Berman and Thiel on the Limits of Globalization: Week 2

This post covers Week 2. You can read Week 1 notes here.

Russell Berman and Peter Thiel are hosting a Stanford class on “Sovereignity and the Limits of Globalization and Technology”. Matt Clifford of Entrepreneur First is hosting a reading group where we discuss the syllabus. These are my notes.

Special thanks to everyone in the group for their thoughts and comments.

The organizing question this week was:

Would anybody ever have believed in in a single destiny for the whole world without first having believed in a single deity? Philosopher Karl Lowith’s Meaning in History gives an answer while it reviews all the ways the West has understood history’s meaning from the Bible to Kant and Marx.

To answer, we studied Meaning in History, a whirlwind tour of mainly Christian influenced explanations for how “the end of history” would look like. We also read the Tower of Babel and Babylon the Great, two excerpts from the Bible.

Why look for the End of History?

Establishing a definite end point for history is one way to figure out where society should move next. Marx catalogued the struggles of the working class and drew a pattern towards eventual elimination of class inequality. 20th Century Socialists readily incorporated his ideas to establish multiple communist states.

If we let ourselves assume humanity is progressing linearly towards some great outcome, identifying the pattern in the past could tell us exactly which policies to strengthen.

The Christian view

Karl Lovith argues essentially that most popular beliefs in linear progress can be attributed back to Christian universalism. Every human sins, but their right relationship to God will eventually be restored.

In the book's conclusion, he argues this is the case because the core of Christianity is under-determined, not because it contains a universal truth. He reveals that the further we go back in time, the less evidence there is that Christian ideas should be used to predict an end of history.

There is no pattern

The counter-argument introduced by Lovith is the idea that humans are natural pattern matchers, but history is merely a random walk. Whether it's uncertain due to the unknowable actions of God or sheer chance, the outcome would be the same.

Or is there?

Before abandoning the idea of a single path for humanity, I felt there is much more that falls well beyond the scope of Christianity. Three examples follow.

1) Complexity vs. Entropy

Big History teaches us that life proceeds as a series of Goldilocks moments where a new kind of complexity emerges. Christianity is built around the Goldilocks moment of creation of life, but today we know of many more. The Big Bang, the first stars, the first planets, the Industrial revolution among others.

The idea of increasing complexity in some small place in the Universe has to face the inevitable law of entropy, which predicts a rather different outcome - the eventual heat death of universe, a moment where no energy is transferred and nothing interesting can happen.

2) Liberty vs. Collaborative efficiency

Asimov predicts another struggle in the Foundation series. In the final books, the hero is presented with a dilemma - to choose between two futures for the universe: one where every living being is united in a single, connected, efficient organism or a future of ultimate individual liberty, exemplified by a planet where every single person occupies an equal plot of land, lives in isolation, mates by itself and produces genderless offspring.

This, of course, is a human view of the end of history. In Asimov's universe the robots have been destroyed since the “I, Robot” series (the Robot series precedes Foundation in the same universe). Ironically, Asimov's answer to this dilemma circles back to AI.

3) Mastering science

In the Three Body Problem, a book I reviewed last year, and the movie Interstellar, another end of history is presented. It's about developing an ever deeper understanding of science and reaching/transcending the limits of every known physical law and dimension.

What if we cannot agree?

If all that must increase is our understanding of universe and ability to develop technological innovations, what room is there for global governance? The Christian faith was instrumental in developing universal values in Europe, but what can we use to shape global consensus right now?

A minimal argument for some level of global governance does exist. Managing existential risk seems like a good starting point. Whether from the advances of AI, or from the increased leverage of individuals in manufacturing dangerous weapons of mass destruction.

Path-dependency

To circle back, Lovith does answer Berman and Thiel's question - we would not have gotten here without religious morals, but it's unclear how that should affect our thinking going forward. Can we move on from viral ideas like religion to a set of shared principles? If so, these principles cannot be Western. Liberalism, technology, progress, these are all Western-influenced ideas and cannot be our defaults; the right principles would exist at a higher level.

As a Mathematician, I'd prefer to look for the answer in game theory over the Bible.

Berman and Thiel on the Limits of Globalization: Week 1

Russell Berman and Peter Thiel are hosting a Stanford class on “Sovereignity and the Limits of Globalization and Technology”. Matt Clifford of Entrepreneur First is hosting a reading group where we discuss the syllabus. These are my notes.

Special thanks to Will, Matt, Alvin, Tom, Will and Daniel whose reflections I'm summarizing here and to Jenny Brennan who shared the links.

In the first week, we read “The End of History?”, an essay by Francis Fukuyama predicting the inevitable victory of Western liberal democracy as the best way to run a country, “Has The West Lost It?” a short book by Kishore Mahbubani describing how the West failed to play its pocket Aces and what it can still do to rise. Stephen R. Platt's “How Britain's First Mission to China Went Wrong” followed, detailing a failed British diplomatic trip to China during the time of the Opium Wars. Finally, Norman Angell's “The Great Illusion” taught us how attacking other countries for territory cannot, at this time in history, increase the wealth of the attacker.

Why this is important to study

There are several questions we as a group were interested in:

  • How does Peter Thiel answer these themes and relate them to investing?

  • Does liberal democracy still work? Is it preferable?

  • Is globalization helpful? What should the strategy of the West be?

  • Is technology to blame and what can it do to help?

Bias

The group was strongly left-leaning and capitalist with positive attitudes towards technology, entrepreneurship and personal choice.

My goal is not to present all the different angles in which the books were right or wrong, I will leave that to political analysts. I'm trying to synthesize a simpler framework in which the texts fit.

Western Liberal Democracy has worked really well

After the end of the Cold War, the Western countries had won. Their citizens were proud and residents flocked in to experience growth and success.

For the capitalist, liberal democracies offer a safe haven to take risks with strong rule of law and clear and predictable taxation. These principles favor wealthy elites, but tend to work well for everyone in times of high productivity growth when there are returns to share.

The common interpretation of Fukuyama was that this triumph is a direct byproduct of the Western liberal democracy, or at least that this dominant position can somehow be used to “convert” the remaining world powers.

In fact the victories stemmed more from the West's timely scientific and technological advances. Other countries did well not to import Western liberal democracy, instead focusing on importing technology.

But when productivity growth falls low, democracy fails to deliver

UK's recent productivity slump reflects the tensions in the economy which have led it to shoot itself in the foot. When the pie gets smaller, we focus on how it's allocated. Brexit hopes were all about dividing that pie better: less for Europe, more for the NHS; less for EU immigrants, more for the British worker; less for the globetrotting cosmopolitans, more for UK lifers.

When globalization goes unchecked, democracy fails to deliver

Much like ahead of the Opium Wars, the West is experiencing a trade deficit with China. A failure to reallocate steel industry workers among other groups has led to systemic unemployment despite increasing overall prosperity. Does this call for better management of globalization? Or a complete reversal?

And when money is thrown away “governing the world”, democracy fails to deliver

Mahbubani's critique of the US was that it misused its role as the economic leader to attempt moral leadership of the world. This had grave consequences not only in stirring religious movements and setting a bad precedent for future leaders, but significant economic opportunity cost.

Trump

For extra credit, see if you can link Trump's campaign thesis with the above 3 points. There is already a strong self-awareness of these issues in American politics albeit with a weak understanding of how to fix them.

A new model

The West has watched with admiration how a number of different Asian models have succeeded. At their core - an emphasis on prosperity, “good governance” and *predictable Rule of Law. Create lots of wealth, distribute it well and don't obsess too much about freedoms or rotating representative government.

(*Predictable Rule of Law is my loose description of a legal system where there is always a way to make space for your commercial activities. In Switzerland, you can choose the right Canton. In China, you have guanxi)

The risk of ignoring prosperity

The path for the West seems to call for following these models a little more: stepping back on global affairs, refocusing on technology and productivity growth, improving distribution of wealth while retaining the freedoms and values that are core to Western society (Mahbubani).

Countries that fail to achieve prosperity, have to gamble for far more extreme outcomes. Russia has not been able to match the controlled economic success of China, nor inspire a generation of entrepreneurs like Western liberal democracies. Its last hope is to pray for a Goldilocks moment in AI military development that could let it shine once more on the world stage.

Democracy still works

As China is stepping on to the world stage, it's inevitably trying to shift from a copy model to foster organic technological innovation. It remains to be seen if its current approach can sufficiently inspire Western-educated Chinese entrepreneurs to bet their chips on a country where their wealth may be at risk.

In this important sense, the Singaporean model feels more sustainable.

But we also need to reject the notion that democracy has somehow failed. Even the calls for Brexit and Trump reflect the informational uncertainty we have about different outcomes and could be long-term net positive as shocks to the system.

My hypothesis here - that democracy is facing a crisis in decision-making. The move from print to digital has shifted the media's ability to give the public what they want. In analogy to the US fast food crisis, by giving us news that we want in order to remain profitable, publications have given up their crucial role in informing the public about political outcomes. Not a single economic model of Brexit implications was widely explored and the markets came to a very different conclusion than the voting crowds. That doesn't feel right.

We touched on many other topics like loyalty, military action, size of the ideal state that I will expand on in the coming weeks.

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