Bjoern Gehrmann

One question that I haven’t seen explored is mechanism design for two sided negotiations. Isn’t there a tidy way to repurpose auction theory? Like: both sides submit sealed bids to Pakistan repeatedly until we have a solution?

War is — ‘a form of communication’ (Putin) — a dynamic asymmetric information game whereby two sides pay in risk and pain to extract private information from the enemy (Schelling) — a historical process that is at once irreversible and has unforeseen consequences no one foretold (Kolko) — a technical process whereby the means of destruction are unleashed by the strong against the weak (Sherry) — a paradoxical clash of opposed wills (Luttwak) — determined ‘from below, by those who are afraid’ (Foucault) What is the response function of the peasant?

POLITICAL BILLIONAIRES The clip below is a good encapsulation of what modern China is by Eric X. Li, who’s one of the most thoughtful Chinese nationalists. I appreciate his description, because the Internet is the exact opposite. Because on the Internet, capital (in the form of Bitcoin, and more generally smart contracts) really does stand above any given state. The negative way of framing this emerging reality is that Internet capitalists are now above national governments. The positive way of framing it is: anyone can become an Internet capitalist, and there is now truly global rule-of-code that no state can easily abrogate. Moreover, individuals can’t have their digital rights revoked even by powerful states. As for whether it’s bad if “billionaires” have influence over the government…the reality is that political leaders control many billions in assets. For example, a city like SF with ~$16B in annual budget and 11 supervisors plus a mayor essentially has 12 political billionaires. Each of these political billionaires allocates $1B+ per year in cash, on average. This is orders of magnitude more than a typical tech billionaire allocates. That’s because tech billionaires might have $1B in net worth but perhaps only $10-50M liquid. So: market billionaires actually have far less in the way of financial resources than political billionaires. A market billionaire might allocate perhaps $100M over the course of their lifetime, whereas a political billionaire will allocate $1B+ in a single year. This is a >100X differential. Now, yes, it’s true that political billionaires have less for personal consumption than market billionaires do, but that is (almost by definition) societally unimportant. A political billionaire spending a billion on government worker salaries does a lot more to steer the world than a pair of fancy shoes. One might also argue that political budgets are less discretionary than market budgets, and I’d agree, but the sheer scale of public budgets makes up for it. Even if only 1% of a $16B city budget is discretionary, that’s $160M in discretionary cash per year. Anyway, the point is that anyone in control of a giant public budget is already in full billionaire mode. They are allocating billions in capital, so they are political billionaires. You are going to have billionaire-run government in this sense no matter what.

The bond market, at least parts of it, still pay attention to the balance of payments "Milei remains unable to tap international dollar markets. One reason investors ... is [Argentina's] failure to rebuild its foreign currency reserves." 1/

Services vs goods is not the issue. The issue is tradables vs non-tradables. The former is exposed to the rigors of the global market and accounts for virtually all productivity growth. Competition is an order of magnitude less intense in non-tradables and productivity growth is close to non-existent. The most successful and dynamic countries are those that dominate high value-added tradables. Countries that specialize in low value-added tradables—esp commodities—are at the receiving end of the international division of labor. What you want is not manufacturing so much as a niche at the top of the ladder of the international division of labor in the production of tradables. This is hard. There are no shortcuts. You have to compete with the world’s best. You have to climb the ladder one step at a time. Industrial policy and good governance helps. But ultimately it comes down to human capital and general institutional competence. My advice to all developmentalists world wide is to front-load investments in human capital, build efficient institutions, and gain as much exposure to the world market as possible. Everything else is second order and will fall in place if you stay disciplined and keep your shit together.

Strongly disagree. (1) The actual reform would be to make IPOs easier, by essentially eliminating Sarbox. And we'll actually get that reform... but only via crypto, because all companies will become cryptoequities. However, that means they'll list on Internet capital markets and crypto exchanges, rather than NYSE/NASDAQ. (2) See how the number of US public companies has crashed since the early 2000s? Then, ten years later, the number of Internet coins started soaring. The big picture is that we're just sunsetting US capital markets in favor of Internet capital markets. (3) Now, let's talk about why random government interference with voluntary capitalist transactions is so bad. (a) First, bigcos (invisibly) reduce already rare M&A activity, because they need to budget for a global fight with regulators just to get a deal done. (b) Next, bigcos are forced into baroque deal structures, like the recent Character, Scale, Inflection, Adept, Covariant, and Windsurf deals, which can cause drama for everyone. (c) And, bigcos are forced to fight to the death with startups rather than surrender to them by acquiring them. In practice this often means political skullduggery. (d) Finally, bigcos put far less of their profits into exits, which in turns results in less money for tech startups. After all, a big M&A is a big surrender for a bigco, as they'd prefer not to capitulate to a startup by buying them. So: that means less M&A, more complexity, more politics, and less money. That's like every dysfunctional socialist country, where businesses need to use political connections simply to get a deal done. To be clear: of course I understand the hostility towards Big Tech, which did after all censor millions. But regulations in general strengthen bigcos by making it so complex and expensive to do things that startups can't compete (or, in this case, get acquired). Finally: the Elizabeth Warren/Lina Khan faction of statists generally haven't founded businesses and certainly don't want to advance technology. Their actual policy goal was to kill tech and stop us from getting to Mars. Sometimes they're explicit about it; see poster below. The only edit you'd make is that they were building an anti-tech army, and that army was (for now) defeated on the battlefield of ideas.

Never in the last 20 years has there ever been such a massive divergence in long-term real interest rates between the US (blue) and Euro zone (black). Markets price continued stagnation in the Euro zone versus continued growth outperformance in the US. I think that's right...