“There is only one way of thinking that is capable of making progress, or of surviving in the long run, and that is the way of seeking good explanations through creativity and criticism.” –David Deutsch, The Beginning of Infinity
MEDIA
The truth about financial innovation - Silicon Valley Examined 29
In this episode of Silicon Valley Examined, Robert Hendershott and Yaron Brook discuss the state of finance, where we're seeing innovation and where we're not, and what to expect in the future.
INSIGHT
Nothing is more dangerous than sacrificing progress to safety
Robert Hendershott and Don Watkins
Nuclear power is experiencing something of a renaissance: Commonwealth Fusion recently raised $1.8b. But safer, smaller, more versatile fission technologies are getting increasing pushback despite being far closer to real-world application than fusion.
Opponents of new fission technologies claim that despite nuclear fission having been around for a long time, it remains unsafe and expensive. Why make bets on a technology that has come up short for 70 years?
While this superficially sounds right, it misses a critical point about progress. Progress and innovation are not inevitable. They don’t happen because time passes; they require ingenuity and learning. Both have been missing from the nuclear industry, stymied in the name of safety.
Set aside whether the concerns over nuclear’s safety are justified. What’s crucial is that the source of improving safety (and performance) are ingenuity and learning. If you can’t innovate because you are not safe (or are perceived that way), then you end up unsafe because you are not innovating. The nuclear industry has been caught in a catch-22 for 70 years, stuck with designs from the 50s and 60s.
Think about that for a minute. In the 50s and 60s plane crashes were regular tragedies. In 2022 it has been almost two decades since there has been a fatal airline crash in the United States.
Technological progress comes from novel breakthroughs followed by a long cycle learning and innovation-driven improvement. The Wright brothers build the first “plane” which flies for 12 seconds. Orville Wright almost dies in the first fatal crash five years later. A century of steady innovation later we have safe, reliable jumbo jets that cruise 10,000 miles at close to 600 miles/hour.
Industries that embody Ingenuism—that experiment, learn, and innovate—flourish. Industries that keep doing things the same way stagnate and eventually disappoint. Not just nuclear (we’re looking at you, education).
In the 50s and 60s cars were expected to break down and typically had a useful life of less than 100,000 miles. In 2022 you can buy a Toyota reasonably expecting it to break down zero times over 20 years and 300,000 miles. Innovation improves safety (and performance)…if you let it. By what logic can we deny that the same is possible for nuclear technologies? No logic at all.
Imagine a world where instead of being frozen for over 50 years, nuclear technology has followed the long cycle of learning and innovation. There are Toyota-level nuclear reactors, extraordinarily safe and reliable. One-third the cost of the obsolete designs from 60 years ago. A combination of nuclear and other energy sources provide abundant, inexpensive power to the entire planet. A billion people who today live in extreme poverty are thriving.
Fantasy? No. As cars and planes show, complex systems have the most potential upside from long-term incremental improvement. But if you don’t give novel technologies the chance to evolve and improve, you might as well not invent them in the first place. We missed this lesson in the early years of nuclear technology. Let’s not make the same mistake with new (and old) technologies.
QUICK TAKES
The bad thing about good advice
The other day I was listening to Lex Fridman’s interview with combat sports legends Georges St-Pierre, John Danaher, and Gordon Ryan. John made the really valuable point that, if you want to succeed in combat sports, you can’t do what everyone else is doing.
You can’t go through life doing the same things as everybody else and expecting to get different results. . . . In order to be special, you’re going to have to exhibit skills that other people simply don’t have.
This is true in any competitive setting…including startups. And this leads to an enormous challenge for founders: most advice amounts to “do what everyone else is doing.” Here’s Andrew Chen:
The problem with giving and taking so much of the same advice is that ultimately it breeds conformity, which is another way if saying it reduces the variance in the outcome. And if you conform enough, you end up creating the average outcome.
He then quotes Naval Ravikant:
The average outcome for entrepreneurs is, your startup fails.
Not exactly the outcome founders are striving for. But paradoxically, it’s this process of discovering knowledge and sharing it that makes Silicon Valley work.
The funny thing with all of this, of course, is that this is what innovation looks like. The remarkable ability for practical knowledge to disseminate amongst the Bay Area tech community is what makes it so strong. Before something becomes autopilot advice for a wide variety of people, often a small number of hard-working teams who know what they’re doing leverage it to great success. Follow those people, and you might find yourself successful – just like them.
To put this in Ingenuist terms: connection allows good ideas to proliferate, but it takes exploration to discover where those ideas will be useful and where they won’t. The big winners will be those who implement useful ideas while those ideas are still unknown or unpopular. Once an idea has achieved popularity, you’re probably better exploring in other directions.
The morality of progress
Last week I pointed to Jason Crawford’s essay on the progress movement’s need for a philosophy. Well, you can help contribute to that philosophy. Jason is organizing a workshop in March on the moral foundations of progress studies.
The goal of this workshop is to reach a consensus on what major moral/ethical questions are at the foundations of a study of progress, and what broad answers to these questions have been proposed. A few designated attendees will take notes and draft a short article afterwards summarizing the discussion.
Looking forward to reading about what ideas emerge.
The end of pregnancy?
Noah Smith talks about a recent Twitter debate over the desirability of artificial wombs and makes the interesting point that a lot of the opposition comes from the sheer fact that this is a really weird idea. And yet almost every innovation is weird in the sense that “it changes the fundamental shape of human life.”
Noah points out many once-common experiences that are now absurdly rare, including getting lost, losing touch with people, getting chicken pox, and not being able to get porn (hey, we don't make the news, we just report it).
That doesn’t mean that every change is for the better. But what it does mean is that changes in the way people live per se—even radical ones—shouldn’t be grounds for opposing innovation.
Quantum leap into the abyss
I divide techno-optimists into two groups: those who have generalized confidence in our ability to make progress (under the right conditions), and those who have confidence in specific, unproven technologies. Call them general optimists and narrow optimists.
Narrow optimism is important! If it weren’t for a tiny number of mRNA optimists willing to devote year and years to a venture most people thought was hopeless, we wouldn’t have today’s COVID vaccines.
But narrow optimism’s track record is not great—at least not compared to general optimism. Think of the nuclear fusion optimists and AI optimists. So it’s good to think about what will happen if the narrow optimists are wrong.
So, not to be a wet blanket, but here’s an assessment of quantum computing that examines the possibility “that the technical challenges will prevent technologists from ever realizing the elusive promise of quantum computing,” which the authors assess as “likely.”
Hard to excerpt, but the basic idea is that we’re likely going to sink money into the field at the expense of more promising fields, and that when the bubble bursts it will set back aspects of quantum computing that are actually promising (essentially what happened in AI and nuclear).
My takeaway is a question: given the reality that many potential technologies follow this pattern, what is the best way to manage the downside?
Back to the futures
James Pethokoukis paid a visit to the Smithsonian Institution’s new exhibit “Futures.” But with a couple of exceptions, Futures appears to be stuck in the past:
Most exhibits seem to be about sustainability: a display showing how washing machines could be used to create a “closed wastewater system” for growing a garden of wetland plants; a biodegradable wall of bricks made from mycelium — mushroom fibers, basically; one of the 32 solar panels that President Jimmy Carter had installed on the White House roof in 1979, later removed during the Reagan administration.
It’s strange, then, that the Smithsonian would name the exhibition “Futures,” plural, when it shows just one vision of the future as possible and desirable. It’s a vision about “sustainable cycles, rather than endless growth” — a concept firmly rooted in the eco-pessimist 1970s.
This is…disappointing. As James points out, what’s really exciting about the future is not our ability to cope with scarcity, but the potential for abundance.
Until next time,
Don Watkins
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