Rajesh Jain

Thomas Sowell: “Politics is the art of finding clever reasons for doing dumb things.” [via CafeHayek]

Anticipating the Unintended: “Truth is a contested notion in today’s world. Maybe it has always been. But there’s something clarifying about a conspiracy theory that no truth can match. It is not the conspiracy itself. That often crumbles under the lightest of burden of logic applied to it. The real deal is what prompts the need for the conspiracy. It stems from the irreconcilability of an often irrational belief that many hold with the reality of the world around them. The greater the chasm between the two, the weirder the conspiracy theory. And it is this chasm, this flight from reality, that a conspiracy theory is born to serve. By denying the facts that are around you and leaning on your own right to have an opinion, conspiracy theorists make it easier for you to dismiss inconvenient facts as mere opinions. Once you have painted facts as fabrications of another mind, you get the permission to have your own facts. That’s how conspiracy theory works.”

Shane Parrish: “Iatrogenics is when a treatment causes more harm than benefit…The key lesson here is that if we are to intervene, we need a solid idea of not only the benefits of our interventions but also the harm we may cause—the second and subsequent order consequences. Otherwise, how will we know when, despite our best intentions, we cause more harm than we do good?”

Economist: “The grandfathers of modern philanthropy are American industrialists like Andrew Carnegie, Henry Ford and John D. Rockefeller. Such men gave the bulk of their money late in their lives. They created foundations that would outlive them, employed highly qualified advisers, and were prepared to dish out funds for decades to achieve their goals. That model was tweaked at the turn of the millennium. Businessmen and venture capitalists began thinking about charitable donations like hard-nosed investments. Recipients were ranked by which offered the most charitable bang for each buck. The impact of every dollar was measured, and, if a project failed to deliver its expected “social return”, funding was cut…To the newer generation of philanthropists, raised in a business culture that prizes getting to market and scaling quickly over cautious planning, all this appears unbearably stodgy.”

Atanu Dey: “If the relaxing of rules and regulations good for special economic zones (SEZs), why is it not good for the whole economy? Why isn’t the whole economy an SEZ? The answer is that those who make the rules stand to gain from the rules they make. They make rules that benefit them but are not concerned with the costs that those rules impose on the rest. This claim is not quantum mechanics. The bureaucrats and the politicians they advise are self-interested, just like everyone else. They would impose rules that benefit them, say, $1 million even if those rules impose a cost of $1 billion on the economy. It’s not that complicated when the benefits are concentrated (on a few bureaucrats and politicians) and the costs are dispersed on millions of citizens who are not only uninformed but are too busy with their lives to take action. SEZs are good in that they create wealth and therefore special. Why isn’t the whole economy “special” in that sense? Because the politicians and bureaucrats have a lot to lose if the whole nation becomes as SEZ.”

Cory Doctorow: “Here is how platforms die: First, they are good to their users; then they abuse their users to make things better for their business customers; finally, they abuse those business customers to claw back all the value for themselves. Then, they die. I call this enshittification, and it is a seemingly inevitable consequence arising from the combination of the ease of changing how a platform allocates value, combined with the nature of a “two-sided market,” where a platform sits between buyers and sellers, hold each hostage to the other, raking off an ever-larger share of the value that passes between them…Surpluses are first directed to users; then, once they’re locked in, surpluses go to suppliers; then once they’re locked in, the surplus is handed to shareholders and the platform becomes a useless pile of shit. From mobile app stores to Steam, from Facebook to Twitter, this is the enshittification lifecycle.”

Meritech Capital: “In 2021, private companies were raising at 100x ARR and best-in-class public companies were trading close to 100x NTM (next-twelve-months) revenue. Today’s world couldn’t be more different. Typically, at the beginning of a year we do a post summarizing the characteristics of the past year’s IPOs in an attempt to understand “what it takes to go public”. Because there were zero high-growth SaaS IPOs in 2022 we’ve decided instead to benchmark the high-growth SaaS companies that currently trade at the highest ARR multiples. Our aim is to help CEOs and management teams understand what it takes to earn a premium multiple in the public markets.”

NYTimes: “Advancements in digital advertising technology were meant to improve users’ experience. People interested in shoes are intended to get ads for sneakers and loafers, and not repeated pitches for courses teaching seduction techniques. And the technology is supposed to filter out misleading or dangerous pitches. But lately, on several platforms, the opposite seems to be happening for a variety of reasons, including a slowdown in the overall digital ad market. As numerous deep-pocketed marketers have pulled back, and the softer market has led several digital platforms to lower their ad pricing, opportunities have opened up for less exacting advertisers. “Anytime you lower the barrier to entry, you’re going to get lower-quality entrants,” said Jessica Fong, an assistant marketing professor at the Ross School of Business at the University of Michigan.”

WSJ: “Generative AI in all its forms will insinuate technology more deeply into the way we live and work than it already is—not just answering our questions but writing our memos and speeches or even producing poetry and art. And because of the financial, intellectual and computational resources needed to develop and run the technology are so enormous, the companies that control these AI systems will be the largest, richest companies…Based on the runaway success of the ChatGPT AI—perhaps the fastest service to reach 100 million users in history, according to a recent UBS report—it’s clear that being an aggressive first mover in this space could matter a great deal. It’s also clear that being a successful first-mover in this space will require the kinds of resources that only the biggest tech companies can muster.”

Fortune has the inside story on ChatGPT: “There have been chatbots before. But not like this. ChatGPT can hold long, fluid dialogues, answer questions, and compose almost any kind of written material a person requests, including business plans, advertising campaigns, poems, jokes, computer code, and movie screenplays. It’s far from perfect: The results are not always accurate; it can’t cite the sources of its information; it has almost no knowledge of anything that happened after 2021. And what it delivers—while often smooth enough to pass muster in a high school class or even a college course—is rarely as polished as what a human expert could produce. On the other hand, ChatGPT produces this content in about a second—often with little to no specific knowledge on the user’s part—and a lot of what it spits out isn’t half bad. Within five days of its release, more than 1 million people had played with ChatGPT, a milestone Facebook took 10 months to hit.” Technology Review has the backstory: “OpenAI’s breakout hit did not come out of nowhere. The chatbot is the most polished iteration to date in a line of large language models going back years.”

Atanu Dey: “I am sure most of us (in the US, India and elsewhere) are keenly aware that politicians are the ruling class and the citizens are second-class people. Especially in India, politicians inherited the privileges that the colonial rulers of British India had given themselves. Free palatial housing, free first class travel, free security, free everything, including life-time pensions are a burden on a deeply impoverished population. What hurts the most, in the case of India, is that the reason the people are pathetically poor is precisely because of the corrupt, blood-suckers that the majority of the politicians are. Knowing that the people actually elect the politicians is cold comfort for those who understand the injustice built into the system. The set of rules that Indians chose and abide by is what keeps them poor and underdeveloped.”

Dylan Patel: “First off, let’s define the parameters of the search market. Our sources indicate that Google runs ~320,000 search queries per second. Compare this to Google’s Search business segment, which saw revenue of $162.45 billion in 2022, and you get to an average revenue per query of 1.61 cents. From here, Google has to pay for a tremendous amount of overhead from compute and networking for searches, advertising, web crawling, model development, employees, etc. A noteworthy line item in Google’s cost structure is that they paid in the neighborhood of ~$20B to be the default search engine on Apple’s products. Google’s Services business unit has an operating margin of 34.15%. If we allocate the COGS/operating expense per query, you arrive at the cost of 1.06 cents per search query, generating 1.61 cents of revenue. This means that a search query with an LLM has to be significantly less than <0.5 cents per query, or the search business would become tremendously unprofitable for Google…If the ChatGPT model were ham-fisted into Google’s existing search businesses, the impact would be devastating. There would be a $36 Billion reduction in operating income. This is $36 Billion of LLM inference costs.”

Richard Waters: “The internet was meant to be a free-for all where all views would flourish. The trouble is, markets like social media and internet search are more like the old world of broadcast TV; there are really only a couple of real alternatives. For decades, the US had something called the “fairness doctrine” to force broadcasters to maintain balance. No one wants anything like that for the internet. Competition is the only answer.”

Michael Robinson: “The SaaS recession is here and it’s time to optimize with decisive action…Tech markets have experienced a paradigm shift, swinging from 2021’s record-setting funding activity at sky high valuations to a sharp market correction in 2022. Growth at all costs has been replaced by a return to SaaS fundamentals: revenue durability, growth efficiency, and healthy unit economics…[Here are] eight initiatives to increase efficiency in an economic downturn.”

Dan NcQuillan: “Large language models (LLMs) like the GPT family learn the statistical structure of language by optimising their ability to predict missing words in sentences (as in ‘The cat sat on the [BLANK]’). Despite the impressive technical ju-jitsu of transformer models and the billions of parameters they learn, it’s still a computational guessing game. ChatGPT is, in technical terms, a ‘bullshit generator’. If a generated sentence makes sense to you, the reader, it means the mathematical model has made sufficiently good guess to pass your sense-making filter. The language model has no idea what it’s talking about because it has no idea about anything at all. It’s more of a bullshitter than the most egregious egoist you’ll ever meet, producing baseless assertions with unfailing confidence because that’s what it’s designed to do. It’s a bonus for the parent corporation when journalists and academics respond by generating acres of breathless coverage, which works as PR even when expressing concerns about the end of human creativity.”

NYTimes: “When we talk about optimism, it’s often easy to oversimplify it as having a relentlessly upbeat outlook. Optimists, we imagine, spend their time gazing at the bright side of life through rose-colored glasses, sipping glasses half-full of good cheer. But the science suggests that optimism is best understood not as an unchanging attitude but as a pattern of responses — which taken together dictate how we view our prospects. Being optimistic is more complicated than blithely thinking, “Everything will turn out fine.” Optimism and pessimism, it turns out, are all about the stories we tell ourselves after both our successes and our failures.”

Art Carden: “Public choice theory—the economic theory of politics, or a body of work that analyzes political decision-making with the same tools we use to study market decision-making—has been derided as cynical if not outright immoral. Such criticism sells it short, though, and it fails to recognize the subtlety of public choice assumptions and analysis. Anyone can tell a story about how things would be better if people were not fools or knaves. What makes public choice interesting, however, is that it does not rely on assumptions of foolishness or knavery to arrive at its conclusions. It only needs to posit that people respond to incentives. The rest, as the Talmudic scholar Hillel might say, is commentary.”

FT: “We should think of honour as a way of making sure we are behaving in a way that is worthy of respect, rather than as a value system in itself. “The psychology of honour attaches itself to all sorts of values, and sometimes those values are good, and sometimes they’re not,” [Kwame Anthony] Appiah says. But on the whole, “when you have a culture where people want to do the right thing because it’s worthy of respect, people will behave better”…Behaving honourably means doing the right thing even — or especially — when we will not personally gain from it. A society with this approach would surely be a better one. We need to learn to honour honour again.”

Gulzar [1 2]: “I believe that the biggest challenge for India in the years ahead is to manage the quality of its economic growth and create jobs to absorb its youthful population…It’s on jobs that the structural transformation pathway is important. Specifically the nature and quality of the structural transformation….[India] needs to spread industrialisation and productive economic activity beyond the current few urban cores to cover the hinterland areas. At least some of its currently numerous sub-optimally productive urban centres (largely parasitic economies dependent on government activities, like many state capital cities are) should embrace productive industrial activities, especially of the labour intensive kind…The country needs to geographically spread out its industrial base to ensure broad-based economic growth. This requires industrial policies that promotes large anchor industries which can provide the basis for knowledge spill-overs and eco-system development; labour intensive manufacturing sectors like textiles, footwear, toys etc; agriculture secondary and tertiary processing etc. Equally, if not more importantly, it needs to address the poor quality of its public services especially in health and education.”

FT: “There are basically two investment models in venture capital. The first is the Greater Value Theory model, where a VC invests in a start-up that is able to create value through sustainable high-growth, and hence can IPO or exit through acquisition during good times or bad. The second is the Greater Fool Theory model, where a VC invests in a loss-hungry company that is able to, through a certain amount of hand-waving, convince retail investors, bigger investment firms or large corporations to facilitate an exit through IPO or acquisition. The problem with the Greater Value Theory model is that it’s actually really hard to find and invest in high-growth start-ups that generate durable and outsized returns. The problem with the Greater Fool Theory model is that the off-ramps (retail investors and large companies) are closing.”

Ruchir Sharma: “Since early 1998 [when it was ground zero of the Asian financial crisis], Thailand has faded on the global radar but the baht has proved uncommonly resilient, holding its value against the dollar better than any other emerging world currency and better than all but the Swiss Franc in the developed world…Thailand has achieved financial stability despite constant political upheaval, including four new constitutions in the last 25 years. By overcoming challenges the Swiss franc never faced, the Thai baht has sealed its unlikely claim to be the world’s most resilient currency — and a case study in the upsides of economic orthodoxy.

Julian Simon: “The quantity of a natural resource that might be available to us – and even more important the quantity of the services that can eventually be rendered to us by that natural resource – can never be known even in principle, just as the number of points in a one-inch line can never be counted even in principle.” [via CafeHayek]

Eugenia Cheng: “There is a whole branch of mathematics devoted to attempting accurate calculations just by folding paper—that is, by using origami, best known as a Japanese art form. The idea of employing physical tools to do math goes back to the ancient Greeks, who tried to make mathematical constructions using just a pair of compasses and a straight edge. The straight edge didn’t have markings and wasn’t used to measure things, so there were only two basic actions to this method: Drawing circles of any size or a straight line between any two points. By folding paper we cannot even draw circles, but we can make many more straight-line constructions…The art of origami provides ways to solve equations and design gear for outer space.”

Ed Warren: “America has a strenuous challenge ahead. Ideologues bemoan America’s failures and proclaim “American carnage.” But their shortsightedness and self-interest should not dictate America’s future. Instead, we should build upon the virtues already integrally woven into our civic DNA. Average Americans give their full measure of devotion by leading decent, honorable lives despite the distractions and disappointments of our current moment. They request very little outside help; they simply want the economic opportunity, social foundation, and basic respect to build lives of meaning for themselves and their children. The task ahead of us is to see the goodness in their example, internalize it, and begin the work of building a more empowering and respectful society.”

Arnold Kling: “We might think of the state as a set of commitments and mutual obligations between the rulers and the ruled. One of the implications of this perspective is that government must have long-term credibility in order to function…Democracy works better than autocracy because the transfer of power does not entail a crisis. In a democracy, the mechanism is in place for a peaceful transfer of power. Civil servants can keep working. Soldiers can remain at their posts. Citizens know that they ought to continue to pay taxes and obey the law. The regime persists.”