pierced barista and fellow pre-employed chai latte sipping layabouts using daddy’s credit card discussing how capitalism isn’t simply over but “so over”?

The German economist Werner Sombart is said to have been the first to print the term late-stage capitalism, around the turn of the century—the 20th century, that is. More than 120 years on, can it get any later? Better late than post, I guess. Late-stage capitalism means folks are fed up with having to work hard and instead are looking for handouts. Complain about capitalism all you want, but folks in Russia, Venezuela and Seattle, the short-lived home of the Capitol Hill Autonomous Zone, sure know what late-stage socialism looks like.

It works both ways. A doctor looking at my A1C blood-test readings told me I was pre-diabetic and to give up bread. How “pre”? Because I’m also pre-death. In Silicon Valley, most software is pre-release, even though it’s been released. Renamed “beta” to make it sound cool, these are test versions of the future. ChatGPT was released with many flaws—let users find all the mistakes.

“Uber” was a cool preemie, as in uber-athlete, Übermensch, until canceled ride pickups ruined it. The umlaut version of über is a nice touch. And be warned, adding “super” in front of any word can be super-annoying.

Here’s another trick. Add “neo” before almost any “ism” and it makes it sound über-hip, super-now.

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WSJ: 15 Ways to Win a Presidential Primary

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https://www.wsj.com/articles/win-presidential-gop-republican-primary-debate-election-2024-youngkin-desantis-trump-45ffe02d

The first Republican presidential debate is Wednesday, and voters are asking: What will it take to win in 2024? Donald Trump is ahead in the polls running a Festivus campaign, airing his grievances. Florida Gov. Ron DeSantis and entrepreneur Vivek Ramaswamy poke at woke. Here’s a thought: Virginia Gov. Glenn Youngkin thinks voters are “more focused on who is going to deliver results, who’s looking forward with a plan.” He’s right. Mr. DeSantis should take his own Iowa campaign event advice: “Leadership is not about entertainment. It’s not about building a brand. It’s not about virtue-signaling. It is about results.”

Candidates need to tell us what they can do and get done, especially when it comes to getting government off our backs. Mr. Youngkin asked the WSJ CEO Council in December: “What are the key issues that families are sitting around in the evenings concerned about and do you have a very clear agenda to address them?” K-12 curriculum was a winning issue for him. And this: “We really did fix our DMV. Virginians . . . can get things done faster today than you can check your rate at Geico.” Great line.

Americans aren’t stupid. We live in quiet desperation as government interferes with our lives—until we vote. Mr. DeSantis showed his get-government-out-of-our-lives philosophy in Florida by ending lockdowns, mask mandates, school closings and DEI requirements. He should get back to it—Halloween costumes show why bashing Disney probably isn’t a winning strategy.

We need a new phrase for kitchen-table issues. DoorDash-dining-while-streaming problems? Twitter jitters? Pain points? How about WTF—what to fix? Voters know what needs fixing, yet for mysterious reasons, no candidate seems to. Do it. Be Mr. Fix It. I have a list.

Start with the Transportation Security Administration: Everyone is sick of seeing dirty, holey socks at airports. Let us keep our shoes on and laptops in our bags and randomly screen 1 in 20 fliers.

Prescription-drug pricing is baffling. I paid $300 for a brand-name drug at Walgreens that dropped to $15 when I switched to Amazon Pharmacy. Why? Who knows?

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WSJ: Disney Makes a Mickey Mouse Mistake

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https://www.wsj.com/articles/disney-makes-a-mickey-mouse-mistake-attendance-business-media-woke-politics-florida-inflation-791a6ad1

Is Disney a haunted mansion? Squishy earnings. Writer and actor strikes. A woke fight with Florida Gov. Ron DeSantis. Indiana Jones bombed, and Marvel is mostly milked. But these are nothing compared with the age-old trap Disney has voluntarily walked into: When growth stops, raise prices to make up for lower volume.

The company’s earnings release last week says it all: “Lower affiliate revenue resulted from a decline in subscribers, partially offset by higher contractual rates.” And after losing subscribers, Disney raised Disney+ and Hulu ad-free streaming prices 20% last week. You can’t raise prices to infinity and beyond. Consumers eventually break.

Sure enough, attendance appears down this summer at Disney theme parks. No wonder. Tickets can cost $169 a day; 2-Day Park Hopper Disneyland tickets are $345 plus $30 a day for parking. Then add $8 pizza slices, $6 lemonade and $5 churros. Dinner at the River Belle Terrace might include less-than-mouthwatering bargains such as $19 BBQ Tofu or $22 Pimento Mac and Cheese. The Disneyland Hotel charges $425 a night, though you can find rooms for $200 outside the park. Add $20 embroidered Mickey Ear hats, and I calculate the tab can be more than $1,600 a day for a family of five. It’s “The Happiest Place on Earth,” except if you’re paying for it.

Disney CFO Christine McCarthy said in May that ticket prices track inflation. That’s not quite true—the New York Post reported last year that Disney theme park ticket prices are up 3,871% in 50 years, well above inflation. Ms. McCarthy cited spending on other stuff: “It’s T-shirts and hats, but also build your own light saber. Not cheap. But people tend to spend the money. That is consumer choice.” It seems consumers are choosing not to show up. Can you blame them?

The cable business may be worse—cord-cutters are killing it. Disney-owned ESPN has around 70 million paid subscribers, down from some 100 million 10 years ago. PwC thinks that number will drop to 50 million by 2027. One reason is constant price increases. ESPN now costs $9.42 a month per subscriber for cable operators, vs. 49 cents for the average channel in the basic-cable bundle. Many cable subscribers don’t even watch sports. Like clockwork, whenever ESPN and cable raise fees, athlete salaries and ticket and beer prices go up. It’s a virtuous circle for everyone but consumers.

The business model of professional sports is quickly deteriorating.

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WSJ: August’s Surprises Arrived Early

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https://www.wsj.com/articles/augusts-surprises-arrived-early-ufos-lk-99-brain2music-news-stock-market-trump-hunter-biden-c153db49

UFOs, brain scans and superconductors made it an unusually interesting July.

It’s as if they read my mind. In 2021 I noted that surprises often come during August. Two weeks later, President Biden’s Afghan exit turned into an unexpected fiasco. I figured, hey, let’s try again. I spent the past few weeks researching for a column about more August surprises. Imagine my surprise when July—even its last week or so—spit out a stream of surprises, all seemingly related. I ripped up the August column.

Let’s start with unidentified anomalous phenomena, the trendy new expression for UFOs. Former U.S. intelligence agent David Grusch testified to Congress on July 26 that the U.S. has retrieved not only UFOs but also “nonhuman” biologics of supposed pilots. Any pictures? If so, wanna bet they’re blurry and grainy?

I’m in the camp that thinks the government rolls out UFOs every time it needs a distraction. In 2003 the Central Intelligence Agency declassified documents showing that it had made up stories about flying saucers shortly after it was outed for its role in a 1954 Guatemala coup. Are the UFO stories being used to distract us from the Donald Trump indictment or the Hunter Biden tax evasion?

Maybe UFOs are real. If so, aliens must possess some really cool technology, like superconductors enabling quantum-drive engines. Lo and behold, July 22 saw the announcement out of South Korea of LK-99, a room-temperature ambient-pressure superconductor, surprising everyone. A video claims to show the Meissner effect, levitation via emitted magnetic waves as material becomes superconducting.

The creators even describe how to make the lead-based superconductor. The first step requires the synthesis of copper phosphide from copper powder and red phosphorus. Oops, the Drug Enforcement Administration labels red phosphorus a List I chemical used by illegal meth labs to convert pseudoephedrine into methamphetamine. It’s also in strike-anywhere matches. I suspect every scientist trying to replicate the room-temperature superconductor is now binge-watching “Breaking Bad” for tips.

Replicating the results will take time—a few weeks, or forever as many skeptics think.

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WSJ: AI’s Growing Legal Troubles

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https://www.wsj.com/articles/ais-growing-legal-troubles-section-230-publisher-class-action-9efaf374

Wow, that was fast. It took only eight months to find ChatGPT and generative artificial intelligence’s Achilles’ heel. No, it isn’t naive management, though OpenAI CEO Sam Altman did declare that AI poses a “risk of extinction” for humanity and practically begged a Senate Judiciary subcommittee to regulate AI, and then when the European Union actually did pass regulations, he threatened to pull out of the region.

And no, it’s not the White House, through which top AI execs did a walk of shame, allowing President Biden to extract from them a pledge of voluntary safety guardrails for AI. A pledge! Is that stronger or weaker than a pinkie promise?

Nor was it the Federal Trade Commission’s recent fishing-expedition letter to OpenAI demanding minuscule details of everything the company does. Well, Mr. Altman certainly was asking for that. Given that the FTC has been on the losing end of so many cases recently, maybe the company should let ChatGPT write the answers.

Instead, AI’s Achilles’ heel consists of good old-fashioned media issues. The first is copyright. Tools like ChatGPT, Google’s Bard and Meta’s Llama are large language models, meaning they input up to a trillion parameters by reading everything they can get their servers on, including Wikipedia, the cesspool of snark formerly known as Twitter, and racy Reddit of Roaring Kitty and GameStop fame. No wonder ChatGPT is so prone to hallucination. Social-media companies now want to be paid and have restricted the scanning of their innards.

Copyrighted snippets showing up in today’s search results are considered fair use. But can OpenAI or Google or Meta legally scan copyright material and create brand-new content from it, or is generative AI’s output considered “derivative,” requiring the original copyright owners’ permission? We are about to find out in a slew of copyright lawsuits. Comedian and sometime author Sarah Silverman this month joined a class-action suit against OpenAI and Meta, claiming they “copied and ingested” copyrighted materials and created “derivative” versions.

It turns out OpenAI scanned giant repositories of books, named Books1 and Books2—reminiscent of Dr. Seuss’s Thing 1 and Thing 2.

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WSJ: ESG is Blowin’ in the wind

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https://www.wsj.com/articles/esg-is-blowin-in-the-wind-protest-songs-60s-70s-companies-capitalism-187f5ce4

Turns out the answer wasn’t blowin’ in the wind. The 1960s and ’70s were filled with protest songs against the Vietnam War, discrimination, and The Man! While heartfelt, these songs they didn’t do much except create an artsy activist political class committed to resisting anything resembling hard work to suppress the pending wave of innovation.

Songs can be inspirational, but they aren’t instruction manuals. With an air of despair, Bob Dylan’s 1963 “Blowin’ in the Wind” asked lots of breezy questions. I think “Puff the Magic Dragon” had more answers. Then Crosby, Stills, Nash & Young’s “Ohio” in 1970 offered a solution to the horrible Kent State shootings: “Gotta get down to it,” which “should have been done long ago.” That’s it?

Gil Scott Heron sang “The Revolution Will Not Be Televised” in 1971. Instead, our television was digitized and revolutionized. I hate war, but I can’t help noticing that Edwin Starr’s 1970 “War, huh, yeah / What is it good for? / Absolutely nothing” wasn’t sung in German.

Saigon collapsed. The draft ended in 1973, and my age group didn’t have to register, which explains a lot of apathy. But the cultural damage lingered. In 1984, Bruce Springsteen released the gloomy “Born in the U.S.A.,” right on the cusp of the most spectacular economic boom in history, “I’m 10 years burning down the road / Nowhere to run, ain’t got nowhere to go.” Except, it turns out, up.

Nope, my friend, the answer wasn’t blowin’ in the wind. The answer was to roll up your sleeves and dig in. Work your way up. Create the future. Effort over easy. That’s what drove progress.

My first boss, cheering me up after a frustrating day, told me (cleaned up), “Life is like a bag of manure with the handles on the inside.”

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WSJ: The Innovation Cage Match

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https://www.wsj.com/articles/the-innovation-cage-match-facebook-twitter-competition-musk-ai-794e0ebf

The mystical and probably mythical Elon Musk-Mark Zuckerberg cage fight, which could perhaps be held in Rome’s Colosseum, is beyond stupid and would probably be nothing more than a rich slap contest. But it got me thinking about competition and why it so often happens in pairs, from Cain vs. Abel to ChatGPT vs. Bard and now Twitter vs. Threads.

Charles Darwin scrambled to get his book on natural selection, “On the Origin of Species,” in print in 1859 because naturalist Alfred Russel Wallace was also writing on the subject. In 1908-09, Robert Peary and Frederick Cook raced well-funded expeditions to the North Pole. Both claimed victory—Cook by a year—though Congress honored Peary’s claim.

Thomas Edison, the Wizard of Menlo Park, tried thousands of materials for incandescent lamps until the carbon-based filament worked, which he patented in November 1879. Maybe he got the idea because English inventor Joseph Swan had already demonstrated a working carbon filament that February. Edison built direct-current electricity generators, even wiring up J.P. Morgan’s home. Eccentric Serbian Nikola Tesla (and George Westinghouse) eventually beat Edison with an alternating-current generator whose output could travel long distances.

New Yorkers loved to ask, “Does Macy’s tell Gimbels?” about cross-street retail rivals. There was nothing better in my time at Morgan Stanley than beating Goldman Sachs to lead a hot company’s initial public offering. Heck, The Wall Street Journal and New York Times have been competing for more than a century.

Inventions happen at the same time because unlike hard goods, knowledge about what is state of the art travels fast. Ideas are fluid, more so in today’s digital world. As Victor Hugo put it, the most powerful thing in the world is an idea whose time has come. Competition pushes, creating races until winners emerge. Forget the “aha” moment or a lightbulb turning on, the hard work that follows is what matters. The default mode in physics is entropy or gradual decline. Similarly, progress is lazy. It takes competing humans to drag things over the finish line.

In 1952 Linus Pauling proposed that DNA had a three-chain helical structure.

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WSJ: The Bidenomics Blather

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https://www.wsj.com/articles/the-bidenomics-blather-populist-election-free-market-union-price-controls-economy-7048dae0

In Chicago last month, President Biden hailed “Bidenomics,” which throws free trade and free-market capitalism under the bus in favor of centralized government controls. Be afraid. He’s already declared himself “the most pro-union president leading the most pro-union administration in American history.” His minions got the message.

In January, U.S. Trade Representative Katherine Tai, to an approving Davos crowd, called for a “new economic world order” that was “worker-centered,” which means wage floors and price controls. Transportation Secretary Pete Buttigieg wants to solve railroad safety with more paid sick leave. Gina Raimondo at Commerce is doling out $39 billion of pork from the Chips and Science Act, imposing requirements on daycare, foreign investment, union workers, buyback limits and even profit-sharing. I long for the days when lawmakers couldn’t spell “semiconductor.”

Then there was national security adviser Jake Sullivan’s April speech at the Brookings Institution declaring a “new Washington consensus” that government should control parts of the economy. That was some shortcut from discussion to consensus. It includes a “global labor strategy that advances workers’ rights” and “targeted and necessary investments in places that private markets are ill-suited to address on their own.” China calls these “encouraged industries.” Heck, the Energy Department has a $400 billion slush fund for greenie loans, perhaps what Mr. Sullivan means by “crowding in private investment.” In other words, free markets are dead.

According to Mr. Sullivan, government is “making long-term investments in sectors vital to our national well-being—not picking winners and losers.” Classic doublespeak. Government is trying to pick winners and losers from electric vehicles and batteries to biomass. He explains, “When [Mr. Biden] hears ‘climate,’ he thinks ‘jobs.’ ” That’s funny, because I hear “boondoggle.” He then sprinkles in the obligatory social engineering of “inclusiveness,” and voilà, he serves up the administration’s populist mantra. But it’s anti-economics.

This is a “modern American industrial and innovation strategy,” Mr. Sullivan coos. He didn’t dare say “industrial policy” without required trigger warnings, after synfuels, Solyndra and Lordstown Motors. But he isn’t fooling anyone. All that’s missing from his “new Washington consensus” is Soviet-style Five Year Plans. Give him time. Government control of industry never works. It distorts price signals by either fixing wages or messing with prices via tariffs or environmental edicts.

I suppose what I find most distasteful is the “government knows all” attitude.

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WSJ: Bruen Transforms the Gun Debate

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https://www.wsj.com/articles/bruen-transforms-the-gun-debate-thomas-second-amendment-restrictions-text-history-b50104f6

The range had a faint smell of crisped paper. “Stand like you’re going to throw a punch. Lean forward. Line up the sights,” the instructor told me. “The ‘A’ in AK-47 doesn’t stand for accuracy. OK, let it fly.” I was in Las Vegas to meet with Chuck Michel, a leading lawyer for Second Amendment advocacy groups and an old high-school friend. What happens in Vegas . . . is because machine gun ranges can’t be found in my home state, California.

I’m not a gun guy—though I’ve hunted with an Ithaca shotgun and even shot a .357 Magnum—but I respect the Second Amendment right to own a firearm. Still, I’m horrified and saddened by every mass shooting that lights up national headlines. Other shootings are rarely mentioned, like the 29 shot, eight fatally, in Chicago on the last weekend of June. And most other weekends.

Next up was a belt-fed gas-operated M240 Bravo machine gun. “This is what Biden left behind in Afghanistan,” the instructor noted. Finally, he handed me a semiautomatic AR-15, often called an “assault weapon.” Mr. Michel explained, “Pistols with magazines are also semiautomatic. AR-15s are labeled assault weapons because of scary cosmetic features, a muzzle brake or flash suppressor or a collapsible stock, even though ARs have similar stopping power as many other firearms.” It was very slow shooting compared with the machine guns, though I still don’t understand why you would want to own one.

Well, because gun rights are individual rights. In District of Columbia v. Heller (2008), the Supreme Court upheld gun ownership for self-defense in the home. New York State Rifle & Pistol Association v. Bruen (2022) upheld the right to carry pistols outside the home for self-defense, striking down “may-issue” licensing systems that required a “proper cause” or “special need” to carry firearms.

Now all states must allow open or concealed carry—“shall-issue” licensing. I don’t care if you love guns or hate guns; this is the new reality for individual rights. “This was a hard reset,” Mr. Michel says. “Gun laws passed pre-Bruen are all subject to relitigation. It’s legal vs. policy.”

It also guarantees full employment for gun-advocacy lawyers. “Since Bruen, gun-reform groups, often funded by Bloomberg and Soros, are going state to state to pass laws with restrictions on people, places and gun types.” Mr. Michel says. But there is now a Bruen test…

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WSJ: The High Cost of Losing Elections

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https://www.wsj.com/articles/the-high-cost-of-losing-elections-8eabce4a

After Donald Trump’s federal indictment, he was nice enough to email, “While today is certainly grim and dark, do NOT lose faith! Please make a contribution to peacefully stand with me today and prove that YOU will NEVER surrender our country to the radical Left. CONTRIBUTE $24,” with a link to WinRed.com. The caps give it a Nigerian-prince feel.

It reminded me of a note from a reader: “Donald Trump is in politics for only one reason: money. There is a reason he campaigned for the two GOP senate candidates in Georgia in the January 2021 runoff, when even the WSJ said he should have shut up—he wanted them to lose and the Dems in control so he could energize his base to contribute more. The scenario he wants is to get nominated again for 2024, get lots of contributions, then lose the election so he doesn’t have to deal with politics again.”

I suppose there is some truth to this—Mr. Trump did sell $5 million in Trump digital trading-card NFTs, after all. But purposely losing? Like Gollum from “The Lord of the Rings,” I think Mr. Trump tasted power and wants it back. And to be fair, Mr. Trump reportedly contributed $66 million of his own money in 2016, although the campaign spent $13 million at his businesses. Maybe he is trying to recoup the rest.

Who makes money in elections? I started turning over rocks to find out. There is certainly plenty of money. Some $14 billion was spent during the 2020 elections, almost $6 billion on the presidential race. Another $16 billion was spent on the 2022 midterms. That’s a lot of traditional media and digital advertising. Wanna bet it’s more than $25 billion for 2024?

Campaigns are lucrative. Barack Obama paid strategist David Axelrod’s firm more than $2 million from 2005 to 2008. Hillary Clinton’s campaign paid pollster Mark Penn’s firm more than $5 million when she lost the 2008 nomination. Nice work if you can get it. I wonder who she paid in 2016 to tell her not to bother visiting Wisconsin.

Campaigns consist of fundraising, operations and advertising.

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WSJ: How United Became an Airline

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https://www.wsj.com/articles/how-united-became-an-airline-flight-dress-code-first-class-jobs-boarding-crew-c9f74c37

“I was told you’d have a ticket to Chicago in my name,” I said to the woman working the United Airlines ticket counter. I was headed for an interview with United but was really going to visit my girlfriend (now wife). “Yes, here you go. First class.”

Another woman behind the counter looked over and, with a slightly disgusted look on her face, said, “Sir, I can’t let you travel in first class. We have a no-jeans policy.” Huh? It turns out this was still a thing in the 1980s. The first woman pointed to her screen, “Well, it does say VIP.” I couldn’t help smiling, mostly because I was being called “sir” and “VIP”—the first (and last) time that ever happened. With clenched teeth, they wished me a good flight.

Arriving at United in Elk Grove Village, Ill., not far from O’Hare International Airport, I was met by Norm Poole, who was in charge of the company’s technology. He started spouting statistics: “United has over 70,000 employees, 10,000 of them in the Chicago area. We’re its largest employer. Let me give you a tour before we sit down.”

We must have walked a quarter-mile talking about computers and networking—turns out they kept the tech types far away from everyone else. He asked about my time at Bell Labs. I said, “I prefer to use native Vax computers from Digital. Unix machines are always crashing.” Mr. Poole corrected me, “This is an airline. There is an unwritten rule to not use that word.” “OK, uh, Unix is prone to unscheduled service disruptions.” He smiled.

We kept cutting through rooms with giant tables covered in red-carbon-printed airline tickets, stacked in foot-high piles. Employees, almost exclusively women, were chatting away while flipping through them, making different stacks. I saw a dozen of these rooms, all loaded with tickets.

“It’s the dirty little secret of the airline business,” Mr. Poole explained. “We can get people on and off planes and fly them to where they need to go, but then we have to fly the damn tickets back here and sort them.”

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WSJ: A Tale of Two Economies

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https://www.wsj.com/articles/two-economies-unemployment-tech-layoffs-ai-gpus-nvidia-6df509ee

Did you see the latest jobs numbers? Employment increased 339,000 in May, according to the Bureau of Labor Statistics. Woo-hoo! But the same report showed that the number of unemployed persons increased by 440,000. Weird. Tech layoffs are continuing, but so are shortages of cashiers and cooks. Also, last week saw the largest money inflow into technology equity funds ever. The S&P 500 is up 12% for the year, but it’s down if you exclude seven top tech names. We’re living in a Dickensian tale of two economies—the best and worst of times.

The market is going sideways. We’re at one of those precarious Yogiesque forks in the road for the economy and market. We tread water, walk a tightrope. It’s both an “age of wisdom” and an “age of foolishness.” What will tip things up or down?

Here’s some nasty stuff: Now that the debt-ceiling arm-wrestling contest is over, Treasury needs to raise more than $1 trillion in auctions over the next few months. That is some overhang. Who is going to buy all that debt? Not the Federal Reserve, which is in quantitative-tightening mode. And remember, U.S. banks are $2.2 trillion underwater in their bond portfolios. As deposits move to higher-yielding money-market funds, banks are selling bonds as well. Plus, their commercial real-estate loans are a mess. Defaults are the highest they have been since the 2008-09 financial crisis as city office occupancy rates hover around 50%. No shortages there.

As opposed to eggs. This spring’s egg shortage caused prices to jump 60% year over year. Now guess what’s in short supply? Baby chicks. Note the eggs came first. Shortages began during the pandemic and kept rolling: dumbbells, toilet paper, baby formula, many generic drugs, lithium, nickel and now GPUs, graphic processors used for graphics, crypto and artificial-intelligence platforms like ChatGPT.

Nvidia stock popped 25% in May, reaching a $1 trillion market cap based on decent earnings and a shortage of their GPUs. That’s $200 billion in value created in a finger snap. AI is hot. It’s the next upside. Any company that so much as whispers “AI” has seen its stock skyrocket.

But beware—AI companies are the new meme stocks.

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WSJ: Can the Climate Heal Itself?

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https://www.wsj.com/articles/can-the-climate-heal-itself-cumulus-cirrus-clouds-negative-feedback-un-30bbbef0

Stop with all the existential crisis talk. President Biden said, “Climate change is literally an existential threat to our nation and to the world.” Defense Secretary Lloyd Austin also talks about the “existential threat” of climate change. National security adviser Jake Sullivan identifies an “accelerating climate crisis” as one reason for a “new consensus” for government picking winners and losers in the economy. Be wary of those touting consensus.

But what if the entire premise is wrong? What if the Earth is self-healing? Before you hurl the “climate denier” invective at me, let’s think this through. Earth has been around for 4.5 billion years—living organisms for 3.7 billion. Surely, an enlightened engineer might think, the planet’s creator built in a mechanism to regulate heat, or we wouldn’t still be here to worry about it.

The theory of climate change is that excess carbon dioxide and methane trap the sun’s radiation in the atmosphere, and these man-made greenhouse gases reflect more of that heat back to Earth, warming the planet. Pretty simple. Eventually, we reach a tipping point when positive feedback loops form—less ice to reflect sunlight, warm oceans that can no longer absorb carbon dioxide—and then we fry, existentially. So lose those gas stoves and carbon-spewing Suburbans.

But nothing is simple. What about negative feedback loops? Examples: human sweat and its cooling condensation or our irises dilating or constricting based on the amount of light coming in. Clouds, which can block the sun or trap its radiation, are rarely mentioned in climate talk.

Why? Because clouds are notoriously difficult to model in climate simulations. Steven Koonin, a New York University professor and author of “Unsettled,” tells me that today’s computing power can typically model the Earth’s atmosphere in grids 60 miles on a side. Pretty coarse. So, Mr. Koonin says, “the properties of clouds in climate models are often adjusted or ‘tuned’ to match observations.” Tuned!

Last month the coddling modelers at the United Nations’ World Meteorological Organization stated that “warming El Niño” and “human-induced climate change” mean there is a …

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WSJ:AI’s Education Revolution

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https://www.wsj.com/articles/ais-education-revolution-khan-academy-tutor-animation-schools-5aec9a5e

The Journal’s headlines tell the story: “Eighth-Graders’ History, Civics Test Scores Hit Record Low.” “Fourth-Grade Test Scores Plummet.” “ACT Test Scores Drop to Lowest Levels in More Than 30 Years.” Plus, 67% of fourth-graders nationwide score below “proficient” on reading tests. Disgraceful.

Millions of students use Khan Academy’s online videos and problem sets to supplement their schoolwork. Three years ago, Sal Khan and I spoke about developing a tool like the Illustrated Primer from Neal Stephenson’s 1995 novel “The Diamond Age: Or, a Young Lady’s Illustrated Primer.” It’s an education tablet, in the author’s words, in which “the pictures moved, and you could ask them questions and get answers.” Adaptive, intuitive, personalized, self-paced—nothing like today’s education. But it’s science-fiction.

Last week I spoke with Mr. Khan, who told me, “Now I think a Primer is within reach within five years. In some ways, we’ve even surpassed some of the elements of the Primer, using characters like George Washington to teach lessons.” What changed? Simple—generative artificial intelligence. Khan Academy has been working with OpenAI’s ChatGPT since before its release last December.

In the novel, the main character Nell asks about ravens, and “the picture zoomed in on the black dot, and it turned out to be a bird. Big letters appeared beneath. ‘R A V E N,’ the book said. ‘Raven. Now, say it with me.’ ‘Raven.’ ”

Later, she asks, “What’s an adventure?” and “both pages filled with moving pictures of glorious things: girls in armor fighting dragons with swords, and girls riding white unicorns through the forest, and girls swinging from vines, swimming in the blue ocean, piloting rocket ships through space. . . . After awhile all of the girls began to look like older versions of herself.”

Mr. Khan’s stated goals for Khan Academy are “personalization and mastery.”

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WSJ: Dear Grads: 1% Inspiration, 99% Preparation

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https://www.wsj.com/articles/1-inspiration-99-preparation-76a2877b

Dear Grads: Finish that “Ruth Bader Ginsborg” jug at your final Borg party. Wind down your Wednesday Addams and M3gan dances. Quit hating on Nepo Babies. And stop saying “super great” like NoHo Hank on HBO’s “Barry,” even ironically. This merits your attention.

The expression “Genius is 1% inspiration and 99% perspiration” is often attributed to Thomas Edison. But apparently around 1890, a writer and academic named Kate Sanborn gave a lecture saying genius was a combination of inspiration and perspiration and “talent is perspiration.” Even without Twitter, ideas floated around and permeated society. When Edison was later asked what genius was, he answered “2% is genius and 98% is hard work.” When asked if genius was inspired, he blurted out, “Bah! Genius isn’t inspired. Inspiration is perspiration.”

Two lessons here: 1) If you have great ideas, others will repeat them without attribution. 2) There was a lot of sweating going on in the 19th century—modern antiperspirant wasn’t available until 1941.

Let me update the saying for the 21st century: “Success is 1% inspiration and 99% preparation.” Ideas are shooting around faster than ever, but most are worthless because no one does the hard work to implement them. Implementation requires hours and hours not of sweat—we’re in a service economy now—but of preparation. You must do it all: reading, researching, falling into one rabbit hole after another on the internet to find the right series of precedents and test cases and quotes to make your point, pitching your idea coherently and succinctly so it doesn’t sound pie-in-the-sky but practical.

Preparation is everything! Forget football’s old-timey “3 yards and a cloud of dust.” After a 2021 touchdown, Los Angeles Rams receiver Cooper Kupp shared his read of the defense: “They had a little three-deep fire zone. Brought the nickel off the edge, safety dropped down. They didn’t look like they were doing a replacement fire zone.” That level of understanding required preparation, memorization and practice. And news flash, Stephen Curry draining half-court shots isn’t luck.

Watch the amazing 2021 video of the Perseverance rover landing on the surface of Mars.

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WSJ: Ignore the Hysteria on AI and Jobs

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https://www.wsj.com/articles/ignore-the-hysteria-on-ai-and-jobs-chatgpt-automation-workforce-tech-innovation-51b3d994

Will artificial intelligence destroy jobs? As sure as night follows day. Old jobs disappear and new jobs are created all the time. It reminds me of the time I got jobbed. On a “radio tour” promoting a book a decade or so ago, I was up at 4 a.m. California time calling drive-time radio programs on the East Coast, switching every five minutes and then calling in to stations farther west. I remember two things. Every radio personality sounds the same: “Hey, we’ve got a new book author coming atcha, right after these messages . . .” And the ambush.

I called into a big-city public-radio station, a great catch. We discussed my 12 rules for entrepreneurs and investors including lower costs, waste what’s abundant, scale and get horizontal. But the host wanted to discuss only the title, “Eat People.” OK. I walked through the history of how technology has replaced lower-end jobs—tellers, librarians, travel agents, stock traders—with higher-value, better-paying jobs.

I thought it was going well until the host said, “Well, I’m against it.” I asked, “Against what?” “I’m against technology destroying careers and lives. It has to stop. That’s why we have unions.” Ruh-roh, I thought. I calmly explained that you can’t be for or against it—it’s part of progress and happens again and again, from buggy-whip manufacturers to elevator operators. And history shows that more and better-paying jobs are always created as some jobs are destroyed. He didn’t want to hear it and babbled on about the evils of big business and the need for unionization. I was ready to move on to St. Louis and Denver.

New and better jobs are always created, yet no one believes it. We no longer have “Mad Men”-era typing pools, stenographers, compositors or typesetters. A 2022 paper studying automation and job categories, led by economist David Autor, states that “roughly 60% of employment in 2018 is found in job titles that did not exist in 1940.” A Goldman Sachs report from March goes further: “85% of employment growth over the last 80 years is explained by the technology-driven creation of new positions.” Bingo.

Job destruction is still happening. Last July, Southwest Airlines ended expiration dates on flight credits. Generous? Nah. Having real people handling calls is expensive; I bet the airline figured it would be cheaper to have no expiration date so customers would stop calling and use its website instead. And people fight against job destruction: A few weeks ago, dockworkers reached a tentative deal with West Coast ports on automation technology—a decadeslong battle. The union wants limits on everything from computer-controlled cranes to bar codes—anything that threatens jobs. Yes, bar codes. And now this: Striking Hollywood writers are demanding that AI not be used to write “sloppy first drafts.”

Now touch-screen cash registers are turned around at McDonald’s and lots of other restaurants to face customers. White Castle is using…

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WSJ: Sherlock Diverts the Fire Hose

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https://www.wsj.com/articles/sherlock-diverts-the-fire-hosesherlock-diverts-the-fire-hose-technology-social-media-notifications-twitter-6f4c49f5

We all drink from a fire hose of information, an unfiltered stream that blasts facts and photos and figments of truth, bloating and overloading us. Phones buzz with updates. Breaking news. Snarky tweets that demand a peek. Kardashian sibling fashion faux pas. Amazon deals, Instagram hamming, TikTok twerks and daily BeReals—these torrential rains strain brains.

When Elon Musk bought Twitter, President Biden remarked, “There’s no editors. How do we expect kids to be able to understand what is at stake?” Great question. And the fire hose refuses to be turned off. But there is a way to slow the flow, at least to a manageable trickle. Ask Sherlock Holmes.

Trusty assistant Dr. Watson expressed astonishment that Holmes was “ignorant of the Copernican Theory and of the composition of the Solar System.” Holmes replied, “Now that I do know it I shall do my best to forget it.” He explained further, “I consider that a man’s brain originally is like a little empty attic, and you have to stock it with such furniture as you choose. A fool takes in all the lumber of every sort that he comes across, so that the knowledge which might be useful to him gets crowded out.”

We all remember the stupidest things. Holmes’s advice is to forget. But what to keep? “Now the skillful workman is very careful indeed as to what he takes into his brain-attic. He will have nothing but the tools which may help him in doing his work, but of these he has a large assortment, and all in the most perfect order.” Here are some tips:

• Filter. Search engines and social media bypass newspaper and TV editors. This helps free us from bias and censorship, but we’re all editors now, perusing the water blast to find what’s important. The trick is to filter almost everything—start with Meghan and Harry. If it isn’t in your wheelhouse or meaningful for your friendships, career or personal development, let that fire hose soak someone else.

• Favor the right topics. A college friend moved to Oregon to study the effects of Mount St. Helens’s volcanic eruption on nearby forestry. I presumed the simple answer was “not good.”

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WSJ: AI Simply Needs a Kill Switch

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https://www.wsj.com/articles/ai-simply-needs-a-kill-switch-regulations-biden-commerce-innovation-musk-pause-spacex-767ae62a

The best lesson for artificial intelligence may be Thursday’s “rapid unscheduled disassembly” of SpaceX’s Starship rocket, aborted four minutes after launch. With ChatGPT prompting speculation about mankind’s destruction, you should know that techies have obsessed seemingly forever over what’s known as the Paper Clip Theory—the idea that if you told an artificial-intelligence system to maximize the production of paper clips, it would fill the whole world with paper clips. Another version of the theory, Strawberry Fields Forever, has AI using every piece of available dirt to grow strawberries. Scary, right? So are “Halloween” movies.

Not to be outdone, decision theorist (huh?) Eliezer Yudkowsky recently wrote in Time magazine that the “most likely result of building a superhumanly smart AI” is that “literally everyone on Earth will die.” Literally everyone! That’s ludicrous, as is most clickbait these days. Sam Altman, CEO of ChatGPT creator OpenAI, told podcaster Lex Fridman, “There is some chance of that.” C’mon now.

Apparently, Pandora’s box has opened and is spewing its evils, which ignores all the good uses of large language models that will transform software coding, the workplace, education and more. Sadly, our geniuses in government appear to be the remaining few who still read Time magazine. So bring on the regulators to shut the box heroically.

Earlier this month, the Commerce Department initiated the process of regulating artificial intelligence, with Assistant Secretary Alan Davidson suggesting, “We know that we need to put some guardrails in place to make sure that they are being used responsibly.” Bad idea. Guardrails are for children bowling at birthday parties. AI is in its infancy, and we don’t yet know how it will change industries and society. Don’t freeze it now.

If the U.S. regulates AI, research will just move somewhere that doesn’t regulate it, maybe the Bahamas, where the unkempt coders of the future could keep cranking away. Or worse, China. Google CEO Sundar Pichai told CBS’s “60 Minutes” that he wants global AI regulation. Elon Musk and a group of AI experts wrote an open letter calling for an immediate six-month pause of “giant AI experiments.” Isn’t it interesting that those who need to catch up are pushing for a pause?

We don’t need onerous new regulations. There are already laws on the books…

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WSJ: A Wrench Thrown Into Capitalism

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https://www.wsj.com/articles/a-wrench-thrown-into-capitalism-philanthropy-investment-technology-musk-attention-innovation-climate-5b319142

I’m pretty sure we’ve hit peak absurdity. I recently read about a climate author “investigating how shade can be a powerful civic resource to protect us from climate change.” Shade! This from the announcement of a new “climate cohort” at a well-regarded philanthropy. It reveals a flaw in capitalism.

Not a single scientist can be found in the climate cohort—why bother?—but instead authors, educators, designers, a poet and, hmmm, a chef. There is a “data ecologist,” but that almost sounds made up. Reading further, apparently the lack of shade is racist and a product of inequality. Of course it is.

Hey look, the wealthy can do what they like with their money—often paradoxically amassed by delivering productivity-enhancing products. I’ve noted before that there are only four things you can do with your money: spend it, pay taxes, invest it or give it away. The flaw in capitalism is that only one of these helps the world in the long term.

In the short term, spending is great for the economy, but it’s hard to blow a billion dollars at Costco or buy 3,000 Lamborghinis. Paying taxes funnels money to unproductive government spending and should be kept to a minimum. Even investing has turned absurd: An Oklahoma City brand designer prompted ChatGPT: “You have $100, and your goal is to turn that into as much money as possible in the shortest time possible, without doing anything illegal.” ChatGPT instructed him to launch “Green Gadget Guru” and promote “eco-friendly gadgets and sustainable living.” Climate is lucrative!

Anyway, of the four, philanthropy is the most misunderstood. Yes, many philanthropies do great stuff, especially on a local level. And it sure feels good for the giver. We all get that warm fuzzy feeling—a psychic reward—when we donate to causes. Help your fellow human. Fund schools. Gild the opera. But does that giving do any lasting good? Sadly, only sometimes.

Andrew Carnegie funded libraries.

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WSJ: Turn Off the Fed Bubble Machine

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https://www.wsj.com/articles/turn-off-the-fed-bubble-machine-inflation-federal-funds-interest-rates-stimulus-regulation-keynes-supply-a90c462

“The Lawrence Welk Show,” which ran from 1951 to 1982, was known for its schmaltzy “champagne music” and a TV screen full of bubbles to open most shows. The interest-rate-slashing Federal Reserve has been running the bubble machine ever since. Now, with inflation feeling like it’s rolling over as the economy slows, it’s time to shut the machine down.

Since the fall of 2008, with a brief respite in 2019, the real federal-funds rate has been negative, meaning interest rates have been below inflation (and still are) and the Fed has been accommodative. Accommodating what? Well, in the false hope of boosting aggregate demand and fighting deflation, they’ve accommodated bubbles, bubbles everywhere.

Deflation is only a ghost, often mistaken for prices dropping naturally and to our benefit. Productivity, doing more with less, lowers prices. Think of chips, iPhones and $538 for a 75-inch 4K smart TV at Walmart. Why fight it?

Ask the Fed. Faced with this productive trend, it keeps trying to stimulate aggregate demand by dropping interest rates or buying bonds. Instead the central bank ends up inflating prices for various assets and unproductive things that don’t naturally drop in price, like housing, healthcare and education. This sets up the next bubble and downturn and bank bailouts which the Fed fights with even more interest rate cuts, churning the crank on the Welkian machine. Stop doing this!

Don’t worry, central bankers would reassure, they keep a sharp eye on consumer inflation indexes. But even former Fed Chairman Alan Greenspan admitted they’re flawed, noting in 2019, “We have a problem with measuring inflation.” Even through mid-2021, inflation numbers looked subdued, but didn’t the Fed notice the asset inflation that rate cuts were causing elsewhere?

Stocks were flying. Even the junkiest bonds had low yields.

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WSJ: Does AI Dream of Electric Sheep?

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https://www.wsj.com/articles/does-ai-dream-of-electric-sheep-neural-networks-chatgpt-sleep-memory-overfitting-research-5ab42f1b

I had a weird dream last night. I’m sure you’ve said that many times. But why? From Sigmund Freud to Carl Jung to Calvin Hall, dreams have been researched ad nauseam and there’s still no good answer to what shapes them. Unconscious desires? Keeping neurons active? Memory consolidation? Psychosexual wish fulfillment? No one knows. Even Freud supposedly noted, “Sometimes a cigar is just a cigar.”

But clues are starting to emerge from artificial intelligence and its use of brain-mimicking neural networks. In 1968, Philip K. Dick published the novel “Do Androids Dream of Electric Sheep?”—on which the 1982 movie “Blade Runner” was based. Turns out the answer is yes.

First, a quick and oversimplified primer on neural networks. They contain digital layers of interconnected nodes, modeled on the human brain’s neurons and synapse connections, which are great at finding patterns. Based on numerical weightings in each node after scanning millions of photos, a layer might conclude that a roundish object with eyes, nose and mouth is a face. Then that data moves onto the next layer, which looks for patterns in those patterns. Perhaps it determines whether it’s a cat’s or dog’s face. Then another layer finds patterns of patterns of patterns until, for example, it can identify the dog’s breed as a Siberian Husky. And so on.

Theorized in 1943, trainable neural networks have been around since 1958, when psychologist Frank Rosenblatt demonstrated the Perceptron machine at the Cornell Aeronautical Laboratory. But only in the past decade has AI scaled to the masses and gained the ability to understand your voice or recognize faces in photos.

What changed? Faster processors and cheaper memory certainly helped, but neural networks in the past often got stuck by “overfitting” data to a conclusion, such as determining that everything with feline-shaped eyes is a cat. Or concluding that dinosaurs built Stonehenge. We do that too when we knock on wood or wear our lucky socks because our team won last time we did. Computers can be superstitious like us.

In 1970 Finnish student Seppo Linnainmaa proposed “back-propagation”—again oversimplifying here—sending errors backward through neural-network layers to generalize the weightings and better find patterns.

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WSJ: The Economy Gets Wrung Out

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https://www.wsj.com/articles/the-economy-gets-wrung-out-earnings-layoffs-credit-fed-svb-bailout-merger-crypto-recession-5b957cb

So now what? You don’t just lose Silicon Valley Bank, Signature Bank (used by fake heiress Anna Delvey) and Credit Suisse in a week without repercussions. We saw hundreds of billions in stock-market value and tons of debt vaporized. Yes, all U.S. bank deposits are now supposed to be fully insured. And yes, the Federal Reserve has rolled out a new Bank Term Funding Program that offers banks one-year loans against underwater Treasurys and mortgage-backed securities at par value. Wow. Last week the Federal Reserve announced a currency-swap line, basically to help foreign banks. But is that even enough?

More failures and quickie mergers are inevitable—banks are some $2 trillion underwater with their bond portfolios. First Republic Bank’s stock has fallen 90% in three weeks as depositors pulled their money. Like SVB, First Republic goosed returns by chasing yield. Unfortunately, it doesn’t have many of the bonds that the Fed’s Bank Term Funding Program will loan against, hence the $30 billion in “deposits”—almost charity—from 11 large banks.

I suspect someone will buy First Republic soon, similar to United Bank of Switzerland (UBS) buying Credit Suisse for a bar of Toblerone. The deal was helped by $17 billion in contingent convertible bonds, or Cocos, which went puff, wiped out in value. Plus, the Swiss National Bank will cover nearly $10 billion in losses and provide almost $110 billion in liquidity. But UBS inherits Credit Suisse’s First Boston curse. Everyone on Wall Street recalls the scandals that plagued First Boston: “Bid ’Em Up Bruce” Wasserstein, the 1989 Ohio Mattress “burning bed” deal, IPO kickback charges, and most recently Archegos and Greensill.

Last week I heard some crypto hypesters have been telling startups to put some of their future payroll into crypto for safekeeping in case of more bank failures—which probably is why bitcoin popped 40%. That might end up being expensive insurance. And circular reasoning, considering the stablecoin USDC had $3.3 billion deposited at SVB.

Even if there are no more bank failures, credit is tight and getting tighter. Last week saw February home prices down 0.2% year over year, the first drop in 11 years. By the way, the mortgage-debt market is $8 trillion. And $1.5 trillion in commercial real estate debt is due over the next three years. Work from home means future office vacancies, a ticking bomb. It’s starting: In late February, Pimco and its Columbia Property Trust defaulted on $1.7 billion in loans on seven buildings. Brookfield stopped paying $784 million in loans on two Los Angeles buildings. As all New Yorkers know, there’s never just one or two cockroaches.

It’s increasingly improbable that we escape a recession.

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WSJ: From Zero to Hero

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https://www.wsj.com/articles/from-zero-to-hero-biden-inflation-fed-fdic-svb-deposit-insurance-bailout-interest-rates-oil-gas-willow-643b9f2d

Isn’t it bizarre that so many people who cause problems then turn around and become heroes fixing the same problems they created?

Between the Biden administration’s $1.9 trillion American Rescue Plan and the green-laden $738 billion Inflation Reduction Act and paying people not to work, Bidenflation is roaring. It peaked last summer at 8.5% but is still running at 6%. In December President Biden, the newly self-declared inflation warrior, said, “My goal is simple: get prices under control without choking off economic growth.” And there it is: The Biden administration is trying to slay an inflation dragon that it created.

To help fight this inflation, the Federal Reserve has raised the federal-funds rate from near zero to 4.5% to 4.75% since January 2022. This has caught a lot of banks, such as Silicon Valley Bank, holding portfolios of underwater bonds and mortgage-backed securities. Treasury Secretary Janet Yellen, in her previous role as Federal Reserve chair, kept rates too low for too long.

Now to save banks, Ms. Yellen says the Treasury, along with the Federal Deposit Insurance Corp. and the Fed, will act “in a manner that fully protects all depositors,” which means those not insured above $250,000. Catch that? She helped cause inflation and now is a hero for saving depositors. The press release notes, “No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.” Uh huh. Pay no attention to those losses behind the curtain, which “will be recovered by a special assessment on banks.” Maybe no one will notice.

This D.C. trio of heroes are effectively guaranteeing all bank deposits, which by the way total $17.7 trillion even though the Fed’s balance sheet is only $8.4 trillion. Hmmm. This creates a classic moral hazard, encouraging bankers to let risk rip—no need for a chief risk officer—and then maximize profits because the federales will step in later. The only thing this guarantees is future bailouts.

Fed Chairman Jerome Powell is also playing this “saving us from his own mistakes” game. He has kept rates below the consumer-price index level for most of his five-year tenure.

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WSJ: Who Killed Silicon Valley Bank?

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https://www.wsj.com/articles/who-killed-silicon-valley-bank-interest-rates-treasury-federal-reserve-ipo-loan-long-term-bond-capital-securities-startup-jpmorgan-bear-stearns-lehman-brothers-b9ca2347

That giant slurping sound on Friday was Silicon Valley Bank imploding. America’s 16th-largest bank had some $175 billion in deposits and disappeared by breakfast. It wouldn’t have happened if not for management mistakes. This was a 21st-century bank run—customers tried to withdraw about $42 billion, a quarter of all deposits. But what triggered the collapse?

Let’s go back. In January 2020, SVB had $55 billion in customer deposits on its balance sheet. By the end of 2022, that number exploded to $186 billion. Yes, SVB was a victim of its own success. These deposits were often from initial public offerings and SPAC deals—SVB banked almost half of all IPO proceeds in the last two years. Most startups had relationships with the bank.

That’s a lot of money to put to work. Some was lent out, but with soaring stock prices and near-zero interest rates, no one needed to take on excessive debt. There was no way SVB was going to initiate $131 billion in new loans. So the bank put some of this new capital into higher-yielding long-term government bonds and $80 billion into 10-year mortgage-backed securities paying 1.5% instead of short-term Treasurys paying 0.25%.

This was mistake No. 1. SVB reached for yield, just as Bear Stearns and Lehman Brothers did in the 2000s. With few loans, these investments were the bank’s profit center. SVB got caught with its pants down as interest rates went up.

Everyone, except SVB management it seems, knew interest rates were heading up. Federal Reserve Chairman Jerome Powell has been shouting this from the mountain tops. Yet SVB froze and kept business as usual, borrowing short-term from depositors and lending long-term, without any interest-rate hedging.

The bear market started in January 2022, 14 months ago. Surely it shouldn’t have taken more than a year for management at SVB to figure out that credit would tighten and the IPO market would dry up.

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WSJ: The Rise of Kickback Capitalism

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https://www.wsj.com/articles/the-rise-of-kickback-capitalism-american-rescue-plan-government-benefits-debt-chips-act-inflation-reduction-act-smoot-hawley-e2a74ba8

“I’m a capitalist,” President Biden said in the State of the Union address. Yeah, right. He then added, “But pay your fair share.” He’s missing the fashionable modifiers for capitalism: late, sustainable, patrimonial, state-directed. Real capitalism is, by definition, a meritocracy in which money flows to those providing the highest returns. No modifiers needed.

Collectivism always fails for lack of meritocracy. America’s rugged individualism makes it most compatible with real capitalism. Sure, the U.S. always has had some patronage and cronyism. Elections are expensive, after all. But now we’ve entered an era of kickback capitalism, which has created a mangy mob of meritless mooches.

Why do I suspect this? Because Jared Bernstein—the economist who, like an old REO Speedwagon T-shirt, has been hanging around Joe Biden seemingly forever—said the quiet part out loud. Just before being nominated to run the Council of Economic Advisers, Mr. Bernstein told the Brookings Institution, “We’re trying to do, you know, what we believe, what the president believes . . . is really great, important policy on behalf of strengthening workers. And sometimes that’s not necessarily all kosher economics, sometimes it’s political economics. And sometimes you have to do things that may not be as aesthetically appealing in a neoclassical model.” Lael Brainard, nominated as director of the National Economic Council, worries about “irreversible ‘tipping points’ that introduce new climate shocks.” These aren’t the people who should be making economic policy.

What kickbacks? Start with up to $20,000 in student-loan forgiveness for tens of millions of voters who took on debt to overpay for college. Those who saved and paid retail get nothing. While it’s likely to be struck down by the Supreme Court, it’s also a kickback to universities that constantly raise prices and hire more administrators. In 2021 the average university had 45 diversity, equity and inclusion officers, according to a Heritage Foundation report.

But isn’t buying votes illegal? I looked it up—18 U.S. Code 597: “Whoever makes or offers to make an expenditure to any person, either to vote or withhold his vote, or to vote for or against any candidate . . . if the violation was willful, shall be fined under this title or imprisoned not more than two years, or both.”

Well, Mr. Biden does have two more years in office.

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WSJ: How ChatGPT’s AI Will Become Useful

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https://www.wsj.com/articles/ais-not-useful-yet-but-it-will-be-chatgpt-artificial-intelligence-robots-microsoft-bing-chatbot-elder-care-tyrell-corporation-self-driving-tesla-technology-a1a27df0

In the rudimentary days of videogames, I met the team that created the first multiplayer Formula 1 Grand Prix racing game. They had to alter the original code because they discovered almost every player at the start of the first race would turn his car around on the track and crash into the incoming traffic. I started to laugh, because that’s what I did too. Gives new meaning to the Facebook motto: Move fast and break things.

That’s exactly what’s going on with the newfangled generative AI chatbots. Everyone’s trying to break them and show their limitations and downsides. It’s human nature. A New York Times reporter was “thoroughly creeped out” after using Microsoft Bing’s chatbot. Sounds as if someone needs reassignment to the society pages. In 2016 Microsoft had to shut down its experimental chatbot, Tay, after users turned it into what some called a “neo-Nazi sexbot.”

Coders can’t test for everything, so they need thousands or millions banging away to find their flaws. Free testers. In the coming months, you’re going to hear a lot more about RLHF, reinforced learning from human feedback. Machine-learning systems scan large quantities of data on the internet but then learn by chatting with actual humans in a feedback loop to hone their skills.

Unfortunately, some people are ruder than others. This is what destroyed Tay. So ChatGPT currently limits its human feedback training to paid contractors. That will eventually change. Windows wasn’t ready until version 3.0; generative AI will get there too.

For now Microsoft’s solution is to limit users to six questions a session for the Bing chatbot, effectively giving each session an expiration date. This sounds eerily similar to the Tyrell Corporation’s Nexus-6 replicants from the 1982 movie “Blade Runner.” If I remember, that didn’t end well.

Every time something new comes out, lots of people try to break it or foolishly try to find the edge, like jumping into the back seat of a self-driving Tesla.

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WSJ: This Is One Puzzling Job Market

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https://www.wsj.com/articles/one-puzzling-job-market-employment-unemployment-productivity-tech-layoffs-help-wanted-technology-automation-robots-ai-chatgpt-70d9e54

Before generative AI replaces me (it can pry my keyboard from my cold dead hands), what’s going on with jobs? The jobs report for January was huge: 517,000 new hires and a 3.4% unemployment rate, the lowest since Woodstock. Restaurants and retailers can’t hire fast enough. Yet we’re bombarded with layoff announcements: Google, Amazon, Goldman Sachs, Salesforce, Microsoft, Disney, Dell and—say it ain’t so—fake meaters Impossible Foods and Beyond Meat. Meanwhile, productivity dropped 1.5% in 2022. Something’s screwy.

Technology has brought wonders: desktop publishing, spreadsheets, automated check deposit, social networks and speech bots. Many jobs became obsolete. And now ChatGPT spits out humanlike prose. Google’s Bard promises the same. So why are productivity statistics so underwhelming?

In 1987, the economist Robert Solow said, “You can see the computer age everywhere but in the productivity statistics.” Why? Because, as science-fiction author William Gibson purportedly said, “The future is already here. It’s just not evenly distributed yet.”

Same with technology and jobs. This headline from November is a case in point: “ILWU clerks shut down Port of Oakland.” As International Longshore and Warehouse Union president Willie Adams had written in a letter to California Gov. Gavin Newsom, “This is simply not the time to allow further job losses to automation.” Uneven distribution indeed. This pushback is sad because technology enables better jobs as capital flows to more productive uses.

We saw this on Wall Street in the 1980s with spreadsheets, which replaced X-Acto-knife-wielding experts cutting Mylar sheets spread out on large tables. Many jobs were lost, but Wall Street expanded because everybody could build digital balance sheets and dividend discount models. I think Wall Street and private equity made more money from spreadsheets than Lotus or Microsoft did.

Same with desktop publishing. Layout jobs were lost, but 10 times as many magazines were printed until the web enabled digital delivery.

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WSJ: The FTC Can’t See the Future

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https://www.wsj.com/articles/the-ftc-cant-see-the-future-activision-microsoft-lina-khan-antitrust-xbox-gaming-consoles-video-games-11675628406

In December, Federal Trade Commission Chair Lina Khan told the WSJ CEO Council, “competition is critical to have an economy that’s thriving, to ensuring that we have robust innovation.” That’s idle chatter. Actions speak louder than words. Look at her agency’s innovation-killing actions: “FTC seeks to block” Meta’s acquisition of virtual reality app Within. Or Microsoft’s acquisition of videogame maker Activision. Ms. Khan is playing checkers while others are playing chess.

In the early 1990s I raised money for Activision at a $100 million valuation. Last January, Microsoft offered $69 billion for the company—we’ve come a long way. Gaming companies used to sell cartridges for videogame consoles like Nintendo and Sega or floppy disks for personal computers. Over time this changed to CD-ROMs for new consoles like Sony’s PlayStation and Microsoft’s Xbox. Then came handhelds. And now mobile phones. The FTC, seemingly prodded by Sony, is worried that Microsoft will “harm competition in high-performance gaming consoles.”

That’s laughable. It’s like protecting floppy disks. While Microsoft has promised to make some games available on competing consoles, including Sony’s PlayStation for the next 10 years, I doubt anyone will be selling new consoles a decade from now as everything moves to the cloud. Why? Because while 75% of today’s televisions are Smart TVs, soon TVs will have graphics engines as powerful as today’s videogame consoles. Then it’s game over.

As usual, the FTC is still fighting the last war. The next war is over online worlds, the so-called metaverse. This makes even more bizarre the FTC’s attempt, which was recently denied by a district court judge, to block Meta from buying fitness app maker Within. As if Jazzercise or “Sweatin’ to the Oldies” is innovation. The metaverse already exists and videogames are, pun intended, its killer app so far.

Don’t care about videogames? OK, but the future of commerce and education will live in online worlds. Microsoft will bring Azure’s cloud expertise, HoloLens’ headset, and even ChatGPT’s conversational artificial intelligence to Activision’s 3-D worlds. Chatbot avatars might replace salesmen and teachers one day.

Microsoft would make a formidable competitor to Meta. So would Apple…

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WSJ: A Better Future for ALS Patients

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https://www.wsj.com/articles/a-better-future-for-als-patients-medicine-research-fundraising-cure-basketball-pharmaceuticals-lou-gehrig-11675000441

For 15 years, I sat next to Stephen Kauffman and his dad Scott at Golden State Warriors games. Every National Basketball Association referee knew Stephen because he’d call them out by their first names for bad calls. Sadly, Stephen first started showing signs of neurodegenerative disease at age 27 and was soon diagnosed with amyotrophic lateral sclerosis, ALS. The disease, which causes the brain to stop communicating with the muscles, has no cure. Early on, Stephen would ask me to help him stand for the national anthem and eventually attended games in a wheelchair and a device to help him breathe. He kept his same bright attitude and diligence with the refereeing, but his slow-motion decline was one of the saddest things I’ve ever seen.

Scott and his family deal with ALS 24/7. He is now chairman of the ALS Association. Meeting last week in Palo Alto, Calif., he told me that in the U.S. more than 30,000 people live with ALS, typically only for two to five years after diagnosis. Only 15% of cases are hereditary; the causes of the rest are unknown. There are no diagnostic tests for ALS—doctors eventually rule out everything else.

I’ve noticed that ALS is either fast or slow. In 2012, at age 57, one of my old college roommates told me he noticed he couldn’t hit a golf ball as far and got drunk on half a beer. He soon was diagnosed with ALS and died a year later leaving behind two teenage daughters. On the other hand, Stephen Hawking was diagnosed in his 20s and died at age 76. ALS is often known as Lou Gehrig’s disease. The Yankee great died with ALS at age 37. Here’s a twist: Stephen, now 38, was a huge Lou Gehrig fan as a kid—he had a Gehrig-signed baseball and even wore his No. 4 in Little League.

Only a few drugs slow the disease’s progression, and none provide a cure. Scott told me that the Food and Drug Administration “has pledged to bring ‘regulatory flexibility.’ Of course, patients are willing to risk everything for drugs that might work once they’re deemed safe.” In September, the FDA approved the drug Relyvrio from Amylyx Pharmaceuticals. Patients who take it generally show a slower rate of decline and live longer, but only by a few months.

In July the FDA accepted Biogen’s Tofersen into its accelerated-approval pathway, and it might receive full approval this spring. The drug binds to the SOD1 gene whose mutation is common in ALS patients. A few other drugs are in the pipeline, but little is known about what causes ALS, which makes developing treatments difficult. There is so much research to be done. That takes money.

Remember the ice-bucket challenge in 2014 that took over social media?

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WSJ: Can ChatGPT Write This Column?

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https://www.wsj.com/articles/can-chatgpt-write-this-column-openai-computing-scale-fusion-gene-editing-technology-11674399416

With every new piece of technology—today it’s generative artificial intelligence like OpenAI’s ChatGPT—I’m fascinated by the possibilities but always ask: Will it scale? Can it get smaller, cheaper, faster, better? Early releases are usually clunky. After the initial “huh, I didn’t know that was possible,” often comes denial and ridicule. I’ve been guilty of this. So how do you figure out what works and what’s a dud?

ChatGPT uses machine learning to find patterns of patterns in training data, mostly written by humans, to produce human-sounding prose in response to prompts. Machine learning is the greatest pattern-recognition system ever invented. It’s why Alexa’s voice interface works and how Google can find you in photos from when you were 3.

I’ve played around with ChatGPT, and it’s pretty good—if you need to turn in a high-school freshman term paper. Its answers are dull, repetitive and often filled with mistakes, like most freshmen.

Speaking of dull, lawyers may have the greatest reason to be nervous. In February, online ticket fixer DoNotPay will coach someone to fight a speeding ticket in a live courtroom using its AI chatbot speaking into the defendant’s earpiece. DoNotPay has even offered $1 million to the first lawyer arguing before the Supreme Court who agrees to wear an earpiece and repeat what the bot says.

Will this work? Who cares? This is Kitty Hawk. Google, which funds its own generative-AI efforts, has declared a “code red,” worried about threats to its money-gushing search business, as it should. Microsoft was years late in responding to a quirky but scaling internet.

Pure digital technology almost always scales.

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WSJ: Euchre's Life Lesson

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https://www.wsj.com/articles/euchres-life-lessons-midwest-cards-game-tricks-suit-win-cheat-juckerspiel-trump-players-dealer-advice-11673791542

If you hail from upstate New York, downstate Illinois, Michigan, Wisconsin, Indiana, Ohio and many other Midwest locales, chances are good you’re a Euchre fanatic. This four-person, trick-taking card game—originally called Juckerspiel—was brought over by German immigrants who settled in the Midwest.

Euchre, it turns out, reflects life. The game is played with 24 cards, 9 through ace. Like bridge, one suit becomes trump and defeats all other cards (no election jokes, please). The jack of the trump suit is called the right bower (Bauer is “farmer” in German) and is the highest card. The other jack of the same color is called the left bower and is the second-highest card. Then it proceeds from the ace on down.

The dealer is supposed to shuffle the deck only twice before dealing five cards to each player, in sets of twos and threes. This is to maximize good hands, making the game move faster. The dealer turns one card up and keeps the last three facedown, or “buried.” Players go around clockwise from the dealer and say whether they think they and their partner can win three hands, or “tricks.” If so, the dealer is told to pick up the card, whose suit becomes trump, and has to discard another. If it goes all the way around and the dealer turns down the card, bidding goes around again, and players in turn can pick any suit as trump. There are lots of local variations, with allegedly ancient rules. You can learn in five minutes, but it takes years to master.

As cards are played, you must follow suit, unless you can’t. Then you can play a trump card. Highest card wins. Win three tricks for a point. Win all five for 2 points. If you call trump and fail to win three tricks, the other team gets 2 points and will loudly yell “Euchre!” With a really strong hand, you can tell your partner “I’m going alone” and win 4 points if you get all five tricks—a “Lone Bone.” First team to 10 points wins.

As in life, the rules are pretty simple and mindless, but decent strategy gets you ahead.

In Euchre, there are many unknowns. That’s true of many card games. In poker you learn about others through their body language, their tells. In blackjack, you assume every other card is a 10. But in euchre, because there are only 24 cards, you have to figure out what’s going on by seeing a quarter of the cards. Every time a card is played, you learn more. In cards and in life, especially investing, acting without knowing the whole truth is an art some people, but not many, actually master.

Euchre is also about camaraderie.

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WSJ: The Voting Bloc Against Bossiness - Don't Tell Me What To Do!

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https://www.wsj.com/articles/the-voting-bloc-against-bossiness-dontell-libertarian-freedom-covid-education-language-silicon-valley-11673195159

Meet the Dontells, sure to be a political force in the next few elections. Their mantra is simple: Don’t tell me what to do, hence the name. Their telltale sign is an obvious case of ODD. What’s that? Oppositional defiant disorder, which, according to Johns Hopkins Medicine, is a behavior disorder, often in children who “are uncooperative, defiant, and hostile toward peers, parents, teachers, and other authority figures.” Yeah, I’ve got that.

Also add: Don’t tell me what to say, to think, to pay. Backlash was inevitable against the metastatic absurdity. Use only paper straws. Don’t tell me what to do. You can’t say “master bedroom” anymore. Oh yes I can. That 6-foot-tall dude winning all the NCAA women’s swimming meets is really a woman. I don’t think so. Every threat is existential. Maybe to you. No abortions ever. What? Your taxes pay people not to work. Make it stop!

Tea partiers and red-hatted MAGA supporters pushed back against Obama-era bossiness. They didn’t want high taxes to pay for open-border welfare, gun confiscation or being woke poked. Heck, they even supported a blundering bloviator for president. That’s how desperate their Dontell dedication was. Note, there is a fine distinction between the Doncares (I don’t care), the Leavmis (leave me alone), and the Dontells. The first two groups rarely vote. But Dontells vote in droves, on both sides of the aisle.

Amazingly, the whole Dontell thing still comes as a huge surprise to self-important city dwellers on both coasts. Yes, most big-city progressives like to be dominated and enjoy being told what to do. Walk/Don’t Walk. Mind the gap. Wait in long lines. Alternate-side-of-the-street parking regulations. Calorie counts in doughnut shops. Confiscatory taxes. New York’s (unconstitutional) ban on large sodas. San Francisco’s ban on Happy Meals. The seemingly mandatory use of words such as “positionality” and “performative” in conversation.

Liberals, implied in the name, say they are for freedom, but are they? The progressive wing is full of authoritarians telling others what to do or how to think: America is a racist country. Wear a mask. Limit charter schools. Bees are fish (in California). “A drag queen for every school” (Michigan’s attorney general promises). ESG. CRT. DEI. I could go on. Meanwhile, Dontells are fed up with submission.

Elon Musk, who tweets about a “woke mind virus,” became a card-carrying Dontell in 2020 when California Gov. Gavin Newsom’s lockdowns closed his Tesla factories.

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WSJ: Lincoln, Douglas and Netflix

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https://www.wsj.com/articles/lincoln-douglas-and-netflix-streaming-social-media-tv-stories-plot-intelligence-attention-gold-fish-tiktok-11672427896

I just finished streaming the latest season of “The White Lotus.” And “House of the Dragon,” “The Peripheral,” “The Crown,” “Andor,” “The Rings of Power” and too many more. What a change from May 1961, when Newton Minow, chairman of the Federal Communications Commission, called television a “vast wasteland.” Or 1992, when Bruce Springsteen sang “57 Channels (and Nothin’ On).”

Many shows exist only because computer-generated imagery can create otherworldly landscapes and gravity-defying creatures. Like it or not, Silicon Valley owns Hollywood. Well, not literally, but clearly today’s Hollywood wouldn’t exist without Silicon Valley’s streaming technology and high-end graphics. As these two industries continue to merge, which will become more dominant driving society and culture?

I have to admit, I’m usually in the camp suggesting that Hollywood makes us dumber and technology makes us smarter. But now we are at Yogi Berra’s fork in the road. Sure, I have my beefs with Hollywood, with its preachy output and woke agendas. Most of the shows I mentioned above pushed back against toxic masculinity, the punching bag du jour. But increasingly I think streaming is making us smarter, while social media is bringing out the goldfish in us.

In the old days of 22-minute sitcoms, almost every episode had three intertwining plots. The A plot was the main one, “The One With Monica and Chandler’s Wedding,” while the B plot was often centered on another character, think “Kramer takes over Moviefone.” The C plot is often incidental, like Jim and Pam playing pranks on Dwight in “The Office.” This TV-writing formula was meant to please the lowest common denominator. These intertwining plots were why “Friends” had six main characters. You could pair up any two in any given plot. “Seinfeld” had four but often plugged in two other characters: Newman, Puddy or Jerry’s parents at Del Boca Vista. A-B-C! This defined the mostly mindless over-the-airwaves television. As the saying goes, television is 50 inches wide and barely an inch deep.

But with cable came more bandwidth and time available on premium networks such as HBO, so more characters could fit in each season. Shows could have long arcs and much more complexity. Think of how many twisty plots and characters filled “The Sopranos” and “The Wire.” This lengthened the attention span of viewers. Characters could be developed over years—such as Tony Soprano’s therapy sessions involving his mother. Try doing that in 22 minutes. Was it good for us? Author Steven Johnson suggested “Watching TV Makes You Smarter” in 2005 in the New York Times. I think he was right, and that was way before streaming.

Today we have infinite storage and massive bandwidth to deliver elaborate narratives that make you think.

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WSJ: Tech and the Wisdom of Crowds

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https://www.wsj.com/articles/tech-and-the-wisdom-of-crowds-guardian-missing-children-crime-elizabeth-smart-google-genes-11671383537

Are you ready for a good story about the internet, one that doesn’t mention Twitter’s reality-censoring cesspool of snark or twerking TikTokers? About the internet’s power to connect all of us instantly? I sure am.

I recently had a Zoom call with Elizabeth Smart—yes, that Elizabeth Smart, who in 2002 was abducted as a 14-year-old and held for nine months in Utah, a harrowing experience for her and her family. I once lost a son at Disneyland for three minutes and went out of my mind.

Ms. Smart not only is an advocate for missing children but is doing something about it. She told me 600,000 children go missing in the U.S. every year and that 98% of missing children are located within a few days. She noted that “after 48 hours, the chances of being found are almost zero, but obviously not zero in my case.”

Ms. Smart had good things to say about the Amber alerts posted on highway signs and blasted to cellphones, but pointed to their shortcomings. There is an age limit, and law enforcement needs a reasonable belief of imminent danger, so it is used rarely. Something else is needed. She connected with an Oregon-based tech company to help design and promote its Q5id Guardian app, which makes use of crowdsourcing. When a child is missing, the app sends out localized alerts to a network of volunteers, all verified to avoid potential predators on the system. “Remember,” she said, “I was found by everyday people paying attention, not law enforcement.”

The Guardian app launched in November. I asked Ms. Smart what makes her think it can be scaled to an effective size. “I believe in the goodness of people.” Amazing given her experience.

That goodness does exist. Wikipedia was enabled by digital crowdsourcing in 2001, but real-time volunteer networks started gaining traction in March 2014, when Malaysia Airlines Flight 370…

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WSJ: The Tech Censors Return

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https://www.wsj.com/articles/the-tech-censors-return-twitter-apple-app-store-elon-musk-tin-cook-free-speech-big-tech-files-laptop-iphone-11670773265

Do we need hall monitors? Last week Elon Musk released the “Twitter Files,” revealing that the company blocked anything it wanted related to the Hunter Biden laptop story—wrongly it turned out. I wrote a column in October 2020 on social-media bias that Twitter restricted for many users simply because I mentioned the ban and Ukrainian payoffs. In addition, Mr. Musk previously accused Apple of threatening to remove Twitter from its App Store after his company uncanceled Donald Trump and others. Apple CEO Tim Cook then walked Mr. Musk around the company’s spaceship headquarters in Cupertino, Calif., and assured him that “Apple never considered doing so.” Sunshine can be a pre-emptive disinfectant.

Apple could censor any time it wants. Its App Store, the only one on the iPhone, with fees that would make Tony Soprano blush, demands that apps “not include content that is offensive, insensitive, upsetting, intended to disgust, in exceptionally poor taste, or just plain creepy.” OK, that sounds creepy.

And Apple does censor. The social-media app Parler was suspended from the App Store for more than three months in 2021. A video app named Odysee also has issues. According to Tucker Carlson and Fox News, “Apple presented Odysee with a list of nearly two dozen search terms, most related to Covid, that it had to ban if it wanted to join the App Store.” I decided to see for myself. I downloaded Odysee and typed in “covid origin china.” Sure enough, a screen popped up warning me: “This search term is restricted for iOS users of Odysee.” I find it offensive that Apple can decide what is offensive.

Other companies are doing the same. The “China Uncensored” podcast notes that if you type “protests in Chi,” Google offers to autocomplete with Chile or Chicago, but not China. And in July 2021, Clarke Humphrey, a member of the Biden administration Covid-19 response team, wanted Facebook to remove an Anthony Fauci parody Instagram account. He emailed the company: “Any way we can get this pulled down? It is not actually one of ours.” The reply came in under 60 seconds: “Yep, on it!”

That’s right, the public square of social media is no longer in public, it sits partly inside a government building. Apple, Facebook, YouTube and Twitter are like nerdy grade-school hall monitors. That’s also creepy.

Doesn’t this all sound familiar? I typed “June 4, 1989” into Google and got “Tiananmen Square protests and massacre.” When I typed the same thing into China’s leading search engine, Baidu…

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WSJ: A Market Hype Cycle Winds Down

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https://www.wsj.com/articles/a-hype-cycle-winds-down-crypto-ftx-bankman-fried-musk-ipo-investors-hubris-greed-11670161728

Crypto exchange Coinbase went public in April 2021 and briefly traded at a $100 billion valuation. Its owners soon piled into real estate. Last December, CEO Brian Armstrong bought a $133 million Los Angeles estate, while his venture backers bought up swaths of Malibu. Post-IPO shares are usually locked up for six months, so assuming they all sold Coinbase shares, that was a smart move. Coinbase now is barely worth $10 billion.

I’m a huge fan of venture capitalists, who put risk capital from investors with long time horizons (like foundations and endowments) into companies that invent the future. Corporations usually don’t have the risk tolerance. I’ve invested venture capital. You really do have to think ahead of everyone else. But I’ve noticed that most of the returns from venture investing, mine included, came when everyone got too excited about future possibilities, deep into the hype cycle of new technology. That’s when the toxic cocktail of greed, stupidity and hubris takes over.

In 1983 an IPO boom emerged from the recession raising funds for Compaq and other computer companies. In 1995 Netscape investor John Doerr said, “It’s possible that the Internet in fact has been underhyped.” On its first day of trading that August, Netscape was valued higher than General Dynamics at nearly $3 billion (I know, how quaint). Dot-com mania took hold until early 2000. America Online milked the hype long enough to merge with Time Warner on Jan. 10, 2000, before spiraling down as reality set in.

Don’t get me wrong. The hype cycle is a great time to fund future technology. Electric-truck maker Rivian says the company is funded through 2025. Many great winners have emerged from a hype cycle—Compaq, Google, Amazon, Salesforce, Facebook. But many multiples of those winners try and fail. That’s OK, but overenthusiastic public investors almost always end up holding the bag stuffed with losers after venture capitalists sell or distribute unlocked shares to their limited partners at puffed-up prices.

The 2014-21 cloud-computing hype cycle, helped by near-zero interest rates, was a barn burner that lasted way too long. Some great companies went public: ServiceNow, Snowflake, Uber. But it also brought huge dreams of autonomous cars and electric vehicles, pumping Nikola and others and burning investors. Remember QuantumScape, funded by Bill Gates? With its vision for a better battery, it peaked at $114 in December 2020 and is now under $8. QuantumScape went public via a special-purpose acquisition company, taking advantage of quirky rules that almost ensure sponsors don’t lose money while making whatever future projections they want without investor lawsuits. A license to hype.

Social Capital’s Chamath Palihapitiya became known as the SPAC king after promoting and then burying investors in companies such as Clover Health, SoFi, Opendoor and Virgin Galactic, which are down 49% to 86% from their $10 offering price.

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WSJ: Crypto’s Final Price Could Be Zero

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https://www.wsj.com/articles/cryptos-final-price-could-be-zero-technology-debt-lbo-twitter-musk-bankman-fried-ftx-market-cap-coin-11669567022

There aren’t many leveraged buyouts of technology companies, and for good reason. Technology and debt, like Red Bull and milk, don’t mix. Why? Because when technology works, it commands high valuations. You can’t LBO Google. But when technology moves on to the next new thing, there isn’t much residual value in the form of assets and collateral to call on in case of debt defaults. FTX, Elon Musk and SoftBank are learning this lesson.

Twitter, which last turned a profit in 2019, now has $1 billion a year in debt payments. Wall Street can’t off-load Twitter’s buyout debt, now maybe 60 cents on the dollar, without losing money. Mr. Musk even told employees “bankruptcy isn’t out of the question.” Of course, he has benefited from selling his own highly valued (though declining) Tesla shares, recently another $4 billion for a total of more than $19 billion. As Chief Twit, Mr. Musk proclaims Twitter will operate under free-speech principles. Advertisers are fleeing. So are employees. If he defaults and walks away, the only thing left is some aging code and a few plastic blue birds to sell at auction.

The new poster child for the toxic cocktail of technology and debt is Sam Bankman-Fried, with his imploded FTX and Alameda empires. Sure, these companies misappropriated, to put it nicely, customers’ assets. And yes, withdrawals that acted like a bank run drove the company into Chapter 11. But the company’s original sin was to borrow against its own FTT token, which was held up by nothing but air.

This was crypto’s mass delusion. FTT was so thinly traded that FTX could set any price, but not forever. FTX and Alameda borrowed against tokens they themselves were manipulating, including Solana and others, which some called Sam Coins, now Scam Coins. The fatal conceit: They thought FTT would stay high forever, so they invested in often illiquid positions. FTX was even paying employees, vendors and whoever else would take it in FTT tokens, whose total market cap used to be almost $10 billion and is now about $400 million.

You can’t manipulate something forever. Reality eventually replaces delusion. All it took was someone to touch a pin to the bubble. After Coindesk leaked a copy of Alameda’s balance sheet loaded with FTT tokens, Binance CEO Changpeng Zhao started selling. FTT went from $22 to under $3 in 48 hours. So much for collateral. When the smoke clears, FTX/Alameda may have $8 billion to $15 billion in debt outstanding, with little to sell for repayment. It will take years to sort out who gets what.

Meanwhile, others also barreled in.

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WSJ: My Attempt at Tuning Out the World

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https://www.wsj.com/articles/my-attempt-at-tuning-out-the-world-wellness-retreat-meditation-thanksgiving-spa-emails-work-life-11668976792

Welcome to Thanksgiving week, which raises the question: How do you turn it all off? You know, thinking about work, the fire hose of newsfeeds, emails and texts, constantly solving the never-ending puzzle of a job. I’ve asked other columnists this question, on this page and others, and to a person they smiled and said, “You don’t!”

Things requiring complete focus work for me: Playing basketball. Building an electric car. Skiing. But you can’t do these things 24/7. Recently, coming off a family wedding, my wife suggested we go on a wellness retreat. Being a red-blooded American male, I said “absolutely not.” We went.

The whole place had that classic spa smell—a mixture of lavender, eucalyptus and mugwort (I asked). I was informed the cucumber water was available only until 4:45 p.m. Not a problem. Everything had a spiritual twist to it. I noticed some people carrying Chopra-branded tote bags. Appropriate because Deepak Chopra personally—well, at a conference with a few hundred people—tried to teach me how to meditate. It didn’t take.

I’ve always been envious—well, not envious, more in awe—of those who could detach from real life with only their thoughts and meditation. Maybe this place could do that for me, and for what they charge a night, it better.

I figured I would spend my time sitting in a hot tub and watching football, my kind of wellness. Little did I know that I was signed up for a host of activities. Sadly, I slept through the morning “Intentions Ceremony,” which promised mindfulness and neuroplasticity. I was already behind. I intentionally skipped “Intentions Burning.” No need, I’ve burned many bridges with bad intentions in my life already.

Instead, I was off to “Floating Guided Relaxation”—more my speed.

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WSJ: The Decline of Work

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https://www.wsj.com/articles/whats-work-worth-unions-profit-value-life-balance-human-capital-labor-foce-economy-manufacturing-11668268509

You hear these all the time now. “I want a career with a purpose,” which usually means an activist. Or “I need a good work-life balance,” which suggests someone doesn’t want to work very hard. Gimme a break. The CEO of a Fortune 500 company told me he recently spent an entire afternoon discussing his company’s pet-bereavement policy. He asked the human-resources folks, “Let me get this right, someone’s goldfish dies, and they get a week off from work?”

Work has become a dirty word. Cyber bohemians just want to dream and stream. And now this: The New York Times ran an opinion piece titled “How to Fight Back Against the Inhumanity of Modern Work.” What? Paper cuts are a bigger risk these days than losing an arm in a loom. Still, I thought the piece would be about dirty jobs—the hardships of coal miners, the plight of burnt-out nurses or the inhumanity of waking up at 5 a.m. to milk cows. Nope. The author complained about digital monitoring—coders, cashiers and others being tracked by evil bosses, who are measuring productivity. Gasp! Has society become that spoiled? Apparently so. The prevailing thinking is we’re all Lucy Ricardo and Ethel Mertz wrapping chocolates on a conveyor belt.

Only 8.4% of U.S. nonfarm payroll positions are in manufacturing. Many of those jobs were exported long ago to cheaper labor markets such as China. Even if some of those jobs return to the U.S., many workers aren’t qualified. Mike Rowe of “Dirty Jobs” fame said, “We are lending money we don’t have to kids who can’t pay it back to train them for jobs that no longer exist.” So they are underemployed. Or quit. Or seek purpose and balance.

We rightly encourage STEM jobs—science, technology, engineering and math. I recently learned of HEAL jobs. Dog walkers? No, jobs in health, education, administration and literacy. These are the growing jobs of a vibrant service economy.

It isn’t news that the U.S. is a service economy, yet too often the focus is on labor vs. capital, as if we still make widgets. Unions want to arm-wrestle value from capital and force higher wage payouts than is economically sound. This blatantly disregards human capital—what workers learn on the job is theirs to keep. We increase productivity and wealth by having workers figure out how to do more with less from the bottom up. So please stop paying people not to work. The best antipoverty program is a job because a job’s value comes from this increase in human capital. One-time payments are a waste.

I’ve written often that profits are a measure of the societal wealth created by corporations, and that the price paid for products and services is the minimum amount of value created.

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WSJ: FTX and Binance: Another Nail in the Crypto Coffin

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https://www.wsj.com/articles/crypto-coffin-ftx-sam-bankman-fried-market-exchange-loans-binance-bailout-token-alameda-deal-11668030037

Tuesday’s blowup of crypto exchange FTX—run by wunderkind Sam Bankman-Fried, who once boasted that he could spend $1 billion on the 2024 elections—was inevitable. My beef with the crypto market has always been that it is backed by nothing but air. At any moment, that support could disappear. For FTX it just did. FTX sister company, Alameda, had been making loans against billions in an FTX token known as FTT, which traded last fall near $80 with a value of over $9.5 billion. On Monday it was $22 amid concerns that a leaked balance sheet showed excess leverage. Now it’s hovering around $3. No wonder FTX has liquidity problems. The fall happens fast. FTX agreed to be acquired by rival exchange Binance, the world’s largest, though Binance indicated Wednesday the deal was off.

Only four months ago, Mr. Bankman-Fried said that the worst of the crypto crisis was over and that FTX had a few billion dollars to bail out failed crypto companies. I guess not. Binance could afford to buy FTX because Binance is backed by its own token, BNB, which was worth $106.5 billion last fall, though now is worth only $45 billion. Is that crypto’s last $45 billion for bailouts? Bubbles collapse when no one else buys in. Coinbase, whose stock is down almost 90% from its initial public offering, and other exchanges may not have the heft to bail out too many failed crypto ventures.

So what backs BNB? I’m not privy to Binance’s balance sheet or income statement—one of the reasons tokens should be classified as securities, so investors can know what they are holding—but my guess is that the Binance token is held up by the same magical forces as FTT, nothing.

It has been only six months since the “algorithmic stablecoin protocol” Terra, tied to the Luna coin, blew up. They were held up only by hype. Then one day the bellows stopped pumping. This wiped out $80 billion in value, whacking some hedge funds and lots of individuals, neither savvy enough to see the bubble.

The dollar and Treasurys are backed by the good faith of the U.S. government via its income-tax-generating ability. When stocks sell off, they eventually find a bottom so long as they are viable enterprises that can eventually make money. Real-estate loans are backed by the value of a home or building, but crypto has no backing.

And the heat is on.

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WSJ: The Cure? Cut Taxes and Spending

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https://www.wsj.com/articles/cut-taxes-spending-joe-biden-liz-truss-inflation-energy-costs-california-economy-manufacturing-recesesion-11667746085

A 45-day period will forever be known as a “Truss” for Liz Truss’s tenure before resigning as British prime minister, much as 11 days is a “Mooch” for Anthony Scaramucci’s short stint in the Trump administration. Come to think of it, a “Biden” is 208 days, the time from Inauguration Day until the fall of Kabul after the Afghanistan scram in August 2021. President Biden has been a bit of a lame duck ever since, and if polls are right, even more so after Tuesday’s elections.

I feel bad for Ms. Truss, but only because whoever was in that seat, like the passenger in James Bond’s Aston Martin DB5, was going to be ejected. Unknown to many, U.K. pension funds had been hedging against interest rate increases, using derivatives with six or seven times leverage. As inflation hit 10.1%, interest rates were going up no matter what, which caused funds to dump gilts, or bonds, to pay their margin calls, crushing the currency.

The press jumped on Ms. Truss’s tax cuts (lowered from 45% to 40% for £150,000 earners) but ignored her subsidies for high energy bills. It wasn’t tax cuts that did her in; it was deadly pension leverage. Both Reagan and Thatcher knew to slay the inflation dragon first. To stabilize the situation, the Bank of England printed tons of pounds to buy bonds—more quantitative easing in an inflationary world. Not smart.

The new prime minister Rishi Sunak, a Stanford M.B.A., is foolishly exploring tax increases. Sadly, tax cuts are probably dead in the U.K., maybe for a decade. Well, stick a fork in jolly old England. Mr. Sunak should listen to his predecessor Winston Churchill, who said: “We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”

The U.S. should heed that advice as well. Mr. Biden says “in our bones, we know democracy is at risk” but nevertheless he turbocharges spending—bucket handle lifting. The Biden administration is pro-union, a tax on consumers. It killed pipelines and energy exploration, raising energy costs. It has forgiven student loans, which means tuition is going up. Its Inflation Reduction Act is filled with green pork and healthcare tax credits. It set minimum corporate taxes of 15% for big corporations that will be passed along to consumers. And a 1% excise tax on stock buybacks. And 87,000 new IRS agents to shake down the American middle class. Democracy is fine; I’d say the economy is at risk.

Interest rates of 5% or higher should slay the inflation dragon, but then what?

Read the rest here.

WSJ: The Deadly ‘De-Growth’ Craze

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https://www.wsj.com/articles/growth-world-economic-forum-sustainability-poverty-investment-esg-climate-protectionist-trade-energy-11667077994

The modern world is constantly subjected to crackpot movements that eventually fail, but not before causing serious damage. Karl Marx was a crackpot. So was the John Birch Society in its mission to fight communism “behind every tree.” The latest is Modern Monetary Theory and unlimited dollar creation for government spending, which caused today’s runaway inflation.

In the 1970s, the Club of Rome insisted that for the world to be ecologically sound, we needed a “no-growth economy.” This was as dumb as the debunked Malthus theory that population growth would outstrip food. The disgraced Club of Rome thankfully went dormant. But it’s baaaack.

The new craze is “de-growth.” Proponents demand we “put well-being ahead of profit.” Normally, I’d say “Pfffft, ignore them,” but none other than the Davos dudes of the World Economic Forum are featuring arguments for de-growth. Weird because mostly growing global companies pay the WEF’s bills—tributes to the woke dons. The WEF’s website is filled with scholar-infested nonsense including a video asking, “What would a post-economic-growth world look like?”

It wouldn’t be pretty. Like Manta rays that must keep swimming or die (sharks too), societies that don’t grow eventually devolve into oppression, chaos, anarchy and then ruin. The Roman Empire. The Soviet Union. Venezuela. De-growth is living with less. Capitalism’s productivity is doing more with less. Big difference.

What would this mean for the U.S.? No growth means no investment for innovation. This leads to stagnation—freezing everything in place. Then comes command and control. Experts to allocate slices of a finite pie. Unions (see how they treat independent gig workers as meat to organize). True collectivism. Eventually “Lord of the Flies” chaos. The Fyre festival. Everyone for himself.

Growth is oxygen.

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WSJ: Make the Metaverse a Sandbox

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https://www.wsj.com/articles/metaverse-sandbox-innovators-tech-companies-meta-google-microsoft-tim-cook-apple-future-supernatural-ftc-facebook-11666548553

Apple CEO Tim Cook was asked recently about the dreaded green bubble—the one that appears when you send a message to someone without, gasp, an iPhone running the proprietary iMessage app. But it’s worse than that. His questioner added, “I can’t send my mom certain videos and she can’t send me certain videos and so . . .” Mr. Cook interrupted with a chuckle and said, “Buy your mom an iPhone.” Corporate hubris usually proceeds a downfall.

Interoperability can make or break technology, and much is still broken. Many Google apps don’t work well on an iPhone. Why? Apple wants you to use its apps, interoperability be damned. The iPad only recently added support for a mouse, but it’s not good enough for iPads to replace Mac computers and laptops. Why? To protect Apple’s $35 billion Mac business. Users suffer. Technology has a long history of ignoring interoperability. America Online ran its business like a walled garden. More hubris that didn’t end well. It even had two messaging services, AOL Instant Messenger and ICQ (I seek you), that couldn’t send messages to each other until 2003.

In 1990 a judge ruled that competitors infringed Lotus Development’s copyright on its 1-2-3 spreadsheet’s command structure and keystrokes. But it turns out that file formats can’t be copyrighted or patented, allowing Microsoft Excel to read and write Lotus 1-2-3 spreadsheets. This interoperability was a boon to users, though in the end not so good for Lotus, as the company didn’t innovate enough beyond spreadsheets. To protect its Windows operating system, Microsoft was slow to embrace internet protocols like TCP/IP and mobile standards such as Bluetooth and lost its edge in both.

Standards matter. Think of road widths, gasoline mixtures and lights that don’t blind opposing drivers. The 120/220 volt electricity divide was fixed via sensors that allow travelers to use their computer and phone chargers universally, although with different plugs. AA batteries were introduced in 1907, standardized in 1947, AAA in 1911 and 1969. Cellphone standards were another benefit to users and keep evolving—6G isn’t coming until 2030 or so.

Which brings me to the Metaverse, an awful moniker for the nascent three-dimensional online world where we will eventually work, learn and play. I’d prefer names like the Hive or the Vortex (franchising opportunities available). Whatever we call it, there are no real standards for avatars, clothing, motion, weapons, speech or architecture.

To figure this out, Facebook aka Meta announced the purchase of Within, maker of virtual-reality fitness app Supernatural. Almost immediately, the Federal Trade Commission fought the purchase.

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WSJ: Stocks Can Always Get Cheaper

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https://www.wsj.com/articles/stocks-can-always-get-cheaper-wall-street-investment-earnings-bargain-market-trends-losses-charges-recession-peloton-11665945285

Are stocks cheap yet? When I was a young Wall Street analyst visiting institutional investors in Boston, I sat in a money manager’s office noting his framed prints of horseback riders in red jackets on a fox hunt. He asked me what I thought about a particular tech stock. I walked him through my forecast for the company and said the stock was a buy. “Why?” he asked. I said, “Because the stock is cheap.”

Big mistake. He launched into a 10-minute tirade, screaming, “Who are you to know if a stock is cheap? Have you ever lived through a downturn?” He even told me my tie was too expensive before he threw me out of his office. Ah, the service business. But I never again said a stock was cheap and instead focused on fundamentals, emerging trends, expectations and market sentiment.

Cheap stocks can always get cheaper. Companies such as Peloton, Carvana and Robinhood are down 80% to 95% from their peaks. Buy the dip, right? Be careful—the biggest mistake is looking backward, not forward.

Later I worked as an investment banker until I found out you had to be nice to people. I discovered a graphics-software company with a $5 stock and $5 a share in cash. Intriguing. If they could turn around their business, it could be a bargain. I won’t ever say cheap! I kept an eye on it and visited a year later. Because of losses and restructuring charges, the company only had $4 a share in cash and, sure enough, the stock traded at $4. After another year, it had $3 a share in cash and the stock was worth $3. I stopped visiting. It eventually went out of business. No future, no upside.

Market bottoms form when everyone is negative. The International Monetary Fund says the world economy is headed for “stormy waters.” Ray Dalio, who founded the hedge fund Bridgewater Associates, thinks we’ll see five years of “negative or poor real returns.” JP Morgan CEO Jamie Dimon says stocks could fall another 20%. Is that negative enough? It’s a start, given that few said these words a year ago.

My sense is there is more ugly stuff coming.

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WSJ: Blame Lockdowns on Silicon Valley

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https://www.wsj.com/articles/blame-lockdowns-on-silicon-valley-technology-artificial-intelligence-safety-privacy-innovation-liberty-new-york-crispr-11665321090

Lockdowns were a huge policy mistake. I blame Silicon Valley. I know, I know, the real blame resides with ill-informed technocrats who instituted the draconian and non-Jeffersonian lockdowns: the Trump and Biden administrations, blue-state governors, the Centers for Disease Control and Prevention and the rest of the alphabet soup of head-nodding agencies. Yet policy makers implemented lockdowns only because they could—because Silicon Valley provided the tools to lock people in their homes without completely imploding the economy.

Think about it. You couldn’t force lockdowns without laptops, Zoom, Amazon deliveries, cloud computing, Slack, QR codes or Netflix. Without them, lockdowns would have lasted two, maybe three weeks tops before the utter destruction of the economy forced everyone back to the workplace. Instead, we took the Faucian bargain of technology-enabled yearlong lockdowns because it was doable. Silicon Valley’s tools became shackles.

Lockdowns came with huge costs: job losses, increased crime, stunted learning, delayed medical treatments, violent protests, government spending blowouts, supply-chain disruptions, inflation, mental-health issues—all avoidable. Like bad air days, I fear bad carbon days will soon invoke climate-emergency lockdowns to keep people from driving.

Technology giveth and technology taketh away. The latest example is the plan to install cameras on every New York City subway car to limit crime. Gov. Kathy Hochul said, “You think Big Brother is watching you on the subways? You’re absolutely right. That is our intent.” Privacy advocates, such as the New York Civil Liberties Union, are naturally up in arms. Its statement reads, “Living in a sweeping surveillance state shouldn’t be the price we pay to be safe.”

Smart cities are now possible. Surveillance cameras, congestion pricing, timed traffic lights, buses that actually show up on time, balanced electricity usage, it could be urban utopia. But I wonder when smart cities crash, will we turn them off and then back on again? China has already created smart cities and uses data as scoring inputs for its Social Credit System, which stifles freedom for its citizens. Tech giveth and taketh.

The National Traffic Safety Board last week recommended blood-alcohol monitoring for all new vehicles. Another invasion of privacy, although no word yet from the New York Civil Liberties Union.

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WSJ: Marxism at the Museum

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https://www.wsj.com/articles/marxism-at-the-museum-new-york-washington-capitalism-socialism-marx-smith-wealth-productivity-schwarzman-donors-11664712471

Polls show more than half of 18- to 24-year-olds in the U.S. have a negative view of capitalism. More than half have a positive view of socialism. I wonder where they got that.

I recently strolled through the New York Public Library’s “Treasures” exhibit, which would delight readers and writers alike: Charles Dickens’s writing desk, a manuscript delivered in a box from former newspaper columnist Mark Twain, draft cover art for Jack Kerouac’s novel “On the Road,” and an illustrated page from Tom Wolfe’s “The Bonfire of the Vanities” manuscript. Pretty cool stuff.

Ah look, a first edition of Adam Smith’s “The Wealth of Nations” from 1776—the free-market bible. I was in awe until I read the description: “Adam Smith believed, as did Karl Marx the following century, that national prosperity was best measured by a country’s labor power rather than by how much gold lay in its treasury.” I guess the description is technically correct, but Karl Marx? In the same breath as Adam Smith, who called free markets “the obvious and simple system of natural liberty”? Unlike Smith, Marx naively saw a static world without productivity, only labor exploitation. He completely missed that labor is more brain than brawn. Add exhibit curators to the list of socialist tub thumpers.

I wonder what Stephen Schwarzman, CEO of the rather capitalistic private-equity firm Blackstone and giver of $100 million to the New York Public Library, whose name is etched in stone outside, thinks about the Marxist agenda of the library’s curators.

Wouldn’t you know it, next to “The Wealth of Nations” was none other than manuscript notes for “Das Kapital” by Karl Marx with this description: “The work has exerted an immense and lasting influence on world events: over the past century, its ideas have not only maintained a secure place in the realm of economic and political theory, but also inspired anticapitalist revolutions across the globe.” OK, but it was a lasting negative influence. And of course there was no mention of the hundreds of millions of people impoverished and slaughtered by Marxist regimes.

The description goes on: “Karl Marx’s foundational account of capitalist production and its manifold effects on human lives still inspires argument, insight, and resistance.” Inspires?

Read the rest here.