AI Scaling Walls

19 ноя · Let's Know Things

This week we talk about neural networks, AGI, and scaling laws.

We also discuss training data, user acquisition, and energy consumption.

Recommended Book: Through the Grapevine by Taylor N. Carlson

Transcript

Depending on whose numbers you use, and which industries and types of investment those numbers include, the global AI industry—that is, the industry focused on producing and selling artificial intelligence-based tools—is valued at something like a fifth to a quarter of a trillion dollars, as of halfway through 2024, and is expected to grow to several times that over the next handful of years, that estimate ranging from two or three times, to upward of ten or twenty-times the current value—again, depending on what numbers you track and how you extrapolate outward from those numbers.

That existing valuation, and that projected (or in some cases, hoped-for growth) is predicated in part on the explosive success of this industry, already.

It went from around $10 billion in global annual revenue in 2018 to nearly $100 billion in global revenue in 2024, and the big players in this space—among them OpenAI, which kicked off the most recent AI-related race, the one focusing on large-language models, or LLMs, when it released its ChatGPT tool at the tail-end of 2022—have been attracting customers at a remarkable rate, OpenAI hitting a million users in just five days, and pulling in more than 100 million monthly users by early 2023; a rate of customer acquisition that broke all sorts of records.

This industry’s compound annual growth rate is approaching 40%, and is expected to maintain a rate of something like 37% through 2030, which basically means it has a highly desirable rate of return on investment, especially compared to other potential investment targets.

And the market itself, separate from the income derived from that market, is expected to grow astonishingly fast due to the wide variety of applications that’re being found for AI tools; that market expanded by something like 50% year over year for the past five years, and is anticipated to continue growing by about 25% for at least the next several years, as more entities incorporate these tools into their setups, and as more, and more powerful tools are developed.

All of which paints a pretty flowery picture for AI-based tools, which justifies, in the minds of some analysts, at least, the high valuations many AI companies are receiving: just like many other types of tech companies, like social networks, crypto startups, and until recently at least, metaverse-oriented entities, AI companies are valued primarily based on their future potential outcomes, not what they’re doing today.

So while many such companies are already showing impressive numbers, their numbers five and ten years from now could be even higher, perhaps ridiculously so, if some predictions about their utility and use come to fruition, and that’s a big part of why their valuations are so astronomical compared to their current performance metrics.

The idea, then, is that basically every company on the planet, not to mention governments and militaries and other agencies and organizations will be able to amp-up their offerings, and deploy entirely new ones, saving all kinds of money while producing more of whatever it is they produce, by using these AI tools. And that could mean this becomes the industry to replace all other industries, or bare-minimum upon which all other industries become reliant; a bit like power companies, or increasingly, those that build and operate data centers.

There’s a burgeoning counter-narrative to this narrative, though, that suggests we might soon run into a wall with all of this, and that, consequently, some of these expectations, and thus, these future-facing valuations, might not be as solid as many players in this space hope or expect.

And that’s what I’d like to talk about today: AI scaling walls—what they are, and what they might mean for this industry, and all those other industries and entities that it touches.

—

In the world of artificial intelligence, artificial general intelligence, or AGI, is considered by many to be the ultimate end-goal of all the investment and application in and of these systems that we’re doing today.

The specifics of what AGI means varies based on who you talk to, but the idea is that an artificial general intelligence would be “generally” smart and capable in the same, or in a similar way, to human beings: not just great at doing math and not just great at folding proteins, or folding clothes, but pretty solid at most things, and trainable to be decent, or better than decent at potentially everything.

If you could develop such a model, that would allow you, in theory, to push humans out of the loop for just about every job: an AI bot could work the cash register at the grocery store, could drive all the taxis, and could do all of our astronomy research, to name just a few of the great many jobs these systems could take on, subbing in for human beings who would almost always be more expensive, but who—this AI being a generalist and pretty good at everything—wouldn’t necessarily do any better than these snazzy new AI systems.

So AGI is a big deal because of what it would represent in terms of us suddenly having a potentially equivalent intelligence, an equivalent non-human intelligence, to deal with and theorize over, but it would also be a big deal because it could more or less put everyone out of work, which would no doubt be immensely disruptive, but it would also be really, really great for the pocketbooks of all the companies that are currently burdened with all those paychecks they have to sign each month.

The general theory of neural network-based AI systems, which basically means software that is based in some way on the neural networks that biological entities, like mice and fruit flies and humans have in our brains and throughout our bodies, is that these networks should continue to scale as the number of factors that go into making them scale: and usually those factors include the size of the model—which in the case of most of these systems means the number of parameters it includes—the size of the dataset it trains on—which is the amount of data, written, visual, audio, and otherwise, that it’s fed as it’s being trained—and the amount of time and resources invested in its training—which is a variable sort of thing, as there are faster and slower methods for training, and there are more efficient ways to train that use less energy—but in general, more time and more resources will equal a more girthy, capable AI system.

So scale those things up and you’ll tend to get a bigger, up-scaled AI on the other side, which will tend to be more capable in a variety of ways; this is similar, in a way, to biological neural networks gaining more neurons, more connections between those neurons, and more life experience training those neurons and connections to help us understand the world, and be more capable of operating within it.

That’s been the theory for a long while, but the results from recent training sessions seem to be pouring cold water on that assumption, at least a bit, and at least in some circles.

One existing scaling concern in this space is that we, as a civilization, will simply run out of novel data to train these things on within a couple of years.

The pace at which modern models are being trained is extraordinary, and this is a big part of why the larger players, here, don’t even seriously talk about compensating the people and entities that created the writings and TV shows and music they scrape from the web and other archives of such things to train their systems: they are using basically all of it, and even the smallest payout would represent a significant portion of their total resources and future revenues; this might not be fair or even legal, then, but that’s a necessary sacrifice to build these models, according to the logic of this industry at the moment.

The concern that is emerging, here, is that because they’ve already basically scooped up all of the stuff we’ve ever made as a species, we’re on the verge of running out of new stuff, and that means future models won’t have more music and writing and whatnot to use—it’ll have to rely on more of the same, or, and this could be even worse, it’ll have to rely on the increasing volume of AI-generated content for future iterations, which could result in what’s sometimes called a “Habsburg AI,” referring to the consequences of inbreeding over the course of generations: and future models using AI-generated content as their source materials may produce distorted end-products that are less and less useful (and even intelligible) to humans, which in turn will make them less useful overall, despite technically being more powerful.

Another concern is related to the issue of physical infrastructure.

In short, global data centers, which run the internet, but also AI systems, are already using something like 1.5-2% of all the energy produced, globally, and AI, which use an estimated 33% more power to generate a paragraph of writing or an image, than task-specific software would consume to do the same, is expected to double that figure by 2025, due in part to the energetic costs of training new models, and in part to the cost of delivering results, like those produced by the ChatGPTs of the world, and those increasingly generated in lieu of traditional search results, like by Google’s AI offerings that’re often plastered at the top of their search results pages, these days.

There’s a chance that AI could also be used to reduce overall energy consumption in a variety of ways, and to increase the efficiency of energy grids and energy production facilities, by figuring out the optimal locations for solar panels and coming up with new materials that will increase the efficiency of energy transmission. But those are currently speculative benefits, and the current impact of AI on the energy grid is depletionary, not additive.

There’s a chance, then that we’ll simply run out of energy, especially on a local basis, where the training hubs are built, to train the newest and greatest and biggest models in the coming years. But we could also run out of other necessary resources, like the ginormous data centers required to do said training, and even the specific chips that are optimized for this purpose that are in increasingly short supply because of how vital this task has become for so many tech companies, globally.

The newest concern in this space, related to future growth, though, is related to what are called scaling laws, which refer to a variety of theories—some tested, some not yet fully tested—about how much growth you can expect if you use the same general AI system structure, and just keep pumping it up with more resources, training data, and training time.

The current batch of most powerful and, for many use-cases, most useful AI systems are the result of scaling basically the same AI system structure so that it becomes more powerful and capable over time. There’s delay between new generations because tweaks are made, all that training and feeding has to be done, but also because there are adjustments required afterward to optimize the system for different purposes and for stability.

But a slew of industry experts have been raising the alarm about a possible bubble in this space, not because it’s impossible to build more powerful AI, but because the majority of resources that have been pumped into the AI industry in recent years are basically just inflating a giant balloon predicated on scaling the same things over and over again, every company doing this scaling hoping to reach AGI or something close to AGI before their competitors, in order to justify those investments and their sprawling valuations.

In other words, it’s a race to a destination that they might not be able to reach, in the near-future, or ever, using the current batch of technologies and commonly exploited approaches, but they can’t afford to dabble in too many alternatives, at least not thoroughly, because there’s a chance if they take their eyes off the race they’re running, right now, one of their many also-super-well-funded opponents will get there first, and they’ll be able to make history, while also claiming the lion’s share of the profits, which could be as substantial as the entire economy, if you think of those aforementioned benefits of being able to replace a huge chunk of the world’s total employee base with equally capable bots.

The most common version of this argument, that the current generation of AI systems are hitting a point of diminishing returns—still growing and becoming more powerful as they scale, but not as much as anticipated, less growth and power per unit of resource, training time, size of dataset, and so on, compared to previous generations—and that diminishment means, according to this argument, we’ll continue to see a lot of impressive improvements, but should not longer expect the doubling of capability every 5 to 14 months that we’ve seen these past few years.

We’ve picked the low-hanging fruit, in other words, and everything from this point forward will be more expensive, less certain, and thus, less appealing to investors—while also potentially being less profitable, and thus, the money that’s been plowed into these businesses, thus far, might not payout, and we could see some large-scale collapses due to the disappearance of those resources that are currently funding this wave of AI-scaling, as a consequence.

If true, this would be very bad in a lot of ways, in part because these are resources that could have been invested in other things, and in part because a lot of hardware and know-how and governmental heft have been biased toward these systems for years now; so the black hole left behind, should all of that disappear or prove to be less than many people assumed, would be substantial, and could lead to larger-scale economic issues; that gaping void, that gravity well made worse because of those aforementioned sky-high valuations, which are predicated mostly on what these companies are expected to do in the future, not what they’re doing, today—so that would represent a lot of waste, and a lot of unrealized, but maybe never feasible in the first place, potential.

This space is maybe propped up by hype and outlandish expectations, in other words, and the most recent results from OpenAI and their upcoming model seem to lend this argument at least some credibility: the publicly divulged numbers only show a relatively moderate improvement over their previous core model, GPT4, and it’s been suggested, including by folks who previously ran OpenAI, that more optimizing after the fact, post-training, will be necessary to get the improvements the market and customers are expecting—which comes with its own unknowns and additional costs, alongside a lack of seemingly reliable, predictable scaling laws.

For their part, the folks currently at the top of the major AI companies have either ignored this line of theorizing, or said there are no walls, nothing to see here, folks, everything is going fine.

Which could be true, but they’re also heavily motivated not to panic the market, so there’s no way to really know at this point how legit their counter-claims might be; there could be new developments we’re not currently, publicly aware of, but it could also be that they’re already working those post-training augmentations into their model of scaling, and just not mentioning that for financial reasons.

AI remains a truly remarkable component of the tech world, right now, in part because of what these systems have already shown themselves capable of, but also because of those potential, mostly theorized, at this point, benefits they could enable, across the economy, across the energy grid, and so on.

The near-future outcomes, though, will be interesting to watch, as it could be we’ll see a lot of fluffed-up models that roughly align with anticipated scaling-laws, but which didn’t get there by the expected, training-focused paths, which would continue to draw questions from investors who had specific ideas about how much it would cost to get what sorts of outcomes, which in turn would curse this segment of the economy and technological development with more precarious footing than it currently enjoys.

We might also see a renewed focus on how these systems are made available to users: a rethinking of the interfaces used, and the use-cases they’re optimized for, which could make the existing (and near-future) models ever more useful, despite not becoming as powerful as anticipated, and despite probably not getting meaningfully closer to AGI, in the process.

Show Notes

https://arxiv.org/abs/2311.16863

https://www.weforum.org/stories/2024/07/generative-ai-energy-emissions/

https://epochai.org/blog/will-we-run-out-of-ml-data-evidence-from-projecting-dataset

https://www.semafor.com/article/11/13/2024/tiktoks-new-trademark-filings-suggest-its-doubling-down-on-its-us-business

https://arxiv.org/abs/2001.08361

https://archive.ph/d24pA

https://www.fastcompany.com/91228329/a-funny-thing-happened-on-the-way-to-agi-model-supersizing-has-hit-a-wall

https://futurism.com/the-byte/openai-research-best-models-wrong-answers

https://en.wikipedia.org/wiki/Neural_network_(machine_learning)

https://en.wikipedia.org/wiki/Neural_scaling_law

https://futurism.com/the-byte/openai-research-best-models-wrong-answers

https://futurism.com/the-byte/ai-expert-crash-imminent

https://www.theverge.com/2024/10/25/24279600/google-next-gemini-ai-model-openai-december

https://ourworldindata.org/artificial-intelligence?insight=ai-hardware-production-especially-cpus-and-gpus-is-concentrated-in-a-few-key-countries

https://blogs.idc.com/2024/08/21/idcs-worldwide-ai-and-generative-ai-spending-industry-outlook/

https://explodingtopics.com/blog/chatgpt-users

https://explodingtopics.com/blog/ai-statistics

https://www.aiprm.com/ai-statistics/

https://www.forbes.com/advisor/business/ai-statistics/

https://www.mckinsey.com/capabilities/quantumblack/our-insights/the-state-of-ai

https://www.researchgate.net/profile/Gissel-Velarde-2/publication/358028059_Artificial_Intelligence_Trends_and_Future_Scenarios_Relations_Between_Statistics_and_Opinions/links/61ec01748d338833e3895f80/Artificial-Intelligence-Trends-and-Future-Scenarios-Relations-Between-Statistics-and-Opinions.pdf

https://www.statista.com/outlook/tmo/artificial-intelligence/worldwide

https://en.wikipedia.org/wiki/Artificial_intelligence#Applications

This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit letsknowthings.substack.com/subscribe

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South Korean Tumult
17 дек· Let's Know Things
This week we talk about Yoon, martial law, and impeachment.
We also discuss the PPP, chaebol, and dictators.
Recommended Book: Starter Villain by John Scalzi
Transcript
In the wake of WWII, Korea—which was previously held by the recently-defeated Japanese Empire—was split into two countries, the north backed by the Soviet Union and the south backed by the United States and its allies.
North Korea had a guerrilla fighter and staunch Soviet-style communism activist, Kim Il Sung, placed at the head of its new government, while South Korea was to be led by a longtime local politician named Syngman Rhee, who had run the country earlier, from 1919 until 1925, at which point he was impeached, and then again in 1947-1948, as head of the country’s post-war provisional government.
Rhee was a hardcore Korean independence activist during a period when the Japanese were clamping down on their mainland holdings and doing away with anyone who caused trouble or sparked anti-colonial protests, so he spent some time in exile, in China, returned to the US, where he was educated, for a bit, and then the US military returned him to Korea to run that provisional government once the dust had settled and the Japanese had been ousted from the area.
Rhee was an ideal representative in the region by American standards, in some ways, as he was vehemently anti-communist, even to the point of killing and supporting the killing of something like 100,000 communist sympathizers during an uprising on South Korea’s Jeju Island. He was president when North Korea invaded, sparking the Korean War, and then refused to sign the armistice that would have formally ended the conflict in 1953, because he believed the only solution to the conflict between these nations was a military one, and he held out hope that the South would someday conquer the North and unify Korea as a nation, once more.
Rhee then won reelection in 1956, and changed the country’s constitution to allow him to remain in office, getting rid of the two-term limit—which was not a popular move, but it worked, and he was able to run uncontested in 1960, because his opponent died of cancer in the lead-up to the election—though his opposition protested the results, claiming a rigged voting process, and this led to a huge movement by students in the country, which became known as the April Revolution; students were shot by police while protesting during this period, and that ultimately led to Rhee stepping down that same year, 1960.
So Rhee was a western-educated, christian conservative who was vehemently anti-communist, though also living in a part of the world in which an aggressive communist dictatorship recently invaded, and was threatening to do so again—so it could be argued his paranoia was more justified than in other parts of the world that had similar frenzied moments and governments during the cold war, though of course the violence against innocent citizens was impossible to justify even for him and his government; his authoritarian rule was brought to an end following that shooting of student protestors, and that left a power vacuum in the country, and South Korea saw 13 months of infighting and instability before a General named Park Chung Hee launched a coup that put him in charge.
Park positioned himself as president, and he did pretty well in terms of economic growth and overall national development—at this point the South was way behind the North in pretty much every regard—but he was also an out-and-out dictator who ruled with an iron fist, and in 1972 he put an entirely new constitution into effect that allowed him to keep running for president every six years, in perpetuity, no term limits, and which gave the president, so himself, basically unlimited, unchecked powers.
The presence of a seemingly pretty capable, newly empowered dictator helped South Korea’s economy, manufacturing base, and infrastructure develop at an even more rapid pace than before, though his nearly 18-year presidency was also defined by the oppression he was able to leverage against anyone who said anything he didn’t like, who challenged him in any way, and who spoke out of turn against the things he wanted to do, or the constitution that allowed him to do all those things.
In 1979, he was assassinated, and there’s still a lot of speculation as to the why of the killing—the assassin was in Park’s orbit, and was seemingly doing okay as part of that all-powerful government entity—but alongside speculation that it might have been planned by the US, in order to keep South Korea from developing a nuclear weapon, that it might have been the result of political jealousy, and that if might have been just an impulsive act by someone who was done being pushed around by a bully, it’s also possible that the perpetrator was a democracy activist who wanted to get a successful and long-ruling dictator out of the way.
Whatever the actual catalyst was, the outcome was more political upheaval, which by the end of the year, we’re still in 1979, led to yet another military coup.
This new coup leader was General Chun Doo-hwan, and he implemented martial law across the whole of the country by mid-year, as he ascended to the role of president, and he cracked down on democracy movements that erupted across the country pretty violently.
Chun held onto power for nearly 8 years, ruling as a dictator, like his predecessor, until 1987, when a student democracy activist was tortured to death by his security forces.
This torture was revealed to the country by a group of pro-democracy catholic priests in June of that year, and that sparked what became known as the June Democratic Struggle, which led to the June 29 Declaration, which was an announcement by the head of the ruling party—so the head of the party the dictatorial president belonged to, the Democratic Justice Party—that the next presidential vote would allow for the direct election of the president.
That party leader, Roh Tae-woo, very narrowly won the election, and his term lasted from 1988 until 1993; and during his tenure, the country entered the UN, that was in 1991, and his presidency is generally considered to be a pivotal moment for the country, as while he was technically from the same party as the previous ruler, a dictator, he distanced himself and his administration from his precursor during the election, and he abided by that previously enforced two-term limit.
By 1996, things had changed a lot in the country, the government fully recalibrating toward democratic values, and those previous rulers—the dictator Chun and his ally-turned-democratic reformer, Roh—were convicted for their corruption during the Chun administration, and for their mass-killings of pro-democracy protestors during that period, as well. Both were pardoned by the new president, but both were also quite old, so this was seen as a somewhat expedient political maneuver without a lot of downsides, as neither was really involved in politics or capable of causing much damage at that point in their lives.
In the years since, especially since the turn of the century, South Korea has become one of the world’s most successful economies, but also a flourishing example of democratic values; there are still some remnants of those previous setups, including the government’s tight ties with the so-called chaebol, or “rich family” companies, which were business entities propped up by government support, which were often given monopoly rights that other businesses didn’t enjoy, as part of a government effort to pull the country out of agrarianism back in the mid-20th century; companies like Hyundai, Samsung, and LG thus enjoy outsized economic power, to this day, alongside a whole lot of political influence in the country, as a result of this setup, which is a holdover from those earlier, dictatorial times.
But South Korea has generally erred toward rule of law since the late-1990s, even to the point of punishing their most powerful elected leaders, like President Park, who was accused of corruption, bribery, and influence-peddling, by removing her from office, then sentencing her to 24 years in jail.
What I’d like to talk about today, though, is a recent seeming abuse of power at a pretty staggering level in South Korean governance, and the consequences of that abuse for the country and for the abuser.
—
In March of 2022, Yoon Suk Yeol, a conservative candidate of the People Power Party, who was hoping to oust the incumbent Democratic Party from office, won the narrowest victory in South Korea history.
In his previous role as the chief of the Seoul Central District Prosecutor’s Office, Yoon was partly responsible for convicting former President Park for her abuses of power, and his public disagreements with President Moon, who appointed him as Prosecutor General of the country in 2019, led to his popularity in conservative circles, in turn leading to his ascension as a candidate in 2021.
Yoon ran on a conservative platform that’s become familiar in elections around the world in recent decades; basically deregulation paired with culture-war issues, like doing away with government support for gender equality and other often politically liberal efforts of that nature.
He won the election by less than a percentage point, and his tenure is office has not been favorably reviewed by democratic watchdogs, which have noted various sorts of corruption and democratic backsliding under his watch, and economic and policy analysts consider his administration to have been a somewhat ineffectual one.
Yoon’s tenure, like his candidacy, was also plagued by gaffes and seeming missteps.
He tried to raise the country’s maximum weekly working hours from 52 to 69, though he pulled back on this idea after a huge wave of backlash from young people.
He was also criticized for having just three women in his government, and two among his vice-ministerial level officials. He added two more after those criticisms, but one of them quit about a month after being appointed, following her attempt to implement massively unpopular school system revisions—and the entire government’s approval rating collapsed around this time, due to that proposed revision, which was criticized as being half-baked and nonsensical, but it was also partly the result of her ascension to the government in the first place, as she had a record of drunk driving and academic plagiarism; the president brought in a woman to placate the masses, basically, despite that woman being just a really, really bad choice for the position, which by some estimates further demonstrated his disdain for and ignorance about the whole conversation about women in government.
Yoon also tried to create an agency that would provide more oversight of the country’s police force, but this led to protests by police, who saw it as an attempt to take control of law enforcement and use it against the president’s enemies; the president’s office then worsened matters threatened to punish protesting officers.
By 2024, leading into the country’s parliamentary elections, Yoon’s government was incredibly unpopular with just about everyone, because of those and other decisions and statements and gaffes. Even his wife has been under investigation for accepting bribes and having undo influence on who takes positions of power, alongside comments she’s made about seeking revenge against people who say not nice things about her, including journalists.
The opposition swept that 2024 parliamentary election, which had the practical impact of making Yoon’s government something of a lame duck, unable to get anything done, because his party only controlled 36% of the National Assembly. He then boycotted the inaugural session of this new National Assembly, seemingly because he didn’t like the outcome, becoming the first President to do so since democracy returned to the country in 1988.
All of which leads us to what happened on December 3, 2024.
Late that night, President Yoon declared martial law, which would give him, as president, wartime powers to do all sorts of dictator-like things.
He said he declared martial law to unfreeze a frozen government that was paralyzed by his opposition: Assemblymembers had stymied a lot of his efforts to pass laws favored by his party and constituents, and had tallied a large number of impeachment efforts against people in his administration, while he, in turn, used more vetos than any other democratically elected president in the country’s history—so the executive and legislative branches were at a standoff, and this was freezing the government, so he says he declared martial law to basically get things done.
The opposition, in contrast, says his move was unconstitutional, and that he tried to launch a coup.
That latter claim seems to be backed by the fact that Yoon accused his political competition of collaborating with North Korean communists and engaging in anti-state activities, which he said were intended to destroy the country—this seems to be based, again, on the fact that they didn’t approve the stuff he wanted to get approved.
As part of this martial law declaration, he also declared a prohibition on all political activities and all gatherings of the National Assembly and local representatives, and he suspended the freedom of the press.
He apparently also ordered the arrest of many of his political opponents, alongside some people within his own party who might oppose him and his seeming power-grab.
Both parties, his own included, opposed this proclamation, and there were some dramatic standoffs following his announcement at 10:30pm local time, as protestors took to the streets and legislators gathered at the National Assembly Proceeding Hall, where they do their job, because members of the military were ordered to stop them; there are videos of these soldiers standing in the way of these politicians, trying to keep them from entering the building where they could vote to do away with the martial law declaration, and in some cases pointing assault rifles at them. The legislators didn’t backing down, and in a few cases wrestled with the soldiers while thousands of citizens protested behind them against the military action.
Eventually, the Assembly members made it inside and voted to lift martial law; this happened at 4:30am that morning. And over the next few days they began impeachment proceedings against the president, saying they would keep doing so until he resigned.
A bunch of people resigned from Yoon’s administration following his seeming attempt at a coup and, and on December 7, a few days later, he issued a public apology, saying that he wouldn’t try to do that again, though on the 12th he backtracked and defended his declaration of martial law, saying that he had to protect the country from these anti-state forces, accusing his opponents, once more, of being on North Korea’s side.
On December 14, Yoon was impeached and booted from office, following another, failed vote; his party sticking with him for a while, though seemingly distancing themselves from him, following his doubling-down on the “my political opponents are communists” stance.
The leader of his party the PPP, stepped down shortly after that successful vote, having changed his vote from being against impeachment to supporting it, saying basically that there was no other way to remove Yoon from office, and Yoon’s Supreme Councilmembers all stepped down, as well.
South Korea’s Constitutional Court will now have to decide, within the next six months, whether Yoon will be formally and permanently removed from office, or if he’ll be reinstated.
In the two previous instances of a president being impeached, the court has taken 2 and 3 months to make their decision, and they reinstated one president, while allowing the impeachment to stand for the other.
If Yoon is removed by the court, the country will have to elect a new leader within two months, and in the interim, the country’s Prime Minister, the number 2 person in the government, is serving as president; Yoon has been stripped of his powers.
Yoon has a broad swathe of immunity against criminal charges due to his position as president, but that doesn’t apply to rebellion or treason, which could apply in this case.
He’s been banned from leaving the country, but there’s a good chance if he tries, he won’t be stopped, due to a potential conflict between state security forces and presidential security forces—it would be a bad look to have them fight and maybe kill each other.
Yoon’s presence was requested by prosecutors over the weekend, but he didn’t show up to be questioned, and there’s a chance that if this happens again, him deciding not to show up and ignoring these requests, he’ll be arrested—though that same issue with presidential security fighting with police forces applies here, too, so it’s an open question what will happen if he just ignores the whole process and keeps claiming he did nothing wrong.
A preliminary court hearing date has been set for December 27, and though the court only has six of its total nine members at the moment, it has said it’s fine to move forward with an incomplete court, though the government has said they’ll likely be able to get another three judges approved by the end of December.
So things are complicated in South Korea right now, the former president disempowered, but seemingly refusing to participate in the proceedings that will help a new government form, if his dismissal is upheld by the court, that is, and that means the interim government is even more of a lame duck than he was, at a moment in which the world is very dynamic, both in the sense of geopolitics and North Korea becoming more active and antagonistic, and in the sense that economics and tech and everything else is roiling and evolving pretty rapidly right now; a new paradigm seems to be emerging in a lot of different spaces, and South Korea is in a terrible spot to make any moves in any direction, based on that—and that seems likely to remain the case for at least a few more months, but possibly longer than that, too, depending on how the court case plays out, and how the potential next-step election turns out, following that court case.
Show Notes
https://en.wikipedia.org/wiki/2024_South_Korean_martial_law_crisis
https://www.nytimes.com/2024/12/03/world/asia/south-korea-martial-law.html
https://www.yahoo.com/news/heres-whats-going-south-korea-213322966.html
https://www.washingtonpost.com/world/2024/12/03/martial-law-south-korea-explained/
https://apnews.com/article/south-korea-protesters-photo-gallery-yoon-b17f96063a2635ebc87f35ed9ab5ac5b
https://www.nytimes.com/2024/12/14/world/asia/south-korea-president-impeached-martial-law.html
https://www.nytimes.com/interactive/2024/12/04/world/asia/south-korea-impeachment-vote-president-yoon.html
https://www.nytimes.com/2024/12/13/world/asia/south-korea-protest-feliz-navidad.html
https://www.nytimes.com/interactive/2024/12/14/world/asia/skorea-yoon-timeline.html
https://apnews.com/article/south-korea-martial-law-yoon-impeach-6432768aafc8b55be26215667e3c19d0
https://www.reuters.com/world/asia-pacific/south-koreas-yoon-faces-second-impeachment-vote-over-martial-law-bid-2024-12-14/
https://www.theguardian.com/world/2024/dec/14/south-korea-president-yoon-suk-yeol-downfall-analysis
https://www.wsj.com/world/asia/south-korea-president-yoon-suk-yeol-impeached-49b0779c
https://www.washingtonpost.com/world/2024/12/14/south-korea-yoon-impeachment-vote/
https://english.hani.co.kr/arti/english_edition/e_national/1054103.html
https://en.wikipedia.org/wiki/Yoon_Suk_Yeol
https://www.nytimes.com/2024/02/01/world/asia/south-korea-first-lady-dior.html
https://www.economist.com/europe/2024/12/12/why-romania-cancelled-a-pro-russian-presidential-candidate
https://www.koreaherald.com/view.php?ud=20241215050041
https://www.bbc.com/news/articles/cx2pl4edk13o
https://www.cnn.com/2024/12/14/world/video/south-korea-yoon-second-impeachment-watson-cnntm-digvid
https://www.theguardian.com/world/2024/dec/15/south-korea-president-yoon-suk-yeol-reportedly-defies-summons-in-martial-law-inquiry
https://apnews.com/article/south-korea-yoon-martial-law-investigation-constitutional-court-8ec38d61f0ea5c48b3bd1f683b5e9c8d
https://en.wikipedia.org/wiki/Syngman_Rhee
https://en.wikipedia.org/wiki/South_Korea
https://en.wikipedia.org/wiki/Assassination_of_Park_Chung_Hee
https://en.wikipedia.org/wiki/Coup_d%27%C3%A9tat_of_December_Twelfth
https://en.wikipedia.org/wiki/Chaebol

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Assad Overthrown
10 дек· Let's Know Things
This week we talk about coups, the Arab Spring, and Bashar al-Assad.
We also discuss militias, Al Qaeda, and Iran.
Recommended Book: The Algebraist by Iain M. Banks
Transcript
In the early 2010s, a series of uprisings against unpopular, authoritarian governments spread across the Middle East—a wave of action that became known as the Arab Spring.
Tunisia was where it started, a man setting himself on fire in protest against the nation’s brazenly corrupt government and all that he’d suffered under that government, and the spreading of this final gesture on social media, which was burgeoning at the time, amplified by the still relatively newfound availability and popularity of smartphones, the mobile internet, and the common capacity to share images and videos of things as they happen to folks around the world via social media, led to a bunch of protests and riots and uprisings in Jordan, Egypt, Yemen, and Algeria, initially, before then spreading to other, mostly Arab majority, mostly authoritarian-led nations.
The impact of this cascade of unrest in this region was immediately felt; within just two years, by early 2012, those ruling Tunisia, Egypt, Libya, and Yemen had been toppled, there were attempts to topple the Bahraini and Syrian governments, there were massive protests in Iraq, Jordan, Kuwait, Morocco, Oman, Algeria, and Sudan, and relatively minor protests, which were still meaningful because of the potential punishments for folks who rocked the boat in these countries, smaller protests erupted in Djibouti, Western Sahara, Saudi Arabia, Palestine, and Mauritania.
Several rulers and their ruling parties committed to stepping down soon, or to not run for reelection—some of them actually stuck with that commitment, though others rode out this period of tumult and then quietly backtracked.
Some nations saw long-lasting periods of unrest following this eruption; Jordan had trouble keeping a government in office for years, for instance, while Yemen overthrew its government in 2012 and 2015, and that spun-out into a civil war between the official government and the Iran-backed Houthis, which continues today, gumming up the Red Sea and significantly disrupting global shipping as a consequence.
What I’d like to talk about today, though, is another seriously disruptive sequence of events that have shaped the region, and a lot of things globally, as well, since the first sparks of what became the Arab Spring—namely, the Syrian Civil war—and some movement we’ve seen in this conflict over the past week that could result in a dramatically new state of affairs across the region.
—
In 1963, inspired by their brethren’s successful coup in nearby Iraq, the military wing of the Arab nationalist Ba’ath party of Syria launched a coup against the country’s post-colonial democratic government, installing in its stead a totalitarian party-run government.
One of the leaders of this coup, Hafez al-Assad, became the country’s president in 1971, which basically meant he was the all-powerful leader of a military dictatorship, and he used those powers to even further consolidate his influence over the mechanisms of state, which meant he also had the ability to name his own successor.
He initially planned to install his brother as leader when he stepped down or died, but that brother attempted to overthrow him when he was ill in 1983 and 1984, so when he got better, he exiled said brother and chose his eldest son, Bassel al-Assad, instead.
Bassel died in a car accident in 1994, though, so Hafez was left with his third choice, Bashar al-Assad, which wasn’t a popular choice, in part because it was considered not ideal for him to choose a family member, rather than someone else from the leading party, but also because Bashar had no political experience at the time, so this was straight-up nepotism: the only reason he was selected was that he was family.
In mid-2000, Hafez died, and Bashar stepped into the role of president. The next few years were tumultuous for the new leader, who faced heightened calls for more transparency in the government, and a return to democracy, or some form of it at least, in Syria.
This, added to Bashar’s lack of influence with his fellow party members, led to a wave of retirements and purgings amongst the government and military higher-ups—those veteran politicians and generals replaced by loyalists with less experience and credibility.
He then made a series of economic decisions that were really good for the Assad family and their allies, but really bad for pretty much everyone else in the country, which made him and his government even less popular with much of the Syrian population, even amongst those who formerly supported his ascension and ambitions.
All of this pushback from the people nudged Bashar al-Assad into implementing an increasingly stern police state, which pitted various ethnic and religious groups against each other in order to keep them from unifying against the government, and which used terror and repression to slap down or kill anyone who stood up to the abuse.
When the Arab Spring, which I mentioned in the intro, rippled across the Arab world beginning in 2011, protestors in Syria were treated horribly by the Assad government—the crackdown incredibly violent and punitive, even compared to that of other repressive, totalitarian governments in the region.
This led to more pushback from Syrian citizens, who began to demand, with increasing intensity, that the Assad-run government step down, and that the Ba’athists running the dictatorship be replaced by democratically elected officials.
This didn’t go over well with Assad, who launched a campaign of even more brutal, violent crackdowns, mass arrests, and the torture and execution of people who spoke out on this subject—leading to thousands of confirmed deaths, and tens of thousands of people wounded by government forces.
This response didn’t go over super well with the people, and these protests and the pushback against them spiraled into a full-on civil uprising later in 2011, a bunch of people leaving the Syrian military to join the rebels, and the country breaking up into pieces, each chunk of land controlled by a different militia, some of these militias working well together, unifying against the government, while others also fought other militias—a remnant of the military government’s efforts to keep their potential opposition fighting each other, rather than them.
This conflict was officially declared a civil war by the UN in mid-2012, and the UN and other such organizations have been fretting and speaking out about the human rights violations and other atrocities committed during this conflict ever since, though little has been done by external forces, practically, to end it—instead it’s become one of many proxy conflicts, various sides supported, mostly with weapons and other resources, though sometimes with training, and in rare instances with actual soldiers on the ground, by the US, Turkey, Russia, Iran, the Iran-backed group Hezbollah, Saudi Arabia, Qatar, Britain, France, Israel, and the Netherlands.
This conflict has demanded the country’s full attention for more than a decade, then, and it’s had influence even beyond Syria’s borders, as groups like the Islamic State, or ISIS has been able to grow and flourish within Syria, due to all the chaos and lack of stability, refugees from Syria have flooded across borders, fleeing the violence and causing all sorts of unintended disruptions in neighboring and even some further-afield countries where, in some cases, millions of these refugees have had to be taken care of, which in turn has influenced immigration-related politics even as far away as the European Union. Also due to that lack of internal control, crime has flourished in Syria, including drug-related crime. And that’s lets to a huge production and distribution network for an illegal, almost everywhere, amphetamine called Captagon, which is addictive, and the pills often contain dangerous filler chemicals that are cheaper to produce.
This has increased drug crime throughout the region, and the Syrian government derives a substantial amount of revenue from these illicit activities—it’s responsible for about 80% of global Captagon production, as of early 2024.
All of which brings us to late-2024.
By this point, Syria had been broken up into about seven or eight pieces, each controlled by some militia group or government, while other portions—which make up a substantial volume of the country’s total landmass—are considered to be up in the air, no dominant factions able to claim them.
Al-Assad’s government has received a fair bit of support, both in terms of resources, and in terms of boots on the ground, from Iran and Russia, over the years, especially in the mid-20-teens. And due in large part to that assistance, his forces were able to retake most of the opposition’s strongholds by late 2018.
There was a significant ceasefire at the tail-end of 2019, which lasted until March of 2020. This ceasefire stemmed from a successful operation launched by the Syrian government and its allies, especially Iran, Russia, and Hezbollah, against the main opposition and some of their allies—basically a group of different rebel factions that were working together against Assad, and this included groups backed by the Turkish government.
On March 5, 2020, Turkish President Erdogan and Russian President Putin, which were backing opposite sides of this portion of the Syrian civil war, agreed on a ceasefire that began the following day, which among other things included a safety corridor along a major highway, separating the groups from each other, that corridor patrolled by soldiers from Turkey and Russia.
This served to end most frontline fighting, as these groups didn’t want to start fighting these much larger, more powerful nations—Russia and Turkey—while trying to strike their enemies, though there were still smaller scuffles and attacks, when either side could hurt their opponent without being caught.
In November of 2024, though, a coalition of anti-Assad militias launched a new offensive against the Syrian government’s forces, which was ostensibly sparked by heavily shelling by those forces against civilians in rural areas outside Aleppo, the country’s second-largest city.
On the 29th of November, those forces captured most of Aleppo, and then plowed their way through previously government-held towns and cities at a fairly rapid clip, capturing another regional capitol, Hama on December 5, and securing Damascus, the capitol of the country, on December 8.
This ended the 13-year civil war that’s plagued Syria since all the way back in 2011; Bashar al-Assad fled to Russia, according to Russian and Iranian officials, and he resigned before he hopped on that flight; Russian state media is saying that Assad and his family have been granted asylum by the Russian government.
This is a rapidly developing story, and we’ll know more over the next few weeks, as the dust settles, but right now it looks like the Syrian government has been toppled by rebel forces led by a man named Abu Mohammad al-Jolani, a 42-year-old child of Syrian exiles who was born in Saudi Arabia, and who spent the early 2000s fighting against US occupation forces in Iraq as part of Al Qaeda.
He apparently spent a few years in an Iraqi prison, then led an Al Qaeda affiliate group, which evolved into its own thing when he broke ties with Al Qaeda’s leadership.
This new group that he formed, Hayat Tahrir al-Sham, tried to differentiate itself from groups like Al Qaeda by saying they didn’t want to play a role in the global jihad, they just wanted to reform the government in Syria. As part of that pivot, they started governing and building infrastructure across the chunk of Syria they claimed, even to the point of collecting taxes and providing civilians with identity cards; though throughout this period they were also known for ruling with an iron fist, and for being hardcore authoritarians, dedicated to implementing a hard-line version of Islamist ideological law.
In the midst of their blitz-like capture of Syria, though, representatives from this group have said they’ll implement a religiously tolerant representative government, and they won’t tell women in the country how to dress.
Following the capture of Damascus, Syria’s Prime Minister said that he would remain in the country, and that he was ready to work with whomever takes the reins as things settle down, happy to make the transition a smooth and peaceful one, essentially, whatever that might mean in practice.
The US military has taken this opportunity to strike dozens of Islamic State facilities and leaders across the country, marking one of the biggest such actions in recent months, and military leaders have said they would continue to strike terrorist groups on Syrian soil—probably as part of an effort to keep the new Syrian government, whatever its composition, from working with IS and its allies.
Russia has requested a closed-door meeting with the United Nations Security Council to discuss Syria’s collapse, and it’s been reported that they failed to come to Assad’s aid because they’re too tied up in Ukraine, and they weren’t able to move forces from North Africa rapidly enough to do much good; though there’s a chance they’ll still shift whatever chess pieces they can to the area in order to influence the composition of the new government, as it’s forming.
Iran has said they welcome whatever type of government the Syrian people decide to establish, though it’s likely they’ll try to nudge that formation in their favor, as Syria has long been an ally and client state of theirs, and they are no doubt keen to maintain that reality as much as possible, and bare-minimum to avoid the establishment of an enemy along their border.
And Israel has entered what’s supposed to be a demilitarized buffer zone in the Golan Heights because this zone is on the Syrian border; they’ve also captured a buffer zone within Syria itself. They’ve launched airstrikes on suspected chemical weapon sites in Syria, to prevent them from falling into extremist hands, they’ve said, and Israeli leaders said they want to keep any issues in their neighbor from impacting Israeli citizens. And Iraq’s government has announced that they’re doing the same along their shared border with Syria, so the whole region is bulwarking their potential weak points, just in case something goes wrong and violence spreads, rather than being tamped down by all this change.
Israel’s prime minister, and other higher ups in the government, have also claimed responsibility for Assad’s toppling, saying it was their efforts against Iran and its proxy forces, like Hezbollah, that set the stage for the rebels to do what they did—as otherwise these forces would have been too strong and too united for it to work.
Notably, the now-in-charge rebel group has been a longtime enemy of Iran and Hezbollah, so while there’s still a lot of uncertainty surrounding all of this, Israel’s government is no doubt generally happy with how things have progressed, so far, as this could mean Syria is no longer a reliable corridor for them, especially for the purposes of getting weapons to Hezbollah in southern Lebanon, along Israel’s northern border.
That said, this same group isn’t exactly a fan of Israel, and is backed by Turkey, which has been highly critical of Israel’s actions in Gaza and Lebanon.
So it’s an incredibly tumultuous moment in Syria, right now, and in this region, as a whole, because the conflict in Syria has been super impactful on everyone thereabouts, to varying degrees, and this ending to this long-lasting civil war could lead to some positive outcomes, like Syrian refugees who have been scattered across neighboring countries being able to return home without facing the threat of violence, and the release of political prisoners from infamous facilities, some of which have already been emptied by the rebels—but especially in the short-term there’s a lot of uncertainty, and it’ll likely be a while before that uncertainty solidifies into something more knowable and predictable, as at the moment, much of the country is still controlled by various militia groups backed by different international actors, including Kurdish-led forces backed by the US, and forces allied with Turkey in the north.
So this change of official governance may shuffle the deck, but rather than stabilizing things, it could result in a new conflict catalyzed by the power vacuum left by the Assad government and its allies, if rebel forces—many of which have been labeled terrorists by governments around the world, which is another wrinkle in all this—if they fail to rally behind one group or individual, and instead start fighting each other for the opportunity to become the country’s new dominant force.
Show Notes
https://www.nytimes.com/2024/12/08/world/middleeast/syria-hts-jolani.html
https://www.nytimes.com/2024/12/06/briefing/syria-civil-war-assad.html
https://www.wsj.com/world/middle-east/assads-rule-collapses-in-syria-raising-concerns-of-a-vacuum-95568f13
https://www.nytimes.com/2024/12/02/world/middleeast/syria-rebels-hts-who-what.html
https://www.washingtonpost.com/national-security/2024/12/07/syria-rebels-biden-intelligence-islamists/
https://apnews.com/article/turkey-syria-insurgents-explainer-kurds-ypg-refugees-f60dc859c7843569124282ea750f1477
https://apnews.com/article/israel-hamas-war-gaza-lebanon-news-7-december-2024-53419e23991cfc14a7857c82f49eb26f
https://apnews.com/article/syria-assad-sweida-daraa-homs-hts-qatar-816e538565d1ae47e016b5765b044d31
https://www.nytimes.com/2024/12/08/world/middleeast/syria-damascus-eyewitness-assad.html
https://www.nytimes.com/article/syria-civil-war-rebels.html
https://www.nytimes.com/live/2024/12/08/world/syria-war-damascus
https://en.wikipedia.org/wiki/Ba%27ath_Party
https://en.wikipedia.org/wiki/1963_Syrian_coup_d%27%C3%A9tat
https://en.wikipedia.org/wiki/Hafez_al-Assad
https://en.wikipedia.org/wiki/Syrian_revolution
https://www.cfr.org/article/syrias-civil-war
https://en.wikipedia.org/wiki/Syrian_civil_war
https://en.wikipedia.org/wiki/Bashar_al-Assad
https://en.wikipedia.org/wiki/Fenethylline
https://carnegieendowment.org/research/2024/07/border-traffic-how-syria-uses-captagon-to-gain-leverage-over-saudi-arabia?lang=en
https://en.wikipedia.org/wiki/Northwestern_Syria_offensive_(December_2019_%E2%80%93_March_2020)
https://en.wikipedia.org/wiki/2024_Syrian_opposition_offensives
https://www.bbc.com/news/articles/c8j99447gj1o
https://apnews.com/article/syria-assad-rebels-war-israel-a8ecceee72a66f4d7e6168d6a21b8dc9
https://www.nytimes.com/live/2024/12/09/world/syria-assad-rebels
https://www.nytimes.com/2024/12/09/world/middleeast/israel-assad-syria.html
https://apnews.com/article/iran-mideast-proxy-forces-syria-analysis-c853bf613a6d6af7f6aa99b2e60984f8
https://www.nytimes.com/2024/12/09/briefing/irans-very-bad-year.html
https://apnews.com/article/syria-hts-assad-aleppo-fighting-2be43ee530b7932b123a0f26b158ac22
https://apnews.com/article/syria-insurgents-aleppo-iran-russia-turkey-abff93e4f415ebfd827d49b1a90818e8
https://www.nytimes.com/2024/12/06/world/middleeast/syria-rebels-hama-homs.html
https://en.wikipedia.org/wiki/Syrian_civil_war
https://en.wikipedia.org/wiki/Arab_Spring

This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit letsknowthings.substack.com/subscribe
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COP 29
3 дек· Let's Know Things
This week we talk about emissions, carbon credits, and climate reparations.
We also discuss Baku, COP meetings, and petrostates.
Recommended Book: The Struggle for Taiwan by Sulmaan Wasif Khan
Transcript
In 2016, a group of 195 nations signed the Paris Agreement under the United Nations Framework Convention on Climate Change, usually just called the Paris Agreement, which was negotiated the previous year, and which, among other things, formalized the idea of attempting to keep the global average temperature from increasing by 1.5 C, which is about 2.7 F, above pre-industrial levels.
The really bad stuff, climate-wise, was expected to happen at around 2 degrees C above that pre-industrial level, so the 1.5 degrees cutoff made sense as sort of a breakwater meant to protect humanity and the natural world from the most devastating consequences of human-amplified climate change.
This has served decently well as a call-to-arms for renewable energy projects and other efforts meant to reduce greenhouse gas emissions, and many nations have actually made really solid strides in that direction since this agreement was formalized, dramatically truncating their emissions in a variety of ways, while also laying the groundwork for long-term reductions by installing a whole lot of solar and wind, reviving old and building new nuclear power facilities, reinforcing and expanding their grids, including adding all sorts of large-scale battery storage, and figuring out ways to reduce energy consumption, which has allowed for the shut-down of coal and oil plants.
Shorter-term solutions, like replacing more polluting and emitting sources of energy, like coal, with gas, have also put a big dent in overall global emissions, especially for entities like the US and Europe; this isn’t ideal as a permanent measure, because there are still a lot of emissions associated with gas, especially its transport, because of leakage, and gas itself, in the atmosphere, has really significant greenhouse properties, but in the short-term this has proven to be one of the most impactful solutions for some nations and large corporations, and it’s increasingly being seen as a transitionary measure, even by those who oppose the use of any fossil fuels long-term.
Things have been going decently well, then, even if progress is still far short of where it needs to be for most countries to meet their Paris Agreement commitments, and far slower than many people who are watching this space, and analyzing whether we’ll be able to avoid triggering those much-worse climate outcomes, would prefer.
One issue we’re running into, now, is that those original commitments were a little fuzzy, as the phrase “preindustrial period” could mean many different periods, even if it’s commonly assumed to be something like 1850 to 1900, in the lead-up to humanity’s full-on exploitation of fossil fuels and the emergence of what we might call the modern era—society empowered by things like coal and oil and gas, alongside the full deployment of electrical grids.
Throughout this period, though, from the mid-19th century to today, the climate has experienced huge swings year to year, and decade to decade. The evidence showing that we humans are throwing natural systems way off their equilibrium are very clear at this point, and it isn’t a question of whether we’re changing the climate—it’s more a question of how much, how quickly, and compared to what; what baseline are we actually using, because even during that commonly used 1850 to 1900 span of time, the climate fluctuated a fair bit, so it’s possible to pick and choose baseline numbers from a range of them depending on what sort of picture you want to paint.
Research from the World Meteorological Organization in 2022 found that, as of that year, we were probably already something like 1.15 degrees C above preindustrial levels, but that it was hard to tell because La Niña, a weather phenomenon that arises periodically, alongside its opposite, El Niño, had been cooling things down and dampening the earth-warming impacts of human civilization for about three years.
They estimated, taking La Niña’s impact into consideration, that the world would probably bypass that breakwater 1.5 degrees C milestone sometime in the next four years—though this bypassing might be temporary, as global temperatures would increase for a few years because of the emergence of El Niño.
Adding to the complexity of this calculation is that aforementioned variability in the climate, region to region, and globally. The WMO estimated that through 2027, the world is likely to fluctuate between 1.1 and 1.8 degrees C above preindustrial levels—and that at that higher range, El Niño might tip things into the especially dangerous 2 degree C territory the Paris Agreement was supposed to help us avoid.
By late-2024, it was becoming increasingly obvious that the world had stepped past the 1.5 degrees threshold into unfamiliar climactic terrain.
Three of the five leading research groups that keep tabs on this matter have said that in addition to 2024 being the warmest year on record, it will also be the first year we’ve ever surpassed that 1.5 degree level.
Notably, simply popping up above 1.5 degrees doesn’t suggest we’re now permanently living in that long worried about climate nightmarish world: there are significant, normal fluctuations in this kind of thing, alongside those associated with the El Niño/La Niña patterns; there are a lot of variables acting upon our climate, in other words, in addition to the human variables that are pushing those averages and fluctuating ranges up, over time.
The concern here, though, even if we drop back down below 1.5 degrees C for a while is that this temperature band opens up a whole new spectrum of weather-related consequences, ranging from substantial, persistent, crop-killing, barely survivable heat and drought in some parts of the world, to things like larger, more frequent, and more difficult to predict storm systems, like the ones we’ve already seen in abundance this and last year, but bigger and wilder and in more areas that don’t typically see such storms.
What I’d like to talk about today is what happened at a recent climate-policy focused meeting, COP29, and the international response to that meeting.
—
The United Nations Conference of the Parties of the UN Climate Change Conference, or COP meetings, are held every year in a different host country, and they’re meant to serve as a formal space where governments can present their goals and boast of their climate-related accomplishments. They also serve as a platform for negotiations related to things like emissions standards and goal-setting, like that aforementioned 1.5 degrees C temperature level we’ve been trying to avoid hitting.
The most recent of these meetings, COP29, was held in Baku, the capitol of Azerbaijan, in mid- to late-November of 2024. And that location was pretty controversial from the get-go because Azerbaijan is a petro-state: its authoritarian government basically funded and sustained by the sale of oil and gas, all of which flows through a state-owned, corruption-laden, local elite-profiting energy company.
This isn’t the first time a full-on petro-state has hosted a COP meeting, as COP28 was held in Dubai, in the UAE, which was also controversial.
But this one was seen as a step even further toward what might read as the appropriation or capture of the COP meetings for the benefit of fossil fuel entities, as the meeting was partly hosted by so-called official partners, which were fossil fuel business interests directly owned by the country’s president, while others weren’t directly owned, but were connected to his family’s other businesses, all of them thus linked to both authoritarian corruption, and the wealth associated with fossil fuel focused economics.
As a result, there were allegations that this whole meeting was premised on providing a notorious source of greenhouse gas emissions, which has every reason to try to keep those emitting products available for as long as possible, a venue for greenwashing their efforts, while also giving them the power to moderate discussions related to global emissions targets and other climate change-oriented issues; a major conflict of interest, basically.
The Azerbaijani president, leading up to the meeting, countered that critiques of his country’s government and human rights record and prominence as a fossil fuel exporter were all part of a smear campaign, and that these unwarranted, preemptive criticisms wouldn’t stop those running COP29 from achieving their goal of helping the world “cope with the negative impacts of climate change.”
That statement, too, was criticized, as it implies fossil fuel are more interested in pushing the world to adapt to a climate change and its impacts, rather than attempting to halt the emissions that are causing said climate change; many such companies seem keen to keep pumping oil and burning coal and gas forever, in other words, and their efforts in this regard thus tend to orient around figuring out what the new, warmer, more chaotic world looks like, rather than entertaining the idea of changing their business model in any substantial way.
So leading up to this meeting, expectations were low, and by some estimates and according to some analysis, those low expectations were met.
Article 6 of the Paris Agreement was a big topic of discussion, for instance, as this article outlines how countries can cooperate with each other to reach their climate targets—and this collaboration is predicated on a carbon credit system.
So if County A reduces their emissions by more than the targets set by this group, they can sell the gap, the amount of carbon equivalents not emitted into the atmosphere, to Country B, which failed to reach its targets, but which can bring its emissions into accord by acquiring those credits, which according to such a system count as emissions reductions.
This same general concept applies to companies, like airlines and even fossil fuel producing energy companies, as well.
But while the agreement reached at COP29 does establish a UN-backed carbon credit trading body, which has been heralded as a key step on the way toward concluding Article 6 negotiations that could open up a bunch of new finance for smaller and poorer countries in particular—as they could sell their carbon credits to their wealthier, more emitting fellow COP members—despite that progress, the scaffolding that exists now is generally considered to be leaky and rife with abuse potential, as the UN body doesn’t really have the teeth to enforce anything or do much checking into claims made by governments and corporations. A lot of this system is basically on the honor system, and that means just like the stated goals presented by governments and corporations as to when they’re be net-zero and when they’ll reach the even further-off goal of zero emissions, these claims are often worth little or nothing because there’s no mechanism for punishing entities that fail to live up to their boasts and ambitions.
A company or government could say they plan to hit net-zero by 2035, then, but if they don’t do anything that would allow them to hit that goal in that lead-up to that year, they get to keep claiming to be part of the solution, without having to do any of the work to actually achieve anything. This grants them the veil of sustainability, and without any real consequence.
Also notable here is that this meeting’s progress on Article 6, establishing that UN body, was pushed through using a questionable procedural move that disallowed negotiation, despite this same proposal having been dismissed after negotiation at previous COP meetings.
So while it’s arguably good to see progress of any kind on these matters, that this component of Article 6 was voted down previously, but then forced through using what amounts to a technicality early on at COP29 is being side-eyed by a lot of COP watchers who worry about these meetings being coopted by forces that are keen to see this carbon system formalized not because it will help the world reduce emissions, but because it will create a new asset class worth hundreds of billions of dollars, which many of them hope to profit from.
It’s worth noting, too, that all of the carbon credit markets that have been tried, so far, have either collapsed or served as mechanisms for greenwashing emitting activities; less than 16% of carbon credits issued up till this point represent actual, provable emissions reductions, and most of them are basically just dressed-up money grabs. This new move, despite representing progress of a sort, isn’t being seen as substantial enough to change the current carbon credit paradigm, as those issues have not been addressed, yet.
All that said, the big news out of COP29 was a deal that requires wealthier nations make a big payout to poorer nations in the form of climate finance; so paying for renewable energy infrastructure, paying for flood walls, things like that, so that poorer countries can leap-frog the fossil fuel era, and so they can deal with and survive the consequences of climate change, which is something they bear a lot less responsibility for than wealthier, far more emitting countries.
Those on the receiving end, representing the nations that will receive payments via this plan, were aiming for a minimum of $500 billion, payable in full by 2035, and they were pushing for a lot more than that: something like $1.3 trillion.
The final sum was lower than the minimum target, though, weighing in at just $300 billion; which isn’t great in contrast to those hoped-for figures, though on the upside, it is three-times what was promised as part of a previously negotiated deal from 2009.
Representatives from poorer nations have expressed their discontentment with this agreement, saying that the sum is paltry compared to the challenges they face in trying to shift to renewables while also scrambling to defend against increasingly dangerous temperatures and weather patterns.
They’ve also criticized the meeting’s leadership for basically gaveling this version of the agreement through before it could be commented upon by those on the receiving end of these payouts.
Summing up the consequences of this meeting, then, a lot of money matters were discussed, which is important, and more money was promised to poorer nations by wealthy nations than at earlier meetings, which is also generally considered to be vital to this transition, and to overall fairness within this context—since again, these nations have contributed very little to the issue of climate change, compared to wealthier nations, and they bear a disproportionate amount of the negative consequences of climate change, as well.
There are serious concerns that some of these things were passed without the usual level of democratic consideration, and that some of the money talk, especially related to carbon credits, could represent basically a cash-grab by entities that aren’t super-interested in actually changing the status quo, but are very interested in making potentially tens or hundreds of billions of dollars from what amounts to a fabricated asset class that they can spin-up out of nothing.
There’s a chance that some of this, even the stuff that’s sparking the most concern at the moment, and which seems to be a cynical appropriation of this group and this whole process, could actually lead to more substantial agreements at future COP meetings.
COP30 will be based in Brazil, and Brazil’s current leadership at least has shown itself to be decently concerned with actual climate issues, as opposed to just the money associated with them. And previous meetings have tended to build upon the agreements of their precursors—so the establishment of a UN body for carbon credits could clear the way for an actually empowered, punishment-capable institution that holds companies and countries to their word on things, rather than simply serving as a symbolic institution that watches over a made-up asset class, which seems to be the case, currently. That asset class could become less prone to abuse and manipulation, and could help with this energy transition as it’s ostensibly meant to; but that’ll be determined in large part by what happens at the next couple meetings.
However this policymaking plays out, we’ve stepped into a world in which 1.5 C is no longer a far off concern, but a lived reality, at least periodically, and that could nudge things more in the direction of practical outcomes, rather than aspirations and fuzzy goals from this and similar bodies; though the consequences of this and the last few COP meetings have arguably led to luke-warm progress in that direction, at best.
Show Notes
https://www.wsj.com/articles/u-n-negotiators-take-key-step-to-global-carbon-deal-1e23433e
https://unfccc.int/process-and-meetings/the-paris-agreement/article-64-mechanism
https://en.wikipedia.org/wiki/Petroleum_industry_in_Azerbaijan
https://en.wikipedia.org/wiki/United_Nations_Climate_Change_Conference
https://www.semafor.com/article/11/24/2024/the-cop29-deal-is-even-more-disappointing-than-it-looks
https://apnews.com/article/united-nations-climate-talks-baku-azerbaijan-finance-8ab629945660ee97d58cdbef10136f35
https://www.theguardian.com/environment/2024/nov/24/cop29s-new-carbon-market-rules-offer-hope-after-scandal-and-deadlock
https://www.businessgreen.com/blog-post/4382153/cop29-baku-breakthrough-disappoints-trigger-fresh-wave-climate-finance
https://news.mit.edu/2023/explained-climate-benchmark-rising-temperatures-0827
https://www.theguardian.com/environment/2024/nov/18/climate-crisis-world-temperature-target
https://grist.org/economics/how-the-world-gave-up-on-1-5-degrees-overshoot/
https://www.washingtonpost.com/climate-environment/2024/11/27/global-warming-fight-paris-agreement-future/
https://en.wikipedia.org/wiki/Paris_Agreement

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Bluesky
26 ноя· Let's Know Things
This week we talk about Mastodon, Threads, and twttr.
We also discuss social platform clones, user exoduses, and communication fractures.
Recommended Book: Invisible Rulers by Renée DiResta
Transcript
In 2006, a prototype of a software project called twttr, t-w-t-t-r, was developed by Jack Dorsey and Florian Weber, that name used because the full twitter.com domain, the word with all its vowels, was already owned and in use, and because the vowel-less version of the word only had five letters, which aligned with SMS short codes for the US, which were basically shorthand versions of telephone numbers that were used in lieu of such numbers by mobile network operators at the time.
Going without vowels was also super trendy in Silicon Valley back then, due to the flourishing of online success stories like Flickr.
Twitter, in that early incarnation, was meant to be a one-to-many SMS service, which means sending text messages from one phone to multiple phones, rather than one to one, which was the default.
This early prototype was used internally at Odeo, which was an early-2000s web-based media directory, founded by some of the same people who eventually founded Twitter as a company, and random fun fact, Kevin Systrom who eventually cofounded Instagram, was an intern at Odeo one summer, back in 2005, before the company was sold in 2007.
Twitter was spun out as its own company the same year Odeo was sold, and by 2009 it had become the hot new thing in the burgeoning world of the web—folks were sending tens of thousands of tweets, messages that were shared one-to-many, though online, on the web, instead of via SMS, by the end of 2007, and that was up to 50 million a day by early 2010.
The whole concept of Twitter, then, from its name, which was initially predicated on SMS short codes, to its famous 140-character limit, was based on earlier technology, that of text messages, and that sort of limitation—which has in the years since been messed with a bit, the company slowly adding more capabilities, including the sharing of images and videos and other media types—but those limitations have in part helped define this platform from its peers, as while Facebook expanded and expanded and expanded to gobble up all of its general-purpose social networking competitors, Instagram dominated the photo-posting space, and YouTube has locked down the long-form video world for more than a decade, twitter held its own as a less-sprawling, less successful by most metrics, but arguably more influential network because it was a place that was optimized for concision and up-to-the-minute conversation, as opposed to every other possible thing it could be.
This meant that while it didn’t have the same billion-plus user base, and it didn’t have the ever-growing ad-revenue that Meta’s platforms could claim, it was almost always the more culturally relevant network, its users sharing more up-to-date information, its communities generating more memes, which were then spread to other networks days or weeks later, and it became a hotbed of debate and exclusive information from journalists, politicians, and business owners.
A lot changed when Tesla and SpaceX owner Elon Musk bought the network in October of 2022, changing the name to X in mid-2023, and pivoting the company dramatically in basically every way: removing a lot of those earlier limitations, cutting the number of employees by something like 80%, and losing a lot of advertisers because of his many ideological statements and political stances—including his backing of former president and now president-elect Donald Trump in the 2024 election.
What I’d like to talk about today are the twitter clones that have popped up in recent years, and one in particular that, despite its still-small size and arguable underdog status, is being heralded as the possible successor of Twitter—in that original, influential and scrappy sense—and what makes this network, Bluesky, different from other would-be successors in this space.
—
The leadership at X, including owner Musk, recently promoted a new feature on the app that refocuses attention away from buttons like likes and shares in favor of views—a metric of engagement that some analysts have claimed is meant to conceal the fact that the network is seeing a lot less actual, human engagement, and because it feeds people posts it wants them to see, this change allows them to artificially inflate the seeming activity on these posts for advertising purposes: they can say, hey look how much attention these posts are getting, please buy some ads, and that allows them to charge a higher price than if they were using those more conventional engagement metrics, which are apparently collapsing.
As a company, X has been hemorrhaging money since Musk took over, its ad revenue, which makes up the majority of its income, dropping by nearly half from 2022 to 2023, and it lost another 24% from the first half of 2023 to the first half of 2024.
One estimate released in November of 2024 suggests that X may have missed out on nearly $6 billion in lost ad revenue since Musk took over in 2022, mostly because of all the decisions he’s made—including basically going to war with many of the company’s top advertisers, publicly criticizing and threatening them for not paying more and buying more ads—but also his many foot-in-mouth statements and, at times, support of extremist causes and characters.
He’s attempted to bring some of those advertisers back, with mixed success, as the ones that have returned after boycotts have usually invested far less than in the past, and most of the ad-buyers that have filled the gaps are paying a lot less per ad unit than before, and are generally of a lower quality: a lot of cheaply products from low-grade Chinese factories, scams of various sorts, and/or products sold by companies that are politically conservative culture-warriors, aimed at the network’s increasingly right-leaning and far-right audience; a bit like what we’ve seen on Fox News over the past decade or so, following waves of sexual assault and other scandals on that network, which led to similar advertiser exoduses.
It’s also been estimated that the network lost a substantial portion of its total user-base following Musk’s takeover, including something like a third of all users in the UK and around a fifth in the United States, all just in 2024, up till the month of September.
That loss of revenue and users was enough to cause Fidelity, which owns a multi-million-dollar stake in X, to write down the value of its investment by more than 75%; in July of 2024, it estimated the company, which was purchased for about $44 billion by Musk was only worth about $9.4 billion; a substantial loss for them and their investment, but also for all other shareholders.
All of which leads up to what happened in the wake of the US’s most recent presidential election, during which Musk shelled out more than $100 million to support Trump’s campaign, while also pulling out all the stops to promote the former president on X—something that many users weren’t too keen on, as the owners of other social networks have been criticized and threatened in the past for showing any hint of political bias in their business decisions or personal life, and this was incredibly overt.
This heavy-handed biasing of the network toward Trump, and that very public support of the candidate by X’s owner, sparked a new exodus from the platform, some people simply quitting social media entirely, at least for a while, but others looking for something of the same, and thus checking out the twitter-clones that have popped up over the past handful of years; the majority of which only actually gained real momentum in the wake of Musk’s takeover and rebranding of the network a few years ago.
One of those twitter-alternatives, Mastodon, attracted a lot of early attention because of what it offered that twitter, and other mainstream social networks, did not: an open source platform based on the ActivityPub protocol, which means it can connected to other ActivityPub-capable social networks.
So in theory at least, you can have a profile on a Mastodon instance—which a self-hosted Mastodon network, a social platform island of sorts that is connected to other such islands, the totality of the social network made up of a huge number of such instances, all interconnected in various ways, and each offering different rules and focuses—you can have that profile on that island function on other networks beyond Mastodon, as well.
And that’s interesting because it means your work, your posts and conversations, are all more portable, allowing you to move to different networks if you choose, without losing your history and connections and credibility, because it’s all compatible with other networks.
So it’s almost like having a Facebook profile that you can also use on Twitter and Instagram and YouTube, if all those networks played well together and shared information and post types between each other; that’s the promise of a protocol like ActivityPub and a network like Mastodon.
Mastodon was made public in 2016 as a nonprofit, has basically the same feature-set as pre-Musk twitter, and while it had already gained a steady stream of users from previous upsets at networks like Twitter, Facebook, and Tumblr, among other more mainstream networks, it attained a huge number of new users in 2022 on the news that Musk would be taking over Twitter, hitting around 2.5 million monthly active users by the end of that year.
That number has since dropped to just under a million as of September 2024, suggesting that the initial wave of enthusiasm has crested; though the platform continues to see a lot of support within some online communities, and its interactivity with other networks, including Meta’s Threads, which has also added ActivityPub functionality, means that its numbers will always be a little weird, as folks can read Mastodon content and interact with Mastodon users from other, connected networks.
Speaking of which, Threads is a twitter-clone that was released by Facebook and Instagram parent-company Meta in July of 2023, and it attained more than 100 million users in just five days, which set a new record for the rate of user-attainment.
It took a little while for the network to be released beyond the US, especially in the EU, due to regulatory concerns, and an earlier version of the app was more of a Snapchat-clone, but that one did badly enough with users that the company pulled it from app stores and reused the brand for this new app a few years after that failed experiment.
Threads was able to achieve that high adoption rate in part because it promoted the app heavily on Instagram and Facebook, and in part because of Musk’s takeover of, and changes to Twitter. Folks looking for a Twitter-alternative, but who didn’t want to deal with the comparable complexity of something like Mastodon flooded into this new network, and Meta’s decision to push politics and other serious discussions to the algorithmic back-burner made it a friendly space for brands and influencers who didn’t want to be associated with the chaotic forces that were swirling around the newly rebranded X.
So Threads is similar to Twitter, but it supports ActivityPub, like Mastodon, and has similar community guidelines to other Meta products—which means there’s a lot less nudity, and fewer references to illegal things, like drugs.
It was recently announced that Threads has surpassed 275 million monthly active users, which puts it within spitting distance of independent assessments of X’s monthly active user figure, which Musk recently said was around 600 million, but Sensor Tower says is closer to 318 million, as of October of 2024.
There’s been some hubbub about the possibility that Threads might be seeing losses in activity on the network, though, including a drop in how much time users spend on it. This is potentially the result of that decision to keep controversial stuff more or less hidden, and to heavy handedly, compared to other networks, at least, curate the feeds of users, who have very limited power over what they see in their feeds.
The company announced they would be adjusting the algorithm significantly in the near-future, in order to allow more breaking news and other such posts to rise to the forefront, and it’s thought that this might be a response to the recent success of another twitter-clone called Bluesky.
Bluesky was founded in 2021, and it was originally, back in 2019, an initiative by Twitter to see if decentralizing the network might be possible—making Twitter just one network in a fediverse of networks, basically. As a result, it’s perched atop an open communication protocol it developed called the AT Protocol, which is distinct from, but similar in utility to ActivityPub, in that it allows social platforms to link up and interact with each other, despite being different networks.
Bluesky is superficially similar to pre-Musk twitter, but one of its killer apps, one of the things that distinguishes it from most other options in this space right now, alongside the AT Protocol, is the ability to choose your own algorithm, so that rather than having Meta decide what you see in your feed, and rather than just seeing a chronological list of posts from people you follow, you can also choose to follow curated lists of people, to tweak the word and content filters you use, the way posts are arranged, and an abundance of other options; it’s pretty versatile, and you can easily flip between different filters to peruse different sorts of content filtered in different ways.
The network launched on an invite-only basis in 2023, and was fully opened to the public in February of 2024, at which point it had already attracted more than 3 million users.
Shortly after that launch, Jack Dorsey—the co-founder of Twitter and Bluesky—left Bluesky’s board, saying that the company was making all the mistakes Twitter made and that he was stepping aside to focus on another decentralized social network he founded, Nostr, instead.
Bluesky continued to gain users though, relatively slowly most of the time, though whenever Musk did something controversial they would typically see a larger influx, as was the case for all twitter-clones.
In October of 2024, several changes to Twitter, including one that basically rendered its block feature useless, and another that said the company could use all posted content for AI training purposes, led to a surge in Bluesky adoption, bringing in more than 1.2 million users in just two days.
That paled in comparison to what happened in November, following the election, though, when Bluesky started to grow by about a million users a day, catapulting its user base to more than 20 people million as of November 20—a surge that rocketed the app to the top of the app charts. And for context, the company only has about 20 employees, as of late-November, so that’s a huge employee-to-user ratio.
Bluesky is not without controversy, as the company’s leadership has already been criticized for taking investment money from Blockchain Capitol, which could change its incentives, and though it’s approaching 25 million users as of the day I’m recording this, up from a small fraction of that just a month ago, that’s less than 10% of what Threads and X have, and that growth is almost certain to slow sometime soon, once the post-election flight from X has subsided; so it’s possible this surge could be similar to what Mastodon saw not too long ago—a big surge in users, followed by a ebb in activity as people stop using the network for various reasons.
The company has also been experiencing growing pains, in terms of tech, because of that sudden, much larger scale, but also in terms of culture.
All those newbies joining the network all at once are changing the platform’s makeup, accidentally trampling Bluesky’s traditions and folkways, while also changing the conversational mores and topics and trends from how they were, pre-user-flood.
Bluesky is currently the one the beat in terms of growth rate, in other words, and it seems to have achieved significant cultural resonance following the election, especially for people on the left of the political spectrum who no longer feel welcome or comfortable on X.
But both Mastodon and Threads have represented the same in recent years, too, though their growth largely the consequence of X’s failure, not necessarily the result of their own accolades and advantages.
It’s possible what we’re seeing here, then, is not a struggle to become the next Twitter, but rather the emergence of a fractured text-based social media ecosystem, each platform offering something the others don’t, or favoring some groups and their needs over those of others, and that, in turn, leading to a more fractured communication ecosystem, and maybe reinforced filter bubbles, as well.
Show Notes
https://www.fastcompany.com/91230935/the-website-tracks-how-fast-bluesky-is-growing-in-near-real-time
https://techcrunch.com/2024/10/18/bluesky-surges-into-the-top-5-as-x-changes-blocks-permits-ai-training-on-its-data/
https://en.wikipedia.org/wiki/Threads_(social_network)
https://news.sky.com/story/the-x-exodus-could-bluesky-spike-spark-end-of-elon-musks-social-media-platform-13254722
https://www.newsweek.com/elon-musk-hides-x-engagement-figures-user-exodus-1990065
https://www.cnbc.com/2024/10/31/metas-threads-app-now-has-275-million-users-zuckerberg-says.html
https://www.odwyerpr.com/story/public/21747/2024-08-27/ad-revenue-freefall-continues-at-x.html
https://www.warc.com/content/paywall/article/warc-curated-datapoints/counting-the-cost-xs-59bn-in-lost-ad-revenue-since-its-2022-takeover/en-gb/157583
https://www.euronews.com/my-europe/2024/11/21/are-users-leaving-elon-musks-x-en-masse-and-where-are-they-heading
https://www.euronews.com/next/2024/10/01/x-has-lost-75-of-its-value-since-elon-musk-took-over
https://www.cnn.com/2024/11/06/business/elon-musk-election-bet/index.html
https://anderegg.ca/2024/11/15/maybe-bluesky-has-won
https://www.nytimes.com/2024/11/17/technology/bluesky-growing-pains.html
https://thenextweb.com/twitter/2011/07/15/5-years-ago-today-twitter-launched-to-the-public/
https://www.businessinsider.com/how-twitter-was-founded-2011-4?op=1
https://www.nytimes.com/2010/10/31/technology/31ev.html
https://en.wikipedia.org/wiki/Twitter
https://en.wikipedia.org/wiki/X_Corp.

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AI Scaling Walls
19 ноя· Let's Know Things
This week we talk about neural networks, AGI, and scaling laws.
We also discuss training data, user acquisition, and energy consumption.
Recommended Book: Through the Grapevine by Taylor N. Carlson
Transcript
Depending on whose numbers you use, and which industries and types of investment those numbers include, the global AI industry—that is, the industry focused on producing and selling artificial intelligence-based tools—is valued at something like a fifth to a quarter of a trillion dollars, as of halfway through 2024, and is expected to grow to several times that over the next handful of years, that estimate ranging from two or three times, to upward of ten or twenty-times the current value—again, depending on what numbers you track and how you extrapolate outward from those numbers.
That existing valuation, and that projected (or in some cases, hoped-for growth) is predicated in part on the explosive success of this industry, already.
It went from around $10 billion in global annual revenue in 2018 to nearly $100 billion in global revenue in 2024, and the big players in this space—among them OpenAI, which kicked off the most recent AI-related race, the one focusing on large-language models, or LLMs, when it released its ChatGPT tool at the tail-end of 2022—have been attracting customers at a remarkable rate, OpenAI hitting a million users in just five days, and pulling in more than 100 million monthly users by early 2023; a rate of customer acquisition that broke all sorts of records.
This industry’s compound annual growth rate is approaching 40%, and is expected to maintain a rate of something like 37% through 2030, which basically means it has a highly desirable rate of return on investment, especially compared to other potential investment targets.
And the market itself, separate from the income derived from that market, is expected to grow astonishingly fast due to the wide variety of applications that’re being found for AI tools; that market expanded by something like 50% year over year for the past five years, and is anticipated to continue growing by about 25% for at least the next several years, as more entities incorporate these tools into their setups, and as more, and more powerful tools are developed.
All of which paints a pretty flowery picture for AI-based tools, which justifies, in the minds of some analysts, at least, the high valuations many AI companies are receiving: just like many other types of tech companies, like social networks, crypto startups, and until recently at least, metaverse-oriented entities, AI companies are valued primarily based on their future potential outcomes, not what they’re doing today.
So while many such companies are already showing impressive numbers, their numbers five and ten years from now could be even higher, perhaps ridiculously so, if some predictions about their utility and use come to fruition, and that’s a big part of why their valuations are so astronomical compared to their current performance metrics.
The idea, then, is that basically every company on the planet, not to mention governments and militaries and other agencies and organizations will be able to amp-up their offerings, and deploy entirely new ones, saving all kinds of money while producing more of whatever it is they produce, by using these AI tools. And that could mean this becomes the industry to replace all other industries, or bare-minimum upon which all other industries become reliant; a bit like power companies, or increasingly, those that build and operate data centers.
There’s a burgeoning counter-narrative to this narrative, though, that suggests we might soon run into a wall with all of this, and that, consequently, some of these expectations, and thus, these future-facing valuations, might not be as solid as many players in this space hope or expect.
And that’s what I’d like to talk about today: AI scaling walls—what they are, and what they might mean for this industry, and all those other industries and entities that it touches.
—
In the world of artificial intelligence, artificial general intelligence, or AGI, is considered by many to be the ultimate end-goal of all the investment and application in and of these systems that we’re doing today.
The specifics of what AGI means varies based on who you talk to, but the idea is that an artificial general intelligence would be “generally” smart and capable in the same, or in a similar way, to human beings: not just great at doing math and not just great at folding proteins, or folding clothes, but pretty solid at most things, and trainable to be decent, or better than decent at potentially everything.
If you could develop such a model, that would allow you, in theory, to push humans out of the loop for just about every job: an AI bot could work the cash register at the grocery store, could drive all the taxis, and could do all of our astronomy research, to name just a few of the great many jobs these systems could take on, subbing in for human beings who would almost always be more expensive, but who—this AI being a generalist and pretty good at everything—wouldn’t necessarily do any better than these snazzy new AI systems.
So AGI is a big deal because of what it would represent in terms of us suddenly having a potentially equivalent intelligence, an equivalent non-human intelligence, to deal with and theorize over, but it would also be a big deal because it could more or less put everyone out of work, which would no doubt be immensely disruptive, but it would also be really, really great for the pocketbooks of all the companies that are currently burdened with all those paychecks they have to sign each month.
The general theory of neural network-based AI systems, which basically means software that is based in some way on the neural networks that biological entities, like mice and fruit flies and humans have in our brains and throughout our bodies, is that these networks should continue to scale as the number of factors that go into making them scale: and usually those factors include the size of the model—which in the case of most of these systems means the number of parameters it includes—the size of the dataset it trains on—which is the amount of data, written, visual, audio, and otherwise, that it’s fed as it’s being trained—and the amount of time and resources invested in its training—which is a variable sort of thing, as there are faster and slower methods for training, and there are more efficient ways to train that use less energy—but in general, more time and more resources will equal a more girthy, capable AI system.
So scale those things up and you’ll tend to get a bigger, up-scaled AI on the other side, which will tend to be more capable in a variety of ways; this is similar, in a way, to biological neural networks gaining more neurons, more connections between those neurons, and more life experience training those neurons and connections to help us understand the world, and be more capable of operating within it.
That’s been the theory for a long while, but the results from recent training sessions seem to be pouring cold water on that assumption, at least a bit, and at least in some circles.
One existing scaling concern in this space is that we, as a civilization, will simply run out of novel data to train these things on within a couple of years.
The pace at which modern models are being trained is extraordinary, and this is a big part of why the larger players, here, don’t even seriously talk about compensating the people and entities that created the writings and TV shows and music they scrape from the web and other archives of such things to train their systems: they are using basically all of it, and even the smallest payout would represent a significant portion of their total resources and future revenues; this might not be fair or even legal, then, but that’s a necessary sacrifice to build these models, according to the logic of this industry at the moment.
The concern that is emerging, here, is that because they’ve already basically scooped up all of the stuff we’ve ever made as a species, we’re on the verge of running out of new stuff, and that means future models won’t have more music and writing and whatnot to use—it’ll have to rely on more of the same, or, and this could be even worse, it’ll have to rely on the increasing volume of AI-generated content for future iterations, which could result in what’s sometimes called a “Habsburg AI,” referring to the consequences of inbreeding over the course of generations: and future models using AI-generated content as their source materials may produce distorted end-products that are less and less useful (and even intelligible) to humans, which in turn will make them less useful overall, despite technically being more powerful.
Another concern is related to the issue of physical infrastructure.
In short, global data centers, which run the internet, but also AI systems, are already using something like 1.5-2% of all the energy produced, globally, and AI, which use an estimated 33% more power to generate a paragraph of writing or an image, than task-specific software would consume to do the same, is expected to double that figure by 2025, due in part to the energetic costs of training new models, and in part to the cost of delivering results, like those produced by the ChatGPTs of the world, and those increasingly generated in lieu of traditional search results, like by Google’s AI offerings that’re often plastered at the top of their search results pages, these days.
There’s a chance that AI could also be used to reduce overall energy consumption in a variety of ways, and to increase the efficiency of energy grids and energy production facilities, by figuring out the optimal locations for solar panels and coming up with new materials that will increase the efficiency of energy transmission. But those are currently speculative benefits, and the current impact of AI on the energy grid is depletionary, not additive.
There’s a chance, then that we’ll simply run out of energy, especially on a local basis, where the training hubs are built, to train the newest and greatest and biggest models in the coming years. But we could also run out of other necessary resources, like the ginormous data centers required to do said training, and even the specific chips that are optimized for this purpose that are in increasingly short supply because of how vital this task has become for so many tech companies, globally.
The newest concern in this space, related to future growth, though, is related to what are called scaling laws, which refer to a variety of theories—some tested, some not yet fully tested—about how much growth you can expect if you use the same general AI system structure, and just keep pumping it up with more resources, training data, and training time.
The current batch of most powerful and, for many use-cases, most useful AI systems are the result of scaling basically the same AI system structure so that it becomes more powerful and capable over time. There’s delay between new generations because tweaks are made, all that training and feeding has to be done, but also because there are adjustments required afterward to optimize the system for different purposes and for stability.
But a slew of industry experts have been raising the alarm about a possible bubble in this space, not because it’s impossible to build more powerful AI, but because the majority of resources that have been pumped into the AI industry in recent years are basically just inflating a giant balloon predicated on scaling the same things over and over again, every company doing this scaling hoping to reach AGI or something close to AGI before their competitors, in order to justify those investments and their sprawling valuations.
In other words, it’s a race to a destination that they might not be able to reach, in the near-future, or ever, using the current batch of technologies and commonly exploited approaches, but they can’t afford to dabble in too many alternatives, at least not thoroughly, because there’s a chance if they take their eyes off the race they’re running, right now, one of their many also-super-well-funded opponents will get there first, and they’ll be able to make history, while also claiming the lion’s share of the profits, which could be as substantial as the entire economy, if you think of those aforementioned benefits of being able to replace a huge chunk of the world’s total employee base with equally capable bots.
The most common version of this argument, that the current generation of AI systems are hitting a point of diminishing returns—still growing and becoming more powerful as they scale, but not as much as anticipated, less growth and power per unit of resource, training time, size of dataset, and so on, compared to previous generations—and that diminishment means, according to this argument, we’ll continue to see a lot of impressive improvements, but should not longer expect the doubling of capability every 5 to 14 months that we’ve seen these past few years.
We’ve picked the low-hanging fruit, in other words, and everything from this point forward will be more expensive, less certain, and thus, less appealing to investors—while also potentially being less profitable, and thus, the money that’s been plowed into these businesses, thus far, might not payout, and we could see some large-scale collapses due to the disappearance of those resources that are currently funding this wave of AI-scaling, as a consequence.
If true, this would be very bad in a lot of ways, in part because these are resources that could have been invested in other things, and in part because a lot of hardware and know-how and governmental heft have been biased toward these systems for years now; so the black hole left behind, should all of that disappear or prove to be less than many people assumed, would be substantial, and could lead to larger-scale economic issues; that gaping void, that gravity well made worse because of those aforementioned sky-high valuations, which are predicated mostly on what these companies are expected to do in the future, not what they’re doing, today—so that would represent a lot of waste, and a lot of unrealized, but maybe never feasible in the first place, potential.
This space is maybe propped up by hype and outlandish expectations, in other words, and the most recent results from OpenAI and their upcoming model seem to lend this argument at least some credibility: the publicly divulged numbers only show a relatively moderate improvement over their previous core model, GPT4, and it’s been suggested, including by folks who previously ran OpenAI, that more optimizing after the fact, post-training, will be necessary to get the improvements the market and customers are expecting—which comes with its own unknowns and additional costs, alongside a lack of seemingly reliable, predictable scaling laws.
For their part, the folks currently at the top of the major AI companies have either ignored this line of theorizing, or said there are no walls, nothing to see here, folks, everything is going fine.
Which could be true, but they’re also heavily motivated not to panic the market, so there’s no way to really know at this point how legit their counter-claims might be; there could be new developments we’re not currently, publicly aware of, but it could also be that they’re already working those post-training augmentations into their model of scaling, and just not mentioning that for financial reasons.
AI remains a truly remarkable component of the tech world, right now, in part because of what these systems have already shown themselves capable of, but also because of those potential, mostly theorized, at this point, benefits they could enable, across the economy, across the energy grid, and so on.
The near-future outcomes, though, will be interesting to watch, as it could be we’ll see a lot of fluffed-up models that roughly align with anticipated scaling-laws, but which didn’t get there by the expected, training-focused paths, which would continue to draw questions from investors who had specific ideas about how much it would cost to get what sorts of outcomes, which in turn would curse this segment of the economy and technological development with more precarious footing than it currently enjoys.
We might also see a renewed focus on how these systems are made available to users: a rethinking of the interfaces used, and the use-cases they’re optimized for, which could make the existing (and near-future) models ever more useful, despite not becoming as powerful as anticipated, and despite probably not getting meaningfully closer to AGI, in the process.
Show Notes
https://arxiv.org/abs/2311.16863
https://www.weforum.org/stories/2024/07/generative-ai-energy-emissions/
https://epochai.org/blog/will-we-run-out-of-ml-data-evidence-from-projecting-dataset
https://www.semafor.com/article/11/13/2024/tiktoks-new-trademark-filings-suggest-its-doubling-down-on-its-us-business
https://arxiv.org/abs/2001.08361
https://archive.ph/d24pA
https://www.fastcompany.com/91228329/a-funny-thing-happened-on-the-way-to-agi-model-supersizing-has-hit-a-wall
https://futurism.com/the-byte/openai-research-best-models-wrong-answers
https://en.wikipedia.org/wiki/Neural_network_(machine_learning)
https://en.wikipedia.org/wiki/Neural_scaling_law
https://futurism.com/the-byte/openai-research-best-models-wrong-answers
https://futurism.com/the-byte/ai-expert-crash-imminent
https://www.theverge.com/2024/10/25/24279600/google-next-gemini-ai-model-openai-december
https://ourworldindata.org/artificial-intelligence?insight=ai-hardware-production-especially-cpus-and-gpus-is-concentrated-in-a-few-key-countries
https://blogs.idc.com/2024/08/21/idcs-worldwide-ai-and-generative-ai-spending-industry-outlook/
https://explodingtopics.com/blog/chatgpt-users
https://explodingtopics.com/blog/ai-statistics
https://www.aiprm.com/ai-statistics/
https://www.forbes.com/advisor/business/ai-statistics/
https://www.mckinsey.com/capabilities/quantumblack/our-insights/the-state-of-ai
https://www.researchgate.net/profile/Gissel-Velarde-2/publication/358028059_Artificial_Intelligence_Trends_and_Future_Scenarios_Relations_Between_Statistics_and_Opinions/links/61ec01748d338833e3895f80/Artificial-Intelligence-Trends-and-Future-Scenarios-Relations-Between-Statistics-and-Opinions.pdf
https://www.statista.com/outlook/tmo/artificial-intelligence/worldwide
https://en.wikipedia.org/wiki/Artificial_intelligence#Applications

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Online Tutoring
12 ноя· Let's Know Things
This week we talk about the Double Reduction Policy, gaokao, and Chegg.
We also discuss GPTs, cheating, and disruption.
Recommended Book: Autocracy, Inc by Anne Applebaum
Transcript
In July of 2021, the Chinese government implemented a new education rule called the Double Reduction Policy.
This Policy was meant, among other things, to reduce the stress students in the country felt related to their educational attainment, while also imposing sterner regulations on businesses operating in education and education-adjacent industries.
Chinese students spend a lot of time studying—nearly 10 hours per day for kids ages 12-14—and the average weekly study time for students is tallied at 55 hours, which is substantially higher than in most other countries, and quite a lot higher than the international average of 45 hours per week.
This fixation on education is partly cultural, but it’s also partly the result of China’s education system, which has long served to train children to take very high-stakes tests, those tests then determining what sorts of educational and, ultimately, employment futures they can expect.
These tests are the pathway to a better life, essentially, so the kids face a whole lot of pressure from society and their families to do well, because if they don’t, they’ve sentenced themselves to low-paying jobs and concomitantly low-status lives; it’s a fairly brutal setup, looked at from elsewhere around the world, but it’s something that’s kind of taken for granted in modern China.
On top of all that in-class schoolwork, there’s abundant homework, and that’s led to a thriving private tutoring industry. Families invest heavily in ensuring their kids have a leg-up over everyone else, and that often means paying people to prepare them for those tests, even beyond school hours and well into the weekend.
Because of all this, kids in China suffer abnormally high levels of physical and mental health issues, many of them directly linked to stress, including a chronic lack of sleep, high levels of anxiety, rampant obesity and everything that comes with that, and high levels of suicide, as well; suicide is actually the most common cause of death amongst Chinese teenagers, and the majority of these suicides occur in the lead-up to the gaokao, or National College Entrance Exam, which is the biggest of big important exams that determine how teens will be economically and socially sorted basically for the rest of their lives.
This recent Double Reduction Policy, then, was intended to help temper some of those negative, education-related consequences, reducing the volume of homework kids had to tackle each week, freeing up time for sleep and relaxation, while also putting a cap on the ability of private tutoring companies to influence parents into paying for a bunch of tutoring services; something they’d long done via finger-wagging marketing messages, shaming parents who failed to invest heavily in their child’s educational future, making them feel like they aren’t being good parents because they’re not spending enough on these offerings.
This policy pursued these ends, first, by putting a cap on how much homework could be sent home with students, limiting it to 60 minutes for youngsters, and 90 minutes for middle schoolers.
It also provided resources and rules for non-homework-related after-school services, did away with bad rankings due to poor test performance that might stigmatize students in the future, and killed off some of those fear-inducing, ever-so-important exams altogether.
It also provided some new resources and frameworks for pilot programs that could help their school system evolve in the future, allowing them to try some new things, which could, in theory, then be disseminated to the nation’s larger network of schools if these experiments go well.
And then on the tutoring front, they went nuclear on those private tutoring businesses that were shaming parents into paying large sums of money to train their children beyond school hours.
The government instituted a new system of regulators for this industry, ceased offering new business licenses for tutoring companies, and forced all existing for-profit businesses in this space to become non-profits.
This market was worth about $100 billion when this new policy came into effect, which is a simply staggering sum, but the government basically said you’re not businesses anymore, you can’t operate if you try to make a profit.
This is just one of many industries the current Chinese leadership has clamped-down on over the past handful of years, often on cultural grounds, as was the case with limiting the amount of time children can play video games each day. But like that video game ban, which has apparently shown mixed results, the tutoring ban seems to have led to the creation of a flourishing black market for tutoring services, forcing these sorts of business dealings underground, and thus increasing the fee parents pay for them each month.
In late-October of 2024, the Chinese government, while not formally acknowledging any change to this policy, eased pressure on private tutoring services—the regulators in charge of keeping them operating in accordance with nonprofit structures apparently giving them a nudge and a wink, telling them surreptitiously that they’re allowed to expand again—possibly because China has been suffering a wave of economic issues over the past several years, and the truncation of the tutoring industry led to a lot of mass-firings, tens of thousands of people suddenly without jobs, and a substantial drop in tax revenue, as well, as the country’s stock market lost billions of dollars worth of value basically overnight.
It’s also worth noting here that China’s youth unemployment rate recently hit 18.8%, which is a bogglingly high number, and something that’s not great for stability, in the sense that a lot of young people, even very well educated young people, can’t find a job, which means they have to occupy themselves with other, perhaps less productive things.
But high youth unemployment is also not great for the country’s economic future, as that means these are people who aren’t attaining new skills and experience—and they can’t do that because the companies that might otherwise hire them can’t afford to pay more employees because folks aren’t spending enough on their offerings.
So while it was determined that this industry was hurting children and their families who had to pay these near-compulsory tutoring fees, they also seemed to realize that lacking this industry, their unemployment and broader economic woes would be further inflamed—and allowing for this gray area in the rules seems to be an attempt to have the best of both worlds, though it may leave them burdened with the worst of both worlds, as well.
What I’d like to talk about today is another facet of the global tutoring industry, and how new technologies seem to be flooding into this zone even more rapidly than in other spaces, killing off some of the biggest players and potentially portending the sort of collapse we might also see in other industries in the coming years.
—
Chegg, spelled c-h-e-g-g, is a US-based, education-focused tech company that has provided all sorts of learning-related services to customers since 2006.
It went public on the NYSE in 2013, and in 2021 it was called the “most valuable edtech company in America” by Forbes, due in part to the boom in long-distance education services in the early days of the Covid-19 pandemic; like Peloton and Zoom, Chegg was considered to be a great investment for a future in which more stuff is done remotely, as seemed likely to be the case for a good long while, considering all the distancing and shut-downs we were doing at the time.
In early 2020, before that boom, the company was already reporting that it had 2.9 million subscribers to its Chegg Services offering, which gave users access to all sorts of school-related benefits, including help with homework, access to Q&As with experts, and a huge database of solutions for tests and assignments.
The company then released a sort of social-publishing platform called Uversity in mid-2021, giving educators a place to share their own content, and they acquired a language-learning software company called Busuu, which is a bit like Duolingo, that same year for $436 million.
In May of 2023, though, the company’s CEO said, on an earnings call, that ChatGPT—the incredibly popular, basically overnight-popular large-language-model-powered AI chatbot created by OpenAI—might hinder Chegg’s near-future growth.
The day after that call, Chegg’s stock price dropped by about 48%, cutting the company’s market value nearly in half, and though later that same month he announced that Chegg would partner with OpenAI to launch its own AI platform called Cheggmate, which was launched as a beta in June, by early November the following year, 2024, the company had lost about 99% of its market valuation, dropping from a 2021 high of nearly $100 per share, down to less than $2 per share as of early November.
This isn’t a unique story: LLM-based AI tools, those made by OpenAI but also its competitors, including big tech companies like Google and Microsoft, which have really leaned into this seeming transition, have been messing with market valuations left and right, as this collection of tools and technologies have been evolving really fast—a recent five-year plan for Chegg indicated they didn’t believe something like ChatGPT would exist until 2025 at the earliest, for instance, which turned out to be way off—but they’ve also been killing off high-flying company valuations because these sorts of tools are by definition multi-purpose, and a lot of the low-hanging fruit in any industry is basically just providing information that’s already available somewhere in a more intuitive and accessible fashion; which is something a multi-purpose, bot-interfaced software tool is pretty good at doing, as it turns out.
Chegg’s services were optimized to provide school-related stuff to students—including test and homework answers those students could quickly reference if they wanted to study or cheat—and serving up these resources in a simple manner is what allowed them to pay the bills.
ChatGPT and similar AI tools, though, can do the same, and for practically or literally—for the end-user, at least—free. And it can sometimes do so in a manner that’s even more intuitive than the Cheggs of the world, even if these AI offerings are sometimes jumbled along the way; the risk-reward math is still favorable to a lot of people, because of just how valuable this kind of information provided in this way can be.
Other companies and entire industries are finding themselves in the same general circumstances, also all of a sudden, because their unique value proposition has been offering some kind of information intuitively, or in some cases they’ve provided human interfaces that would do various things for customers: they would look up deals on a particular model of car, they would write marketing copy, they would commentate on sporting events.
Some of these entities are trying to get ahead of the game, like Chegg did, by basically plugging their existing services into AI versions of the same, replacing their human commentators with bots that can manage a fair approximation of those now-unemployed humans, but at a fraction of the cost. Others are facing a huge number of new competitors, as smaller businesses or just individuals are realizing they can pay a little money for AI tokens and credits, plug an API into a website, which allows that AI to populate content on their site automatically, and they can then run the same sort of service with little or no effort, and vitally, little or no overhead.
This creates a race-to-the-bottom situation in many such cases, and often the bots are nowhere near as good as the humans they’re replacing, but especially in situations where human jobs have been optimized so that one human can be replaced with another human relatively simply, it has proven to be fairly easy to fire people and then replace them with non-humans that seem human-enough most of the time.
So blog-writing and video-making and inventory-organizing and, yes, school-tutoring and similar services are increasingly being automated in this way, and while, sure, you could pay a premium to stick with Chegg and access these AI tools via their portal for $20 a month, the bet many investors are making is that folks will probably prefer to get what amounts to the same thing cheaper, or even free, directly from the source, or via one of those other lower-end intermediaries with fewer overhead costs.
Chegg has lost about $14.5 billion in market value since early 2021, and the company is now expected to collapse under the weight of its debts sometime in the near-future; the shift in fortunes brought about by the deployment of generally capable, if not perfectly capable, chat-interface accessible AI tools has been that sudden.
None of which means this is a permanent thing, as entities in industries currently being challenged by AI equivalent or near-equivalent tools might push back with their own, difficult to replicate offerings, and there’s a chance that the small but burgeoning wave of vehemently non-AI tools—those that wave their human-made-ness, their non-AI-ness like a flag, or like an organic, cruelty-free label—might carve out their own sustainable, growable niche. That becomes their unique value proposition in place of what these AI-focused companies stole from them.
But this kind of disruption sometimes leads to an extinction-level event for the majority of operators in a formerly flourishing space.
Chegg, for their part, decided to revamp their AI offering, moving away from the Cheggmate name and working with Scale AI instead of OpenAI, to build a few dozen AI systems optimized for different academic focuses; which could prove to be a valuable differentiator for them, but it could also fall flat in the face of OpenAI’s own re-skinned versions of ChatGPT, called GPTs, which allow users to do basically the same thing, coming up with their own field focused experts and personalities, rather than using the vanilla model of the bot.
There’s a chance this will also help Chegg deal with another AI-related issue—specifically, that ChatGPT was providing better answers to some students’ questions than Chegg’s human-derived offerings; they’re trying to out-bot OpenAI, essentially, doing the homework-AI thing better than ChatGPT, and there’s a chance that offering a demonstrably higher quality of answers might also serve as a survival-enabling differentiator; though their ability to consistently provide better answers in this way is anything but certain.
It’s also worth noting that what we’re talking about here, so far, isn’t the sci-fi dream of a perfect digital tutor—something like the Young Lady’s Illustrated Primer from Neal Stephenson’s novel The Diamond Age, which is something like an AI-powered storybook that adapts its content to the reader, and which then teaches said reader everything they need to know to flourish in life, day by day. Chegg and ChatGPT serve up tools that help students cheat on tests and homework, while also helping them look up information a lot easier when they decide not to cheat, and to practice various sorts of assignments and exams beforehand.
So this is a far easier space to compete in than something more complex and actually tutor-like. It may be, then, that moving in that direction, toward tools that focus more on replacing teachers and tutors, rather than helping students navigate schoolwork, might be the killer app that allows some of these existing tutoring-ish tools to survive and thrive; though it may be that something else comes along in the meantime which fulfills that promise better—maybe ChatGPT, or maybe some new, more focused version of the same general collection of tools.
It’ll probably be a few years before we see how this and similar bets that’re being made by at-risk companies facing the AI barbarians at the gate turn out, and at that point these tools will likely be even more powerful, offering even more capabilities and thus disrupting, or threatening to disrupt, even more companies in even more industries, as a consequence.
Show Notes
https://www.wsj.com/tech/ai/how-chatgpt-brought-down-an-online-education-giant-200b4ff2
https://openai.com/index/introducing-gpts/
https://ai.wharton.upenn.edu/focus-areas/human-technology-interaction/2024-ai-adoption-report/
https://www.weforum.org/stories/2024/07/ai-tutor-china-teaching-gaps/
https://en.wikipedia.org/wiki/Double_Reduction_Policy
https://journals.sagepub.com/doi/full/10.1177/20965311241265123
https://www.sciencedirect.com/science/article/abs/pii/S0738059324000117
https://archive.ph/VKkrL
https://www.japantimes.co.jp/news/2023/07/22/asia-pacific/china-private-tutoring/
https://www.nbcnews.com/news/world/chinas-youth-unemployment-hits-fresh-high-economic-slowdown-restrictiv-rcna172183

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British Coal
5 ноя· Let's Know Things
This week we talk about peat, pig iron, and sulphuric acid.
We also discuss the Industrial Revolution, natural gas, and offshore wind turbines.
Recommended Book: Deep Utopia by Nick Bostrom
Transcript
This episode is going live on election day here in the US; and this has been quite a remarkable election season for many reasons, among them that there’s been just a boggling amount of money spent on advertisements and events and other efforts to claim attention and mindshare, and in part because the vitriol and tribalism of the past several elections—an evolved, intensified version of those things—has almost completely dominated all those messages.
And as someone who’s based in a swing-state, Wisconsin, I can tell you that it’s been a lot. It’s been a lot everywhere, as US elections also claim more than their fair-share of news reportage in other countries, but in the US, and in the relatively few states that are assumed to be the kingmakers in this election, it’s been just overwhelming for months, for basically a year, actually. So instead of doing anything on the election, or anything overtly political—there’ll no doubt be time for that in the coming weeks, once the dust has settled on all this—let’s talk about coal. And more specifically, British coal.
Coal has been used throughout the British Isles for a long time, with early groups burning unrefined lumps of the substance to heat their homes, though generally only when their local, close-enough-to-the-surface-to-be-gathered source for the stuff was pure enough to beat-out other options, like peat and wood, which was seldom the case in most of these areas.
It was also used to create lime from limestone, the lime used for construction purposes, to make mortar, and it was used for metal-shaping purposes by blacksmiths.
Beyond that, though, it was generally avoided in favor of cleaner-burning options, as coal is often accompanied by sulphur and other such substances, which means when burned in its natural form, it absolutely reeks, and it can make anyone unlucky enough to be caught in the smoke it creates tear-up, because the resulting sulfurous gas would react with their eye-moisture to create sulphuric acid; not pleasant, and even though it was generally better than peat and wood in terms of the energy it contained, it was worse in basically every other way.
Earlier groups of people had figured out the same: there were folks in China as early as 1000 BC, for instance, who used these rocks as fuel for copper smelting, and people in these same early-use areas, where coal veins were exploitable, were really leaning into the stuff by the 13th century AD, when Marco Polo visited and remarked that the locals were burning these weird black stones, which granted them wild luxuries, like being able to take “three hot baths a week.”
Groups in Roman Britain were also surface mining, using, and trading coal at a fairly reasonable level by around 200 AD, though it was still primarily used to process things like grain, which needed to be dried, and to work with iron—as with those Chinese groups, coal has long been appreciated for its smelting capabilities, because of its high energy density compared to other options.
In the British Isles, though, coal was largely imported to major cities by sea, until around the 13th century when the easily accessed deposits were used up, and shaft mining, which granted access to deeper deposits via at times long tunnels that had to be dug and reinforced, was developed and became common, including in areas that hadn’t previously had surface sources that could be exploited.
In the 16th century, this and similar innovations led to a reliable enough supply of coal that folks living in the city of London were able to largely replace their wood- and peat-burning infrastructure with coal-burning versions of the same.
It’s thought that this transition was partly the consequence of widespread deforestation that resulted from a population boom in the city—more lumber was needed to build more buildings, but they also required more burnable wood fuel—though some historians have argued that what actually pushed coal to the forefront, despite its many downsides compared to wood and peat, is the expansion of iron smelting and the increasing necessity of iron for Britain’s many wars during this period, alongside England’s burgeoning glass-making industry.
Both of these manufacturing processes, making iron and glass, required just a silly amount of fuel—making just one ton of the lowest-grade cast iron, so-called pig iron, consumed something like 28 tons of seasoned wood, and glass was similarly wood-hungry.
What’s more, that combination of city expansion and the King’s desire to massively build-out his Navy meant timber resources were continuously being strained anywhere industry popped up and flourished, so those industries would then expand to areas where wood was still cheap, over time making wood it more expensive there, too. Eventually, wood was costly pretty much everywhere, and coal thus became comparably cheap in these regions, and you could use a lot less of it to achieve the same ends.
Even if that subbing-in led to bad smells and burning eyes and clouds of dense, black smoke wherever it was burned, then, the cost differential was substantial enough to make using coal the better option in many such cases and areas.
This boom in coal usage was amplified still further by the rapid clearing of forests due to the expansion of farm- and pastureland.
It was determined, by the late 17th century, that an acre of farm- or pastureland was worth a lot more than woodland used for timber or other purposes—around three-times as valuable—so there was a large-scale deforestation effort to basically claim as much value from these forested lands as possible, dramatically changing the landscape of the British Isles over the course of just a few decades; this transition in part enabled and powered by coal.
Around the year 1700, about five-sixths of all coal that was mined, globally, was mined in Britain, and that helped power the empire’s industrial revolution later that century, beginning in something like 1760, as the majority of clever devices that arose during that period were powered by coal, and the global industrial revolution that eventually created what we might consider technological modernity arose, initially—at least in this manifestation of the concept—from coal-powered Britain.
What I’d like to talk about today is a remarkable coal-related milestone, considering that history, that Britain recently marked, and what it might mean for this and other fuel-types, moving forward.
—
In 1882, the first-ever coal-fired power station opened in London—a thermal power station that uses coal as its fuel, which basically means you refine the stuff, break it into tiny, semi-uniform pieces, and then feed those pieces into a coal-fired boiler. In that boiler the coal is burned to generate heat, and that heat boils water, the resulting steam spinning turbines which turn generators that produce electricity.
Coal-fired power stations are massively inefficient, with modern versions of the model only boasting a 34-ish% efficiency, meaning about 34% of the total energy contained in the fuel source is ultimately converted into electricity—the rest, about 66% of the energy contained in the coal that’s burned, is lost along the way.
That’s not uncommon for power plants, though other fossil fuel-burning plants are somewhat more efficient on average, with oil-powered plants weighing in at about 37% efficiency, and gas-powered versions managing something like 50-60% at their most modern and sophisticated, though simpler variations of the design only achieve about the same as coal.
All fossil fuel-powered power stations emit greenhouse gases into the atmosphere as a byproduct of their operation, which has been shown to stoke climate change, and they all have pollutant-related byproducts, as well, though there’s a spectrum: gas is relatively clean-burning compared to its kin, while coal is the absolute worst, releasing all sorts of pollutants into the air with at times severe health consequences for anyone in the general vicinity; oil plants are somewhere in between those two extremes, depending on the type of oil used and the nature of the plant.
Those downsides are part of why newer technologies like large-scale wind turbines and solar panel arrays have been replacing fossil fuel-based power plants in many locales, and quite rapidly, though the infrastructure in many areas is optimized for these older-school options, which means there are the plants themselves, which are often quite large and real-estate-spanning, but there’s also all the mines, there’s the shipping facilities, the processing capacity for the coal or oil or whatnot—it’s a nation-spanning network of buildings and machinery and businesses, not to mention all the people who work jobs related to these vital, energy-creating industries.
Coal was already beginning to decline in the UK 100 years after that first plant was built, so by the 1990s, as gas, often called natural gas as a sort of branding effort by gas companies to make it sound cleaner and more desirable, was at that point already beginning to replace coal in many electricity-generating facilities.
Gas has done the same in many countries—especially those with vast natural sources of it, and the US has opened up a lot of new markets for this fuel type in recent decades, and in the past decade in particular, as it mastered the means of compressing gas into a liquid, often called LNG, and shipping it to ports in Europe around the same time Russia’s invasion of Ukraine was fundamentally rewiring the energy mix on the continent.
So gas has played a role in disrupting coal’s hold in many previously coal-happy areas, including the US. But it was renewables that really turned the tide against coal in the UK, with a combination of solar and wind making up about 6% of Britain’s electricity in 2012—compared to 40% for coal, at the time—but just over a decade later, in 2023, renewables were making up a whopping 34% of the UK’s energy mix, mostly due to the widescale deployment and success of offshore wind farms.
This, paired with the emergence of increasingly efficient appliances and lighting, which sip energy compared to previous-generation bulbs and kettles and refrigerators, meant the UK was able to deplete its coal-usage, even as energy demand increased—because that demand was less than anticipated, due to those efficiencies, and enough new renewables and gas facilities were coming online to meet that reduced demand.
At the tail-end of September this year, 2024, the UK witnessed the shut-down of its last remaining coal power plant, which was built 57 years ago.
This was a meaningful moment, as it marked the first time in about 142 years that coal wasn’t contributing to the UK’s electrical grid, and it has global significance, as while 23 European countries have announced that they will phase out coal in the relatively near-future, and while Belgium was the first previously coal-burning European nation to go fully coal-free, back in 2016, the UK is the first G7 nation to do so—the rest of the G7 having committed to accomplishing the same by 2035.
Decommissioning the plant will take about two years, and that will include the task of reallocating the plant’s 170-or-so employees to other positions within the power network, and going through the many steps required to clean up the area after decades of voluminous pollution, while also getting the area ready for other types of development.
In many cases right now, globally, that means swapping in some other piece of energy infrastructure; in some cases coal-fired plants can be replaced with gas-fired plants, which is still not ideal in terms of emissions, but much better than coal, and in some cases it’s a more significant change, like building-out grid-scale battery arrays, which allow nearby wind turbines and solar panels to store the excess energy they generate when the wind is blowing and sun is shining, so that none of that energy goes to waste, and so it can be used when the wind and sun aren’t cooperating.
The British government is also planning to expand its nuclear power capacity, quadrupling its currently five-strong nuclear power plant holdings by 2050, which is a choice that comes with a lot of its own consequences, including, often, very high price tags on building and operating such facilities. But because of the nature of nuclear power plants—specifically, that they produce high levels of consistent, reliable, emissions-free electricity—that additional expense is often okay, because that steady consistency nicely blends with the inconsistent output of solar and wind.
It’s worth noting that coal-heavy nations elsewhere around the world, like Russia, are currently having trouble with the stuff, Russia’s coal industry reportedly experiencing its worst crisis in 30 years due in part to sanctions, in part to a lack of demand from previous customers that’re transitioning away from coal, and in part due to issues within the industry, itself.
Coal production in Russia dropped by 6.7% year on year in July of 2024, marking the lowest output since the height of the covid pandemic, and it’s estimated that they’ve lost around 27% of monthly output compared to recent peaks.
There are different types and grades of coal, so those numbers are averages, and not all coal-exporting nations are having as much trouble as Russia right now. Australia is the world’s foremost exporter of coal, for instance, and while China is going through some economic complications right now—which is an issue for Australia, because they shipped the majority of their coal to China until just recently—India has been stepping in to pick up the majority of that slack.
Australia has still cut its coal export outlook by 6% because of those and other geopolitical ripples, and there’s a chance their sales could continue to drop due to the transition to renewables on one hand, and the move toward gas-powered plants on the other.
But some types of coal remain the cheapest form of energy production in some countries, so there’s a good chance that rising stars like India, and possibly Indonesia and other Southeast Asian booming economies, as well, could step in and grab what they can, despite all the downsides of coal, because they can get it at a discount; which won’t be great for coal companies that are used to higher prices, but it likely will allow them to keep operating at something close to their previous capacity for longer than would otherwise be the case, lacking these rising nations that need cheap fuel, whatever the consequences of using it.
In the UK, though, coal is gone, and the remnants of its use are slowly being wiped away: the land cleaned up and repurposed, more of the grid being optimized for cleaner production types.
We’ll probably see a few other big nations accomplish the same over the next decade, but because of all that aforementioned geopolitical turmoil, there’s also a chance those planned end-dates will be pushed: the cheap, dirty needs of the present overshadowing these nations’ cleaner, healthier next-step ambitions.
Show Notes
https://www.eia.gov/tools/faqs/faq.php?id=107&t=3
https://e360.yale.edu/digest/uk-last-coal-plant
https://ourworldindata.org/grapher/electricity-mix-uk?stackMode=absolute&facet=none
https://www.wsj.com/us-news/coal-ash-cancer-epa-north-carolina-b39ddf6a
https://beyondfossilfuels.org/europes-coal-exit/
https://www.npr.org/2024/09/30/nx-s1-5133426/uk-quits-coal-climate-change
https://www.theguardian.com/business/2024/sep/30/end-of-an-era-as-britains-last-coal-fired-power-plant-shuts-down
https://www.epa.gov/sites/default/files/2016-06/documents/4783_plant_decommissioning_remediation_and_redevelopment_508.pdf
https://www.gisreportsonline.com/r/peak-coal/
https://www.moscowtimes.ru/2024/10/07/samii-tyazhelii-krizis-za30-let-vrossii-nachala-rushitsya-dobicha-uglya-a144209
https://interactive.carbonbrief.org/coal-phaseout-UK/index.html
https://www.bbc.com/news/articles/c5y35qz73n8o
https://www.nytimes.com/2024/09/30/climate/britain-last-coal-power-plant.html
https://www.washingtonpost.com/climate-environment/interactive/2024/uk-coal-power-exit/
https://www.theguardian.com/business/2024/sep/30/the-deep-history-of-british-coal-from-the-romans-to-the-ratcliffe-shutdown
https://www.reuters.com/markets/commodities/uks-last-coal-plant-shutdown-bodes-well-us-lng-exports-maguire-2024-10-01/
https://www.wired.com/story/uk-no-coal-fired-power-plants-first-time-in-142-years/
https://www.statista.com/statistics/371069/employment-in-coal-mining-industry-in-the-united-kingdom-uk/
https://apnews.com/article/high-court-rejects-uk-coal-mine-whitehaven-83b9b7ceedebee1b70927667987b4dd7
https://www.bbc.com/future/article/20240927-how-coal-fired-power-stations-are-being-turned-into-batteries
https://www.reuters.com/sustainability/climate-energy/britain-become-first-g7-country-end-coal-power-last-plant-closes-2024-09-29/
https://www.nytimes.com/2024/09/30/opinion/england-coal-wind-power.html
https://en.wikipedia.org/wiki/Coal-fired_power_station
https://en.wikipedia.org/wiki/Coal_in_Australia
https://en.wikipedia.org/wiki/Industrial_Revolution
https://en.wikipedia.org/wiki/Coal

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Politics and Podcasts
29 окт· Let's Know Things
This week we talk about Joe Rogan, Call Her Daddy, and podcast monetization.
We also discuss Kamala Harris, Donald Trump, and double-haters.
Recommended Book: You Sexy Thing by Cat Rambo
Transcript
In the world of US politics, double-haters are potential voters who really just don’t like the candidate from either major political party, and thus they decide whether and how to vote based on who they dislike least—or in some cases who they would like to hurt, the most.
This isn’t a uniquely American concept, as voters in many global democracies face similar situations, but it seems to be an especially pressing issue in this year’s upcoming US Presidential election—and election day is a week away as of the day this episode goes live—because the race is just so, so close, according to most trusted polls.
In that same context, swing states are states that could swing either way, theoretically at least, in terms of who their votes go to, and because these swing states contain enough electoral college votes to allow even the candidate who doesn’t win the popular vote to win the presidency, that makes them especially vital battlegrounds.
So there’s a scramble going on right now, for both parties, to muster their existing bases, to shore-up some of the demographic groups they’re relying upon in this election, and to get their messaging in front of as many of those double-haters and other undecideds as possible so as to maybe, possibly swing this neck-and-neck race in their direction.
Toward that end, we’ve seen simply staggering sums of money pulled in and spent by both major parties’ campaigns: it’s looking likely that this will be the most expensive election season in US history, with just under $16 billion in spending across federal races, alone—which is up from just over $15 billion in 2020, according to nonpartisan group Open Secrets; that actually means this election will probably end up being just a smidgeon cheaper than 2020’s election, if you adjust for inflation, rather than comparing in absolute dollar terms, but both of these races will have been several times as expensive as previous elections, weighing in at about double 2016’s cost, and triple what these races tended to cost previously, in the early 2000s.
For perspective, too, US elections were already quite a lot more expensive than elections held in other wealthy countries.
According to a rundown by the Wall Street Journal, Canada’s 2021 election only cost something like $69 million in inflated-adjusted dollars, and US elections tend to cost about 40-times more, per person—so this is a population-scaled figure—than elections in the UK and Germany.
The cost of local elections in the US have been increasing, as well, in some cases substantially, and that’s part of why unpaid exposure and promotion is becoming increasingly valuable: it takes a lot of communications oomph to puncture the hubbub of commercial marketing messages in the US, and while pulling in a lot of money to buy ads and fund other promotional efforts is one way to do that, it’s also possible to approach the problem asymmetrically, going to people where they already are, basically, and getting some of that valuable face-time without having to spend a cent on it.
And that’s what I’d like to talk about today—specifically, efforts by candidates to get on popular podcasts, and why this medium in particular seems to be the go-to for campaigns at a moment in which the electoral stakes are historically high.
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Podcasts, by traditional definition, are audio files delivered using an old-school, open technology called RSS.
In the years since they first emerged, beginning in the early days of the 2000s, the transmission mechanisms for these audio files have become a bit more sophisticated, despite being based on essentially the same technology. They’ve been joined, though, by utilities that allow folks to stream undownloaded audio content, to ping the servers where these audio files are stored more regularly, and to attach all kinds of interesting and useful metadata to these files, which add more context to them, while also providing the fundaments of basic micropayment schemes and the capacity to include video versions of an episode, alongside audio.
That video component has been pushed forward in part by the success of content-makers on YouTube, where for a long while podcasters have promoted their audio shows with visualized snippets, behind-the-scenes videos, and other such add-on content. Over the past handful of years, though, it has also become a hotbed of original video podcast content, some podcasters even using YouTube as their native distribution client—and that, combined with Spotify’s decision to start offering video podcasting content alongside audio podcasting content, in part to compete with YouTube, has pushed video-podders to the forefront of many charts.
Multi-person conversational and interview shows have maybe benefitted most from that shift toward video, as being able to see the people recording these shows, and to watch their body language, all the little microexpressions and other components of conversation and social dynamics that are left out of pure audio shows, has helped them attract more listeners / viewers, while also making these shows an even more potent source of parasocial camaraderie—which was especially valuable during the lockdown-heavy phase of the covid-19 pandemic, but which is also arguably a valuable thing to provide at a period in which a lot of people across all demographics are suffering from intense loneliness and a perceived lack of connection; the sense of familiarity that folks felt listening to a familiar voice in their ear on a regular basis has been emphasized still-further by the ability to see those people on their phones, TVs, and laptops in the same way, and at the same regular cadence.
The business model of podcasting has also contributed to the expansion of this type of show, as while podcasting has never been as big and spendy an industry as comparable broadcast mediums, it has been growing, with most shows leaning on some combination of ads, sponsorships, memberships, patronage models, and subscriptions to keep their operations in the black.
Some shows make use of many or all of these income-generation approaches, and many of them have varied their business models based on the boom and bust phases the industry has seen over the years; so when ad revenue plummets, formerly ad-heavy shows will pivot to memberships, and when the listener membership well grows shallow, they might shift to some kind of featured sponsor model.
As of early 2024, there are more than half a billion regular podcast listeners, globally, and ad spending in this space, globally, reached over $4 billion for the first time this year.
That aforementioned shift toward video has tilted a lot of listening in that direction, with about a third of all podcast listeners in the US also watching at least one podcast, rather than just listening to it.
That watchability component has also nudged YouTube and Spotify into the lead in terms of podcast delivery, alongside Apple, which didn’t invent the podcast, even though the medium is named after their iPod product, but they did bring it to the forefront and make it widely available—Apple’s relative lack of investment in this space, for years, left the doors open for those other competitors, and again, their decision to feature video podcast content alongside pure audio shows has shifted the landscape of this industry substantially, raising questions about what a podcast even is, if any old YouTube show could also theoretically be categorized as such; it’s a blurry distinction at this point, a bit like the debate over whether audiobooks should be considered books, or if only written, visual versions should bear that label.
Also worth noting here is that nearly half, about 47%, of all US citizens ages 12 and up listen to a podcast at least once a month, and 34% listen every week.
11% of that demographic’s daily audio-time is spent listening to podcasts, which is quadruple the figure a decade ago, in 2014, and 23% of weekly podcast listeners in the US spend 10 or more hours with these shows each week, though the average listening time each week is also pretty high, weighing in at 7.4 hours.
Podcasts have diverse audiences and hit a range of economic classes and people of varying education levels—though it leans slightly higher than the average in terms of both educational attainment and income—and interestingly, folks seem to be especially influenced by podcast recommendations, 46% of weekly podcast listeners reporting that they purchased something based on a recommendation or advertisement they heard on a show.
All of which points at why podcasts, and especially interview podcasts, and even more especially video-heavy interview podcasts, have become such highly desired media real estate in this year’s US presidential election; these sorts of shows aren’t always the most desired medium for brands, because tracking return on investment, money earned per dollar spent, is difficult with podcasts compared to, for instance, buying ads on streaming TV shows or social media, but they’re great for raising awareness and general brand-building efforts, which is exactly what these candidates and their parties are aiming for.
So more people are listening to these things, people tend to trust what they hear on podcasts more than on other types of media, and the demographics these shows reach are highly desirable, politically.
This is why, over the past few weeks, candidates Kamala Harris and Donald Trump have appeared on some of the biggest podcasts in existence, right now: Call Her Daddy for the former, and the Joe Rogan Experience for the latter.
Both of these appearances were ostensibly pretty risky, as podcast interviewers tend to color outside the lines compared to hosts on conventional television or radio shows, but the potential upsides were huge for both, as Alex Cooper, the host of Call Her Daddy, which is kind of a comedic advice show, has become a massive force in the world of women’s issues, and she recently became one of the best-paid and most influential podcasters in the world by leaving Spotify for SiriusXM, that change beginning in 2025, for a reported $100 million.
Joe Rogan, in contrast, has consistently been the number one podcast in the world for years, and his audience skews toward the people Trump wants to reach: the listening base is 80% male, more than half of those listeners are ages 18-34, more than a third identify as Independents, politically, and a little over a quarter are Democrats who might be convinced to switch sides for this election, because of Rogan’s somewhat conservative-leaning, independent stance on most things.
Trump recorded a 3-hour podcast interview with Rogan, leaning into the host’s chilled-out, but often heavy and asymmetric-question laden format, and that was blasted out to the show’s 14.5 million Spotify followers and 17.5 million YouTube subscribers.
Call Her Daddy is the second-biggest podcast on most networks after Rogan’s show, and while it has a comparably meager 5 million weekly listeners, the show’s demographics lean heavily toward women, and especially young women, which is seemingly favorable to the messaging Harris wants to megaphone at this point in her campaign; she’s rounded-out that appearance with appearances on other shows, like All The Smoke, which is hosted by a pair of NBA stars, and The Breakfast Club, which is hosted by the popular personality, Charlamagne Tha God.
Trump has appeared on quite a few podcasts of late, as well, though they’ve largely been in the same demographic vein as Joe Rogan—Trump went on YouTuber Logan Paul’s show, Impaulsive, for instance, alongside This Past Weekened with Theo Von and the Lex Fridman Podcast—all shows that lean heavily toward the young, male demographic, and which skew somewhat conservative and/or the libertarian side of independent.
Like many aspects of this election, we don’t really know if these bets will pay off for these candidates and their campaigns. There’s a lot to suggest that folks trust podcasts and podcasters, and that this industry may therefore be an excellent means of blasting a message to the right people, allowing politicians to realize a huge return on the time they invest preparing for their appearances and recording these interviews.
On the other hand, there’s a chance that, like many supposed means of reinforcing brand awareness and identity, that the numbers are kind of fuzzy and don’t necessarily reflect the reality many people think they reflect: it could be that folks tune in, listen, and then don’t do anything with what they learn; a more passive means of engagement that results few, if any, real-world conseqences.
It could also be that one or the other, or both of these parties aimed at the wrong audiences, or at the wrong influencers to help them reach those audiences, which could result in the same outcome, but with their demographic assumptions to blame, rather than the nature of the medium.
We won’t know for sure until after the election, and even then it’ll still be an open question, because it’s difficult to definitely link action to outcome when it comes to this facet of the political world.
That said, it does seem pretty likely, that for the next few elections, at least, podcasters will carry somewhat higher credibility and weight, and consequently attract even more attention, and probably ad-dollars, too, because it’s becoming more and more difficult to reach the right people, the right potential voters, and podcasts are still new and wild westy enough that they could break through the hubbub, even when other content types struggle to do so.
Show Notes
https://www.bbc.com/news/articles/cy8nn0913e8o
https://backlinko.com/podcast-stats
https://www.insideradio.com/free/candidates-embrace-podcasts-but-is-it-working-here-s-what-one-survey-shows/article_b8858d76-92a8-11ef-9063-13e0c716cedd.html
https://www.npr.org/2024/10/27/nx-s1-5162304/politics-chat-trump-gives-3-hour-joe-rogan-interview-harris-leans-on-fascist-label
https://www.aljazeera.com/news/2024/10/23/trump-harris-turn-to-podcasts-and-maybe-joe-rogan-for-us-election-boost
https://www.elle.com/uk/life-and-culture/culture/a62526922/kamala-harris-call-her-daddy/
https://www.quillpodcasting.com/blog-posts/podcast-stats-and-facts-2024
https://soundsprofitable.com/research/the-podcast-landscape-2024/
https://www.edisonresearch.com/the-podcast-consumer-2024-by-edison-research/
https://finance.yahoo.com/news/alex-cooper-lands-100-million-143000863.html
https://en.wikipedia.org/wiki/Call_Her_Daddy
https://www.edisonresearch.com/the-race-to-rogan-who-will-candidates-reach-on-americas-top-podcast/
https://www.washingtonpost.com/elections/2024/10/25/trump-joe-rogan-podcast-interview/
https://time.com/7099104/presidential-podcast-media-tour-donald-trump-kamala-harris/
https://www.hollywoodreporter.com/business/digital/alex-cooper-interview-call-her-daddy-1236023570/
https://apnews.com/article/trump-election-lies-rogan-interview-ballots-voting-c8c06eb608c1b1ae8ca0e93ec1022b02
https://www.wsj.com/politics/elections/elections-cost-us-highest-spend-b8475961
https://www.politico.com/news/magazine/2024/10/21/meet-the-worlds-double-haters-00184634
https://www.washingtonpost.com/politics/2024/10/25/wisconsin-swing-state-undecided-voters-trump-harris/

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Political Betting Markets
22 окт· Let's Know Things
This week we talk about DJT, Polymarket, and Kalshi.
We also discuss sports betting, gambling, and PredictIt.
Recommended Book: Build, Baby, Build by Bryan Caplan
Transcript
Trump Media & Technology Group, which trades under the stock ticker DJT, has seen some wild swings since it became a publicly tradable business entity in late-March of 2024.
The Florida-based holding company for Truth Social, a Twitter-clone that was released in early 2022 following former President Donald Trump’s ousting from Twitter—that ousting the result of his denial of his loss in the 2020 presidential election—is a bit of an odd-bird in the technology and media space, as while it’s ostensibly an umbrella corporation for many possible Trump-themed business entities, Truth Social is the only one that’s gotten off the ground so far, and that platform hasn’t done well in traditional business or even aspirational tech-business terms: a financial disclosure in November of 2023 indicated that the network had tallied a cumulative loss of at least $31.5 million since it was launched, and the holding company’s numbers were even worse: when they filed their regulatory paperwork in March of 2024, they noted that Trump Media & Technology Group had lost $327.6 million, while making a mere $770,000 in revenue.
Those kinds of numbers, the company hemorrhaging money, would be a huge problem if DJT was a typical media business, or business of any kind, really. But for most people who invest in the company’s stock, this entity seems to be less a traditional stock holding, like you might buy shares of NVIDIA or Coca-Cola, hoping to earn dividends or see the value of the stock increase over time based on the performance and assumed future performance of the company in question, but instead it seems to operate as a means of betting on Trump and his political aspirations: many people who have been asked why they’re buying the stock of a clearly fumbling company say that they do it because they like Trump and what he stands for, and some have suggested they assume the stock will do much better if and when he’s back in office.
Other entities, especially those who oppose Trump and his politics, have pointed out that this publicly traded business provides foreign and US entities an easy, and easily deniable means of basically bribing Trump—or getting on his good side, if you want to use less charged language—as they could simply, and legally pick up a large number of shares, raising the price of the stock, which in turn increases the size of Trump’s fortune, which he could then, if he so chooses, cash out of at some point, but in the mean time this allows him to do the more typical rich person thing and just borrow money against the non-money, stock assets he owns.
All of which would be difficult to prove, which is part of why this would, in theory, be an excellent means of funneling money to someone who might hold the reins of power in the near-future, if one were so inclined to do so.
But at the moment that’s all speculation, and with ongoing investigations into other purported bribery schemes on the part of Trump and his campaign, it’s not clear that Trump would need DJT in order to get money into his coffers, as more direct approaches—like simply depositing ten million dollars into his campaign account from Egypt’s state-run bank, seem more straightforward, and just as unlikely to result in any kind of pushback from the US’s oversight panels, based on how they’ve addressed that particular accusation so far, at least.
Of course, some people are simply looking for points of leverage anywhere they can find it, not for political or regulatory manipulation purposes, but to earn money by gambling on assets that change value in dramatic and seemingly predictable ways.
For day traders and other arbitrage-seekers, then, a stock that goes up and down based on the perceived successes and failures of a public figure who’s constantly saying and doing things that can be construed in different ways by different people is an appealing target, even lacking a political motivation for tracking (and perhaps even influencing, to a limited degree) those numbers.
What I’d like to talk about today is another type of political betting, and how a recent court case may make politics in the US a lot more tumultuous, maybe more measurable, and possibly more profitable, for some.
—
In mid-2021, a New York-based online prediction market called Kalshi launched in the US, and this service was meant to serve as a platform through which users could place bets—in the form of trades—on all sorts of things, ranging from when the Fed would next cut interest rates, and by how much, to who would win various global awards, like the Nobel in chemistry.
Bets can only be placed on yes or no questions, which shapes the nature of said questions, and delineates the sorts of questions that can be asked, and in general the platform pays out a dollar for each winning contract—so if you buy one contract saying the Republican party will control the House after November’s election, and they do, you would win a dollar, but if they don’t, you would lose whatever money you spent to buy that contract—and these contracts can be purchased for sums that are based on how likely the event is currently expected to be: so if there’s a low chance, based on all available variables, that the Republicans will take the House, that contract might cost substantially less than a dollar to purchase, whereas if it’s likely they’ll take it, it would cost close to a dollar—so the payout is larger for events considered to be unlikely.
The original idea behind Kalshi, and similar platforms, of which there are many, operating in many different places around the world, was to provide investors with a hedge against events that are otherwise difficult to work into one’s asset portfolio.
It’s relatively simple to have a bunch of bets that will pay out big time if the US economy does well, for instance, and simple enough to buy counter-bets that will pay out decently well if it does badly—many investors buying some of each, so they’re not wiped out, no matter what happens—but there are all sorts of things that can mess with one’s otherwise well-balanced investment strategies, like the emergence of global pandemics and the surprise decision of the UK to leave the European Union.
If you can place bets that will pay out big-time when unlikely things happen, though, that can help re-balance a financial loss that arises from the occurrence of said unlikely events; if you lose a bunch of money from your stock portfolio because the UK voted for Brexit, but you also bought a bunch of contracts on this kind of market that would pay out substantially if Brexit was successful, you’ll reach a kind of equilibrium that isn’t as simple to achieve using other markets, because of how difficult it can be to directly link a stock or bond with that kind of not-directly-financial event.
So Kalshi pitched itself as that kind of alternative asset market, predicated on bets, but while they had a license from the US Commodities Futures Trading Commission, or CFTC, to function as a contract market in the States, acquired the year before they launched, their proposal to start a political prediction market, which would allow folks to bet on which party would control the US congress, was denied by the CFTC in September of 2023, the agency claiming that allowing such bets would create bad incentives in the electoral process, and that offering these sorts of contracts would violate US market regulations for derivatives.
A judge ruled in Kalshi’s favor a year later, in September of 2024, saying that the agency had exceeded its authority in banning this type of contract-issuance by Kalshi, and while the CFTC attempted to stall that component of their market’s implementation, on October 2 of this year, a federal appeals court ruled in Kalshi’s favor, and the platform was thus formally allowed to offer contracts that served as a betting market for US politics on which actual money could be lost and earned.
That last point is important, as throughout this process, and even before Kalshi was launched, other betting markets have been common, including those that have allowed bets on US political happenings.
It’s just that the majority of them, and the ones that have persisted and grown in the US in particular, haven’t allowed folks to bet actual money on these things: they’ve allowed, in some cases, the betting of on-platform tokens, which represent credibility, not money, though a few money-trading entities, like PredictIt, have been on the agency’s radar, but in PredictiIt’s case, it was granted what amounts to a “we won’t take action against you, despite what you’re doing being questionable” letter from the CFTC, which until Kalshi’s case turned out in their favor, meant PredictIt was one of the few, large-scale, reputable real-money political prediction markets available in the US.
Not all such markets have been so lucky, but that luck has been highly correlated with their approach to handling money, the structure of the company, and the degree to which they’ve been willing to play ball with the CFTC and other interested agencies.
All that said, we’ve reached an interesting point in which these markets have conceivably become more serious and useful, because rather than relying on not-real tokens that have no actual value to anyone—so you could create an account on one of these sites, bet all your tokens on a silly position that makes no sense, and suffer no consequences for that bet—we now have platforms that allow folks to put their money where their beliefs are, which in turn should theoretically make these markets more reliable in terms of showing what a certain segment of the population actually believes; how likely different candidates are to win, different parties are to hold Congress, and how likely various bills are to be passed into law.
Interestingly, though, that theory may already be destined for the dustbin, as one of the larger betting platforms, Polymarket—which allows folks to place bets on all sorts of things using a crypto asset called USDC, and which isn’t regulated by the CFTC because its operations are not based in the US—is experiencing what looks like market manipulation, possibly meant to sway poll forecasts that take these sorts of markets into account.
What that means in practice is that of the nearly $2 billion in bets that have been placed on the outcome of the upcoming US presidential election on Polymarket, as of the day I’m recording this, about $30 million seems to have been recently bet by just four accounts, all of which have behaved so similarly that a report from the Wall Street Journal posits that they might be the same person, or a collection of people operating alongside each other.
In any case, the net-impact of this investment, which landed in late-October, was to bump Trump’s odds of winning to 60% from where it was previously, at 53.3%.
There’s a chance, of course, that this is just the result of a person or some people with money wanting to earn what they consider to be an easy buck, betting on the candidate they think is most likely to win, and there’s also a chance that they’re plowing that money into this bet in order to show support for their favored candidate.
But there’s also a chance that this is the first example, at this scale at least, of betting market manipulation that’s sizable enough to shift the balance of polls that take betting market numbers into consideration.
Some of the poll predictions you in see in the news work these numbers from these betting markets into their formulae alongside the findings of more conventional polling entities, basically, so if you have tens of millions of dollars to throw into this kind of market, you can bump your favored candidate’s seeming chances significantly higher, which then in turn can make it seem like that candidate has achieved a surge in support more broadly—despite that seeming support actually just having been bought and paid for by one or a few enthused supporters on this kind of market.
So if it does turn out that this is a conscious effort on someone’s part to shift perceptions of the election—maybe big-time Trump fans, maybe someone affiliated with him or one of the PACs trying to get him elected—that could be a big deal, especially considering that Trump and his people have said that they won’t accept the outcome of the election if they don’t win, and if they can show strong expectations, or seeming expectations in the shape of favorable poll numbers that their candidate was meant to win, that could be a point of seeming evidence in favor of their argument that there was voter manipulation by their opponent; this of course wouldn’t be the case, but because of how the news, and even more so social media platforms, sometimes present superficial versions of what’s actually happening, seeing the candidate who had 60% support lose could seem like a valid argument at a highly charged post-election moment, despite all the other evidence to the contrary.
One more important point to make here is that election markets don’t actually represent probabilities—they represent a relatively small population of people’s expectations or hopes about what will happen.
It’s in the interest of these markets to imply that there’s substantial meaning and real-deal data in their numbers, but that’s mostly marketing copy to try to get more people involved; at the end of the day, these markets are often wrong, are populated by outliers who don’t represent the voting public, and in many cases they’re heavily biased in all sorts of directions—some of them more popular with folks on the left, some more popular with folks on the right, and some more popular with folks who just love making big bets that feel like gambling, and in some cases creating chaos or funny outcomes just for laughs.
On that final point, it’s worth mentioning that sports gambling has recently become legal, to some degree at least, across much of the United States, and this has already become a huge industry, representing an expected $14.3 billion in 2024, alone, with an anticipated annual growth of something like 10%, which is astonishing for something that was mostly illegal until just recently—the Supreme Court decision that paved the way for it as a nation-spanning market was only made in 2018.
So there’s a chance that these prediction markets will boom, as there’s clearly an appetite for betting on stuff in the US, as a form of entertainment, as a means to try to get ahead, and potentially as a way to put one’s money where one’s mouth is.
Though all of these incentives and purposes could potentially make these markets less valuable for political researchers hoping to better understand odds, as the incentives may or may not align with those that lead to more accurate predictions, and there’s no way to really know how those post-money-injection numbers will align with actual voting tallies, or fail to do so, until we have more data about this and other near-future elections’ outcomes.
Show Notes
https://www.wsj.com/finance/investing/how-investors-are-betting-on-the-election-from-utility-stocks-to-djt-c2b9e838
https://www.yahoo.com/news/hes-sale-trump-djt-stock-001901595.html
https://www.cnbc.com/2024/09/03/trump-egypt-democrats-letter.html
https://en.wikipedia.org/wiki/Truth_Social
https://www.axios.com/2024/09/10/prediction-markets-election
https://stanfordreview.org/kalshis-court-victory-a-turning-point-for-prediction-markets-2/
https://www.politico.com/news/2024/10/04/harris-trump-election-betting-00182432
https://en.wikipedia.org/wiki/Prediction_market
https://www.investopedia.com/terms/p/prediction-market.asp
https://www.axios.com/2024/09/16/prediction-markets-election
https://asteriskmag.com/issues/05/prediction-markets-have-an-elections-problem-jeremiah-johnson
https://www.chapman.edu/esi/wp/porter_affectingpolicymanipulatingpredictionmarkets.pdf
https://www.ft.com/content/82199ea0-9707-4d37-b4c4-b65a65d17ecb
https://worksinprogress.co/issue/why-prediction-markets-arent-popular/
https://www.wsj.com/finance/betting-election-pro-trump-ad74aa71
https://www.washingtonpost.com/technology/2024/10/19/election-betting-trump-harris-odds-polymarket-predictit/
https://www.wsj.com/finance/investing/how-investors-are-betting-on-the-election-from-utility-stocks-to-djt-c2b9e838
https://www.wsj.com/livecoverage/stock-market-today-dow-sp500-nasdaq-live-10-03-2024/card/betting-markets-on-the-presidential-race-set-to-go-live-NnRne85QCyVAnc9nZy8z
https://www.wsj.com/finance/regulation/are-you-ready-to-bet-on-u-s-elections-a-judges-ruling-opens-the-door-556abc73
https://en.wikipedia.org/wiki/Kalshi
https://www.coindesk.com/policy/2024/09/13/kalshis-new-political-prediction-markets-halted-as-cftc-appeals-loss/
https://www.brookings.edu/articles/how-betting-platform-predictits-legal-struggle-could-hamper-regulators-and-hurt-regulated-firms/
https://www.wsj.com/finance/betting-election-pro-trump-ad74aa71
https://en.wikipedia.org/wiki/Polymarket
https://www.statista.com/outlook/amo/online-gambling/online-sports-betting/united-states

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Mixed Reality Eyewear
15 окт· Let's Know Things
This week we talk about the HoloLens, the Apple Vision Pro, and the Meta Ray-Ban Smart Glasses.
We also discuss augmented reality, virtual reality, and Orion.
Recommended Book: The Mountain in the Sea by Ray Nayler
Transcript
Originally released as a development device in 2016—so aimed at folks who make software, primarily, not at the general public—the HoloLens, made by Microsoft, was a fairly innovative device that looked like virtual reality headgear, but which allowed folks to interact with graphical elements overlayed on a transparent surface so that they seemed to be positioned within the real world; so-called augmented reality.
This functionality relied upon some of the tech Microsoft had developed for its earlier Kinect accessory, which allowed Xbox owners to play games using their bodies instead of more conventional controllers—it used a camera to figure out where people, and their arms, legs, and so on, were in space, and that helped this new team figure out how to map a person’s living room, for instance, in order to place graphical elements throughout that room when viewed through the HoloLens’ lenses; so stuff could appear behind your couch, pop out of a wall, or seem to be perched atop a table.
The HoloLens was not the only option in this space, as several other companies, including other tech titans, but also startups like Magic Leap, were making similar devices, but it was arguably the most successful in the sense that it both developed this augmented reality technology fairly rapidly, and in the sense that it was able to negotiate collaborations and business relationships with entities like NASA, the US Military, and Autodesk—in some cases ensuring their hardware and software would play well with the hardware and software most commonly used in offices around the world, and in some cases showcasing the device’s capabilities for potential scientific, defense, and next-step exploratory purposes.
Like many new devices, Microsoft positioned the HoloLens, early on, as a potential hub for entertainment, launching it with a bunch of games and movie-like experiences that took advantage of its ability to adapt those entertainments to the spaces in which the end-user would consumer them: having enemies pop out of a wall in the user’s kitchen, for instance, or projecting a movie screen on their ceiling.
It was also pitched as a training tool, though, giving would-be astronauts the ability to practice working with tools in space, or helping doctors-in-training go through digital surgeries with realistic-looking patients before they ever got their hands dirty in real life. And the company leaned into that market with the second edition of the headset, which was announced and made available for pre-order in early-2019, optimizing it even further for enterprise purposes with a slew of upgrades, and pricing it accordingly, at $3,500.
Among those upgrades was better overall hardware with higher-end specs, but it also did away with controllers and instead reoriented entirely toward eye- and hand-tracking options, combined with voice controls, allowing the user to speak their commands and use hand-gestures to interact with the digital things projected over the real-world spaces they inhabited.
The original model also had basic hand-tracking functionality, but the new model expanded those capabilities substantially, while also expanding upon the first edition’s fairly meager 30 degrees of augmented view: a relatively small portion of the user’s line of sight could be filled with graphics, in other words, and the new version upgraded that to 52 degrees; so still not wall to wall interact-with-able graphics, but a significant upgrade.
Unfortunately for fans of the HoloLens, Microsoft recently confirmed that they have ended production of their second generation device, and that while they will continue to issue security updates and support for their existing customers, like the US Department of Defense, they haven’t announced a replacement for it—which could mean they’re getting out of this space entirely.
Which is interesting in the sense that this is a space, the world of augmented reality, which some newer entrants are rebranding as mixed reality, that seems to be blowing up right now: two of Microsoft’s main competitors are throwing a lot of money and credibility into their own offerings, and pitching this type of hardware as the next-step in personal devices.
Some analysts have posited, though, that Microsoft maybe just got into this now-burgeoning arena just a little too early, investing in some truly compelling innovations, but doing so at a moment in which the cost was too high to justify the eventual output, and now they might be ceding the space to their competition rather than doubling-down on something they don’t think will pay off for them, or they may be approaching it from another angle entirely, going back to the drawing board and focusing on new innovations that will bypass the HoloLens brand entirely.
What I’d like to talk about today are the offerings we’re seeing from those other brands, and what seems to be happening, and may happen in the near-future, in this augmented-reality, mixed-reality segment of the tech world.
—
I did an episode on spacial computing and the Apple Vision Pro back when the device was made available for purchase in the US, in February of 2024.
This device was considered to be a pretty big deal because of who was making it, Apple, which has a fairly solid record of making new devices with unfamiliar interfaces popular and even common, and because the approach they were taking: basically throwing a lot of money at this thing, and charging accordingly, around $3,500, which is the same price the second HoloLens was being sold for, as I noted in the intro.
But because of that high price point, they were able to load this thing up with all sorts of bells and whistles, some of which were fundamental to its functionality—like super-high-density lenses that helped prevent nausea and other sorts of discord in their users—and some that were maybe just interesting experiments, like projecting a live video of the user’s eyes, which are concealed by the headset, on the front of the headset, which to me is a somewhat spooky and silly effect, but which is nonetheless technically impressive, and is something that seems aimed at making these things less anti-social, because you can wear the Vision Pro and still see people, and this projection of their eyes allows them to see you and your facial expression at the same time.
I’ve actually had the chance to use this device since that episode went live, and while there are a lot of weird little limitations and hindrances to this device going mainstream at the moment, the technology works surprisingly well right out of the box, with the eye- and hand-tracking elements working shockingly, almost magically well for relatively early-edition tech; Apple is pretty good at making novel user-interfaces intuitive, and that component of this device, at least, seemed like a slam dunk to me—for casual use-cases, at least.
That said, the company has been criticized for that high price point and their seeming fixation on things like putting the users’ eyes on the outside of the headset, rather than, for instance, investing in more content and figuring out how to make the thing more comfortable for long periods of time—a common complaint with basically every virtual reality or mixed-reality headset ever developed, because of the sheer amount of hardware that has to be crammed into a finite, head-and-face-mounted space, that space also needing to be properly balanced, and it can’t get too hot, for perhaps obvious reasons.
Those criticisms related to price are the result not of comparison to HoloLens, as again, the pricing is basically the same between these two devices, but instead the result of what Meta has done with their mixed-reality offerings, which are based on products and technology they acquired when they bought Oculus Labs; they’ve leaned into providing virtual reality devices for the low- and mid-market consumer, and their newest model, the Meta Quest 3S is a stand-alone device that costs between about $300 and $400, and it has mixed-reality functionality, similar to the Vision Pro and HoloLens.
While Meta’s Quest line doesn’t have anywhere near the specs and polish of the Vision Pro, then, and while it didn’t arrive as early as the HoloLens, only hitting shelves quite recently, it does provide enough functionality and serves enough peoples’ purposes, and at a far lower price point, that it, along with its other Quest-line kin, has managed to gobble up a lot of market share, especially in the consumer mixed-reality arena, because far more people are willing to take a bet on a newer technology with questionable utility that costs $300 compared to one that costs them more than ten-times as much.
Interestingly, though, while Meta’s Reality Labs sub-brand seems to be doing decently well with their Quest line of headsets, a product that they made in collaboration with glasses and sunglasses company EssilorLuxottica, which owns a huge chunk of the total glasses and sunglasses global market, via their many sub-brands, may end up being the more popular and widely used device, at least for the foreseeable future.
The Ray-Ban Meta Smartglasses looks almost exactly like traditional, Ray-Ban sunglasses, but with slightly bulkier arms and with camera lenses built into the frames near where the arms connect to them.
If you’re not looking carefully, then, these things can be easily mistaken for just normal old Ray-Bans, but they are smartglasses in that they contain those two cameras on the front, alongside open-air speakers, a microphone, and a touchpad, all of which allow the wearer to interact with and use them in various ways, including listening to music and talking on the phone, but also taking photos of what they’re looking at, recording video of the same, and asking an AI chatbot questions like, what type of flower is this, and getting an audible answer.
These things cost around what you would pay for a Quest headset: something like $300-400, but their functionality is very different: they don’t project graphics to overlay the user’s view, in that regard they function like normal sunglasses or prescription glasses, but if you want to snap a photo, livestream whatever it is you’re seeing, or ask a question, you can do that using a combination of vocal commands and interacting with the built-in touchpad.
And while this isn’t the mixed-reality that many of us might think of when we hear that term, it’s still the same general concept, as it allows the user to engage with technology in real-life, in the real-world, overlaying the real world with digital, easily accessed, internet-derived information and other utilities. And it manages to do so without looking super obtrusive, like earlier versions of the same concept—Google’s Google Glass smartglasses come to mind, which were earlier versions of basically the same idea, but with some limited graphical overlay options, and in a form factor that made the wearer look like an awkward, somewhat creepy cyborg.
Snap, the parent company of Snapchat, has a similar offering which originally leaned into the same “these look just like glasses, but have little camera lenses in them” strategy, though with their newest iteration, their Spectacles smartglasses product has reoriented toward a look that’s more akin to a larger, clunkier version of the free 3d glasses you might use at the movie theater—not exactly inconspicuous, though offering much of the same functionality as Meta’s Raybans, alongside some basic graphical overlay functions: a lightweight version of what the Vision Pro and Quest offer, basically, and in a much small package.
These new Spectacles are only available for folks who sign up for the company’s developer program at the moment, however, and are purchased not as a one-off, but for $99/month, with a minimum commitment of 12 months—so the price tag is quite a bit higher than those Quests and Raybans, as well.
Interestingly, Meta’s Reality Labs recently held an event in which they showed off an arguably more advanced version of Snap’s Spectacles, called Orion.
These things are being pitched as the be-all, end-all mixed-reality solution that every company is trying to develop, but which they can’t develop yet, at least not at scale. They look like giant, cartoony glasses—they’re shaped like glasses, but comically oversized ones—and they provide many of the same benefits as today’s Quest headset, but without the large, heavy headset component; so these could theoretically be used in the real-world, not just in one’s living room or office.
The company announced this product along with the caveat that they cannot make it on scale, yet, because cramming that much functionality into such a small device is really stressing the capacity of current manufacturing technologies, and while they can build one of these glasses, with its accompanying wristband and a little controller, both of which help the glasses do what they do, in terms of compute and the user interface, for about $10,000 per unit, they could not, today, build enough of them to make it a real, sellable product, much less do so at a profit.
So this was a look at what they hope to be doing within the next decade, and basically gives them credibility as the company that’s already building what’s next—now it’s just a matter of bringing down costs, scaling up production, and making all the components smaller and more energy efficient; which is a lot of work that will take years, but is also something they should theoretically at least be able to do.
To be clear, most other big tech companies should be capable of build really snazzy, futuristic one-offs like the Orion, as well, especially if they, like Meta, offload some of the device’s functionality into accessory hardware—the Vision Pro has offloaded its battery into a somewhat clunky, pocketable appendage, for instance, and most of these devices make use of some kind of external controller, to make the user interface snappier and more accurate.
But Meta is attempting to show that this is the direction they see wearable technology going, and maybe our engagement with the digital world more holistically, as well. It’s easy to imagine a world in which we all have these sorts of capabilities built into our glasses and wristbands and other wearables, rather than having to work with flat, not-mixed-reality screens all the time, especially once you see the tech in action, even if only as a not-for-sale example.
One aspect of this potential future that Meta is forecasting is already leading to some soul-searching, though.
Some students at Harvard modified a pair of Meta Ray-Bans to use facial recognition and reverse-image search technology so they could basically look at a stranger, then learn a bunch of stuff about them really quickly, to the point that these students were able to do this, then pretend to know the that stranger, talk about their work, find their spouse’s phone number—a bunch of details that made it seem like they knew this person they’d only just met.
All of which is pretty wild and interesting, but also potentially frightening, considering that this is basically doxing someone on demand, in public, and it could be used—like many other tech innovations, granted—to enable and augment stalking or kidnapping or other such crimes.
None of which is destiny, of course. Nor is the success of this product type.
But there does seem to be a lot of interest in what these gadgets seem like they might offer, especially as the prices drop, and as more entrants carve out space in that relatively lower-cost space—which is a space Apple is reportedly planning to enter soon, too, with a new edition of their Vision Pro that would cost maybe something like half as much as the first one, and possibly smart glasses and maybe even Airpods with cameras meant for release over the next couple of years.
So it may be that the early divulgence of these next-step devices, showing us where these things might go with these higher-priced, smaller audience initial editions, could allow us to predict and prepare for some of their negative externalities before they go completely mainstream, so that when they finally arrive in their finished form, we’re a bit more prepared to enjoy the benefits while suffering fewer (though almost certainly not zero) of their potential downsides.
Show Notes
https://en.wikipedia.org/wiki/Spatial_computing
https://en.wikipedia.org/wiki/Apple_Vision_Pro
https://en.wikipedia.org/wiki/Meta_Quest_3S
https://en.wikipedia.org/wiki/Meta_Platforms
https://www.reddit.com/r/RayBanStories/comments/1e3frhc/my_honest_review_of_the_rayban_metas_as_everyday/
https://en.wikipedia.org/wiki/Ray-Ban_Meta
https://www.spectacles.com/spectacles-24?lang=en-US
https://en.wikipedia.org/wiki/Spectacles_(product)
https://forums.macrumors.com/threads/students-add-facial-recognition-to-meta-smart-glasses-to-identify-strangers-in-real-time.2438942/
https://archive.ph/6TqgF
https://www.theverge.com/24253908/meta-orion-ar-glasses-demo-mark-zuckerberg-interview
https://about.fb.com/news/2024/09/introducing-orion-our-first-true-augmented-reality-glasses/
https://www.reddit.com/r/augmentedreality/comments/1frdjt2/meta_orion_ar_glasses_the_first_deep_dive_into/
https://appleinsider.com/articles/24/10/13/cheaper-apple-vision-headset-rumored-to-cost-2000-arriving-in-2026
https://www.uploadvr.com/microsoft-discontinuing-hololens-2/
https://www.theverge.com/2024/10/1/24259369/microsoft-hololens-2-discontinuation-support
https://www.theverge.com/2022/6/7/23159049/microsoft-hololens-boss-alex-kipman-leaves-resigns-misconduct-allegations
https://en.wikipedia.org/wiki/Microsoft_HoloLens

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Remigration
8 окт· Let's Know Things
This week we talk about the AfD, the Freedom Party, and the Identitarian Movement.
We also discuss Martin Sellner, Herbert Kickl, and racialism.
Recommended Book: The Ministry of Time by Kaliane Bradley
Transcript
Racialism, sometimes called scientific racism, is the pseudoscientific belief that groups of human beings are inherently, biologically different from each other based on different evolutionary paths that have carved up the species into different races that are distinct enough from each other to make interbreeding undesirable, and cultural exchange a dangerous hazard.
Said another way, racialism posits, using all sorts of outdated and misinterpreted scientific understandings—like determining intelligence based on the shape of a person’s skull—that black people and white Europeans and folks from Asia are different enough (which is an idea also called polygenesis) that they should stay in their own parts of the world, and that by separating everyone out according to presumed racial background, we would all be able to do as we like, based on our own alleged cultural guide rails, and in accordance with our own, alleged biological destinies; which in some cases would mean invading and killing and maybe enslaving the other, inferior, in our minds at least, races, but in the polite, political telling, usually means something like putting up walls to keep out the racially inferior riffraff, so they don’t pollute our good and pure and obvious superior bloodlines.
Important to note is that different people with genetic lineages in different parts of the world do tend to have distinct collections of biological traits, ranging from skin tone to height to propensities to, or defenses against various sorts of disease.
There’s actual no clean line between groups of people the way this theory says, though: race, the way the word is used today, references a collection of qualities that tend to be found within different groups of people, but every person is a unique collection of genetic mutations and variations, and the old-school concept of biological race has not held up to modern scientific scrutiny—it’s mostly a cultural concept at this point, and even then it’s a fairly fuzzy one.
That said, a lot of very smart people used to believe in the racialism concept back in the Enlightment era, from around the mid-1600s to the late-1700s, as science back then was helping us delineate between all sorts of species, and giving us a hint of the more complete evolutionary understandings that would arrive the following century; but as with many fields of inquiry, this initial glimpse granted us as much new confusion, masquerading as insight, as it did actual, novel understandings.
Today, this concept is almost exclusively cleaved to by folks belonging to various racial supremacist groups, including but not limited to those who are part of the so-called Identitarian Movement, which is a far-right, European nationalist ideology that spans many countries and political organizations, and which aims, among other things, to significantly truncate or end globalization, to do away with multiculturalism in all its forms, to combat what this group sees as the spread and influence of Islam across Europe, and to significantly limit or even completely end immigration of people from outside Europe into European nations.
Folks and parties that subscribe to this ideology are often considered to be ultra-conservative, but also xenophobic and racist—racism being distinct from racialism, as racialism posits there are different, hard-coded biological racial realities that cleanly delineate one group of humans from another, while racism tends to be the belief that one group of people is superior to another, with folks who are racist at times acting on that belief in various ways.
The Identitarian Movement is officially categorized as a right-ring extremist group by the German intelligence agency, and the Southern Poverty Law Center considers a slew of groups that align with this movement to be hate groups.
Though based on the writings and principles of earlier thinkers and politicians, this group is actually fairly modern, only coming into being in its current form in the early 2000s—though the collection of ideas and efforts that informed this movement arose in France in the 1960s as part of a neo-fascist effort to inject out-of-vogue, extremist ideas into respectable, post-WWII political debate.
This was essentially an effort to rebrand Nazi ideology so as to make it seem smart and with-it in the still-stunned, but rebuilding European idea marketplace, and its primary innovation was taking some of those fascist concepts and hiding them under the more palatable label of nationalism—which was experiencing a resurgence following the wave of multiculturalism that began to flourish after the war, though not without imperfections and conflict.
One of the most popular elements of this ideology, though, was introduced a fair bit later, in the early 2000s and 2010s.
Remigration refers to the idea that liberals, people on the left of the political spectrum, want to replace good, hard-working, morally correct, white French people—and later this idea was expanded to encompass all white Europeans—with folks from other countries, especially Muslim-majority countries, but also other places where folks don’t tend to be white.
These lefties are keen to do this for a variety of reasons, apparently, but one of the most popular claims is that they want to give handouts to these new arrivals, and thus get their votes, capturing the government forever by slowly reducing the overall population of the good, wholesome white locals, in order to out-populate them with new arrivals, whose votes will forever be captured by the politicians who gave them all these handouts.
Sometimes called The Great Replacement Theory, this idea serves as justification for the aforementioned, increasingly popular concept of remigration, which basically means rounding up everyone who’s living in Europe, but not originally from Europe, and shipping them elsewhere—even if they are citizens, and even if they aren’t citizens of the countries they’re being shipped to.
Some versions of this idea also say that the descendants of immigrants, folks who were born in their European homes, not elsewhere, should nonetheless be shipped back to where their grandparents came from, due to a lack of sufficient assimilation—which means taking up the culture of the place you’ve moved to, but in this case usually serves as a stand in for “has a different faith, likes different food, adheres to different norms,” and other multiculturalism-linked, distinctions.
This rounding up and shipping would be based on the person’s supposed racial identity, not on their national identity—so in a way, this concept is a means of smuggling racialism into politics, by making it seems as if the modern way of organizing the world and its people—that of nation states, and those nation states granting an identity, a national origin—is not inherent or ideal, and that we should instead force people to stay where we believe other people like them, according to our beliefs about such things, originally came from, and thus, belong.
That underlying concept isn’t one that’s taken seriously by most scientists, philosophers, demographers, or anyone else who’s profession is linked to this collection of ideas, but it’s proven to be a useful narrative and justification for folks who feel as if they’re becoming strangers in what they consider to be their homeland, their culture, their city, and so on. And that’s made it a useful point of leverage for traditionalist and conservative political parties across Europe; and increasingly, in recent years especially, elsewhere around the world, as well.
What I’d like to talk about today is a party in Austria that has leaned heavily into this collection of ideas, and which claimed the most votes in the country’s recent election, as a consequence.
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The Freedom Party, or FPO, is an Austrian political party that’s a founding member of the European-scale Identity and Democracy Party, which recently merged with other, fellow traveler parties from the Czech Republic and Hungary, to become the Patriots for Europe group; though all of these entities share roughly the same ideological platforms and practical, political ambitions.
And among those ambitions is the desire to tackle the issue of immigration across the EU, reducing especially the number of people coming into the bloc from Muslim-majority nations, which large numbers of people in many European countries have complained about, usually because they feel the cultures of their hometowns and home countries are changing rapidly, and they consequently feel like they’re being elbowed out and replaced by these newcomers.
This is not a new complaint, and this isn’t only a European thing; across history, even very modern history, when a wave of immigrants arrive in a new home, that can make the people who were there before them feel like they’re under assault—and if those new arrivals have a different religion than the majority of the people in the place they’ve immigrated to, that can increase the perceived differences and threats, as can a difference in skin color, the clothing they wear, cultural customs, foods, fragrances, language, and just about anything else.
This angle of politicking has become increasingly popular with mostly but not exclusively conservative parties around the world in recent years, though, as some of those parties have gotten pretty good at spreading this message to disaffected people, including disaffected youths, in some of the most immigrated-to places in the world.
So young men in the United States have, according to recent polls, been hearing a lot about this and seem to be open to the idea that some of the, on average, at least, issues they seem to be facing in terms of educational attainment and employment options, among other things, are the fault of those new arrivals, and that’s possibly a component of the gender-skewed shift we’re seeing in the lead-up to November’s election, with young people in general leaning liberal, but more young men leaning conservative than young women.
That’s almost certainly not the only issue at play here, of course, but it’s something conservative politicians in the US seem to be leveraging, even to the point that former president and current Republican candidate Donald Trump recently mentioned the term “remigration” in a social media post: something that’s being seen by political analysts as a trial balloon to see if the concept might be picked up by folks in his political orbit, and might in turn garner him more support amongst people who feel like too many immigrants are entering the US, and that all that immigration is bad for one of several possible, and well-promoted, reasons; maybe, this trial balloon implies, we should just ship them all back from where they came from, and that may then free up housing and jobs and maybe set things back to normal, how things used to be.
It’s worth noting that the word remigration was initially used to refer to the return of European Jews to their homes after WWII, but it was adopted by French white nationalists in the mid-2010s to allude to deporting immigrants and the children of immigrants, en masse.
The term became more widely known after an investigation found that, in late-2023, members of the Alternative for Germany, or AfD party had a secret meeting with neo-nazis, at which there was a presentation by a thirty-something far-right Austrian political activist named Martin Sellner, who among other things is the leader of the Identitarian movement I mentioned in the intro, and in that talk he supported the idea of a program that would involve identifying and removing minorities of various kinds from Germany by force—remigration, basically, a topic he’s also written a book about.
Sellner later said that his words were twisted by the media and that remigration is really just a collection of policies that would slow or stop some types of immigration in the future, but he was banned from Germany because of that talk, until a German court revoked that ban last May, and he was denied entry into the UK in 2018, and into the US in 2019 because of a large donation he received from the mass-shooter who attacked two mosques in Christchurch, New Zealand in 2019, killing 51 people and injuring 89.
Sellner himself has said that until 2011 he was a neo-nazi, and his wife, an American pro-Trump online influencer—who was a big proponent of the so-called Pizzagate conspiracy theory among other notable, and demonstrably untrue narratives that became popular in the lead up to previous elections—she spreads a lot of the same content, but with a US bent, rather than a European one.
Both Sellners, and other members of the Identitarian movement, have been accused of parroting Nazi talking points, promoting things like Holocaust denial, and calling for minorities to be mass-executed, but they generally contend that they’re simply proud nationalists who love their countries and don’t want to see them changed or ruined by a bunch of people from other places with different ideas, beliefs, and priorities coming in and taking all the jobs, and tweaking everything to suit their wants and needs, against the desires of those who were there first.
The concept of remigration has attained popularity at a more rapid rate in some places than others, and it seems to have done especially well in Austria—the country’s Freedom Party won 29% of the vote in the country’s last election in late-September of this year, and that was the highest tally of all the parties that participated; which is notable in part because of what the Freedom Party believes now, in remigration and adjacent policies, but also because this is a party that was founded in the 1950s by a former SS officer and Nazi politician.
It’s expected that the Freedom Party won’t be able to form a government, because every other party has said they won’t form a coalition with them—the currently governing conservative People’s Party has said they might be open to it, but not with Herbert Kickl, the group’s current leader, involved in the resultant government.
Kickl is an ardent ally of Russian president Putin and has been accused of attempting to meld right-wing populism with nazi-valenced, fascist extremism—a common accusation against folks in this corner of the political spectrum, though in some cases an accusation that is also seemingly true.
Like Sellner and other folks with this ideological orientation, Kickl promotes the idea of Remigration, which in the context of Austrian politics, in his mind at least, would help reinforce the strength of a Fortress Austria with completely closed borders and which is run by an all-powerful security state apparatus, that is capable of managing those borders, and keeping the peace inside the nation’s impermeable walls.
Kickl has said, in the wake of the election in which his party was victorious, that Austrian politicians are making a decision, by excluding his party, and him specifically from government, that is a slap in the face to the electorate—though he’s continued to make overtures to other conservative parties in the hope that they might be willing to work with the Freedom Party to form a functioning government; this seems unlikely, at this point, though it’s not impossible.
Even without a functioning coalition, though, Kickl and his party’s win at the polls, bringing in the most support of any party, speaks volumes about the popularity of this general collection of concepts and ideas; and the same seems to be true in many other countries where these ideas are being spread: despite a few let-downs for European far-right parties in recent years, this collection of political entities and personalities have done pretty well over the past decade, making substantial gains in France, Germany, and the Netherlands, in particular.
That these parties often align themselves with fascist governments and subscribe to easily disproven conspiracy theories doesn’t necessarily outweigh their support of increasingly popular anti-immigration policies, it would seem, and that popularity seems to be the result of their success in tying immigration to all manners of social and economic ills.
Much of Europe is still experiencing economic downswings, high levels of inflation, and overall underperformance compared to their peers, post-pandemic peak, so this sort of messaging may be decently well-received even by folks who wouldn’t typically agree with much of the rest of their platform or narrative, but who are currently looking for anything that defies the current status quo, and anyone who provides something that seems like it might be an explanation for those many and varied downswings and other perceived ills.
Show Notes
https://www.infomigrants.net/en/post/56618/italyalbania-asylumseeker-deal-to-cost-%E2%82%AC653-million-report-finds
https://archive.ph/PFWhk
https://www.nytimes.com/2024/09/29/world/europe/austria-election-freedom-party-kickl.html
https://www.reuters.com/world/europe/austrian-far-right-head-urges-rivals-let-him-govern-after-election-win-2024-10-05/
https://www.reuters.com/world/europe/austria-holds-tight-election-with-far-right-bidding-historic-win-2024-09-28/
https://en.wikipedia.org/wiki/Remigration
https://en.wikipedia.org/wiki/Race_(human_categorization)
https://en.wikipedia.org/wiki/Identitarian_movement
https://en.wikipedia.org/wiki/Great_Replacement
https://en.wikipedia.org/wiki/European_New_Right
https://en.wikipedia.org/wiki/Scientific_racism
https://en.wikipedia.org/wiki/Martin_Sellner
https://en.wikipedia.org/wiki/Brittany_Sellner
https://en.wikipedia.org/wiki/Herbert_Kickl

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Soft Landing
1 окт· Let's Know Things
This week we talk about the Fed, interest rates, and inflation.
We also discuss cooling economies, the Federal Funds Rate, and the CPI.
Recommended Book: Dirty Laundry by Richard Pink and Roxanne Emery
Transcript
I’ve done a few episodes on this general topic over the past several years, so I won’t get super in-depth about many of the specifics, but the US Federal Reserve has a dual-mandate to keep prices stable and to maximize employment in the country—though that core responsibility has been expanded in recent years to also include regulatory control over banks, providing a variety of services to banks and other savings associations, and doing what it can to moderate long-term inflation rates.
A lot of these responsibilities are intertwined, in the sense that, for instance, if you increase interest rates, that can lead to less spending by corporations that might otherwise borrow and spend liberally, creating more jobs; so adjusting one lever often tweaks seemingly disconnected outcomes—which is part of why this agency’s activities often fly below the radar of non-regulation, non-monetary-world people and publications; they’re super-careful with their powers, because one wrong move can cause ripples of discomfort throughout the US and global economy.
When one of those metrics they’re meant to moderate goes haywire, on the other hand, they’re all over the news; their every action, even the seemingly unimportant ones, tracked in great details, and breathlessly reported-upon.
For a variety of reasons, including the large-scale shut-down of various aspects of society and the global economy, and the consequent disruption of global supply chains, inflation—as measured by CPI, or the Consumer Price Index—shot through the roof, pretty much everywhere on the planet, beginning in 2020.
Leading up to that moment, many wealthy countries had been doing pretty well in terms of moderated inflation levels, and the US was no different: year-over-year inflation growth was down to sub-1% levels in 2014 and 2015, and it was close to the Fed’s 2% target level from 2010, when the worst of the 2007-2008 economic crisis had receded, until 2020, when it was down to 1.4%.
That year, the Federal Funds Rate, which is the lever the Fed uses to adjust interest rate levels throughout the US government and economy, setting the interest rate banks charge to lend each other money short-term, basically, that number eventually influencing everything from savings account interest payments to mortgage rates to what you can expect to pay for a car loan—that Federal Funds Rate was down to .25% in 2020 and 2021, which is very low, which meant that debt was very cheap and easy to acquire, corporations happily borrowing as much money as they wanted, as it would cost them very little to do so, and that meant expansion across the economy, that expansion further aided by low interest paid on savings accounts and similar, safe-havens for money, which made investing in startups, stocks, and similar, risky investment vehicles more appealing—because the safe stuff didn’t pay much of anything.
All of which meant a spending bonanza—right up to the point that COVID-19 started rippling outward from China, and the world’s governments responded with lockdowns and similar, economy-stifling measures.
By the end of 2021, year-over-year inflation in the US was up to 7%, from 1.4% the previous year, and it was 6.5% the following year.
In 2022, the Fed bumped the Federal Funds Rate from that incredible low of .25% up to 4.5%—a huge jump, and a staggering blow for an economy that was experiencing a dramatic surge in prices; the goal being to slow things down, and consequently, hopefully, also slow that inflation rate.
Other factors likewise influenced inflation around the world during this period, including Russia’s invasion of Ukraine, which massively complicated the global energy market, alongside other disruptions, and the weirdening of politics, which have become increasingly tribal and extreme over the past decade or so in many governments around the world, have made it trickier to legislate, and have carried a wave of unserious and obstructive lawmakers into office.
That hiking of the Federal Funds Rate ended what’s been called the US’s ZIRP era: a period in which zero interest-rate policy, or so close to zero that it’s essentially zero interest rate policy, defined the shape of the economy, what professions everyone chose to pursue, which players became dominant in their industries, and what sorts of bets made financial and reputational sense.
The US, and much of the world, especially the wealthy world, was thus suddenly plunged into a very different financial and regulatory environment, changing its posture and the politics of money and spending, while also queueing things up for a potential future in which inflation might be tackled and the Fed might start adjusting the dial downward once more, tipping the economy back into something more spendy and risk-taking, after a handful of years in which the name of the game has been cutting costs, laying off as many people as possible, and recalibrating toward today’s profits over investing in tomorrow’s potential gamechanging outcomes.
What I’d like to talk about today is the Fed’s recent decision to do exactly that, adjust their interest rate dial, and how the way they did it is being received by those who are the most affected by this choice.
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The mechanism of the Federal Funds Rate is fairly straightforward: make it more expensive to borrow money and you tend to cool the economy.
Do this at the wrong time—when the economy is already cool—and you hurt the businesses that make up the production side of things, but also consumers, as there likely won’t be enough jobs, and enough jobs paying enough for folks to earn a living, buy things, and keep those businesses operating at nominal capacity.
Don’t do it when you need to, though, and the economy can get out of hand, running too hot, expanding wildly, and possibly also pumping up inflation at a rate that makes everything pricier, which can lead to similar consequences: folks not able to afford as much because the price of things is going up, despite their pay being decent and the job market being on fire.
This rate has to be used like a scalpel, not a chainsaw, then, lest you tip things one way or the other, in either case resulting in some type of economic truncation and various types of suffering for the citizenry of the country in question.
In this context, a “soft landing” is a semi-mythical accomplishment involving the just-right application of the Federal Funds Rate so that you increase interest rates, maybe dramatically, to stifle high inflation, but then pull those interest rates back at just the right moment so that the economy is cooled, but not damaged, and you’re thus able to put things back on a nice growth trajectory, but with something like a 2% inflation rate, rather than something much higher, or just as bad in some ways, much lower than that.
It’s been speculated that a soft landing might be attainable by this Fed’s current leadership because they seemed to be acting prudently and objectively, despite the politics surrounding their efforts, and they also seemed willing to hold off on lowering the rate even when much of the business world and parts of the government were losing its mind over worry that they would keep it high for too long.
In late September 2024, the Fed announced that they’d decided to finally cut this rate, from a target range of 5.25-5.5%, down to a target range of 4.75-5%.
That’s a drop of .5%, which is unusual except in emergency circumstances, and while it wasn’t totally out of the blue—many analysts and betting markets had given a high probability to this potentiality, as opposed to the usual .25% cut—it was still quite a big event, as it makes pretty clear that the Fed sees their job as being mostly done, at least in the sense that they need to cut inflation quickly and dramatically.
That decision was made on the basis that US inflation rates, using the Fed’s preferred index, had dropped for the fifth consecutive month in August of this year, down to 2.2%, which marked the lowest level since February of 2021; that’s down from 2.9% in July, and is tantalizingly close to their target rate of 2%.
The implications of this double-the-usual drop in the Federal Funds Rate are many, and the specifics and claims vary depending on who you ask.
One perspective of why this did this how they did it is that the Fed sees that it’s work is done on this matter, and they’re keen to get interest rate levels back to something more moderated as quickly as possible so that the economy can keep its solid momentum going apace. They also recognize that there’s a delay on these sorts of decisions and their impact, so getting close to 2% and then pulling back is more likely to ultimately land them somewhere close to 2%, while waiting for reports that show 2% before pulling back would be likely to lead to an overshoot, which could be really bad for economic outcomes.
Another view is that the Fed accidentally held on a little too long and maybe should have cut rates by .25% at their previous meeting, and now, to make up for that, they doubled the cut; but because of that accidental delay, the economy could suffer a bit, the Fed overshooting after all, which again, wouldn’t be ideal, but is a possibility because of that aforementioned delay in cause and effect.
Some prognosticators in this space, however, are seeing this as a panicky indication that we’re actually careening toward a recession, as some of the economic indicators folks watch to predict such things are flashing red, and while a successful soft landing could theoretically help the US avoid such a path, the current wave of relief and optimistic anticipation could also be an illusion that’s concealing structural weaknesses in the US economy that are about to rupture.
The most popular version of that more pessimistic prediction is that the US will experience a recession in 2025, maybe 2026 at the latest, and it will have to make it through that trough before it can start climbing up the peak, again—which would be bad news for investors and businesses, and would mean basically resetting to a standing start, in terms of growth, as opposed to perpetuating the momentum of the economy as it exists, today, which is doing pretty well by most metrics.
That could also be quite bad for burgeoning industries like those connected to AI systems, renewable energy, and microchips, as these are all investment-intensive corners of the economy, and a recession would almost certainly significantly truncate the amount of money sloshing around in investors’ bank accounts, waiting to be injected into businesses operating in such spaces.
All that said, at the individual level, while inflation has been moderated by many measures, prices dropping substantially from where they were even a few months ago, what’s been called the “vibecession” seems to still be hampering the everyday person’s sense of how things are going economically in the US—the numbers look pretty good, but the average person reports that they think things are going catastrophically.
It’s thought that this is at least partly the consequence of economic ignorance—folks only remembering the many negative headlines they see, and not realizing how historically low unemployment is, and how historically high the stock market has climbed, alongside other positive measures.
But the more potent ingredient, almost certainly, is that while inflation has moderated for many common goods and expenses, others, like food, are still quite high, and that’s an expense that we don’t just see periodically, like when we buy new shoes or a new car, but every week or even every day, which is a far more regular punch to the gut that hits not just our pocketbooks, but also our perception of how far our money goes, and how well off we feel as a consequence.
There’s already a great deal of speculation as to what the Fed will do at its next meeting in November, and bets on popular futures markets indicate there’s a 54% chance of another half-point cut, as opposed to a 46% chance of a quarter-point cut.
That latter potentiality would arguably support the assertion that the Fed is scrambling to make up for lost time, hoping to avoid an inflation reduction overshoot—or from a more positive perspective, maybe just wanting to get back to a more neutral interest rate stance sooner rather than later, to help keep the economy chugging along, without any periods of sluggishness, while the former potentiality, a quarter-point cut in November, would ostensibly seem to be a more confident stance from the Fed, but could also worry investors, as it might mean it’ll take a bit longer to fully return to that neutral stance.
Whatever speed the Fed ends up opting for in dropping interest rates, though, most analysts see the rate falling to something like the 3-3.25% range by the middle of 2025, which is at the top end of what’s generally see as a neutral rate for such things—a rate that won’t add fuel to a hot economy, but also won’t cool things artificially.
By that point, we’ll probably also know if the Fed has managed to nail a soft landing; it seems like they might have, but at this point there is still reason to suspect they didn’t, and that this is just the silence before the storm.
Show Notes
https://www.washingtonpost.com/opinions/interactive/2024/john-lanchester-consumer-price-index-who-is-government/
https://en.wikipedia.org/wiki/Consumer_price_index
https://en.wikipedia.org/wiki/Misery_index_(economics)
https://apnews.com/article/federal-reserve-barkin-interest-rates-inflation-bba49b528649cf866e391a783033c067
https://www.cnn.com/2024/09/23/economy/rate-cut-what-next/index.html
https://www.wsj.com/business/entrepreneurship/fed-interest-rate-cut-small-business-spending-abfed941
https://www.forbes.com/sites/georgecalhoun/2024/09/26/the-feds-rate-cut--a-soft-landing--or-fake-news/
https://www.reuters.com/markets/us/fed-is-aligned-rate-cuts-upcoming-data-will-shape-pace-2024-09-27/
https://apnews.com/article/interest-rates-inflation-prices-federal-reserve-economy-0283bc6f92e9f9920094b78d821df227
https://www.cbsnews.com/news/federal-reserve-rate-cut-credit-cards-mortgages-already-lowering-rates/
https://www.federalreserve.gov/newsevents/pressreleases/monetary20240918a.htm
https://www.investopedia.com/will-fed-rate-cuts-save-commercial-real-estate-cre-loans-banks-8719181
https://finance.yahoo.com/news/new-pce-reading-supports-case-for-smaller-fed-rate-cut-in-november-143349577.html?guccounter=1
https://www.bloomberg.com/news/articles/2024-09-28/powell-speech-and-jobs-data-to-help-clarify-fed-rate-path?embedded-checkout=true
https://www.reuters.com/markets/us/traders-bet-second-straight-50-bps-fed-rate-cut-november-2024-09-27/
https://en.wikipedia.org/wiki/Federal_funds_rate
https://en.wikipedia.org/wiki/Zero_interest-rate_policy
https://www.investopedia.com/terms/s/softlanding.asp
https://www.cbsnews.com/news/federal-reserve-rate-cut-credit-cards-mortgages-already-lowering-rates/
https://www.theguardian.com/business/2024/sep/27/stock-markets-hit-record-highs-after-news-of-a-fall-in-us-inflation

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Hand of God Operations
24 сен· Let's Know Things
This week we talk about interdiction, the NSA, and Mossad.
We also discuss exploding pagers, targeted strikes, and paramilitary organizations.
Recommended Book: Uncertainty in Games by Greg Costikyan
Transcript
In the world of technology, and especially computers—or anything with microchips and thus, some computing capabilities—a “backdoor” is a bit of code or piece of hardware that allows someone (or a group of someones) to get inside that computer or compute-capable device after it’s been delivered and put into use.
At times the installation of backdoors is done beneficently, allowing tech support to tap into a computer after it’s been sold so they can help the end-user with problems they encounter.
But in most cases, this term is applied to the surreptitious installation of this kind of hardware or software, and generally it’s meant to allow those doing the installing to surveil the activities of whomever is using the product in question, or maybe even to lock them out and/or hijack its use at some point in the future, should they so desire.
There are potential downsides to the use of backdoors even when they’re installed with the best of intentions, as they can allow malicious actors, like hackers, working independently or for agencies or nation states, to tap into these devices or networks or whatever else with less effort than would have otherwise been required; in theory such a backdoor would give them one target to work on, rather than a bunch of them, which would mean attempting to access each and every device individually; a backdoor in an operating system would allow hackers who hacked that backdoor system access to every device that uses said OS, for instance.
Backdoor efforts undertaken by the US National Security Agency, the NSA, were famously divulged by whistleblower Edward Snowden, revealing all sorts of—to many people outside the intelligence world, at least—unsavory activities being conducted by this agency, among them efforts to install backdoors in software like Linux, but also hardware like routers and servers, at times opening these devices up and installing what’s called a Cottonmouth, which allows the NSA to gain remote access to anything plugged into that device.
This sort of interdiction, which is basically the interception of something before it reaches its intended destination—so intercepting a modem that’s been ordered by a big company, opening it up, installing a backdoor, then repackaging it and sending it on its way to the company that ordered it as if nothing has happened—is not uncommon in the intelligence world, but the scope of the NSA’s activities in this regard were alarming to pretty much everyone when they were divulged, with leaks and reporting showing, basically, that the NSA had figured out ways to put hardware and software backdoors in just about everything, in some cases resulting in the mass collection of data from American citizens, which goes beyond their legal remit, but also the surveillance of American allies, like the chancellor of Germany.
What I’d like to talk about today is another, recent high-visibility example of an intelligence agency messing with devices ordered by a surveillance target, and what consequences we might expect to see now that this manipulation has come to light.
—
In the world of covert operations—spy stuff, basically—a “hand of God” operation is one that is almost immaculately targeted to the point where it might almost seem as if those who are struck did something to piss off a deity; those who the targeters want to hit are hit, and everyone else is safe or relatively safe.
In 2020, a hand of God operation was launched against an Iranian general named Qassem Solaimani while he was near the Baghdad airport, an American Reaper drone hitting Solaimani and his escorts’ cars with several missiles, killing the general and nine other people who were with him, but leaving everyone else in the area largely unscathed—not an easy thing to do.
Hamas’s leader, Ismail Haniyeh, was assassinated in July of 2024 by Israel, which blew up his bedroom in a military-run guesthouse in Iran’s capital city, Tehran, either using a well-targeted missile or a bomb that they somehow managed to hide in that room ahead of time—either way, it was a very precise attack that made use of a lot of intelligence data and assets in order to hit the target and just the target, avoiding other casualties as much as possible—which again, can make this sort of strike, though still massively destructive, seem like an act of god because of how highly specific it is.
On September 17 of 2024, at around 3:30 in the afternoon, local time, thousands of pagers, which were purchased and used by the militant group Hezbollah, which governs the southern part of Lebanon, and which is locked in a seemingly perpetual tit-for-tat with Israel, mostly using rockets and drones across their shared border, these pagers began to buzz, indicating there was a new message from Hezbollah leadership, and then seconds later they exploded—some in their owners’ pockets or on their hips, some in their hands, if they lifted them to their faces to see what the message contained.
These sorts of devices were subbed-in for smartphones by the organization’s leadership in recent years, especially following the early October attacks on Israel by Hamas in 2023, due to fears that Israel’s notorious intelligence agency, Mossad, would be able to tap their communications if they used more sophisticated tools.
The pagers in question were a bit more modern than those that were common a few decades ago, allowing users to basically text each other, and it was thought that they were simple enough that they would reduce the number of software backdoors that Mossad could use to intercept their messages, while still allowing those in the higher-levels of the organization to communicate with each other quickly and efficiently.
Instead, it looks like Hezbollah acquired these pagers from an Israeli shell company—maybe several shell companies—operating out of Hungary which licensed the device schematics and branding of a Taiwanese company in order to make it seem legit.
This company or companies were set up in mid-2022, and the tangled web of activities surrounding them is still being unspooled by journalists and intelligence agencies, but pretty much everyone, from the pager brand’s parent company to the Hungarian government deny any connection to any of this, the US and Israel’s other allies deny having any foreknowledge of the operation, and Israel’s Mossad is of course not divulging their secrets, so it could be a little while before we know all the details, if we ever do, but it seems like this larger operation, the infrastructure for it, anyway, may have been in the works for a decade or more.
The way it played out, though, is that those thousands of pagers seem to have been filled with a few ounces of explosives and rigged with software that would detonate said explosives when a specific message was received by them. These pagers, then, were delivered to Hezbollah, distributed to their higher-ups, their inner-circle, basically, and then on September 17 thousands of them received the detonate message, blew up, and killed at least 12 people and injured nearly 3,000.
Lebanon’s hospitals were filled with the dead and grievously injured, shutting down a significant chunk of their overall medical capacity, and the following day a wave of radios—the kind used to communicate, not the kind used to listen to music, so basically walkie-talkies—alongside a few mobile phones, laptops, and some solar power cells, all owned and used by Hezbollah officials and operatives, blew up, killing at least 25 people and injuring about 450.
Then, a few days later, Israel launched an airstrike on a suburb in Beirut—the capital city of Lebanon—killing two senior Hezbollah officials and something like 36 other people with the 140 or so rockets it launched during the operation.
Anonymous officials from the US and Israel have told reporters that the explosives hidden in those pagers and other devices, were originally meant to be used as an opening salvo of an all-out attack against Hezbollah, which by definition would probably mean an invasion of Lebanon, since Hezbollah controls a fair portion of the country, but they were growing concerned that Hezbollah might have been on to them and their explosives-hiding efforts, so they decided to move sooner than planned and detonate these devices without having that immediate full-bore followup ready to go.
This might be part of why the attack is generally being seen, in analytical and intelligence circles, at least, as a tactical success but a strategic question mark, as the end-goal isn’t really clear, especially since Israel is still partly tied-up in Gaza and increasingly the West Bank, as well, and thus not super well-prepared for a potential real-deal war with Lebanon, to its north. This operation’s culmination would have made a lot more sense several months in the future, when they would theoretically have been in a better spot to detonate these devices, launch a bunch of missiles, and then move in with soldiers on the ground to capture or kill the rest of Hezbollah’s leadership.
It has been posited that this effort still serves a few important purposes for Israel’s military and intelligence agencies, though. For the latter, it serves as a reinvigoration of the “don’t mess with us” reputation they held up until the successful sneak-attack by Hamas last October; Mossad has been heavily criticized for ignoring the signals they were receiving about that attack, and this could have been partly meant to show their government and the world that they still have plenty of gas in the tank; it was a highly sophisticated operation, and it’s fairly terrifying to think that the devices we all carry in our pockets might be weaponized in this way; Iran’s military is reportedly disallowing the use of such devices for the time being, and local airlines are not allowing folks to bring these sorts of things aboard, either, so the scare-factor has definitely worked, and it will likely make it a lot more difficult for Hezbollah and similar organizations in the area to function, since they won’t know for certain which of their communication channels have been compromised and potentially weaponized against them.
The Israeli military, too, would seem to benefit from what amounts to a decapitation attack on an organization that has declared its intention to wipe Israel off the face of the map.
Hezbollah and similar organizations are more fluid than typical government organizations by necessity, but Hezbollah is a lot more established and entrenched than other Iran-backed entities, like Hamas in Gaza and the Houthis in Yemen, which means they have more infrastructure, a larger military force, and a more concrete leadership structure—the latter of which was hit hard by these strikes and hand of God operations, and the former of which has been hit hard over the past year or so, airstrikes targeting Hezbollah’s rocket, drone, and missile capabilities in particular having become more common since Hamas attacked Israel.
There are several interesting, and in a few cases alarming, possible implications of this operation and its accompanying airstrikes.
First is that it could represent a time-delayed unofficial declaration of war by Israel against the Hezbollah-controlled portion of Lebanon.
There have been very clear red-lines honored by both militaries for the past several years, both of them generally sticking to hitting targets within a few miles of their shared border, and both sides generally avoiding hitting major cities or higher-ups from the opposing side with their strikes; a lot of rockets and missiles and drones flying, but few of them hitting anything meaningful, other than the sites from which those projectiles were launched.
Israel seems to be indicating that the rules have changed, though, and while Hezbollah has made similar gestures in recent days, aiming at and hitting a few Israeli targets beyond the typical projectile launch-sites and military installations close to the border, including towns dozens of miles from that border, they’re still proving to be less brazen than Israel in this regard, so far at least.
So it could be that Israel is leaving Hezbollah some space to back off, giving them a taste of what’s to come if they don’t accept that ultimatum, and it could be that Hezbollah is gesturing at hitting back, but avoiding doing anything they can’t step back from in order to give themselves time to either tone things down on what feels like their own terms, or to prepare for a more formal conflict; this could change at any moment, of course, but that seems like the most likely resting stance for Hezbollah at the moment—though in recent days both sides have indicated they’re not just prepared, but actually keen for a more formal conflict, including an Israeli invasion of Lebanon, which would allow the Israelis to do more capturing and disassembling of Hezbollah’s infrastructure, but could also bog them down in street combat, which would make them less effective in Gaza, while also probably requiring the summoning of thousands of new soldiers, or already active, but exhausted soldiers—which wouldn’t be a popular move on the Israeli homefront.
This also raises all sorts of questions about the safety, or lack thereof, of international supply chains.
Some of these supply chains have already suffered as a consequence of their tangling and breaking during the height of the COVID-19 pandemic, but others are beginning to shrink or even wither as a result of concerns about, for instance, China integrating itself in global communications systems via its 5G technology and mobile devices, which has led to all sorts of sanctions and import bans by countries like the US and their allies.
Could iPhones built in China be messed with before they’re shipped to their end-users in other countries? It’s not impossible, and the same is true of just about anything that’s made in one place and exported to another. That doesn’t mean it will happen, but the knowledge that it could—and the line that’s been crossed by Israel in blowing up seemingly safe personal devices in this way—could lead to more such bans, or at least concerns and posturing by political figures about these fears. That, in turn, could expedite the truncating and culling of some of these supply chains, further curtailing the expansiveness, range, and openness of global trade.
And finally, this raises more concerns about the possibility of Israel’s invasion and occupation of Gaza sparking a larger, regional conflict, as Hezbollah is backed by Iran, which also backs an array of other non-government interests in the region, including several paramilitary groups. And the Israeli government seems keen to take down as many of the threats it’s surrounded by as possible before any peace treaties are signed; which perhaps understandable when you’re running a country that’s been invaded by all of its neighbors simultaneously as many times as Israel has in its relatively short history as a sovereign nation, but it’s also pretty alarming as Israel is a hugely potent military force in the region, and it’s backed by many of the world’s most globally potent military forces, which means it could wreak a whole lot of havoc if it wants to, and if such an effort increases in scope, that could pull other regional powers, like Iran, more formally and overtly into the conflict.
There are other forces at play, here, too, like the political machinations of Israeli Prime Minister Netanyahu, who’s walking a fine line attempting to stay in office in the midst of large and seemingly endless protests by Israelis who oppose his seeming kowtowing to the country’s far-right political establishment, and who’s scrambling to stay in office, in part to avoid facing ongoing corruption charges against him.
There are also external factors that could influence the region’s next steps, like Russia, which would love to see this conflict expand because that would take resources and attention away from its invasion of Ukraine, while other nations, like Saudi Arabia, would likely prefer to continue along a previous course of regional stabilization and normalization—of more trade enabled by more peace, basically—though it now seems inclined to put those efforts on pause because of the unpopularity of dealing directly with Israel until and unless it recognizes a Palestinian state, which doesn’t seem likely in the immediate future, given everything that’s happened in the past year.
Lots going on, then, and this most recent wave of attacks would seem to stir the pot more than it settles much of anything for everyone involved; which means, most immediately, and this is true whether or not Israel and Lebanon more formally go to war with each other, the ongoing peace talks that many of Israel’s neighbors and allies have been hoping for have been essentially back-burnered for the time being.
Show Notes
https://en.wikipedia.org/wiki/Assassination_of_Qasem_Soleimani
https://en.wikipedia.org/wiki/Assassination_of_Ismail_Haniyeh
https://archive.ph/OqfPt
https://www.nbcnews.com/news/world/israel-strikes-lebanon-hezbollah-revenge-device-blasts-nasrallah-rcna171946
https://www.nbcnews.com/news/world/hezbollah-commanders-killed-israel-strike-beirut-device-blasts-rcna172085
https://www.washingtonpost.com/world/2024/09/21/israel-lebanon-hezbollah-exploding-pagers/
https://www.bbc.com/news/articles/cz04m913m49o
https://www.nytimes.com/2024/09/21/business/dealbook/exploding-pagers-deliver-supply-chain-warning.html
https://www.wsj.com/world/middle-east/hezbollah-exploding-pagers-israel-supply-chain-a4937b48
https://www.wsj.com/world/middle-east/israels-ultimatum-to-hezbollah-back-off-or-go-to-war-f1b99924
https://www.washingtonpost.com/national-security/2024/09/21/israel-lebanon-pager-explosions-hezbollah-warfare/
https://www.axios.com/2024/09/21/hezbollah-launches-medium-range-rockets-israel
https://www.nytimes.com/live/2024/09/22/world/gaza-israel-hamas-hezbollah
https://apnews.com/article/israel-palestinians-gaza-755733f50ad52c5af05a2ea7ef082e26
https://www.nytimes.com/2024/09/21/world/middleeast/israel-hezbollah-lebanon.html
https://www.nytimes.com/2024/09/20/world/middleeast/gaza-cease-fire-talks-hezbollah-lebanon.html
https://www.msn.com/en-us/news/world/israel-s-hand-of-god-operation/ar-AA1qMval
https://www.nytimes.com/2024/09/17/world/middleeast/israel-hezbollah-pagers-explosives.html
https://www.nytimes.com/2024/09/17/world/middleeast/hezbollah-pager-explosions-lebanon.html
https://www.axios.com/2024/09/18/hezbollah-pager-explosions-supply-chain-terror
https://apnews.com/article/lebanon-israel-hezbollah-pager-explosion-e9493409a0648b846fdcadffdb02d71e
https://www.nytimes.com/2024/09/22/world/middleeast/mideast-diplomacy-hezbollah-israel.html
https://www.nytimes.com/live/2024/09/22/world/gaza-israel-hamas-hezbollah
https://www.nytimes.com/2024/09/23/world/middleeast/israel-hezbollah-escalating.html
https://www.reuters.com/world/middle-east/irans-guards-ban-communications-devices-after-strike-hezbollah-security-2024-09-23/
https://arstechnica.com/tech-policy/2014/05/photos-of-an-nsa-upgrade-factory-show-cisco-router-getting-implant/
https://www.reuters.com/article/world/spy-agency-ducks-questions-about-back-doors-in-tech-products-idUSKBN27D1DO/
https://www.extremetech.com/defense/173721-the-nsa-regularly-intercepts-laptop-shipments-to-implant-malware-report-says
https://en.wikipedia.org/wiki/National_Security_Agency
https://en.wikipedia.org/wiki/Hardware_backdoor

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Extended-Range EVs
17 сен· Let's Know Things
This week we talk about EREVs, Ford’s CEO, and Hertz.
We also discuss the used EV market, plug-in hybrids, and the Tesla Model 3.
Recommended Book: Not the End of the World by Hannah Ritchie
Transcript
In late-2021, car rental giant Hertz announced that it would purchase 100,000 Tesla Model 3 sedans for its fleet, giving customers the opportunity to drive what had recently, in 2019, become the best-selling plug-in electric car in US history, beating out the Chevy Volt, and then in 2020 become the bestselling plug-in in the world, bypassing the Nissan Leaf.
This was announced about six months after the company went through a massive restructuring, triggered by a bankruptcy filing in May of 2020, which landed Hertz in the hands of a pair of investment firms that purchased a majority stake in the company for about $4.2 billion.
Part of the goal in making such a huge electric vehicle purchase was that it would ostensibly set Hertz up with some of the snazziest, most future-facing vehicles on the road, and it should—if everything went according to plan—also provide them with some advantages, as full-bore EVs have far fewer parts than traditional internal-combustion vehicles, which means a lot less that can go wrong, and fewer moving pieces that need maintenance; which is pretty vital for vehicles that will be driven pretty much continuously.
So the single largest purchase of electric vehicles in history would represent a massive up-front investment, but the hope was that it would both pay off in dollars and cents, maintenance-wise, and help differentiate a brand that had recently been through some very rough patches, business and competition-wise.
Unfortunately for Hertz, that’s not what happened.
Initially, this announcement bumped the company’s stock up by about 40% over the course of just two weeks, but the Model 3s they purchased weren’t as popular as they thought they would be, and though EVs should in theory be easier to maintain than their ICE peers, the relatively low number of specialized repair shops and high cost of relatively scarce spare parts meant that the cars were actually more expensive to maintain than more common and less flashy alternatives.
The company was also dinged by Tesla’s decision to raise its prices around the same time Hertz was making the majority of its purchases, and Hertz decided to start offloading some of the Model 3s it had bought—which only ended up being about 30,000, rather than the originally announced 100,000—selling the cars at a fire-sale discount, in some cases as low as $25,000, which could drop to about $21,000 in areas where EV tax credits applied to used vehicles.
Unfortunately for those who bought them, many of these used Teslas were hobbled by the same issues Hertz was scrambling to address, but couldn’t make work for their business model.
Many initially happy used-Tesla purchasers found that their car’s battery pack was fundamentally damaged in some way, in some cases costing half, or nearly the same as the price they paid for the car, to repair or replace.
This fire sale arrived at around the same time as an overall drop in used EV prices across the market, too, which meant that Hertz’s prices—though at times falling to about half of what a new Model 3 would cost—weren’t as great as they could have been, especially for cars with so many potentially costly problems.
In other words, at this moment the whole of the EV industry was experiencing a bit of a price shock, as most automobile companies selling in the US were introducing new EV models, and they were finding that supply had surged beyond demand, leaving some of them with lots full of cars—especially in parts of the country where EV charging infrastructure still hasn’t been fleshed out, dramatically diminishing the appeal of EVs in those regions.
In early 2024, Hertz’s CEO resigned, mostly because his bet on Teslas and other EVs, hoping to making about a fifth of the company’s fleet electric, didn’t go as planned, and that’s left the company’s stock trading at around 11% of its 2021 high price point as of early September 2024.
To replace him, the company brought in a former executive from Cruise, which is an autonomous car technology company that’s owned by General Motors; another company that’s been trying to figure out the proper balance between investing in where the automobile market in the US is, today, and where it will be in the coming years.
What I’d like to talk about today is another facet of the automobile industry that’s changing pretty rapidly, and a new take on a third option, straddling the internal combustion engine and EV worlds, that seems to be evolving in a compelling—to those running these companies, at least—manner.
—
In January of 2023, the CEO of Toyota, who was the 66-year-old grandson of the company’s founder and who had been running the company since the early 2000s, stepped down from his position following a wave of criticism about his outspoken focus on hybrids over electric vehicles.
This company, which in some ways has been defined in recent years by its gamble to release the very well-received Prius, an early hybrid that really leaned into the concept of using a battery to support the activities of the car’s conventional fuel-burning engine, which resulted in a bunch of energy-efficiency benefits, the company had lagged behind its competitors in developing, announcing, and releasing new electric vehicle models to compete with the likes of Tesla—a company that was eating everyone else’s lunch in the EV department, and which was seeing sky-high valuations as a consequence.
Toyota was also being criticized by environmentalist groups for failing to move toward fully electric, zero-emissions vehicles, as while it did have a few EV models on the market, they were seemingly afterthoughts, accounting for less than 1% of the company’s US sales, and the main model, the cumbersomely named bZ4X, experienced a significant safety recall that upended its rollout plans.
Toyota’s new CEO leaned a bit more into EVs, announcing 10 new models in 2023, alongside plans to sell 1.5 million of them per year by 2026. But the company was still selling more cars than any other automaker on the planet, and the vast, vast majority of them were some kind of fuel-burning vehicle.
Despite the change in leadership, then, and the slight tack toward EVs the new CEO made soon after ascending to his new position, the company was still being criticized by environmentalist groups for not doing enough or moving fast enough, and the market seemed to think Toyota was setting itself up for a pretty grim next decade, since it was falling so far behind its competition in terms of supply chains and manufacturing know-how, related to EVs.
This general storyline, though, seems to have changed over the past year.
Yes, it’s still generally assumed that EVs are the future, that the electrification of everything is where we’re headed as a globe-spanning civilization, not just our transportation, but everything moving toward renewables—and that’s for climate-related reasons, but also the economics of renewables, which, once installed and connected, tend to be a lot more favorable, economically, than fossil fuel-based alternatives, almost always.
That said, the aforementioned disconnect between EV availability and investment, and EV demand in the United States has increased over the past year. EV sales are continuing to increase overall, but the huge spike in sales we saw over the past handful of years has tempered into a slower ascension, and many automakers have found themselves with car lots filled with models that aren’t the ones people want—at least not in the requisite numbers to keep lot turnover happening at the rate they like, and in some ways need, to see.
This is not the case in many other countries, I should note.
In China, EVs already made up something like 37% of the country’s total automobile marketshare, the share of new cars sold, in 2023, and across Europe, about 24% of all new cars sold were plug-in electric vehicles that same year.
In the US, the number is still in the single-digits, something like 8% as of Q2 2024, which is a lot bigger than the 5% or so in early 2022, but again, not the kind of rampant growth carmakers were planning for.
Another component of the automobile industry in the US has continued to grow a fair bit faster, though, up more than 30% year-over-year, accounting for up to 9.6% of the country’s total light-duty car marketshare in the second quarter of 2024.
And that slice of the market is the world of hybrids—the component of the car industry that Toyota has bet heavily on, despite antagonism from all sides, over the past several years, and which other automakers like Ford, are pivoting toward, as well; Ford recently announced that it would no longer be releasing a full electric, large SUV in the near-future, and will instead be releasing hybrid models, possibly including plug-in hybrid models.
Plug-in hybrids are like traditional hybrid vehicles, except they have a larger on-board battery pack that can be plugged into an electrical outlet, which allows them to be even more efficient than their traditional hybrid kin; so they're like a traditional ICE vehicle, but with a big, plug-innable battery that helps that engine be more efficient, giving it much better gas mileage.
Another recent development in this space, though—one that’s already pretty well-known in China, but still foreign enough in the US that the CEO of Ford said, after being exposed to the idea for the first time earlier this year, that he thinks it might be the right variation of existing approaches to help the US make the transition to electric vehicles—is called an extended-range electric vehicle, or EREV, and rather than being a hybrid with a suped-up battery, it’s an EV with a built-in, smaller internal combustion engine that serves as an onboard generator, allowing the car to burn fuel to generate electricity, which then charges the car’s giant battery, giving it more range when it’s needed.
The CEO of Ford thought this lined up well with how the American market works, and could help temper the range-anxiety many Americans feels, worrying that the battery packs in their EVs won’t allow them to take road trips, or might run out of juice when they’re partway through their homeward-bound commute at the end of the day; recharging an EVs battery still takes a fair bit longer than filling up a tank of gas, and there are way more gas stations than EVs plug in points around the country, as of 2024.
So if there were a little engine inside their EV capable of giving it a backup charge when necessary, and if that little generator could be fueled using gas that’s widely and relatively inexpensively available across the US, that could in theory help people transition to driving with electricity—which can be generated cleanly, using renewables—most of the time, while having that backup system in place, for when it’s needed, which might be rarely or never.
In late-2023, car-maker Stellantis unveiled their Ram 1500 Ramcharger, which is an EREV that can drive up to 690 miles on its battery pack, but it also includes a 3.6-liter V6 engine that activates when the main 92kW battery is running low on juice; a little generator that burns fuel to recharge the main battery.
One of the big, market-defining questions related to that new Ram and similar models, though, is whether US government regulators will categorize EREVs as zero-emissions vehicles, because, in theory at least, they will at times not be zero-emissions, even though for many people they would probably run on just their batteries most of the time.
This judgement call could impact sales substantially, though, as such determinations help define what would-be customers pay up front, what sorts of tax benefits, if any, they can expect on their purchases, and what sorts of taxes and other fees they’ll pay along the way, for the life of the vehicle.
Whether this topsy-turvy version of the hybrid—the traditional version having a conventional engine with battery backup, and this new riff on the theme defined by a massive main battery with a conventional engine backup—whether it will do well on the market anywhere outside of China has yet to be seen, and there’s still the question of whether other automakers will be able to spin up their own versions of the concept before the market moves again, trends realigning, and more plug-in electricity infrastructure maybe making vanilla EVs more desirable and useable in more parts of the country.
In the meantime, though, we seem to be seeing—rather than the clean transition from ICE vehicles to EVs that some people had hoped for and expected—something more akin to a Cambrian Explosion, where new pressures and innovations are sparking all kinds of interesting offshoot evolutions, and rather than just two options, one supposedly the future and the other supposedly on its way out, we have a half-dozen core themes around which most new vehicles are being built, some of them interchangeable, some not so much, and that suggests we could see more large recalibrations and broad market shifts, alongside a slew of new combinations and innovations, before the previous paradigm fully gives way to whatever ultimately replaces it.
Show Notes
https://electrek.co/2023/01/26/toyota-ceo-steps-down-amid-electric-vehicle-movement/
https://caredge.com/guides/electric-vehicle-market-share-and-sales
https://en.wikipedia.org/wiki/Electric_car_use_by_country
https://cleantechnica.com/2024/08/28/u-s-share-of-electric-hybrid-vehicle-sales-increased-in-2nd-quarter-of-2024/
https://electrek.co/2023/04/07/toyotas-new-ceo-adjusts-ev-plans-but-sticks-to-a-hybrid-approach/
https://www.thestreet.com/electric-vehicles/ford-ceo-says-this-type-of-vehicle-can-be-the-bridge-for-electrification
https://www.wsj.com/business/autos/the-plug-in-hybrid-car-starts-to-win-over-buyers-2155e054
https://en.wikipedia.org/wiki/Plug-in_hybrid
https://fortune.com/2024/06/07/buy-used-tesla-hertz-fire-sale/
https://en.wikipedia.org/wiki/Tesla_Model_3
https://www.roadandtrack.com/news/a60232041/hertz-ceo-resigns-after-big-bet-on-evs-fails-to-pay-off/
https://www.roadandtrack.com/news/a35698039/hertz-potentially-saved-from-bankruptcy/
https://www.roadandtrack.com/news/a38053117/hertz-buying-100000-teslas/
https://qz.com/tesla-hertz-used-electric-cars-evs-damage-glitches-1851482632
https://archive.ph/364dj
https://www.cnbc.com/2023/10/26/hertz-pulls-back-on-ev-plans-citing-tesla-price-cuts-repair-costs.html
https://en.wikipedia.org/wiki/Cruise_(autonomous_vehicle)

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Compounded Semaglutide
10 сен· Let's Know Things
This week we talk about Wegovy, Eli Lilly, and HIMS.
We also discuss pig pancreases, beneficial side-effects, and shortages.
Recommended Book: The Death Café Movement by Jack Fong
Transcript
In the 1970s, a pair of researchers looking into possible ways to address duodenal ulcer disease were studying the way we secrete different hormones while eating, and that led to an experiment in which they pumped a hormone called glucagon-like peptide 1, or GLP-1, extracted from pigs, into pig pancreases to see what effect that would have.
As it turned out, this hormone stimulated the secretion of insulin while inhibiting the secretion of glucagon, and that was notable to these researchers because folks with diabetes have too much glucagon in their bodies, which is what causes high blood sugar.
The idea, then, was that by stoking the production of more insulin and limiting the amount of glucagon being produced, you might be able to help folks with type 2 diabetes control their symptoms.
These researchers shopped around the idea of building a treatment based on this hormone a little bit in subsequent years, but didn’t get much interest from the major drug companies. In 1993, though, they were able to do a study that showed that infusing folks who have type 2 diabetes with GLP-1, they could reset their blood glucose levels back to normal within just four hours, which was a pretty big deal—a lot better than most other options at the time.
A drug based on this hormone was approved by the FDA for medical use in the US in 2017 under the name Semaglutide, and by 2021 it had become one of the top 100 most-prescribed drugs in the country—which is saying something, as the US is awash in pharmaceutical options, these days.
Even before that approval, though, there were signs that GLP-1 receptor agonists, which is what Semaglutide and other drugs based on this concept are called, might have also had some other uses.
In some of the clinical trials in which they were trying to gauge how well folks with type 2 diabetes faired while using the drug, for instance, they found that many of their subjects had trouble finishing the meals they were supposed to eat, which was a problem, as having that meal was part of the process, and after they ate it, ideally the whole thing, researchers would measure their blood insulin—so keeping that controlled was kind of important for their results, but the subjects consistently just weren’t as hungry as they typically would have been.
Interestingly, this realization led to a proposal by one of those original researchers to the drug company Novo Nordisk, the company that brought Semaglutide to market, for another drug that would help people control their appetite and consequently limit food intake, perhaps serving as a means of remediating obesity, which at the time, in 1998, was already becoming a big health issue of significant global concern and widespread impact.
The company didn’t end up doing anything with the patent they went in on with that researcher, but they did pursue something along those lines a little bit later, which approached the issue with a similar underlying substance, but via a different route.
And in March of 2021, the company started clinical trials for that drug, which eventually became Wegovy, using basically the same substance as Semaglutide, but in a different volume, and the adult subjects in that trial lost a significant amount of weight.
A few months later, in June of 2021, Wegovy was approved for use in the US to treat adults with obesity, and then in December the following year it was approved for use by obese teens, as well.
Now, Wegovy and its effects were in some ways forecasted in those trials for Semaglutide when test subjects were eating less than usual while on the drug, and something similar happened here, as subjects who were being given Wegovy for weight loss purposes were showing other, unanticipated positive effects, as well.
Among those effects were positive cardiovascular outcomes, which Novo Nordisk then tested for specifically, noting that the drug reduces the risk of major adverse cardiovascular events like heart attacks and stroke by about 20% in obese adults. The FDA approved the drug for this purpose in March of 2024, and another study that looked into Semaglutide’s effect on folks with liver disease resulting from HIV found that it meaningfully reduces the severity of that disease—another unexpected win.
Several earlier studies that showed positive results, and which are now being looked into on larger scales and with human subjects, include those looking into its impact on depression and suicidal ideation, its potential to reduce alcohol consumption, and the possibility that it might also help with gambling addiction and other non-substance-related addictions, alongside substance-based ones like nicotine.
Semaglutide seems to help with eating disorders and may help with infertility issues. It may also help with persistent inflammation, enhance autophagic activity, meaning it could help the body break down the cells that don’t work anymore so new ones can grow, and it might help prevent the buildup of what’s called alpha-synuclein in our brains, which is thought to maybe be a cause of or contributor to Alzheimer’s and Parkinson’s.
There’s even early evidence that GLP-1-based drugs might reduce our risk of developing some types of cancer, and maybe the worst, long-term sorts of COVID outcomes, as well.
It’s a very interesting time in this space, in other words, as the more we test these things, and the more people who take them, the more we learn about their effects and potential other use-cases.
And a lot of people are using this class of drug right now: up to 12% of the US adult population has used a GLP-1 drug at some point, as of early 2024, according to research from KFF, and Novo Nordisk has been struggling to make enough of the stuff in its different manifestations, branded for different purposes, as have its competitors who have launched their own copy-cat products, and in some cases products that up the ante with even more impressive clinical results than what the first wave of GLP-1 drugs can boast.
Novo Nordisk has become Europe’s most valuable company on the strength of this drug class, growing by about 230% since 2021 when it first launched Wegovy; it’s now hovering at something like $500 billion in market cap.
But the company has suffered a few recent stock value hits due to the one-two punch of patients not being able to afford the drug, which can cost more than $1000 per month, and a dearth of production capacity, which means they’ve been unable to meet this drug class’s perhaps understandably significant demand.
What I’d like to talk about today is an aspect of the pharmaceutical industry in the US that has generally operated under-the-radar, but which has recently stepped into the limelight because of this rush to get GLP-1 drugs to market and in the hands of those who want them.
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In the world of pharmaceuticals, especially in the US, but also in a few other countries, “compounding” refers to the practice of creating a drug on-demand for a patient, usually because they need a dosage or specific composition that isn’t manufactured in bulk, or which isn’t readily available in its mass-manufactured form.
So while the majority of drugs in the US and similar wealthy countries are produced on scale, these days, and in a variety of common portions or doses, in some cases you might need an exact dosage that’s somewhere between two doses that are manufactured on scale by the company that makes the drug, and a pharmacist will make that specific you-sized dose for you, maybe by measuring out the right amount of drug powder into a gel-cal pill, maybe by blending two substances into a single liquid that you can take all at once.
These days, the most common compounding tasks revolve around removing non-active ingredients from a drug—something in the gel-capsule, for instance, or a binding agent that allows a drug to be delivered in liquid form—for folks who need that drug, but who are allergic or otherwise sensitive to something in the final, mass-produced form; a color additive, a suspension, a flavoring, something like that.
This is often referred to as “traditional compounding,” and it can only be done by a licensed pharmacist; and while all licensed pharmacists will have at least a rudimentary understanding of how to compound custom medications, much of this kind of work is done in facilities that have compounding-specific equipment on hand; some that can do sterile work, and some that can only be used for non-sterile final products.
Many pharmacies have some basic tools that allow them to do things like mix flavorings into a gross substance to make it more palatable to kids or pets, or to weigh and mix and divvy-up medicinal powders into properly sized capsules, but some pharmacies are a lot more specialized and have far fancier tools that allow them to output more elaborate concoctions for their customers.
Another role these compounding pharmacies can play, though—and in this case I’m referring to that latter type, the ones with specialized tools and machines that allow them to compound on a larger and more specialized scale, if they need to do so—is that the FDA, the Food and Drug Administration which regulates the US drug market, can allow them to make drugs that are experiencing a shortage on the market; when those who have the patent for a drug are unable to scale-up fast enough and meet market demand, in other words, these compounding pharmacies can be given the legal go-ahead by the FDA to make and sell that drug.
To be clear, these pharmacies aren’t allowed to make the exact drug: they can make a drug with the same active ingredients, and sometimes they’ll be quite similar and sometimes they’ll be in a different form (an injectable rather than a powder, a capsule rather than a tablet, etc). These things are also not FDA approved, so while the FDA says it’s okay for them to make and sell them in those limited circumstances, it’s not meant to be equivalent to the real-deal, market-approved product; it’s a temporary, emergency measure meant to help people who would be in a lot of pain or discomfort or even danger if they don’t get a drug they need on a regular basis because of a shortage.
And that brings us to what’s happening now: Novo Nordisk is experiencing a shortage of its GLP-1 inhibitor-based drugs, and the FDA gave these compounding pharmacies legal permission to make GLP-1 inhibitor based drugs, with the same active ingredients, usually in the same dosage, while this shortage persists.
Consequently, there are a bunch of drugs made by compounding pharmacies being marketed all over the place, produced by existing companies like HIMS and 23andMe, alongside brands like Mochi and Eden and HenryMeds—most of them selling doses equivalent to those that are sold by Novo Nordisk for something like $1,000 to $1,300 a month, but those sold by the compounding pharmacies are usually going for closer to $250-300 per month.
It’s been estimated, by the way, that it probably costs only about $5 to produce each of those doses—so even the compounding pharmacies selling at that dramatic cut to the sticker price are likely making money hand over fist on each of these doses, which is probably why ads for these alternative branded versions of the drug are plastered all over the internet, TV, billboards, and magazines, at the moment.
The FDA does keep tabs on these compounded pharmacies, and they can shut down them down if they sell unsafe products, and they can threaten to do so if they don’t toe various lines—which is something the FDA has already done, as a version of the drug that was being delivered attached to salt, which would be dissolved in water before injecting, wasn’t considered to be as safe as the free base version of the drug, so the FDA put out a warning and all the folks who were making the salt version converted over to the free base version, lest they lose their legal ability to sell this product type.
Even with that regulatory pseudo-oversight, there have been reports of people ordering these cheaper versions and getting shoddy products.
One study found that those reports are probably of a kind with reports about side effects experienced by people who take the Novo Nordisk version, as folks taking any version of this drug can experience some pretty uncomfortable side effects, but it’s hard to say right about that right now, as the drug is still relatively new and this aspect of the pharmaceutical industry is, again, approved but not as well-regulated.
So it’s a buy with caution and at your own risk sort of situation, though the cost savings very well might be worth it for many people, regardless of the potential risks.
All of which is interesting, in part because this category of drug-maker is becoming more brazen with its flogging of products, probably at least in part because this particular drug is such a cash-cow and very popular right now, and in part because it will be a little while before the patent-holding drug-makers like Novo Nordisk and Eli Lilly can scale-up their manufacturing capacity appropriately. So investments they make in marketing will pay off longer than they might have, had this shortage been a brief one.
But it’s also interesting because of what this implies about the market, as, conceivably at least, a lot of potential customers for this drug will become accustomed to paying just a few hundred dollars per month for it, rather than more than $1,000, and while that lower price is doable for the compound pharmacies, there’s a chance the Novo Nordisk’s of the world won’t consider that reduced profit margin to be worth their time and up-front investment in developing this drug, which could lead to some weird market effects and a potential whipcrack in the other direction, especially if national insurance plans don’t get on board with adding this type of drug to their acceptable list; a higher sticker price paired with a lack of support from insurance companies would mean this drug remains out of reach for the majority of people who might otherwise benefit from it, and that, in turn, could mean a rough couple of years for Novo, until they can recalibrate their expectations and/or their product catalog, accordingly.
That said, Novo Nordisk competitor Eli Lilly recently announced that they will be selling a version of their Wegovy competitor, Zepbound, which will be sold in vials instead of in auto-injector pens, reducing their packaging costs and requiring that customers load the syringes themselves, that will have a shelf price as low as $399 per month.
That’s a staggering undercut of Novo’s offerings. And while this is partially an attempt to address the shortage of this drug, as this lower priced version will also be available in smaller doses, it will almost certainly also help them compete with Novo and the many compounded pharmacy offerings that are still cheaper, but not as dramatically cheaper as this name-brand offering, as before.
There’s a good chance this move by Eli Lilly is just the first of many reworks to a drug type that will permanently shift the average price, allowing the fully FDA-backed versions to compete with the compound versions, remaining a little pricier, but not much, which should help them maintain market share until they can get their new manufacturing capacity online, knocking those compounding competitors out of the game entirely.
Of course, there’s a chance that within months or just a few years, this whole industry could shift once more, as what’s generally considered to be the “holy grail” in this space—a pill-delivered drug that accomplishes the same or better outcomes as the injectables—is in development by pretty much everyone, and some of them already have pills in phase 2 trials.
For the moment, though, the name of the game seems to be discovering new benefits of this drug type, opening it up for more use-cases and, thus, customers, and repackaging it in different ways so that the price can go lower without fully depleting the massive profits those who are producing it—big pharma and compounding pharmacies, alike—are enjoying.
Show Notes
https://qz.com/ozempic-shortage-ema-novo-nordisk-1851638383
https://en.wiktionary.org/wiki/compounding_pharmacy
https://www.pharmacist.com/Practice/Patient-Care-Services/Compounding/Compounding-FAQs
https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2816824
https://en.wikipedia.org/wiki/Compounding
https://www.goodrx.com/classes/glp-1-agonists/compounded-semaglutide
https://www.fda.gov/drugs/human-drug-compounding/drug-compounding-and-drug-shortages
https://archive.ph/Czn0t
https://qz.com/viking-therapeutics-weight-loss-drugs-amazing-1851631337
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC11227080/
https://en.wikipedia.org/wiki/Semaglutide
https://www.wired.com/story/obesity-drugs-researcher-interview-ozempic-wegovy/
https://www.drugs.com/history/wegovy.html
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC11011817/
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9417299/
https://www.cnn.com/2024/07/30/health/liraglutide-alzheimers-trial/index.html
https://sci-hub.st/https://pubmed.ncbi.nlm.nih.gov/16529340/
https://www.jci.org/articles/view/72434
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7606641/
https://www.biorxiv.org/content/10.1101/2023.10.31.564990v1.full.pdf
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5711387/
https://www.mdpi.com/2076-3425/14/6/617
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3700649/
https://pubmed.ncbi.nlm.nih.gov/24133407/
https://www.science.org/doi/10.1126/science.adn4128
https://www.reuters.com/business/healthcare-pharmaceuticals/most-patients-stop-using-wegovy-ozempic-weight-loss-within-two-years-analysis-2024-07-10/
https://jamanetwork.com/journals/jama/article-abstract/2819949
https://www.reuters.com/business/healthcare-pharmaceuticals/obesity-drugmaker-novo-nordisk-misses-q2-profit-forecast-2024-08-07/
https://www.nytimes.com/2024/08/30/health/wegovy-covid-deaths.html

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Sick Week
3 сен· Let's Know Things
Friends!
It looks like Covid got me (my girlfriend is just getting over her own Covid-y week, and we live together—so despite our best efforts this was maybe unavoidable).
In accordance with my policy of aggressively resting when I get sick, I’ll be taking the week off to sleep, feel generally sore and uncomfortable, and consume alarming quantities of ibuprofen.
Sorry about the gap in programming, but unless something unexpected and worrying happens I’ll be back to my usual publishing schedule beginning next week, on the 10th.

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The Boeing Starliner
27 авг· Let's Know Things
This week we talk about the Falcon 9, the Saturn V, and NASA’s bureaucracy.
We also discuss Boeing’s mishaps, the Scout system, and the Zenit 2.
Recommended Book: What’s Our Problem? by Tim Urban
Transcript
In 1961, the cost to launch a kilogram of something into low Earth orbit—and a kilogram is about 2.2 pounds, and this figure is adjusted for inflation—was about $118,500, using the Scout, or Solid Controlled Orbital Utility Test system of rockets, which were developed by the US government in collaboration with LTV Aerospace.
This price tag dropped substantially just a handful of years later in 1967 with the launch of the Saturn V, which was a staggeringly large launch vehicle, for the time but also to this day, with a carrying capacity of more than 300,000 pounds, which is more than 136,000 kg, and a height of 363 feet, which is around 111 meters and is about as tall as a 36-story building and 60 feet taller than the Statue of Liberty.
Because of that size, the Saturn V was able to get stuff, and people, into orbit and beyond—this was the vehicle that got humans to the Moon—at a dramatically reduced cost, compared to other options at the time, typically weighing in at something like $5,400 per kg; and again, that’s compared to $118,500 per kg just 6 years earlier, with the Scout platform.
So one of the key approaches to reducing the cost of lifting stuff out of Earth’s gravity well so it could be shuffled around in space, in some rare cases beyond Earth orbit, but usually to somewhere within that orbit, as is the case with satellites and space stations, has been to just lift more stuff all at once. And in this context, using the currently available and time-tested methods for chucking things into space, at least, that means using larger rockets, or big rocket arrays composed of many smaller rockets, which then boost a huge vehicle out of Earth’s gravity well, usually by utilizing several stages which can burn up some volume of fuel before breaking off the spacecraft, which reduces the amount of weight it’s carrying and allows secondary and in some cases tertiary boosters to then kick in and burn their own fuel.
The Soviet Union briefly managed to usurp the Saturn V’s record for being the cheapest rocket platform in the mid-1980s with its Zenit 2 medium-sized rocket, but the Zenit 2 was notoriously fault-ridden and it suffered a large number of errors and explosions, which made it less than ideal for most use-cases.
The Long March 3B, built by the Chinese in the mid-1990s got close to the Saturn V’s cost-efficiency record, managing about $6,200 per kg, but it wasn’t until 2010 that a true usurper to that cost-efficiency crown arrived on the scene in the shape of the Falcon 9, built by US-based private space company SpaceX.
The Falcon 9 was also notable, in part, because it was partially reusable from the beginning: it had a somewhat rocky start, and if the US government hadn’t been there to keep giving SpaceX contracts as it worked through its early glitches, the Falcon 9 may not have survived to become the industry-changing product that it eventually became, but once it got its legs under it and stopped blowing up all the time, the Falcon 9 showed itself capable of carrying payloads of around 15,000 pounds, which is just over 7000 kgs into orbit using a two-stage setup, and remarkably, and this also took a little while to master, but SpaceX did eventually make it common enough to be an everyday thing, the Falcon 9’s booster, which decouples from the rocket after the first stage of the launch, can land, vertically, intact and ready for refurbishment.
That means these components, which are incredibly expensive, could be reused rather than discarded, as had been the case with every other rocket throughout history. And again, while it took SpaceX some time to figure out how to make that work, they’ve reached a point, today, where at least one booster has been used 22 times, which represents an astonishing savings for the company, which it’s then able to pass on to its customers, which in turn allows it to outcompete pretty much everyone else operating in the private space industry, as of the second-half of 2024.
The cost to lift stuff into orbit using a Falcon 9 is consequently something like $2,700 per kg, about half of what the Saturn V could claim for the same.
SpaceX is not the only company using reusable spacecraft, though.
Probably the most well-known reusable spacecraft was NASA’s Space Shuttle, which was built by Rockwell International and flown from the early 1980s until 2011, when the last shuttle was retired.
These craft were just orbiters, not really capable of sending anyone or anything beyond low Earth orbit, and many space industry experts and researchers consider them to be a failure, the consequence of bureaucratic expediency and NASA budget cuts, rather than solid engineering or made-for-purpose utility—but they did come to symbolize the post-Space Race era in many ways, as while the Soviet, and then the successor Russian space program continued to launch rockets in a more conventional fashion, we didn’t really see much innovation in this industry until SpaceX came along and started making their reusable components, dramatically cutting costs and demonstrating that rockets capable of carrying a lot of stuff and people could be made and flown at a relatively low cost, and we thus might be standing at the precipice of a new space race sparked by private companies and cash-strapped government agencies that can, despite that relatively lack of resources, compared to the first space race, at least, can still get quite a bit done because of those plummeting expenses.
What I’d like to talk about today is a reusable spacecraft being made by another well-known aerospace company, but one that has had a really bad decade or so, and which is now suffering the consequences of what seems to have been a generation of bad decisions.
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Boeing is a storied, sprawling corporation that builds everything from passenger jets to missiles and satellites.
It’s one of the US government’s primary defense contractors, and it makes about half of all the commercial airliners on the planet.
Boeing has also, in recent years, been at the center of a series of scandals, most of them tied to products that don’t work as anticipated, and in some cases which have failed to work in truly alarming, dangerous, and even deadly ways.
I did a bonus episode on Boeing back in January of this year, so I won’t go too deep into the company’s history or wave of recent problems, but the short version is that although Boeing has worked cheek-to-jowl with the US and its allies’ militaries since around WWII, and was already dominating aspects of the burgeoning airline industry several decades before that, it merged with a defense contractor called McDonnell Douglas in the late-1990s, and in the early 2000s it began to reorganize its corporate setup in such a way that financial incentives began to influence its decision-making more than engineering necessities.
In other words, the folks in charge of Boeing made a lot of money for themselves and for many of their shareholders, but those same decisions led to a lot of inefficiencies and a drop in effectiveness and reliability throughout their project portfolio, optimizing for the size of their bank account and market cap, rather than the quality of their products, basically.
Consequently, their renowned jetliners, weapons offerings, and space products began to experience small and irregular, but then more sizable and damaging flaws and disruptions, probably the most public of which was the collection of issues built into their 737 MAX line of jets, two of which crashed in 2018 and 2019, killing 346 people and resulting in the grounding of 387 of their aircraft.
A slew of defects were identified across the MAX line by 2020, and an investigation by the US House found that employee concerns, reported to upper-management, went ignored or unaddressed, reinforcing the sense that the corporate higher-ups were disconnected from the engineering component of the company, and that they were fixated almost entirely on profits and their own compensation, rather than the quality of what they were making.
All of which helps explain what’s happening with one of Boeing’s key new offerings, a partially reusable spacecraft platform called the Starliner.
The Starliner went into early development in 2010, when NASA asked companies like Boeing to submit proposals for a Commercial Crew Program that would allow the agency to offload some of its human spaceflight responsibilities to private companies in the coming decades.
One of the contract winners was SpaceX’s Crew Dragon platform, but Boeing also won a contract with its Starliner offering in 2014, which it planned to start testing in 2017, though that plan was delayed, the first unmanned Orbital Flight Test arriving nearly 3 years later, at the tail-end of 2019, and even then, the craft experienced all sorts of technical issues along the way, including weak parachute systems, flammable tape, and valves that kept getting stuck.
It was two more years before the company launched the second test flight, and there were more delays leading up to the Starliner’s first Crew Flight Test, during which it would carry actual humans for the first time.
That human-carrying flight launched on June 5 of 2024, and it carried two astronauts to the International Space Station—though it experienced thruster malfunctions on the way up, as it approached the ISS, and after several months of investigation, the Starliner capsule still attached to the Station all that time, it was determined that it was too risky for those two astronauts to return to Earth in the Starliner.
That brings us to where we are now, a situation in which there are two astronauts aboard the ISS, in low Earth orbit, who were meant to stay for just over a week, but who will now remain there, stranded in space, for a total of around eight months, as NASA decided that it wasn’t worth the risk putting them on the Starliner again until they could figure out what went wrong, so they’ll be bringing Starliner back to earth, remotely, unmanned, and the stranded astronauts will return to Earth on a SpaceX Crew Dragon craft that is scheduled to arrived in September of this year, and which will return to Earth six months in the future; that craft was originally intended to have four astronauts aboard when it docks with the ISS, but two of those astronauts will be bumped so there will be room for the two who are stranded when it returns, next year.
All of which is incredibly embarrassing for Boeing, which again, has already had a truly horrible double-handful of years, reputationally, and which now has stranded astronauts in space because of flaws in its multi-billion-dollar spacecraft, and those astronauts will now need to be rescued, by a proven and reliable craft built by its main in-space competitor, SpaceX.
One of the key criticisms of NASA and the way it’s operated over the past several decades, from the shuttle era onward, essentially, is that it’s really great at creating jobs and honorable-sounding positions for bureaucrats, and for getting government money into parts of the country that otherwise wouldn’t have such money, because that spending can be funneled to manufacturing hubs that otherwise don’t have much to manufacture, but it’s not great at doing space stuff, and hasn’t been for a while; that’s the general sense amongst many in this industry and connected industries, at least.
This general state of affairs allowed SpaceX to become a huge player in the global launch industry—the dominant player, arguably, by many metrics—because it invested a bunch of money to make reusable spacecraft components, and has used that advantage to claim a bunch of customers from less-reliable and more expensive competitors, and then it used that money to fund increasingly efficient and effective products, and side-projects like the satellite-based internet platform, Starlink.
This has been enabled, in part, by government contracts, but while Boeing and its fellow defense contractors, which have long been tight-knit with the US and other governments, have used such money to keep their stock prices high and to invest in lobbyists and similar relationship-reinforcing assets, SpaceX and a few similar companies have been stepping in, doing pretty much everything better, and have thus gobbled up not just the client base of these older entities, but also significantly degraded their reputations by showing how things could be done if they were to invest differently and focus on engineering quality over financial machinations; Boeing arguably should have been the one to develop the Falcon 9 system, but instead an outsider had to step in and make that happen, because of how the incentives in the space launch world work.
One of the big concerns, now, is that Boeing will retreat from its contract with NASA, leaving the agency with fewer options in terms of ISS resupply and astronaut trips, but also in terms of longer-term plans like returning to the Moon and exploring the rest of the solar system.
Lacking industry competition, NASA could become more and more reliant on just one player, or just a few, and that’s arguably what led to the current situation with Boeing—its higher-ups knew they would get billions from the government on a regular basis whatever they did, no matter how flawed their products and delayed their timelines, and that led to a slow accretion of bad habits and perverse incentives.
There’s a chance the same could happen to SpaceX and other such entities, over time, if they’re able to kill off enough of their competition so that they become the de facto, go to option, rather than the best among many choices, which they arguably are for most such purposes at the moment.
And because Boeing seems unlikely to be able to fulfill its contract with NASA, which will necessitate flying six more Starliner missions to the ISS, before the International Space Station is retired in 2030, this raises the question of whether the company will move forward with the reportedly expensive investments that will be necessary to get its Starliner program up to snuff.
It’s already on the hook for about $1.6 billion just to pay for various delays and cost overruns the project has accrued up till this point, and that doesn’t include all the other investments that might need to be made to fulfill that contract, so they could look at the short-term money side of this and say, basically, we’re ceding this aspect of the aerospace world to younger, hungrier companies, and we’ll just keep on collecting the reliable dollars we know we’ll get from the US military each year, no questions asked.
We could then see Boeing leave the race for what looks to be the next space-related government contract bonanza, which will probably be related to NASA’s smaller, more modular space station ambitions; the ISS may get a second-wind and be maintained past 2030, but either way NASA is keen to hire private companies to launch larger craft into low Earth orbit for long-term habitation, supplies and crew for these mini space-stations shuttled back and forth by companies like SpaceX and Blue Origin, the latter of which is a direct competitor to SpaceX owned by Amazon founder Jeff Bezos.
Boeing has been tapped by Blue Origin to help keep their in-orbit assets supplied under that new paradigm, but it could be that they show themselves incapable of safely and reliably doing so, and that could open up more opportunities for other, smaller entities in this space, if they can figure out how to compete with the increasingly dominant SpaceX, but it could, again, also result in a new monopoly or monopsony controlled by just a few companies, which then over time will have to fight the urge to succumb to the save perverse incentives that seem to be weighing on Boeing.
Show Notes
https://www.npr.org/2024/03/20/1239132703/boeing-timeline-737-max-9-controversy-door-plug
https://en.wikipedia.org/wiki/Boeing_Starliner
https://en.wikipedia.org/wiki/Boeing
https://arstechnica.com/space/2024/08/after-latest-starliner-setback-will-boeing-ever-deliver-on-its-crew-contract/
https://www.nytimes.com/2024/08/24/science/nasa-boeing-starliner-astronauts.html
https://en.wikipedia.org/wiki/Scout_(rocket_family)
https://en.wikipedia.org/wiki/Saturn_V
https://en.wikipedia.org/wiki/Zenit-2
https://en.wikipedia.org/wiki/Long_March_3B
https://ourworldindata.org/grapher/cost-space-launches-low-earth-orbit
https://www.cradleofaviation.org/history/history/saturn-v-rocket.html
https://en.wikipedia.org/wiki/Space_Shuttle_orbiter
https://en.wikipedia.org/wiki/Reusable_spacecraft
https://en.wikipedia.org/wiki/Spaceplane
https://en.wikipedia.org/wiki/Falcon_9

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Ukraine Invades Russia
20 авг· Let's Know Things
This week we talk about Kursk, asymmetric warfare, and Russian politics.
We also discuss HIMARS, supply lines, and Kyiv.
Recommended Book: The Disappearance of Rituals by Byung-Chul Han
Transcript
About two and a half years ago, on February 24, 2022, Russia invaded neighboring Ukraine.
This invasion had been forecasted for a while, as Russian forces had at times surreptitiously, at times more overtly supported separatist factions in the eastern and southeastern portion of Ukraine for about a decade, eventually invading and them annexing the Crimean Peninsula back in March of 2014 using what became known as the "little green men" strategy because the invading soldiers had their flags, patches, and other insignia removed, which gave the Russian government deniability, saying basically some patriotic members of their military might be inclined to help their fellow travelers in parts of Ukraine that are being repressed for their Russian heritage, and who crave freedom from an oppressive central government; how these patriotic soldiers acting on their own behalf, without support from the Russian government, supposedly, were able to bring so much heavy artillery and tanks with them was never formally addressed.
So Russia had been chipping away at Ukraine for a long while leading up to this more conventional attack in 2022, grabbing an important port when they took Crimea and leaving the Ukrainian government, which had been tilting toward Europe and away from Russia's sphere of influence—which is part of what triggered that pseudo-invasion of Crimea—and all of this left Ukraine fighting those separatist groups on their eastern flank pretty much continuously for the decade leading up to that bigger invasion a few years ago.
When that invasion was launched, Russia was expected by pretty much everyone to basically waltz right into Kyiv with little opposition, as it was this huge, powerful country with nukes and a massive conventional military apparatus, so it stood to reason it should easily defeat its weaker, former supplicant neighbor.
But that's not how things played out.
Ukraine managed to hold off an initial, ill-planned but large invasion force, and for the past two and a half years they've continued to hold those lines, despite huge drafts of soldiers and new investments in wartime materials, including drones and missiles that have been near-continuously lobbed at Ukrainian cities and towns, by the Russian government.
For the past year or so, following some back-and-forth pushes by Russian and Ukrainian forces in mostly the eastern part of Ukraine, at least following that initial unsuccessful incursion toward the capitol, Ukraine's efforts to reclaim its captured territory have been fraught.
It launched a successful counterattack a little while back, retaking some earlier captured territory, but after plowing through Russian forces and arriving in the eastern portion of the country, it's next-stage offensives basically collapsed as soon as they were launched.
The Ukrainian government is still making fresh attempts in this regard, as any stagnation and seeming lack of progress could serve as justification by its allies to stop sending money and weapons to bolster their war effort, but these have been relatively small and haven't accomplished much—not for the last year, at least.
The same was generally true for Russia up until recently, it's troops on the ground exhausted and undersupplied, their pushes deeper into Ukrainian met with stern-enough resistance that they've had to pull back, or they've persisted in shouldering their way through a meat-grinder defense, capturing little tiny bits of territory, but with huge costs in terms of lives and military hardware.
This past year they've seen some decent gains, though, as freshly drafted and trained troops have subbed-in for exhausted and wounded ones, and as Ukraine's forces have suffered the consequences of delayed support from the US in particular, and as their own forces have been unable to tap-out, rest, and recover, because of the difference in the size of the two countries' populations, but also because of the nature of the conflict, Ukraine being invaded, while Russia has remained a safe-haven for the most part.
As of the day I'm recording this in late-August 2024, Russia's military controls about 20% of Ukraine's total territory—and that includes Crimea and other chunks that were taken in 2014—around 8.2 million of Ukraine's 41 million population before the invasion had already fled the country by mid-2023, some having returned in the year or so since, but millions of people are still scattered throughout Europe and the rest of the world, making this the continent's largest refugee crisis since WWII.
About 8 million Ukrainians are now considered to be internally displaced, which means they're homeless within their own country, often because their cities or towns have been captured or destroyed.
Estimates on casualties and fatalities in this conflict vary widely, as official numbers are often incomplete and filtered for public consumption and propaganda purposes, but some fairly strict and consequently probably low estimates from outside groups suggest a few hundred thousand people may have died in this conflict, so far, with hundreds of thousands more having been wounded, in some cases grievously, with some more biased figures—like those provided by Ukraine's Ministry of Defense—suggesting that well over half a million people may have been wounded on Russia's side, alone, since the 2022 invasion began.
Again, this war has been uneven but surprising from the get go, Russia taking a lot of territory, but Ukraine holding its own and performing well beyond most expectations.
But over the last year, since battle lines in the east were more firmly drawn and both sides had the opportunity to carve out defenses, lay mines, things like that, this has been a story of slow attritional conflict, which has tended to mean an advantage for Russia: they've ever-so-slowly been claimed more of Ukraine—grabbing just over 400 square miles of territory over the course of the past twelve months, including a few dozens cities and towns along those well-entrenched emplacements.
What I'd like to talk about today is a recent move by Ukraine that has seemingly surprised just about everyone, and which, depending on who you ask, is the desperate act of a flailing military, or an inspired bit of asymmetrical warfare that could help turn the tides in their favor.
—
Part of why many well-informed analysts assumed Russia's invasion of Ukraine would be a quick thing, several days-long, maybe a week or two at most, is that Russia's military is big and backed by the largest arsenal of nukes in the world. Russia's economy is also decently large, even if it is significantly dependent on fossil fuel and mineral wealth.
So Russia's military should be capable of stomping in to a smaller country's territory, especially a neighboring country, and then killing and threatening everyone into submission, and menacing them with nukes if they do anything threatening in return.
That's the ostensible promise of a nuclear arsenal: you have the whammy on everyone else if they do anything that really scares you or threatens you, no matter what you do to them, first.
That expectation didn't pan out, but the threat of nukes has hovered over this conflict from day one, and Russia's government has happily reinforced the sense that if Ukraine does anything to threaten them in return, even as they invade and gobble up Ukraine's territory, killing and kidnapping their people, Russia might use nukes, because why wouldn't they?
And they've often signaled this by saying, basically, that if the Fatherland is threatened, if anyone menaces Russia in return, that could serve as a spark that turns this invasion into a nuclear conflict.
This threat has ensured Russia's invasion of Ukraine, thus far, has been a fairly one-sided undertaking in which Russia can do basically anything they want, stomping all around Ukraine and launching endless drones and missiles at their densely populated cities, but Ukraine is not allowed to do anything like that to Russia in return.
And this nuclear threat has been taken seriously enough by Ukraine's allies that they've said, from the get-go, we'll give you money and weapons, but you have to promise not to use them on targets within Russia, because we don't want to kick off a nuclear war, or even a broader conflict between nuclear-armed nations, if Russia were to consider attacks by Ukrainians wielding American weapons against Russian civilian targets to be an attack by the US—which was always a theoretical possibility that, again, Russia was happy to reinforce.
As a result, some of the weapons provided to Ukraine by its allies were artificially limited, including the 20 HIMARS long-range rocket systems the US supplied back in late-2022, which were altered before being sent so they couldn't be used against targets within Russia territory.
The US and other allies have also been incredibly hesitant to provide Ukraine weapons with greater range, like ATMS, Army Tactical Missile System rockets, that can strike targets up to 186 miles away, and fighter jets that could be used to take out targets deep within Russian territory, if used correctly.
From the beginning, though, Ukrainian forces figured out ways to hit targets within Russia, generally using asymmetrical methods, like covert infiltrations and loose alliances with anti-government entities operating within Russia, rather than launching aerial or artillery strikes from within their own borders.
In 2022, they struck dozens of air bases, fuel depots, and similar targets across the border, though they almost always denied involvement, officially, due to fears that overtly launching such attacks could lead to significant reprisals, and could cause their allies to step back from supporting Ukraine over fears of an expanding conflict.
Several bits of manufacturing and shipping infrastructure in Russia were damaged or destroyed by Ukrainian missiles and drones in 2023, which were again, often denied, though a bit more overt than their earlier efforts, and military and civilian buildings in Russian towns along their shared borders were damaged by drones and saboteurs from the beginning of the invasion.
Artillery shelling has also incidentally or accidentally hit civilian targets across these borders, though almost all of these attacks, up until 2024, caused little damage and few deaths and injuries; they were more symbolically than practically important.
Beginning in early 2024, though, mostly drone attacks on Russia energy infrastructure seemed to impact Russia's economy, several important oil and gas terminals damaged to the point that they required a lot of time and investment to get them operational again, not to mention the further investment that would be required to protect these small, numerous, and important weak-points that Ukraine had shown a willingness to attack.
There were also a few drone attacks on major cities, like St. Petersburg, but these seemed to be mostly symbolic strikes, and were generally not claimed by Ukraine—they could have been false flag attacks, or launched by Ukraine's anti-Russian-government allies operating within Russia's borders, or attacks by ISIS or similar terrorist organizations—but whoever launched them, they seem to have caused more fear and consternation than actual, physical damage.
Causing fear, though, is still important in this conflict, because, as far as many Russian civilians have understood for years now, the war has been going fine, or fine enough, and they haven't felt they've had much to worry about, because although a lot of their people have been drafted and sent to the frontlines, the conflict itself hasn't really impacted them beyond some brands having disappeared from shelves due to international sanctions, and a general sense that the government has clamped down on several freedoms they previously enjoyed, using the invasion—which has been pitched internally as an effort to liberate Ukrainians from a tyrannical, Nazi government—as justification.
That's part of what makes a recent move by Ukraine's military so interesting.
On August 6, 2024, the Ukrainian military launched an attack across their border with Russia into the Kursk oblast, which is an administrative district of about a million people located in western Russia.
This assault included at least 1,000 troops, alongside armored personnel carriers and tanks, and they plowed more than 6 miles into Russian territory within two days, apparently wiping out local defensive positions without too much trouble.
They reportedly drove right past many defensive emplacements and came at the relatively few defenders from unexpected angles, behind rather than in front of them, and that allowed them to rapidly capture territory and prisoners.
As a result of this blitz into Kursk, more than 100,000 Russian citizens, closer to 200,000 by some estimates, have had to flee their homes, a state of emergency has been triggered in this and surrounding regions, and the Ukrainian military has captured just under 400 square miles, or around 1,000 square km of Russian territory—which is about what Russian forces have managed to capture of Ukraine over the whole of the past year. Within that held territory, they also hold 82 towns and villages, and they've captured an estimated 2,000 or so prisoners.
This rapid assault into Russian territory was unexpected, catching even Ukraine's allies by surprise, reportedly, and it struck an area that was apparently under-defended, which is part of why they were able to break through so easily, hundreds of Russian soldiers surrendering almost immediately, none of them having expected anything like this so far from what has become the front lines of the conflict all the way on the other side of the country.
In the weeks since this assault was launched, Ukrainian forces have taken out a couple of important bridges, which serves the double-purpose of making a counterattack by Russian forces more difficult, while also hobbling some of their supply lines that are fueling the Russian invasion of Ukraine further south and east.
The Ukrainian force that invaded Russia is relatively small, but because of the nature of this sort of thing, it's estimated that Russia will need something like 3 to 5-times as many soldiers as Ukraine has if they want to successfully dislodge them, which will likely mean having to pull troops and military hardware from the frontlines, or other spots along their border, which would leave those other spots less defended, in order to muster that kind of counterattack.
This spot is also reportedly somewhat protected from existing Russian artillery installations, and any attacks they launch against the occupying Ukrainian forces will be attacks against their own cities and towns—something that is arguably inevitable when you're invaded and trying to boot the invaders, but also not something that's super politically popular, because, again, as many as a few hundred thousand people have fled their homes, and if their own government bombs their homes and other infrastructure into smithereens in order to recapture it, that probably won't make all those people too happy, in addition to making them an additional burden in a way, suddenly needing more government support just to keep them fed, housed, and so on.
This is also tricky for Russia because, as I just mentioned, pulling troops from elsewhere will require weakening either some other border area, or their front lines in eastern Ukraine, meaning they either open themselves up to another incursion, or they slow the progress they're making with their own invasion, and that component of the conflict is currently going pretty well for them, so it's a tough sell, the idea of slowing that momentum in order to take back territory they didn't think was under any real threat, up till just now.
Of course, this assault also makes clear that other parts of Russia's extensive shared border with Ukraine might be under threat if they leave any gaps or weak spots, which will likely mean having to shuffle things around a bit, either way. Attacking and capturing this part of Kursk, then, would seem to be a means of forcing Russia into a two-front conflict, while also demonstrating parts of their territory they thought were well-fortified-enough possibly aren't, which could further distract their leaders and spread their forces out over a wider area.
The political aspect of this might prove to be important, too, as while Russia's economy has been doing pretty well, considering all the sanctions, because the government has been flooding the economy with war-time investment and dropping all kinds of regulations to keep businesses afloat and flourishing, authoritarian regimes are often bulwarked by certainty and the projection of strength, and anything that seems to weaken that supposed inevitability and invulnerability can lead to cracks in the facade that ultimately lead to the people up top no longer being up top.
That doesn't seem to be a major threat here at the moment, but if we're looking at the long-term, this could be one more dent in what's meant to be an impervious, pristine visage of power, which could over time lead to something more substantial, in terms of who's in charge in Russia.
All that said, most analysts seem to think this invasion of Kursk won't be terribly maintainable because it stretches Ukraine's supply lines in such a way that those who did the invading can be relatively easily cut off from the rest of their military, and because it forces Ukraine into a two-front conflict, as well, and while Russia can muddle through something like that, even if it would prefer not to, Ukraine will struggle to do the same because of the nature of their population and infrastructure at the moment.
Ukrainian forces are also already struggling on their eastern front, losing territory in small bits, but continuously, to Russian forces, and the grinding nature of the invasion has really taken a toll on those who have been fighting without a break for in some cases years at this point.
This successful and surprising move does seem to have served as a morale boost for Ukrainian troops, though, as this is the first time a rival military has taken and held Russian territory since WWII, marking a huge symbolic victory, and one that may keep Ukraine's allies optimistic as well, which is important, as many politicians in those allied countries have shown themselves to be more than willing to stop the ready flow of money and weapons into Ukraine any time it seems like the conflict might not be going their way, even momentarily.
Some reports have suggested that this assault might be part of a larger effort by Ukraine's leadership to prepare itself for what seems to be, to some at least, inevitable near-future peace talks, as holding this chunk of Russian land and all these prisoners would give Ukraine more leverage to get some of their land and prisoners back in such negotiations.
Others have suggested that the key purpose might have been to humiliate Russian President Putin, while also making everyday Russians feel the war the way everyday Ukrainians have, as that can help tip public opinion enough to, eventually, sway governmental action, even within authoritarian states like Russia.
If that's the case, Ukraine may well achieve the opposite, as while Putin has seemingly been slow to respond, focusing his public statements on the Russian military's continuing success in eastern Ukraine, he's reportedly, behind the scenes, plotting revenge, and telling his people to step back from back-room negotiations that have been focused on agreements related to not targeting energy infrastructure on either side; this is pretty speculative and there are a lot of anonymous sources on this narrative, so take it with a grain of salt, but there's a chance that Putin is playing down how bad this is for him and his forces in public, but is planning some kind of significant and devastating counterattack for sometime in the near-future, to deter future attacks on Russian soil.
Russian officials have described this attack as an escalation, which is exactly the language you would use if you were preparing your own escalation, so we maybe have that to watch out for in the coming weeks.
Simultaneous to all this, though, Russia is on the brink of capturing all of Donesk in eastern Ukraine, which it illegally annexed a little while back, but which Ukraine has partially held all this time—so we may see some kind of change to the conflict once that capture is completed, as it could prove to be a suitable moment, strategically, for Russia to walk back to the peace talks table, happy to take the land it says it owns, before stepping back from active conflict and arming itself for some later, potentially less-direct effort to claim the rest; another little green men attack, perhaps.
There's a chance that this attack will force Putin to make politically expedient, but militarily non-ideal decisions over the next few months, though.
It would arguably be smartest for the Russian military to keep at it in the east, claim what they need to claim and reinforce their holdings, there, before then going and addressing the Ukrainians in Kursk, but he may feel pressured to send forces to Kursk sooner rather than later, because of embarrassment if nothing else, but also possibly pressure from other Russian leaders, which would spread out his forces and the military's attention, while also slowing their advances in the east, which could in turn give Ukraine a chance to shore up some of their positions, and possibly even launch more small attacks into Russian territory, further complexifying the state of play and the number of emergencies the Russian military needs to address simultaneously.
Each of these attacks could be small and strategic, causing outsized damage and requiring an outsized response force: a bit like how irregular militaries, like Hamas and Hezbollah, use cheap rockets that they know will almost always be knocked out of the sky with countermeasures, but those rockets cost maybe ten thousands dollars, while the countermeasures cost ten or twenty times that.
Over time, you can deplete the enemy's reserves of money, hardware, and people by forcing them to commit a lot more than you do to a given area or attack; in this way, the outgunned and out-populated Ukrainian military could tie-up a lot of Russia's forces by making them worry about maintaining the bare-bones status quo back home.
There's also a chance, though, that Russia will play the long game, ignore opinion polls and protests by people who are forced to flee their homes, and wait to address these asymmetric incursions until later, at which point they'd be in a much stronger position within Ukraine, and that leaves them in a good spot to keep pushing forward, militarily, or to have peace talks that heavily favor them, even more than such talks would, today.
Show Notes
https://thehill.com/policy/defense/3762042-us-secretly-modified-himars-for-ukraine-to-prevent-kyiv-from-shooting-long-range-missiles-into-russia/
https://www.wsj.com/world/behind-ukraines-russia-invasion-secrecy-speed-and-electronic-jamming-188fcc22
https://www.reuters.com/world/europe/how-russia-looked-wrong-way-ukraine-invaded-2024-08-17/
https://www.reuters.com/world/europe/belarus-lukashenko-says-nearly-third-army-sent-ukraine-border-belta-reports-2024-08-18/
https://www.news24.com/news24/world/news/most-likely-used-north-korean-ballistic-missiles-russia-strikes-with-for-the-third-time-ukraine-20240818
https://ca.news.yahoo.com/now-even-north-korea-weighed-103312164.html
https://apnews.com/article/russia-ukraine-war-kursk-incursion-bridge-invasion-43d6579c82c24ffc5cfabd99d07c66db
https://www.nytimes.com/2024/08/17/world/europe/ukraine-russia-bridge.html
https://www.nytimes.com/2024/08/17/world/europe/ukraines-incursion-russian-conscripts.html
https://www.politico.eu/article/ukraines-raid-kursk-russia-shift-tactical-narrative/
https://thehill.com/opinion/international/4829506-how-ukraines-surprise-offensive-into-russia-has-changed-the-war/
https://en.wikipedia.org/wiki/August_2024_Kursk_Oblast_incursion
https://www.nytimes.com/2024/08/19/world/europe/ukraine-russia-zelensky-putin-ceasefire.html
https://www.theguardian.com/world/article/2024/aug/17/safety-at-ukraines-zaporizhzhia-nuclear-plant-deteriorating-iaea-warns
https://www.washingtonpost.com/world/2024/08/18/vladimir-putin-kursk-crisis-reponse/
https://www.abc.net.au/news/2024-08-17/ukraine-military-incursion-into-russia-maps-satellite-images/104233912
https://www.barrons.com/news/russia-says-captured-another-village-near-ukraine-s-pokrovsk-6dc20994
https://www.nytimes.com/2024/08/18/world/europe/kursk-russia-ukraine-incursion.html
https://www.nytimes.com/2024/08/16/world/europe/russia-ukraine-pokrovsk-kursk.html
https://en.wikipedia.org/wiki/August_2024_Kursk_Oblast_incursion
https://www.bbc.com/news/articles/cy0ngzg9754o
https://www.aljazeera.com/news/2024/8/10/ukraine-braces-for-reprisals-as-russia-to-send-more-troops-to-kursk
https://en.wikipedia.org/wiki/Attacks_in_Russia_during_the_Russian_invasion_of_Ukraine
https://en.wikipedia.org/wiki/Russian_invasion_of_Ukraine
https://understandingwar.org/backgrounder/russian-offensive-campaign-assessment-august-16-2024
https://apnews.com/article/russia-ukraine-war-incursion-kursk-afa42b9613323901bef07800ac2cae9e
https://en.wikipedia.org/wiki/Annexation_of_Crimea_by_the_Russian_Federation

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UK Riots
13 авг· Let's Know Things
This week we talk about Taylor Swift, knife attacks, and immigration politics.
We also discuss immigration rationales, riffraff, and terrorist plots.
Recommended Book: AI 2041 by Kai-Fu Lee and Chen Qiufan
Transcript
American musician, singer, and songwriter Taylor Swift, at age 34, recently became the world's first music industry billionaire who's primary source of income is their music—as opposed to side-businesses, work, and royalties in adjacent or completely disconnected industries.
A lot of that wealth has stemmed from her incredibly successful, and ongoing—as of the day I'm recording this at least—Eras tour, which began in March of 2023 and which is her sixth tour, and by far the biggest in scope, scale, and success.
The Eras Tour, by itself, has surpassed a billion dollars in revenue—the first tour to ever hit that milestone—and it's had all sorts of interesting direct ramifications and repercussions, like bolstering Swift's music sales and streams, but also indirect ones, like creating a sort of economic weather system wherever these tour stops are planned: it's been estimated, for instance, that the Eras Tour contributed something like $4.3 billion to the GDP of the United States, and the WSJ dubbed these economic impacts "Taylornomics," as the combination of travel, food, entertainment, and other spending surrounding her tour dates, folks coming from all the around the world to visit the relevant cities, attend the concert, and spend on those sorts of things while in town, has all had a meaningful impact legible in even the huge-scale numbers of national income figures.
Swift, then, has been having quite the moment, following the several decades of work in this industry leading up to this tour.
And the swirl of activity—economic and cultural, especially—around her Eras Tour stops have made these events central to the collective consciousness, grabbing lots of airtime and watercooler talk wherever she shows up, because of how much of an event each of these stops are; and notably, they have been very well reviewed, in terms of the performance, the sets, the planning, everything—so it would seem that the attention being focused on these shows isn't superficial and reflexive, it's the result of having put together something pretty special for people who are willing to spend to attend that kind of event.
It maybe shouldn't come as a surprise, then, that there may be people out there looking to garner attention for themselves and their causes who see these events as an opportunity to do exactly that.
Three sold-out shows in Vienna, Austria were cancelled in early August due to a plot by what seems to have been several teenagers looking to kill as many people as possible outside the tour's local concert venue.
An investigation into this plot is ongoing, so there's still a fair bit we don't know, but what's been divulged so far is that three people have been connected to the plot and detained, the main suspect is a 19-year-old who planned to use knives and/or explosives to kill as many of the 30,000 or so onlookers who gather outside the show venues each night as possible—and another 65,000 people would have been inside the venue, so that's a lot of people, and a lot of potential for stampede-related injuries and deaths, alongside those that could be caused with knives and bombs—and that he, alongside two other suspects, a 17-year-old and an 18-year-old, was inspired by the Islamic State group and al-Qaida—the 18-year-old, who is an Iraqi citizen, apparently having pledged himself to the Islamic State.
Propaganda materials from both terrorist organizations were found at the 17-year-old's home, alongside bomb-making materials, and he was hired just a few days before being caught by a company that provides some type of service to the concert venue; specifics about what said company provides haven't been officially divulged yet, but the theory is that this job was meant to give him and his accomplices some kind of access, allowing them to do what they intended to do more effectively.
There were a lot of disappointed Swift fans in Vienna who in some cases spent thousands of dollars just getting and staying there for the concert, only to be told that it was cancelled; most of the response from those affected in this way seems to be relatively upbeat, though, considering the circumstances, pretty much everyone breathing a sigh of relief that this plot wasn't pulled off successfully, which could have resulted in something like what happened at Manchester Arena in 2017, when an Ariana Grande concert was attacked by an Islamic extremist with a bomb who killed 22 people and injured more than 1,000.
Swift's representatives have said that her next concert, scheduled for between August 15 and the 20th, are still on the books and ready to go, at London's Wembley Stadium, which will close-out the European leg of this record-setting tour.
London's mayor has said that local authorities are prepared for whatever might happen, having learned a lot from that aforementioned Ariana Grande concert in 2017.
What I'd like to talk about today is a bout of violent rioting that broke out in the UK recently, which is loosely connected to Swift and her music, though only adjacently, and is primarily focused on the roiling topic of immigration and its British discontents.
—
At the tail-end of July, 2024, there was a knife attack in Southport, a town in northwestern England, in which three young girls were killed and ten other people, eight of whom were also children, were injured—some very badly injured.
This attack targeted a Taylor Swift-themed yoga and dance workshop that catered to children ages 6 to 11, twenty-five of whom were in attendance—hence that large number of young victims. And the adults who tried to stop the attacker were all themselves injured, in some cases critically, and the assailant was only ultimately halted when a pair of police officers managed to subdue him.
The person behind this attack, and those murders, is a 17-year-old British citizen who was arrested at the scene, and whose identity was initially concealed from the public because of how privacy laws work in the UK, related to minors; they tend not to divulge identifying details when crimes are committed by people who are legally children, though in this case they ultimately decided to do so, for reasons I'll get into in a moment.
Thus far, there isn't a clear motive behind this attack—the attacker has been diagnosed with autism spectrum disorder and was apparently deep in the midst of some kind of self-imposed isolation leading up to his apparent decision to take a taxi to this workshop and kill a bunch of children.
He's been charged with possession of a bladed article, ten counts of attempted murder, and three counts of murder, and his trial date is currently set for the end of January in 2025.
This attack is currently not being treated as a terrorist incident, though again, no clear motive has been established, and there's a lot that's not known, and likely quite a bit that hasn't been publicly divulged yet.
This knife attack, unto itself, led to a lot of headlines and attention because of how just brutal and horrible it was.
But in the aftermath of the attack, possibly because the attacker wasn't named, again, because he was a minor, rumors and then outright misinformation began to spread around less-than-legitimate news entities in the UK, and across social media platforms and messaging apps like Telegram, many of them suggesting or directly alleging that the attacker was someone he was not—a false name was given to him by some of those spreading these rumors—and even in cases when a name wasn't misattributed or fabricated, he was alleged to be an immigrant seeking asylum—which is also incorrect; his parents are from Rwanda, but he was born in Cardiff, and is thus a British citizen.
Within days these rumors and this mis- and dis-information, this accidental and purposeful spreading of mistruths, began to reach a fever-pitch, the zone flooded with patently untrue claims and narratives, which is why the police decided to release the attacker's name publicly on August 1; it was going to happen within a week or so, anyway, because he was turning 18 on the 7th, so the idea was to get ahead of that impending forced divulgence, and to try to temper some of that false information spread within facets of British society in the meantime.
Most of the false stories, though, hung on, even after officials made this information public, and to understand why, it's important to understand what a political force anti-immigration sentiment has become in Britain over the past few decades.
The British aren't alone in this, of course: especially in wealthier countries, mostly but not exclusively conservative politicians and parties have been making hay with claims about folks from other countries coming into their territory, taking their jobs, gobbling up their social services, and changing their culture into something those who came before feel they no longer recognize.
Part of this is just the consequence of societies changing being reframed into something devilish and wrong, part of it is the reframing of stagnating economic conditions as something that's being done to their societies by outside forces, not by uncontrollable macro variables like pandemics, and controllable variables that are being mismanaged by those in power.
Part of it, though, is related to real-deal demographic shifts, as folks flee from repression, violence, economic deterioration, and dangerous climactic happenings in less-wealthy parts of the world to those that are currently not suffering from these things, or not to the same degree.
Thus, we see waves of people show up to the US's southern border, all hoping to get into the country, legally or otherwise, and the same is true of European nations with Mediterranean coasts, and, as is the case here, people arriving legally, by ship and plane and train into England, but also illegally, often in makeshift boats crossing the channel, the people who arrive in this way arrested and filtered into a system that often moves sluggishly and puts these new arrivals up in hotels or other housings for the duration of their processing at government expense.
From the perspective of someone in a smaller British town, then, where the economic conditions are not much better than those in a similarly sized town in a much poorer country—since London is the only city in Britain doing really well in that regard, right now—this looks like a bunch of people from elsewhere, who don't belong, taking resources that should go to them, should be spend on their housing and healthcare, should be making jobs for them, and the ones that are allowed to stay continue to take those resources, leaving a lot less to go around, again, in circumstances in which it already feels like there's not anywhere near enough—no chance for growth, few opportunities, and diminishing value in the social services they've been promised.
These are potent political topics, then, because in some cases these are real-deal issues already, and in others it can be useful and effective to stoke fears that this could happen in the future, if we allow these foreigners to keep flooding across our borders, legally or illegally.
In the UK, the Conservatives, the Tories, have used this issue as a very effective lever, and at the height of fervor about this topic, they seemingly accidentally led the country to a successful Brexit referendum in 2016, leading to the UK leaving the European Union, in large part because this would allow them to set their own immigration policies separate from those of the EU, which are much more open in terms of movement between member nations.
All of which, I think, helps explain what happened next, following that knife attack, and the torrent of false information that flooded the zone following the attack, which included all sorts of claims that the attacker was an illegal immigrant, that he was a Muslim, and that if nothing else, he was a black teenager who had brutally murdered several young, British girls.
On July 30, a crowd in Southport gathered outside a local mosque and started causing trouble and making threats. The police showed up to keep the peace, and the protestors attacked them, set fire to a police van, and damaged the mosque—in the process injuring more than 50 police officers and three police dogs.
This initial group of protestors was formed around a nucleus of people belonging to the English Defense League, which is a far-right, anti-Muslim organization, and members of Patriotic Alternative, which is a neo-Nazi group.
Similar protests that became riots popped up in cities across the country in subsequent days, and amidst all the resulting tumult, a police station was set on fire in Sunderland, and more mosques, alongside businesses and homes owned by people who were purported to be, often incorrectly, immigrants, were also damaged or destroyed.
Hotels housing asylum seekers were attacked, and something like 750 of these anti-immigration rioters have been arrested, thus far.
The nature of these riots changed on August 7, when a protest, populated by the same sorts of people as were seen at the other ones, mostly anti-immigrant, neo-Nazi, and far-right folks, was met by a group of anti-racist counter-protestors that dramatically outnumbered them. The police helped support the peaceful anti-racist protestors, and since that day, most of these would-be riots have been quelled by oversized groups of counter-protestors augmented by a police presence.
Before that tactic arose, though, several cities saw a handful of nights in a row of rioting by those far-right groups, many of them pillaging and burning shops, and attacking strangers and the police, and the government has gone out of its way to really throw the book at folks they've arrested, handing down significant punishments to some of the instigators of these riots, in particular, while also publishing their names and faces, in an attempt to embarrass and make examples of them.
As of the second week of August, we're still seeing periodic attacks on mosques and attempted protests and riots by far-right activists pop up here and there, though they're happening a lot less frequently than in previous weeks, and peaceful anti-fascist, anti-racist protests have become a lot more common, in response to attempted riots, but also unto themselves.
There are several ways of looking at what has happened here, in response to that attack, and in response to the riots that followed.
One narrative of all this is that far-right politicians and ideologues int the country have attempted to convert a truly horrible event into something it wasn't for the purpose of regaining some of the power they lost with the last round of parliamentary elections.
It's been alleged by the new British Prime Minister, Kier Starmer, that these riots were instigated by far-right troublemakers like Nigel Farage, who was one of the key proponents of Brexit, and who has recently reemerged in British politics as the leader of a vehemently anti-immigrant, further-right than the Conservatives party in the country.
Farage and similar anti-immigrant leaders flooded the informational zone with disinformation and nudge-nudge-wink-wink innuendo that implied this was one of the consequences of allowing immigrants into the UK, and that, according to Starmer and other government leaders, led to some of this violence and destruction—they've even hinted that it might be prudent to clamp down on those sorts of posts and false claims, because of the real-world consequences that can follow; though that hint has been met with skepticism and worry from free-speech advocates.
It's also been alleged that foreign agencies, like those in Russia, have been helping amplify these false claims, as part of their larger effort to sow discord and to augment the potency of reactionary groups in countries they want to influence, and folks who have aligned themselves with global conservative movements, like Tesla CEO Elon Musk, have been accused of doing the same, Musk himself sharing a lot of misinformation related to this attack and the riots that followed on the social network he bought, formerly Twitter, now X, clashing with the new Labour government on the network while saying that he believes a civil war is inevitable in the UK.
So we could look at all this through the political-leverage lens, as there's a lot of power to be gained by successfully attaching reins to this sort of movement, and amplifying trouble for those in power, if those in power are your political rivals.
We might also look at this through the lens of actual on-the-ground issues, though.
There was a piece in the Financial Times, recently, in which it was posited that how we perceive these riots, and the people sparking and perpetuating them, will tend to depend on whether we subscribe to the "rational actor" or "riffraff" models of riot interpretation.
The rational actor model says people who riot are doing what they do because of real-deal grievances that they can't seem to get addressed in any other way, while the riffraff model says rioters are basically low-lifes who have nothing better to do, and/or who like to mindlessly give in to the animalistic urge to belittle, attack, and maybe even kill those who seem different from them and theirs, and all they're looking for is an excuse to do so.
Most social scientists, today, support the rational actor model, suggesting that even people who lean toward violence will keep those behaviors tamped-down most of the time, and only allow them out at moments in which they feel like there's no other way to get themselves and their grievances heard and addressed; and that's true whether we're talking about people of color rioting because they feel like they're being unfairly and violently targeted by police, or when it's mostly white, British Christians who feel like they're being elbowed out of society by Muslim immigrants and various other people of color.
That folks like Farage might step in and try to ride this kind of wave, then, might ultimately be less important than identifying a pressure-valve that'll allow these sorts of grievances to be worked out and addressed in socially positive, legal ways.
Government healthcare infrastructure in many of these areas is stretched to the breaking point, social safety nets are unraveling, and years of Conservative-instigated austerity measures have left these and other social baselines way below where they were in recent memory—and the messaging from the Conservative Party has been that immigrants are to blame, not their good and logical and responsible monetary policies.
Starmer, as the head of the new Labour government, which won the last election in a landslide, booting the Conservatives from their perch for the first time in a long time, has the opportunity to address these issues, then, but it's likely he'll have to do so in such a way that the actual problems are addressed—providing better funding for these services, helping stimulate more economic activity so there are enough, and high-quality enough jobs for everyone, and ensuring there's enough immigration so that systems that rely on folks coming in from elsewhere (which is especially true of the nation's healthcare system and its construction industries) can function properly—while also addressing some of the seeming issues, like cracking down on illegal immigration; which probably isn't the core problem it's been promoted as by the Conservatives and those to their political right, but is an issue, and is something Starmer has said he will crack down on.
It currently seems like he might aim to grease the wheels of the immigration system, so that folks applying for citizenship are processed faster, which will mean fewer resources expended putting them up in the country while they're waiting to see if they can stay—which would possibly help free up government resources, while also representing a kinder model for those who are otherwise left in limbo for long periods of time.
Whether this can be framed and communicated correctly by the Labour government so that it appeals to those who are worried about immigration is an open question, though, as it's possible that anything other than a hardcore lockdown of the borders and a denial of new immigration requests—which would cause even more chaos in the country's healthcare and other immigration-related systems—might seem like non-solutions, even if they technically solve some of the underlying problems the rioters have been complaining about.
Show Notes
https://en.wikipedia.org/wiki/2024_Southport_stabbing
https://www.cnn.com/2024/07/30/uk/taylor-swift-southport-stabbing-reaction-gbr-intl/index.html
https://www.thetimes.com/article/e87b09fb-b8fe-408d-a961-c89e6ae0f098?shareToken=620a021a38d86ed3af11587c36a52afd
https://www.bbc.com/news/articles/c5y38gjp4ygo
https://apnews.com/article/britain-unrest-riot-southport-police-response-ec348340c7d223f0117ae8c62638dd6f
https://newrepublic.com/article/184691/day-riots-stopped-uk
https://www.reuters.com/world/uk/uk-examines-foreign-states-role-sowing-discord-leading-riots-2024-08-05/
https://www.bbc.com/news/articles/cp35w0kj2y4o
https://www.aljazeera.com/news/2024/8/8/why-is-elon-musk-clashing-with-the-uk-government-over-far-right-riots
https://archive.ph/vKdeu
https://www.bbc.com/news/articles/clyg7dzr8wko
https://www.newstatesman.com/comment/2024/08/is-cocaine-driving-the-british-riots
https://www.lrb.co.uk/blog/2024/august/this-time-it-s-worse
https://www.bristolpost.co.uk/news/bristol-news/amid-chaos-far-right-protests-9459421
https://www.cnn.com/2024/07/29/uk/northern-england-stabbing-intl/index.html
https://apnews.com/article/uk-southport-children-stabbed-dance-class-8a9c7d7ed01441ce96332cd3d1250e43
https://en.wikipedia.org/wiki/2024_United_Kingdom_riots
https://en.wikipedia.org/wiki/English_Defence_League
https://en.wikipedia.org/wiki/Patriotic_Alternative
https://www.independent.co.uk/news/uk/politics/southport-far-right-disinformation-russia-b2589041.html
https://www.theguardian.com/uk-news/article/2024/jul/30/misinformation-southport-attack-suspect-social-media-conspiracy-theories
https://en.wikipedia.org/wiki/Brexit
https://www.ft.com/content/a0a4fb08-40cc-4627-a58f-b3a8d2d0e009?accessToken=zwAGH1UwRNrgkdOgpPsIQMxGJ9Olj7Oo0tDgCQ.MEYCIQChxhfA2SBamOb_Y_c0vQwPJmzXo0fHfucpW2v_dBGr2gIhANMcXEtBzZqY7R0Z9RkAZMkEoGMSy5P49MRnprFYWvAH&sharetype=gift&token=75895b79-b6c8-4e1f-a3ab-dc4d87161131
https://www.nbcnews.com/news/world/taylor-swift-concert-terror-plot-austria-foiled-2-men-arrested-shows-w-rcna165591
https://en.wikipedia.org/wiki/Manchester_Arena_bombing
https://en.wikipedia.org/wiki/Taylor_Swift
https://www.investopedia.com/swiftonomics-definition-8601178
https://en.wikipedia.org/wiki/Impact_of_the_Eras_Tour
https://apnews.com/article/austria-taylor-swift-concerts-canceled-extremism-arrests-17b494f1a164b205128d7faeb607e731
https://www.billboard.com/music/music-news/taylor-swift-vienna-terror-plot-third-person-detained-1235750067/
https://apnews.com/article/austria-taylor-swift-concerts-canceled-extremism-arrests-feff9108d0a14d9941c4bc416c0eb05f

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Venezuelan 2024 Election
6 авг· Let's Know Things
This week we talk about Chávez, Maduro, and Bolivarianism.
We also discuss authoritarianism, Potemkin elections, and the Venezuelan refugee crisis.
Recommended Book: Nuclear War by Annie Jacobsen
Transcript
Venezuela, a country with a population of about 30.5 million people, has lost something like 7 to 9 million people, depending on which numbers you use, to a refugee crisis that began about a decade ago, in 2014, and which has since become the largest ever in the Americas, and one of the top ten all-time biggest outflows of people from a region in recorded history—just under the outpouring of people from Bangladesh into mostly India, which I mentioned in last week's episode, during the country's war of independence from Pakistan, and just above the number of people who have fled Syria over the course of its now 13-year-long civil war.
That means Venezuela has lost around a quarter of its total population in the span of just ten years.
The spark that lit the fire of Venezuela's refugee crisis wasn't a civil war, but a political movement called the Bolivarian Revolution, which is named after Simón Bolívar, who is renowned and respected throughout the region for leading the area's independence movement against Spain.
This revolution was kicked-off by a soldier-turned-polician named Hugo Chávez who has long worked to implement what he calls Bolivarianism across the Americas, which calls for a nationalistic, socialistic state of affairs in which hispanic governments would work together, these governments would own most vital aspects of industry and the economy, according to a social model, it calls for self-sufficiency driven by that state-owned nature—the government reining in the purported excesses of capitalism-oriented competition, basically, and it calls for the elimination of corruption and the expulsion and exclusion of what it calls colonialist forces, alongside the equitable distribution of resources to the people.
It's a riff on other socialist and communist models that have been tried, basically, with a South American twist, but it has many of the same implications for day-to-day realities, including the supposition that everything is owned and run by The People, though generally what that means in practice is a pseudo- or full-on police state, meant to keep those outside, enemy forces—which are blamed for anything that goes wrong—from meddling in local affairs, and it also tends to mean a lot of self-enrichment at the top, those in charge of the police state apparatus, and all the state-owned businesses giving a lot of handouts to their friends and family, and generally becoming quite wealthy while the rest of the population becomes increasingly disempowered and impoverished.
This isn't the way these sorts of models necessarily have to go, of course, and it's not the way they're meant to go according to their own ideals and tenets, but historically this combination of claimed goals seems to lead in that direction, and in Venezuela's case we've seen that same trend play out once more, the Bolivarian Revolution putting Chávez at the top of a system predicated largely on oil wealth, which allowed Chávez to reinforce his hold on power, the reinforcement including the jailing, threatening, and harassing of political opponents, and keeping the main opposition party mostly out of power, despite their widespread popularity.
In 2013, Chávez's Vice President, Nicolás Maduro, stepped into the role of acting president when Chávez had to step aside due to cancer complications. He then won an election that was triggered by Chávez's death by less than 1.5% of the vote, though his opponent claims there were irregularities. The National Election Council carried out an investigation and said that the vote was legit, and Maduro became president later that year.
The seeming illegitimacy of that election, though, remains a huge point of contention between the political forces in Venezuela, and in the years since, the government has engaged in what's often euphemistically called "democratic backsliding," which means those in charge are implementing increasingly authoritarian policies in order to maintain control and keep themselves at the top, at the expense of democratic norms and values, like fair and free elections.
All of which has been bad for morale and for locals' sense of power within their own governmental system, but this has all been maintainable to a certain degree because Venezuela is sitting on the world's largest known oil reserves, and has thus able to just keep pumping oil, and expanding their own pumping capabilities, and that has allowed them to fail across a lot of other metrics of success, but still keep things afloat, the average person doing just well enough that they had something to lose if they stepped too far out of line—challenging the government in some way, for instance.
This increasing mono-focus on oil and similar raw materials, like gold, though, became a huge issue when a series of what are generally considered to be hamfisted policy decisions—including abundant and generous fuel subsidies for citizens and local businesses—that left them with wild levels of inflation that led to an intentional devaluation of the country's currency, as part of an effort to address that inflation, but which ultimately just ended up making things worse.
The government also took out a bunch of debt to help increase their oil-pumping capacity, and that combination of debt, a weak currency, and a local economy that had done away with basically everything else except oil left them without everyday fundamentals, including food, alongside issues like burgeoning disease rates, child mortality rates, high levels of crime and corruption, and a whole lot of violence, politically motivated and otherwise.
As of mid-2024, nearly 82% of Venezuela's population lives in poverty, and 53% of the population lives in extreme poverty, unable to afford enough food, and slowly starving to death.
Maduro seems to have won another election in 2018, though that vote is even more widely considered to be a farce than the one in 2013, and though outside governments like the US supported the ascension of opposition candidate Juan Guaidó, who seems to have actually won, that support didn't lead to any real change within Venezuela—though it did lead to more sanctions by the US and its allies against the Venezuelan government and many higher-ups within that government, of which there were already quite a few, and the weight of these sanctions on their oil industry in particular have made it very difficult to Venezuela to openly sell their oil on the international market at full price, which has further deteriorated their economic situation.
There was some hubbub within the Trump administration in 2020 that a military option, like a full-on naval blockade, to keep under-the-table oil deals that dodge US sanctions from occurring, might be on the table, as Maduro was proving resilient to other, less forceful attempts to dethrone him, like the aforementioned sanctions.
But nothing came of that, and a few years later the Biden administration offered to ease sanctions on Maduro's government, and to begin the process of normalizing relations between the two countries, if Maduro agreed to have a fair and free election, letting Venezuelans decide whether to keep him or not, but in an actual election, not rigged election, this time.
What I'd like to talk about today is how that election played out, and the local and international response to its results.
—
Some of that promised loosening of sanctions began well before the election, which took place at the tail-end of July 2024—and that allowed Venezuela to reap some profits from selling oil, gas, and gold that would have otherwise been tricky to get onto the global market.
But while Maduro made a few gestures at allowing things to be free and fair, and released some political prisoners, as demanded, he figured out a way to justify keeping his main opposition, a woman named María Corina Machado, who has been incredibly popular with Venezuelans, from being on the ballot. So she picked someone to basically serve as a stand-in for her and her party, a man named Edmundo González.
Official numbers released by the government indicate that Maduro won about 52% of the vote, and will thus remain in office.
According to data and analysis from outside watchdog groups, however, the voter numbers released by the government are highly suspect, the numbers giving every indication that they were falsified.
Evidence, including two-thirds of the tally sheets that the electronic voting machines printed out after polls closed on Election Day, provided by González's opposition alliance to some of those watchdog groups and to journalistic entities like the New York Times and Associated Press, suggest that Maduro probably only got something like 31% of the vote, while González, and through him, Machado and her party, received around 66%—a landslide victory, if those numbers are even close to accurate, and there's additional evidence that they are, as that's very similar to the results tallied by an independent exit poll on Election Day.
Despite that evidence, the Venezuelan election authority has confirmed Maduro's reelection, saying that González only garnered 43% of the vote, and the governments of Venezuela's allies, like Russia, China, and Iran, have also recognized the results as valid—though to be clear, China, Russia, and Iran are all renowned for their Potempkin elections that have all the trappings of a democratic act, but which are largely ceremonial and always predetermined to some degree, even if they claim to take the will of the people into account. So this is a group of governments that regularly run invalid elections who are vouching for the legitimacy, the apparent validity, of an election that keeps their preferred, authoritarian ally, in power. Do with that information what you will.
On the other side, we have a slew of mostly Western nations that have come out against the results, saying, with varying degrees of certitude, that there's abundant evidence these election results were faked, and that González is the actual winner.
The US government is included on that list, and many of Venezuela's neighbors—some of whom have recently publicly spoken about their concerns related to Maduro's belligerence in the region, and seeming intention of rigging the vote in his favor—like Brazil, Mexico, and Colombia, they've said they want the Venezuelan government to release the full details of the vote, so everyone can see and analyze the totality of data the government is supposedly working from.
Some of Maduro's allies and former allies, and some hardcore supporters of his predecessor, Chávez, have likewise told Maduro he needs to release the baseline voter data, to clear things up.
Maduro has said, instead, he'll have the country's Supreme Court audit the results, but this is being seen as a sidestep move by Maduro, as the court was recently packed with Maduro loyalists, and is therefore not capable of undertaking an independent review of the data—like other aspects of the country's government, the high court is basically in Maduro's pocket.
Maduro is also saying that the US and other long-time enemies of his government are trying to rig the election against him, and that he can't release detailed vote counts because the National Electoral Council is under attack, including cyberattacks, and they're not able to provide those numbers right now because of that aggression—though he's provided no evidence to support this supposed reason he can't make any of this information public.
So while it's still not 100% certain what has happened here, it's looking a lot like what happened in the last election, Maduro pulling out all the stops to muddle what information is being released, looking like he's playing ball whenever possible, but within a context in which he can make it look that way without facing any real risk of being challenged, and it would seem that he's leveraged the powers of state, once more, to lock in his position at the top for another six years, minimum.
In addition to those international governments and groups calling foul on his actions, we're seeing widespread protests against the government and these alleged results, and in a few cases these protests have become violent—the government supports groups of loyalists called colectivos, giving them weapons and telling them to go attack peaceful protestors, which can spark such violence, though formal police and military forces have also seemingly triggered pushback in some cases.
The government is accusing foreign nations like the US, and immigrant groups of causing this violence, saying these are special covert ops to make the government look bad and attack good loyal citizens basically—which is a common authoritarian move in such circumstances—and police and military forces have been rounding up protestors, and hunting them down afterward, arresting thousands of people for what they're calling anti-government or terrorist activities.
This has led to a situation in which there are still protests, and the opposition is still pushing hard against these supposed results, but many people involved have been pulling down their social media profiles and not posting photos or videos, because they're worried the government will send people to their homes to black-bag them and take them away, which is apparently happening around the country right now, to folks from the opposition party, but also everyday people who went to a rally or protest.
The question, now, is whether the outcome this time around will be any different than it was in 2013, and then again in 2018, when Maduro first stepped into power and when he retook power.
Something the opposition has this time, but which it didn't have in those previous elections is Maria Corina Machado—the candidate who was booted from the ballot and who had to select González to run in her stead.
Machado has become a public figure of almost religious significance in the country, and her star has arguably only gotten brighter the more Maduro has pushed back against her ability to participate in the formal processes of state.
She won 90% of the vote to become the head of the opposition coalition last October, and she's been in politics since 2004, when she promoted a referendum to recall then-President Chávez, and that effort earned her a conspiracy charge.
In later years, as she continued to hold various political roles, she was accused of corruption, disqualified from holding public office, accused of being involved in a plot to assassinate Maduro—all of these accusations seemingly false, and only applied to keep her from causing trouble, by the way—and then, after nearly a decade staying out of the spotlight, she became a candidate in that party primary that she won so handedly, which in turn led to her being banned from running for office for 15 years—all of which just seems to have further empowered her with everyday Venezuelans.
She seems to be a lot more popular and to hold a lot more sway than Guaidó, the candidate who was held up as the actual victor of the 2018 election, and treated as such by several other governments in subsequent years.
Die-hard fans of Machado also seem to have a bit more zeal than Guaidó's followers did, which could mean if the government acts against her or González, as they've threatened to do, and which both candidates seem to be daring the government to do, having shown up in public a few times despite those threats to lock them up or worse, since the election—if something like that happens, that could result in even bigger and potentially more destructive and violent protests, despite her calls for nonviolent opposition against what seems to have been a grave injustice.
The world has also changed quite a lot since 2018, and many of Venezuela's neighbors, even those that would have previously stayed carefully neutral in this election, have outright recognized González as the winner, including Uruguay, Argentina, and Peru, among others.
This changed world could also bring more support for Maduro, though, as their global allies, the Russias, Chinas, and Irans of the world, in particular, are busily building a collection of relationships with governments that oppose the de facto hegemony of the US and Europe, and that's manifesting in all sorts of ways, including providing resources, trade, and misinformation and military support to other fellow travelers who are holding the authoritarian line against pushback from their democratic and close-enough-to-democratic peer states.
There's a good chance there will be more tumult in neighboring nations as a result of all this—most immediately Colombia, as that's where the majority of Venezuelans who have left the country as part of that larger, decade-long exodus, have been going, and there's abundant indication that many people who held out, hoping this election would change something in the country and sticking around on that possibility, are planning to leave, now that Maduro has apparently managed to cling to power.
There's a chance this could trickle into other nations' politics, too, as many of those Venezuelan migrants who don't stay in Colombia end up heading north to US borders, and those borders have been at the center of the past several elections, and the new Democratic nominee for president this November, Kamala Harris, was tasked with handling border issues in the country at a truly tumultuous moment for the border. So a surge in new migrants could lead to more criticism of her on that front, as her performance in that role is generally considered to have been not great.
The Venezuelan military seems to be standing with Maduro, so far, which means it's unlikely the citizenry will have much of a chance of forcing the government to take them seriously and do anything about this seemingly rigged election, beyond protesting at such a scale and regularity that it messes with their ability to get anything else done, which could, at some point, nudge those in positions of power within the military to take the citizenry's side.
This is considered to be unlikely at this point, as Maduro has made sure to tie those leaders to him, giving them all sorts of monetary and business benefits, and arranging the country's military and intelligence apparatuses so that all the agencies and people running them are tasked with watching each other, as much as the other elements they're meant to defend against—again, a common authoritarian tactic, as this can help stave off the potential for coups, no one willing to risk losing their own power to oust the person up top.
The most likely outcome, based on how things have gone previously, at least, and how this has played out so far, is probably that this will remain a talking point internationally for a while, protests will continue to bubble up and be tamped-down, periodically becoming violent enough to warrant international news, but then in a handful of months, Maduro will have reinforced his position in power, still further, neighboring governments will be forced to reckon with his staying power and will figure out ways to deal with him, even if not happily, and the exodus of citizens from the country will continue as the economy continues to get worse in most ways, though perhaps bolstered a bit by support from the Russia/China/Iran alliance.
All of which will reshape the population and demographics of the region, while causing all sorts of economic ripples globally, as well.
Show Notes
https://www.nytimes.com/2024/07/28/world/americas/venezuela-election-results.html
https://www.nytimes.com/2024/07/29/world/americas/venezuela-election-takeaways.html
https://www.nytimes.com/2024/07/31/world/americas/venezuela-maduro-election-results.html
https://www.bbc.com/news/articles/cd1d10453zno
https://www.wsj.com/articles/i-can-prove-maduro-got-trounced-venezuela-election-stolen-772d66a0
https://statmodeling.stat.columbia.edu/2024/07/31/suspicious-data-pattern-in-recent-venezuelan-election/
https://www.washingtonpost.com/national/health-science/trump-administration-announces-sanctions-targeting-venezuelas-oil-industry/2019/01/28/4f4470c2-233a-11e9-90cd-dedb0c92dc17_story.html
https://www.axios.com/2024/07/30/venezuela-election-biden-trump-response
https://theintercept.com/2024/08/02/venezuela-election-maduro-us-sanctions-democracy/
https://www.barrons.com/news/venezuela-election-body-ratifies-maduro-s-poll-win-official-39010070
https://archive.ph/izdLU
https://apnews.com/article/colombia-president-maduro-vote-count-venezuela-election-00d399b74300b6d1ed010bed9539a166
https://english.elpais.com/international/2024-08-05/venezuelas-political-crisis-enters-uncharted-territory.html
https://crsreports.congress.gov/product/pdf/IF/IF10715
https://en.wikipedia.org/wiki/List_of_largest_refugee_crises
https://en.wikipedia.org/wiki/Sim%C3%B3n_Bol%C3%ADvar
https://en.wikipedia.org/wiki/Bolivarianism
https://en.wikipedia.org/wiki/Bolivarian_Revolution
https://en.wikipedia.org/wiki/Crisis_in_Venezuela
https://en.wikipedia.org/wiki/2013_Venezuelan_presidential_election
https://dialogue.earth/en/business/8768-fuel-subsidies-have-contributed-to-venezuela-s-economic-crisis/
https://www.cbc.ca/news/world/venezuela-election-preview-1.7274864
https://en.wikipedia.org/wiki/Venezuela
https://archive.ph/20240726145913/https://www.r4v.info/en/refugeeandmigrants
https://en.wikipedia.org/wiki/Sanctions_during_the_Venezuelan_crisis
https://apnews.com/article/venezuela-maduro-machado-biden-gonzalez-elections-protests-d6e70bd88ee9511298a4850c224a12e2

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