The cultural or institutional rule is, "No polymaths aloud." You know,
you can be, you can be narrowly specialized,
and if you're interested in other things,
you better keep it to yourself and not tell people,
because if you say that you're interested in computer science and also music or
studying the Hebrew Bible wow. That's a,
that must mean you're just not very serious about computer science.
I moved out to work with you in 2013.
I'd never seen a boom before. I mean,
this was one of the things that was really important to me is that being an
academics
the Academy had been in a depression since this change around
1972 73,
and seeing a boom and seeing people with like flowers and
dollar signs in their eyes, you know,
talking about a world of abundance and how everything was going to be great.
It seemed like everybody was the CEO or CTO of some tiny company.
And then very, very quickly it all started to change it.
I felt like a lot of people moved back into the behemoths from their little
startup having failed. A lot of the ideology felt poisonous.
Like don't be evil was not even something you could utter without somebody
snickering behind your back.
There's like a self hating component where the engineers have been recruited
ideologically and are like not actually there to do business.
How did this happen so quickly? Well, it's always it's.
Am I wrong about it's it's striking how fast it's happened.
It's striking how much it's happened in the context of a bull market.
So if you described this in terms of psychology,
you'd think that people or people will be as angry in Silicon Valley as they are
today.
You know, the stock market must be down 40 or 50%. It's like, you know,
people in New York city were angry in 2009, they were angry at the banks.
They hated themselves, but you know, the stock market was down 50, 60%.
The banks had gotten obliterated. And th th that,
that sort of makes sense psychologically.
And and the the strange thing is that on a,
in terms of the circle, all of the macro economic indicators, the stock markets,
the valuations of the larger companies,
it it's, it's like way beyond the.com peaks of,
of 2000 and old in all sorts of ways.
But the mood is not like late 99, early 2000.
It has this very different mood.
And the way I would would explain this is that a for the people involved,
it is sort of a look ahead function. So it is, you know yes, this is where,
where things are, but are they going to be worth a lot more in five years,
10 years. And that's gotten, that's gotten a lot harder to tell.
And so there's been growth,
but people are unhappy and frustrated because they don't see that much growth
going forward, even within tech, even within this world of, of bets,
which had been, you know, very, very decoupled for, for such a long time.
Nope.
One of the things that's interesting to me is, is that when we talk like this,
a lot of people are going to say, wow,
that's a lot of gloom and doom so much is changing so much as is, is better.
And yet what I sense is that both you and I have an
idea that we've lived our entire life in some sort of intellectual Truman show
where everything is kind of fake and something super
exciting is about to happen.
Do you share?
Yeah. Am I, is that a fair telling that?
Well,
I think that I think there's been the potential to get back to the
future for a long time. And you're, there,
there have been breaks in this Truman show at various points.
There was a big break with nine 11. There was a big break with the 2008.
Yeah, you know, you can say some sort of break with a Trump Brexit and Trump,
and in the last few years,
it's still like a little bit undecided with what that all means.
But I think,
I think the were a lot of reasons to question this and reassess this for some
time, the reassessments never quite happened.
But, but I would say, I think we're now at the point where, where this is,
is really going to happen in the next, you know,
Mmm.
You know, two years to five years to two decade, I think,
I don't think the Truman show can keep going,
keep going that much longer. You know, when I was,
you know, and again, I've been wrong about this, so I've been very wrong.
I've called it.
And we had a bit of an offsite when I was running PayPal in spring of 2001.
You know,
the NASDAQ had gone from 2000 to 5,000 back to 2000 dot com bubble was
over. And I was explaining, you know, we're, battening down the hatches,
at least one little company has survived and we're going to survive.
And but the in sort of insanity that we saw and the.com years will never come
back in the lifetimes of the people here because, you know, psychologically,
you can't go that crazy again while you're still alive, right.
1920S didn't come back till the lesbian,
maybe the 1980s or something generationally was over.
And yet already in 2001,
we had the incipient housing bubble and and somehow some other shows
kept going for a, for 20 years. Well, with 25 years narrative,
like the whole narrative behind the great moderation.
I mean, I remember just like clutching my head.
How can you tell a story that we've banished volatility?
Yes, it's always,
I always think of the 1990 narrative was the new economy and you
lied about growth.
And then the two thousands narrative was the great moderation
and you lied about volatility.
And and maybe, you know, the sort of the, the,
the 2000 tens one is a secular stagnation where you lie about the,
the real interest rates,
because the other two don't work anymore and sort of a complicated way,
these things connect.
But but yes new economy sounded very bullish in the nineties,
great moderation was still a reason to long stocks, but sounds less bullish.
And then secular stagnation in the Larry Summers forms to be specific.
What we're talking about means again, that you should be long,
the stock market stock,
market's going to keep going up because things are so stagnant.
The real rates will stay low forever. So so they are equally bullish narratives,
although they sound less bullish over time.
So that effectively we need
what happened with the roaring twenties followed by the depression was that
there was a general skepticism and here the scepticism seems to be specific to
something different in each incarnation that you keep having bubbles with some
lie you have yet to tell.
Yes, but I think,
and of course I think the crazy cut on the twenties and thirties was that we
didn't need to have as big of a crash. You could,
you could have probably done all sorts of intervention because the 1930s,
it was still a period that was very healthy in terms of background scientific,
technological innovation.
If we just rattle off what was discovered in the 1930s that had real world
practical things was the aviation industry got off the ground,
the talkies and the movies got got going.
You had you had the plastics industry, you had the you know,
you had secondary oil recovery, you had household appliances got developed.
And and as you know, by 1939,
there were three times as many people who had cars in the U S as in 1929.
And so it was, there was this crazy,
a tailwind of scientific and technological progress that then somehow got no
badly mismanaged financially by yeah. Whoever you blame the crash on.
Huh. And so I think that's, that's what actually happened in the thirties.
And then and then we tried to sort of manage all these financial indicators
much more precisely in recent decades.
Even though the tailwind wasn't there at all.
So let me focus you on two subjects that
are important for trying to figure out the economy going forward.
I'm very fond of perhaps overclaiming
but making a strong claim for physics that physics gave us atomic
devices, it nuclear power and ended world war II definitively.
It gave us the semiconductor,
the worldwide web theoretical physicists invented molecular biology.
The communications revolution,
all of these things came out of physics and you could make the
argument that physics has been really underrated as powering the world economy.
Right. On the other hand,
it's very strange to me that we had the three dimensional structure of DNA in
53.
We had the genetic code 10 years later and we've had
very little in the way of,
let's say gene therapy to show for all of our new found knowledge.
I have doubt that we are learning all sorts of new things to your point about
specialization in biology,
but the translation hasn't been anything like what I would have imagined for
physics.
So it feels like somehow we're in a new orchard and we're spending a lot of time
exploring it, but we haven't found the low hanging fruit in biology.
And we've kind of exhausted the physics orchard because what we found is so
exotic that, you know, whether it's two black holes colliding or, you know,
a third generation of matter or cork substructure,
we haven't been able to use these things. Are we somehow between revolutions?
Well, I th I, I would say the question of what's going on in, but I'm,
I wouldn't bet I wouldn't, I'd be pessimistic on physics generally.
So that's sort of be my bias on that one.
Biology, I continue to think we could be doing a lot more,
we could be making a lot more progress and you know,
the pessimistic version is that no biology is just someone as much harder than
physics and therefore therefore it's been slower going the the
more optimistic one is that the culture is just broken. We have,
we've had very talented people go into physics. You go into biology. If you're,
if you're less talented, you know, it's sort of like a,
you can sort of think of it in Darwinian terms.
You can think of biology as a selection for people with bad math genes.
And if you, if you're, if you're good at math, you go into physics,
go to math or physics, or at least chemistry.
And and, and biology, we sort of selected for 'em, you know,
all of these people who were somewhat, somewhat less talented. So that might be,
that might be a cultural explanation for for why it's been,
been slower progress. But I mean, we had people from physics,
we had like teller and Feinman and crikey,
there's no shortage of,
I mean, you know, to my earlier point,
molecular biology anyway, was really founded by physicists.
More than more than any other thing,
I think why is it that in an era
where physics is stagnating,
we don't see these kinds of minds.
Like I'm a little skeptical of that, that theory. Well, I, I, I'm not,
I'm not so sure. Like if you, you know,
if you're a string theory person or even sort of an applied experimental
physicist, I don't think you can that easily reboot into biology. I mean, these,
you know, these disciplines have gotten sort of more more rigid.
It's, it's, it's pretty hard to, to transfer from one area to another. I had,
I know I went, when I was an undergraduate,
you still had some older professors who were polymaths,
who knew a lot about a lot of different things, right?
This is, I think the way one should really think of, you know,
Watson and Crick or men, or,
or tell her they, they, you know, they,
they were certainly world-class and in their field,
but also like incredible and transgressive.
And and, and, you know, the, the,
the cultural or institutional rule is no polymath allowed.
You know, you can be, you can be narrowly specialized,
and if you're interested in other things,
you better keep it to yourself and not tell people,
because if you say that you're interested in computer science and also
music or studying the Hebrew Bible well, that's that's, that's just a,
that must mean you're just not very serious about computer science. Well, sorry.
I totally want to riff on this point,
because I think you've hit the nail on the head to my way of thinking.
The key problem is if you go back to our original contention, which is,
is that there is something universally pathological about the stories that
every institution predicated on growth has to tell about itself.
When things are not growing,
the biggest danger is that somebody smart inside of the institution
we'll start questioning things and speaking openly.
And it seems like the pulley mouse would be the people who could connect the
dots and say, you know, there's not that much going on in my department.
There's not much going on in this department over here,
not that much going on in this department over there. And those people are very,
very dangerous. You know, one of my,
one of my friends I studied physics at Stanford in the late nineties.
His advisor was this professor at Stanford, Bob Laughlin, who I'm sure,
you know, the late nineties,
brilliant physics guy, late nineties, he gets a Nobel prize in physics,
and he suffers from these, the Supreme delusion.
But now that he has a Nobel prize,
he has total academic freedom and he can do anything he wants to,
and he decided to direct it at you know, I mean,
there are all of these areas who should probably shouldn't go into each patient
question, climate science,
there are all these things one should be careful about,
but he went into an area of far more dangerous than all of those.
He was convinced that there were all these people in the,
in the university who were doing fake science for wasting government money on
fake research that was, was not really going anywhere.
And he started by and investigating other departments start with the biology
department at Stanford university.
And you can imagine this ended catastrophically for professor Loughlin,
you know,
a graduate students couldn't get PhDs. He no longer got funding,
Nobel peace prize and sort of Nobel prize in physics,
no production whatsoever.
Julian swinger fell out of favor with the physics community,
despite being held in its highest regard and having a Nobel prize.
And he used the epigram and a book where he wanted to redo quantum field
theory around something. He called source theory. He said,
if you can't join them, beat them.
And I think it comes as a shock to all of these people that there is no level
you can rise to in the field that allows you to question the
assumptions of that field, right. It's like, you know,
you're sort of proving yourself. You're, you know,
you're getting your PhD or getting your tenured position.
And then at some point you think you would think that you've proven yourself and
you can, you can talk about the whole and not just the parts,
but you're never allowed to talk about more than the parts. You know,
like the the person in the university context,
the core of the class of people who are supposed to talk about the whole, right.
I would say our university presidents,
because they are presiding over the whole of the university and they should be
able to speak to what the nature of the whole is,
what sort of progress the whole is making is the,
what is the health of the progress of the whole. And and you know,
we, we, we don't,
you know,
we certainly do not pick university presidents who think critically about these,
these questions at all. Well, I remember
discussing with a,
a president of a very highly regarded university.
He came to me, he said,
can you explain how your friend Peter teal thinks,
because I just had a conversation with him and I could not convince him
that the universities were doing a fantastically in this university in
particular, like, how does he come to this conclusion?
And I said, well, look, Peter,
the doesn't come you know, with a PhD,
but let me speak to you in your own language.
I started going department by department talking about the problems of
stagnation.
It was very clear that there was no previous experience
with any kind of informed person making such an argument. I mean,
this was a zero day exploit, but it's all. Yeah, but it's,
but you know, in some sense,
if you're a president of a university, you know, you, you should,
you probably don't want to talk to people that dangerous.
You want to avoid them.
And you don't want to have such disruptive thoughts because you have to convince
the government or alumni or whoever to keep donating money. That everything's,
everything's wonderful and great.
And and no,
I think one has to go back quite a long time to to even
identifying any university presidents in the United States who said things that
were distinctive or interesting or, or powerful. Well, you know, there was,
you know, there was Larry Summers at Harvard, no, a decade and a half ago,
and try to do like the most minuscule critiques imaginable and God, you know,
crucified. But you know, I don't think of, you know,
I don't think of summers as a particularly revolutionary thinker.
Well, he,
he was possessed of an idea that the
intellectual elite in which he ended out at least saw himself a part of had the
right to transgress boundaries.
And I think what's stunning about this is the extent to which this
breed of outspoken
disruptive intellectual has no place left inside of
the system from which to speak, but it's, you know,
there's, it's not that surprising, like in a, in a healthy system,
you can have wild descent and it's not threatening because everyone knows the
system is healthy and unhealthy system.
The descent becomes much more dangerous. So so you know, this is,
and I think that's, it's, it's, it's, it's,
it's not that surprising that there's always a, the one,
one riff I have on this is always, you know, if you,
if you think of a left wing person as someone who's critical of the structures
of our society, right.
There's a sense in which we have almost no left-wing professors left. I mean,
it's right in the
[inaudible] is still there as sort of a last remnant of some
claim that no longer exists. Left-Wing in the sense of,
let's say just being critical of the institutions, they're a part of, right.
And there may be some that are no much older.
So if you're maybe in your eighties, we can, you know,
we can pretend to ignore you or, you know,
it's just what happens to people in their eighties. And but but I don't,
I don't see, you know, younger professors in there,
let's say forties who are deeply critical of the, of the university structure.
I think it's just it's just not, you know, you can't have that.
It's like if you come back to something as, as as reductionist,
as the ever escalating student debt, right. You know, the bigger the debt gets,
you can sort of think, what is the one point 6 trillion? What does it pay for?
And in a sense,
it pays for one point $6 trillion worth of lies about how great the system is.
And so the more the debt goes, the crazier the system gets,
but also the more you have to tell the lies and these,
these things sort of go together. No, it's not a stable sequence at some point,
this breaks.
Again, I would, I would bet on, you know, a decade, not a century.