Being Bullish Humanity
Fed chairs, Labor markets, the Constitution, and that grindset
Last time, divergence between expectations and reality. Today, governance, government, and being bullish humanity
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Topics covered this week on Everything You Need to Know
And a special appearance on Jim O’Shaughnessy’s Infinite Loops podcast!
Let’s get into it.
A New Fed Chair!!!!
There will be a new Fed Chair soon. Either Jerome Powell or Lael Brainard. Biden has people on the edge of their seats (policy nerds, unite).
So what’s the difference? Tbh, it won’t be huge -
Brainard (if chosen) will also likely be harsher on banks, embrace CBDCs, and give more attention to climate change.
The market currently sees her as more dovish (she won’t taper as quickly because of her views on labor markets) which could lead to market reacting upon the news if she is chosen
However, continuity during a crisis is always a good thing - which begs the question, are we out of a crisis? There is a lot more coming.
The debt ceiling debate has been moved to December 15th (at which we will see if the US defaults on their debt or mints the trillion dollar coin)
Which will coincide with the FOMC meeting on December 16th (and the Fed will probably announce that they are pressing the accelerator on tapering)
So things are a bit… volatile.
What’s Going on With the Labor Market
Joseph Politano, an analyst at the Bureau of Labor Statistics, runs Apricitas, an excellent blog on the economy and recently published a piece “Americans are Quitting Their Jobs: Here's Why That's a Good Thing.”
In it he describes the situation of the labor market - and why people are quitting their jobs at record rates. Not to rip a whole paragraph, but this encapsulates what’s going on:
The rise in quits is not a trend driven primarily by well paid white collar professionals. Instead, it is workers in lower pay industries… these workers also tend to be younger, lower-income, non-white, and subject to the most in-person interaction during the pandemic. The tightening labor market has helped strengthen these workers’ bargaining positions while fostering competition among firms and accelerating investments in productivity-increasing methods and fixed capital.
So the labor market looks really odd - the level of quits, turnover, etc, are high.
But all of this movement is towards something that should be a net positive for society - workers should be paid more
Companies are now having to adapt and pay living wages, as well as invest in technology and growth.
Which is good.
But it’s also an interesting backdrop against the situation in the supply chain - where there are clear demographic issues (with the average age of a subcontractor at 55 years old) and gaps in training of who is probably going to fill those jobs. Presumably, there is also an issue with the ability to pay - as Amazon snaps up workers with $3k checks and $22/hr, how can some firms compete?
Almost 80% of all builders nationwide are reporting labor disruptions (which could easily translate into lack of available trained workers or lack of high pay).
Then there is the issue of immigration policy in the United States. This is an extremely important component of the labor market here - not just from a ~pRoDucTiviTy~ perspective, but also from an innovation and growth perspective.
Immigration increases innovation - and it’s important to have a system in place that allows for that.
Governance vs Government
This is where the narrative of crypto is interesting - for however you feel about it, the core thesis (theoretically) is to allow as many people in as possible so they can build as many things as possible.
It gets into ownership, incentivizing people to act as community, stewardship of ideas, controlling value, a permissionless mindset, etc. Ownership and governance are probably two of the most important values - being able to control assets, vote on assets, remove intermediaries from transactions.
When we think about ownership in the online world, a lot of it boils down to:
Being able to participate in the financial upside of an entity
Being able to participate in governance of an entity
People should be able to benefit from structures they spend time within and have the optionality to voice their opinion. However, there tends to be a bit of stickiness here -
What does it mean to have an opinion?
What does ownership really look like?
These are all really abstract questions, so the answers are a bit abstract - but as we see continued dissent and anger at the way the system is currently designed, I think that there are a lot of lessons to be learned from what crypto is trying to achieve (some aspects of it at least). The Infrastructure Bill is a great example of this.
The Problem with the Infrastructure Bill
When you think about most problems that we face as a capital-s-Society, most of them theoretically could be solved with money - somewhat.
The supply chain could use investment and policy
The housing situation could use some money towards building
Higher wages would be incredibly beneficial for a lot of workers
But money doesn’t solve everything. There are aspects to the system that are broken, and I think the whiplash response to the Infrastructure bill highlighted that -
“Oh they are just going to steal our money and run away with it!! Pad their own pockets. We should have PRIVATE INFRASTRUCTURE”
This is fine and good. Sure, maybe we should have private roads. But who determines access to these? Is it paid entry? Who can pay for that, and what happens if they can’t pay? What is a public good vs a private good (once again, abstract questions).
Politicians do kind of steal money (and somewhat get in trouble with it)
From a bipartisan perspective, they play party games (Ben & I talk abt that here)
It just feels very… unproductive
We have a Titanic mindset right now. People seem to want to elevate themselves above others but as this clip states - “a first-class ticket on the Titanic is still a ticket on the Titanic.” The senseless yelling at one another is useless, but we already know this.
So what is the solution to a broken system? Usually two things:
Policy level intervention (which would probably take a revolution at this point, or at least an entire new set of officials)
Outside capital, private money, to fund innovation because the government is busy being the government
Money is one side of the equation. But money doesn’t fix everything. You also need a shift in mindset - hope, to a certain extent. Let’s talk about the Constitution DAO story.
This was a group of people that wanted to buy the Constitution.
They organized a DAO, accepted donations in ETH, USD, etc and got ~15-20k people to donate - and roughly 20% of those donations were new addresses.
They lost because they couldn’t cover extraneous fees
It was the perfect contrast between old-world style and new-world speed. There were just a number of barriers facing them to finalize the transaction.
So they lost.
But for a moment, this very niche sector of the Internet was united. Some people were not happy that it was happening (arguably, $40m could go towards something better, but that is subjective) but this was an interesting inflection point in the narrative.
I don’t know if the goal was a good or bad thing, but the thing itself was an introduction to possibility. To what can be achieved through an interesting style of collaboration (whatever the end goal was). I think most of us know that crowdfunding could have achieved a similar objective, but still - this onboarded thousands of people into crypto, and perhaps woke several thousands more up to possibility.
I don’t know. It was cool. It was hope, to a certain degree.
The Tangibility of the Physical
Hope is one aspect of the equation of progress. Then there is money. The capital allocators.
Humans, at the base level, are combative. Even when we went from prokaryotes to eukaryotes during evolution, we were beating each other with our flagellum. Arms races are one of the ways that we prove our dominance over each other and progress forward (unfortunately, war is an economic growth engine).
It just seems as though with all the financing, all the progress, all the ideas, we still circle back to:
Rich Person Gets More Rich By Profit-taking
And that’s the economic model, right? As Rich People Seek Richness, they allocate their capital accordingly. The thing about money is that it has to find a home.
A Brief Aside on Build to Rent
Just for an example, the build to rent model, in which institutions buy up landAND homes, in order to build single-family-homes to rent out to people, is a bit tough to reconcile. It’s pricing a lot of people out of the market, preventing people from getting equity ownership in a home (one of the key ways to wealth creation in the U.S.)
One in 20 new homes is now for the purpose of rental living
Investors have bought more than 1 in every 10 homes sold over the past decade
Build-for-rent operators snapped up 15% of raw land in FL and are outbidding home builders on deals across many markets
The firms that are doing this are prepared to close on foreclosures and to offer people rented homes - and soon become America’s Landlord. It’s perhaps neither good nor bad, just interesting - as home ownership is the ‘American Dream’. But if these institutions and their money make it impossible for anyone to a home - what is the ‘American Dream’?
Unfortunately, capital allocators (those that house the money) end up deciding how those homes are built + who they are ultimately sold to (metaphorically and literally speaking).
I think ConstitutionDAO helped a lot of people realize they could be allocators (once again, removing the end goal from the equation).
Paul Tudor Jones on Bitcoin:
I think this is an incredible important point. Here PTJ was discussing inflation hedges as being bearish vs bullish humanity, with Bitcoin ultimately being humanity because its a bet on innovation.
I think that there need to be more bullish bets on humanity - things kind of like ConstitutionDAO that rally people together. I don’t know if Bitcoin is the right or wrong tool for that, but the concept:
“An asset/investment/strategy that productively enhances humanity (and the world it lives in)”
Is a really important underlying thesis to have - “how can my money go towards companies/things that are going to make the world a marginally better place to exist in?”
Lottery tickets are investment vehicles for most people (the lottery helped to pay for my education, so not net bad, but definitely negative expected value)
But what if they could invest in themselves? Or invest in a better future? Become stewards of capital in a much more “bullish bet on humanity” way?
The main point of this piece is that *we* are capital allocators. Where our money goes, matters. The public companies that we invest in, the products that we buy, even where we lives (~Taxes~) all circulates back into the broad money universe.
And the other beautiful thing about humans are that we are so wrong. We are so wrong. The big capital allocators don’t know whats going down - no one *really* knows the future, which is why its important to allow people to participate in the upside of whatever happens.
We have to take care of the physical and the digital - invest in the workers who make our world here on Earth an actual reality.
With that being said, there is room to reinvent the way that people think about their ownership and autonomy. Perhaps its just changing hope - rather than hoping for a lottery ticket, there is hope for more bullish bets on humanity - for the potentially endless opportunities of a better future.
I don’t know. It would be cool though.
Disclaimer: This is not financial advice or recommendation for any investment. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.