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Ask Me Anything (AMA) has been a Reddit staple that helped popularize the social media platform. It delivered some unique, personal, and, at times, fiery interviews between public figures and people who submitted questions. The Q&A format became so popular that many people host so-called AMAs these days, but the main subreddit has been r/IAmA, where the likes of then-US President Barack Obama and Bill Gates have sat in the virtual hot seat. But that subreddit, which has been called its own "juggernaut of a media brand," is about to look a lot different and likely less reputable.
On July 1, Reddit moved forward with changes to its API pricing that has infuriated a large and influential portion of its user base. High pricing and a 30-day adjustment period resulted in many third-party Reddit apps closing and others moving to paid-for models that developers are unsure are sustainable.
The latest casualty in the Reddit battle has a profound impact on one of the most famous forms of Reddit content and signals a potential trend in Reddit content changing for the worse.
If we want to move toward a world that meets everyone’s needs, we will need to get serious about the role of money on the left.
Gov. Ron DeSantis of Florida at a bill-signing event this month.
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Orans are sacred lands in the Thar Desert that are are being developed for wind energy projects. Nisha Paliwal argues that while wind energy is considered sustainable, it is experienced as violent extractivism by nearby village communities.
The post The Problem with Wind Farming on Rajasthan’s Sacred Lands appeared first on Edge Effects.
Guest post by Brandon Bolte
On April 15, the paramilitary Rapid Support Forces (RSF) surprised many Western observers when it launched an assault against the Sudanese Armed Forces (SAF) in Khartoum. Led by Mohamed Hamdan Dagalo (“Hemeti”), the RSF previously fought for the Sudanese regime against rebels for years. In 2019, it participated in a coup alongside General Abdel Fattah al-Burhan of the SAF that ousted Sudan’s long-time dictator, Omar al-Bashir. Both generals have since been on a transitionary council meant to shape a new government before popular elections take place. In the 11 days since the violence in Khartoum began, over 400 people have been killed, thousands are trying to flee the capital, and there are signs of the conflict spreading to other parts of the country.
Transitions to democracy are usually rocky, but coups can lead to democratization when coupled with the kind of popular mobilization seen in Sudan. The irony of the current situation is that at one point the RSF was considered by al-Bashir as his “praetorian guard,” meant to deter the SAF from staging a coup. Coup-proofers aren’t usually successful coup-perpetrators. Moreover, the current rupture was caused by a disagreement between the two generals over how the RSF might be integrated into the army’s command structure. Why is the proposed merging of forces so contentious? What do we expect the long-term outcome of this conflict to be?
In a study published in International Studies Quarterly, I unpack the politics of how governments try to manage, regulate, and contain militias like the RSF. I describe how and why states and professed pro-state militias compete for power at one another’s expense. Viewed in this light, the outbreak in Khartoum is part of a predictable, if not inevitable, vicious spiral of poor militia management politics over the course of the last two decades.
Pro-government militias are commonly defined as organized armed groups allied with the state but are not formally part of the official security forces. These groups range from well-equipped paramilitaries designed to supplement the regular army to localized civil defense forces meant to hold territory and extract local information about insurgents. Sometimes they are tasked with carrying out human rights violations like mass killings or genocide, allowing the government to evade accountability. Professionalized militias are also used by certain types of dictators to counterbalance the official military in order to prevent coups d’état.
The challenge for governments employing militias is that militias themselves are perfectly aware the state could eliminate them once they are no longer needed. This is why governments often keep their auxiliaries contained in some way, by actively monitoring them or restricting their capabilities. Otherwise, these militias could switch sides in a conflict, restart a war, be more difficult to disintegrate or integrate, or otherwise undermine the state’s long-term ability to govern.
Weak states facing capable rebellions, however, are usually unable to regulate and contain their militias. Instead, they have to focus on short-term threats from insurgents, allowing militia allies to have free reign. The consequence is that militia groups have incentives to take advantage of these windows of opportunity to “bargain” with the state for resources that they can eventually use to stave off their own future demise.
The RSF is a reorganization of disparate Arab militias called the Janjaweed, which were remobilized from scattered murahileen groups after a coalition of rebel groups shocked Khartoum by seizing an air force base in 2003. The SAF and Janjaweed militias then perpetrated a genocidal campaign in Darfur, leading to over 200,000 deaths.
Over time, the combination of weak state capacity and a significant rebel threat drove al-Bashir’s regime to become dependent on militias for survival. Militia leaders knew this and pursued their own interests unabated. Many leaders profited from looting and extortion during the war, so when the Darfur Peace Agreement (DPA) was signed in 2006 with a provision to disarm the Janjaweed, many, including Hemeti’s faction, revolted against the state. Eventually, Khartoum weakened Hemeti enough to force him to negotiate. There the government again co-opted Hemeti by providing his militia more weaponry, financial rewards, and eventually legitimacy by reorganizing it into the RSF. Al-Bashir soon brought the RSF out from under the command of the National Intelligence and Security Services, ensuring the group’s independence from the constraints of the state.
In the end, al-Bashir’s failure to contain these militias was part of a vicious cycle of his own doing. His growing dependency on militias like the RSF afforded Hemeti multiple windows of opportunity to increase his own capabilities, which he then used to resist his group’s demobilization. Now, even integration is worth resisting for Hemeti, since it would effectively represent the dissolution of his autonomy and influence.
A durable resolution can only occur if the RSF loses its bargaining power. This may require immediate international commitments by Russia, China, Saudi Arabia, and the United Arab Emirates to stop supplying weapons to the RSF and/or the SAF suppressing Hemeti’s forces to a point where the latter has incentives to negotiate but not retreat to remobilize for large-scale war. Unlike the immediate post-DPA period, however, appeasement cannot come in the form of greater autonomy, resources, and capabilities if the end goal is political stability. Al-Burhan knows this, and given the SAF’s own involvement in repression and mass killing, the military will resist appeasing Hemeti in an effort to signal to the pro-democracy movement a desire to turn a new leaf.
The problem is that the RSF is situated with considerable bargaining leverage and has every incentive to use force to preserve the status quo. “Power is as power does.” Temporary ceasefire efforts notwithstanding, until the RSF is demobilized or neutralized, Sudan’s pro-democracy advocates will be sidelined while military strongmen violently compete to fill the void in Khartoum.
Brandon Bolte is a 2022–23 Peace Scholar Fellow with the US Institute of Peace and a Postdoctoral Teaching Fellow at Penn State University. He will start as an assistant professor of political science at the University of Illinois Springfield in the fall. The views expressed in this commentary are his own and do not necessarily reflect the views of the US Institute of Peace.
For the last two years, climate tech was on a tear. To be fair, so were a lot of other sectors. But when a slowdown hit tech investing in the middle of last year, climate tech startups bucked the trend and kept racking up the deals.
Now the party might be over, if preliminary data from a new report holds up.
Climate tech deal-making in the first quarter registered $5.7 billion across 279 deals, according to a new PitchBook report. The amount raised was down 36% year over year with 35% fewer deals. That’s certainly suggestive of a correction.
Investors have been keeping a closer eye on their pocketbooks as fears of a recession continue to rumble through the markets. And yet key economic indicators show a striking resilience in the U.S. economy, with strong hiring keeping unemployment low while consumer sentiment remains high. That hasn’t stopped economists and big names on Wall Street from continuing to predict a recession in the coming months. (Certainly not the first time they’ve done that.)
Still, all that noise tends to give investors the jitters. Since no one wants to be left holding the bag, investor sentiment has a way of becoming a self-fulfilling prophecy. If you’re a startup squeezed for cash, you’ve undoubtedly heard from your investors, and it may feel like a recession is already here.
Yet climate tech’s resilience has led some to call it the ultimate “recession proof” investment. Is that still true?
Maybe.
Let’s break it down. For one, these are preliminary figures looking at data through March 31. It’s hard to say how many deals closed in the last few days of the quarter that weren’t picked up by this report. It might be billions!
Climate tech tapped the brakes in Q1. Will the slowdown continue? by Tim De Chant originally published on TechCrunch
Eight years ago, I wrote about a dominant and pernicious ideology that features two components:
Component one: that we are living in a administrative regime built on technocratic rationality whose Prime Directive is, unlike the one in the Star Trek universe, one of empowerment rather than restraint. I call it the Oppenheimer Principle, because when the physicist Robert Oppenheimer was having his security clearance re-examined during the McCarthy era, he commented, in response to a question about his motives, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”
The topic of that essay was the prosthetic reconstruction of bodies and certain incoherent justifications thereof, so I went on: “We change bodies and restructure child-rearing practices not because all such phenomena are socially constructed but because we can — because it’s ‘technically sweet.’” Then:
My use of the word “we” in that last sentence leads to component two of the ideology under scrutiny here: Those who look forward to a future of increasing technological manipulation of human beings, and of other biological organisms, always imagine themselves as the Controllers, not the controlled; they always identify with the position of power. And so they forget evolutionary history, they forget biology, they forget the disasters that can come from following the Oppenheimer Principle — they forget everything that might serve to remind them of constraints on the power they have … or fondly imagine they have.
In light of current debates about the development of AI – debates that have become more heated in the wake of an open letter pleading with AI researchers to pause their experiments and take some time to think about the implications – the power of the Oppenheimer Principle has become more evident than ever. And it’s important, I think, to understand what in this context is making it so powerful.
Before I go any further, let me note that the term Artificial Intelligence may cover a very broad range of endeavors. Here I am discussing a recently emergent wing of the overall AI enterprise, the wing devoted to imitating or counterfeiting actions that most human beings think of as distinctively human: conversation, image-making (through drawing, painting, or photography), and music-making.
I think what’s happening in the development of these counterfeits – and in the resistance to asking hard questions about them – is the Silicon Valley version of what the great economist Thorstein Veblen called “trained incapacity.” As Robert K. Merton explains in a famous essay on “Bureaucratic Structure and Personality,” Veblen’s phrase describes a phenomenon identified also by John Dewey – though Dewey called it “occupational psychosis” – and by Daniel Warnotte – though Warnotte called it “Déformation professionnelle.” It is curious that this same phenomenon gets described repeatedly by our major social scientists; that suggests that it is a powerful and widespread phenomenon indeed.
Peggy Noonan recently wrote in the Wall Street Journal of the leaders of the major Silicon Valley companies,
I am sure that as individuals they have their own private ethical commitments, their own faiths perhaps. Surely as human beings they have consciences, but consciences have to be formed by something, shaped and made mature. It’s never been clear to me from their actions what shaped theirs. I have come to see them the past 40 years as, speaking generally, morally and ethically shallow—uniquely self-seeking and not at all preoccupied with potential harms done to others through their decisions. Also some are sociopaths.
I want to make a stronger argument: that the distinctive “occupational psychosis” of Silicon Valley is sociopathy – the kind of sociopathy embedded in the Oppenheimer Principle. The people in charge at Google and Meta and (outside Silicon Valley) Microsoft, and at the less well-known companies that are being used by the mega-companies, have been deformed by their profession in ways that prevent them from perceiving, acknowledging, and acting responsibly in relation to the consequences of their research. They have a trained incapacity to think morally. They are by virtue of their narrowly technical education and the strong incentives of their profession moral idiots.
The ignorance of the technocratic moral idiot is exemplified by Sam Altman of OpenAI – an increasingly typical Silicon Valley type, with a thin veneer of moral self-congratulation imperfectly obscuring a thick layer of obedience to perverse incentives. “If you’re making AI, it is potentially very good, potentially very terrible,” but “The way to get it right is to have people engage with it, explore these systems, study them, to learn how to make them safe.” He can’t even imagine that “the way to get it right” might be not to do it at all. (See Scott Alexander on the Safe Uncertainty Fallacy: We have absolutely no idea what will result from this technological development, therefore everything will be fine.) The Oppenheimer Principle trumps all.
These people aren’t going to fix themselves. As Jonathan Haidt (among others) has often pointed out – e.g. here – the big social media companies know just how much damage their platforms are doing, especially to teenage girls, but they do not care. As Justin E. H. Smith has noted, social media platforms are “inhuman by design,” and some of the big companies are tearing off the fig leaf by dissolving their ethics teams. Deepfakes featuring Donald Trump or the Pope are totally cool, but Chairman Xi gets a free pass, because … well, just follow the money.
Decisions about these matters have to be taken out of the hands of avaricious professionally-deformed sociopaths. And that’s why lawsuits like this one matter.
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Effy is at a crossroads. The energy renovation company based in France is doing well, but it is addressing a market that is much bigger than anticipated. That’s why it is making a bet. The company just closed a €20 million funding round (roughly $22 million at today’s exchange rate) from Felix Capital. This is the first external funding round for the company.
“Our story starts 15 years ago,” founder and CEO Frédéric Utzmann told me. “We tackled this market very early on because we really believed in it.”
At first, Effy wasn’t a tech-enabled startup. The company worked on energy renovation for public buildings, residential buildings and industrial facilities. “We started with heavy energy consuming projects with a business that was very much ‘brick and mortar,’ old school. But this allowed us to develop the company in a self-financed and profitable way,” Utzmann said.
Quickly after that, the company started acquiring websites and services that were useful for energy renovation projects. In 2011, the company acquired Calculeo, a tool that helps you calculate how much you can get in public subsidies for energy renovation work. In 2015, Effy acquired Quelle énergie, a VC-backed startup that could calculate how much money you would save by insulating your roof, changing your windows and more.
At the same time, Effy’s traffic started growing rapidly. Search engine optimizations led to more organic traffic. Effy started building a significant network of contractors and redirecting home owners to these partners.
In 2019, Effy chose to focus exclusively on small residential projects. Engie acquired its B2B activities for an undisclosed amount. Effy chose to reinvest everything in product development and growth. In addition to organic traffic, the company spent some money on brand awareness ads (like TV spots), as well as Google and social media ads.
And it has paid off, as Effy attracted 18 million visitors to its websites in 2022. Some people just want to use Effy’s tools to see how much money they could save with energy renovation projects. Others go one step further and submit a request for some construction work.
Effy then contacts those potential customers to understand their needs. To give you a sense of Effy’s scale, last year, the company ended up contacting 500,000 individuals and completing 100,000 energy renovation projects. Effy handled €800 million in transactions on its platform.
Effy can still improve its service in several ways. In particular, its marketplace is still mostly a lead generation product for energy renovation contractors. When potential clients want to move forward with their home projects, they are connected with independent contractors.
These contractors supply quotes, which means that it creates some friction for the end customer. They have to compare quotes between multiple contractors and pick one.
Of course, Effy spends a lot of time curating its marketplace. There are currently 3,800 contractors working with Effy. The company gathered 16,000 reviews and the average rating is 4.8 stars.
Similarly, Effy can handle the paperwork to obtain subsidies for energy renovation work. The company takes a cut on this administrative process and charges contractors a small nominal fee for new potential clients.
Effy now wants to switch to a first-party marketplace model. Clients interact directly with Effy and negotiate the quote with Effy. “Historically, we had an almost 100% third-party business — it represents 90% of our business today,” Utzmann said.
It opens up some new possibilities on the product front. First, there are a lot of optimization possibilities when it comes to creating a quote, sourcing materials and everything that isn’t the construction work itself. This way, contractors can accept more jobs as Effy handles the rest.
Second, Effy could start offering some financing options with partners. For small amounts, Effy can use “buy now, pay later” products. For bigger sums, Effy has an internal team that can negotiate credit lines with Sofinco and Cetelem.
Sure, energy renovation projects can be expensive. But customers often end up paying smaller bills once these projects are done. Effy could even look at the impact on your bills thanks to smart meters.
“Let’s say you pay €2,000 per year and you will pay €1,000 per year starting tomorrow. You could set aside €800 to pay back your investments. You end up saving less because you have to pay something back, but your house is also worth more money,” Utzmann said.
In addition to this product roadmap, Effy’s business could end up growing rapidly thanks to favorable market conditions. The war in Ukraine has had a significant impact on energy bills.
At the same time, the European Union wants to finance projects that have a positive impact on climate change. Residential buildings indirectly generate a ton of carbon emissions as it requires a lot of energy to heat and cool them. Many EU countries are rolling out generous subsidies to foster energy renovation projects.
Finally, Effy is only available in France for now. The company could expand to other European countries in the future, starting with Germany and Spain.
After bootstrapping for 15 years, energy renovation company Effy raises $22 million by Romain Dillet originally published on TechCrunch
Pity Donald Trump. He spent four years in office tearing up trade agreements and ranting about rewriting old ones, all to little avail. Now, a key U.S. climate law is doing more to change the dynamics of international trade than any blustering and bullying ever did.
The Inflation Reduction Act has been hailed as a win for domestic producers of minerals that are critical to electric vehicles and other hallmarks of the decarbonized economy. The most impactful so far have been the provisions that require a minimum amount of domestic sourcing and processing to be eligible for the $7,500 EV tax credit. That language alone has spurred tens of billions of dollars of investment in the U.S. battery supply chain.
But there’s no way the U.S. can produce all that’s needed — the country simply doesn’t have enough reserves, while China has a lock on many parts of the market. So the law also includes a handy loophole qualifying minerals from countries with which the U.S. has a free trade agreement. The law already qualified “North American” suppliers, and the free trade language opens the door further.
Late on Monday, the door opened a little wider as the U.S. and Japan announced a trade deal encompassing cobalt, graphite, lithium, manganese and nickel, all minerals that are key components of EV batteries. The agreement opens up both markets to new supplies of the minerals, allowing battery manufacturers and automakers to benefit from the IRA’s minerals requirement.
For now, Japan is the only country to successfully negotiate a new agreement in the wake of the IRA, but it probably won’t be the only one. The EU, which has made no secret about its displeasure with the new law, is also in talks with the U.S.
In the seven months or so since the IRA was passed, the global landscape for critical minerals and battery manufacturing has changed rapidly, and a potentially steady stream of new free trade agreements promises to keep things fluid. For founders and investors alike, that injects a fresh dose of uncertainty.
Why startups should care about geopolitical repercussions of US climate law by Tim De Chant originally published on TechCrunch
In my previous article, I explained five ideas. First, that computer chips are the fundamental building block of the modern economy, much more so than oil. Second, that because of the enormous economies of scale in the industry, semiconductor production—especially of the most advanced ones—is incredibly concentrated in Taiwan and South Korea, a region with high geostrategic instability. Third, that the United States controls the most important part of the value added in the semiconductor industry (since the physical production of semiconductors is only one step in the industry, which also requires design, software, etc.). Fourth, that for the past decade, China has been trying to capture a larger share of this global value added. And fifth, given the military repercussions of the Asian giant’s progress in semiconductor production, the United States launched an aggressive and unusual campaign of restrictions on the export of technology in this sector to China, with the announcement of new regulations on October 7, 2022, which heralded a new stage in the world economy.
Today I will explain how we have arrived at this situation and outline future prospects for the coming years. It is a complex story, which I will have to summarize and—much to my regret—in some cases simplify (a more extensive treatment appears in Chris Miller’s 2022 book, Chips War, although events have accelerated since the book’s publication).
Recent History
For many decades, U.S. semiconductor policy was relatively lax. The idea was that the U.S. could always “run faster” and stay two generations ahead of its competitors with semiconductors (this strategy was called “sliding scale”). Though the cheapest semiconductors were manufactured in East Asia, this benefited American companies, which could control their production costs and keep the most profitable links of the value-added chains (programming, marketing, etc.) in the United States. In addition, this division of labor helped to foster strategic allies surrounding China (Japan, South Korea, and Taiwan).
This U.S. policy had one exception: the Soviet Union. From the American perspective, limiting the Soviet Union’s access to the most advanced technology meant that Soviet military forces could not adequately compete. In reality, the only real advantages of export limitations on the Soviet Union were rhetorical. Its socialist system was so flawed at its roots that it could never support a powerful semiconductor industry. Much of East Germany’s economic ruin came precisely from trying to mass-produce semiconductors under a system as absurd as a centrally-planned economy.
Most of your material possessions, except for your house, are probably not made in your home country—from the electronic device you are using to read this to the clothes you are wearing
These pragmatic considerations (advantages of the international division of labor, aid to East Asian economies, the inefficiency of socialism) were complemented by economic ideas that in the 1980s and 1990s emphasized the advantages of international trade and distrusted governmental industrial policy. As Michael Boskin once, evidently, said: “Potato chips, computer chips—what’s the difference?”
Boskin had a point. Look around you, dear reader. Most of your material possessions, except for your house, are probably not made in your home country—from the electronic device you are using to read this to the clothes you are wearing. This incredible internationalization of the economy has also meant, for instance, that for my home country, Spain, we have been able to emerge from the morass of economic autarky that resulted from decades of misguided policies. Internationalization works, and Spain is the best example: in 1960, Argentina had a per capita income 19 percent higher than ours, today Spain enjoys more than double Argentina’s per capita income.
The problem, of course, is that international trade is a very good idea when your partner does not intend to use the profits from this trade to undermine your national security. There is no perfect trading partner (as there is no perfect person) and every partner is going to overstep the mark on more than one occasion (as Spanish, Danish, or Slovakian companies often do). But everything is a question of proportionality. Driving at 26 mph in a 25-mph zone is not the same as driving at 190 mph.
Yes, Japanese or Korean companies often overdid it in the ’80s and ’90s, but all within a basically reasonable margin. Even China, from the beginning of its economic reform in 1979 until about 2012, behaved in a way that could be accommodated by international trade rules. Again, I stress, China was not perfect, but no other nation was.
As I pointed out in my previous article, the problem is that Xi Jinping came to power in 2012 with the idea of breaking the deal. Xi distrusts international rules (both political and economic). He thinks that the United States is in terminal decline, that Europe is a pygmy obsessed with irrelevant issues such as human rights and democracy, and that the time has come for China to retake its rightful place in international relations, merited by its history, population, and economy. Moreover, this repositioning must be done through the iron grip of the Communist Party, which is the only institution that, in his opinion, can ensure China’s future. And all this, of course, involves semiconductors: the backbone of the entire modern economy.
In 2014 and 2015, the United States began to realize that Xi is different from his predecessors. The final years of Obama’s presidency marked growing concern over China’s new aggressive style, both internally (increased repression, massive concentration camps in Xinjiang) and externally. Suddenly, the question seemed no longer to be whether Chinese companies are going to take a 5-percent market share from them in the semiconductor industry in a somewhat crooked way. Instead, it was about a geostrategic rival that wants to reorganize the world map.
The Opening Shot
Although the details of this shift in U.S. foreign policy are complex, for our issue, semiconductors, the opening shot was fired in October 2016 when Commerce Secretary Penny Pritzker warned in a speech to the Center for Strategic and International Studies in Washington, D.C., that there are “new attempts by China to acquire companies and technology based on their government’s interests—not commercial objectives.” And before that, “The U.S. government will make clear to China’s leaders at every opportunity that we will not accept a $150-billion industrial policy designed to appropriate this industry.”
The unexpected electoral victory of Donald Trump a few days after Penny Pritzker’s speech reinforces this new vision. There is a fundamental and underappreciated continuity in U.S. foreign policy from Obama’s second term through Trump to Biden.
The first battle in this U.S.–China standoff centered on ZTE and Huawei. These two companies specialized in telecommunications equipment, a particularly tricky subject. Several European governments learned during the last few years that their ministers’ cell phones had been hacked and their private conversations spied on by unknown third parties. The problem here was not just that ZTE and Huawei violated too many intellectual property rules and skirted sanctions on Iran and North Korea, but that both companies had close relationships with the Chinese government—one being semi-public and the other with opaque shareholding.
ZTE was fined in 2017 for selling banned equipment to Iran and North Korea, and after much back and forth, the company remains sanctioned in the United States, with a recent prohibition on exporting telecommunications equipment. The case of Huawei is similar, with a ban on purchases of this company’s products by the federal government in 2018 and additional sanctions in the years that followed. There was the issue of controlling such an important technology as 5G, where Huawei had significant advantages. And in 2022 it was SMIC’s turn to be banned, due to its close links with the Chinese armed forces.
China’s reaction to this first battle was interesting. Of course, it complained in public and protested to international organizations (there are complex issues here of international trade law and the jurisdiction of the World Trade Organization). But on the whole, there was little retaliation. Did Xi think that this was not the time to escalate the confrontation? Or that perhaps the United States would tire of these battles, as the price of phones and other telecommunications equipment went up, and the sanctions would fade over time, especially given Trump’s volatile nature? Or did he think simply that the sanctions were not very effective and therefore not worth fighting over?
Then came COVID and everything accelerated. In a production-constrained world, securing semiconductor supply was a clearer priority than ever. Significantly, one of the few companies to receive exemptions from the draconian COVID containment policy by the Chinese government was Yangtze Memory Technologies. Moreover, we all became aware of the lack of chips and the enormous risks that the concentration of production in Taiwan and South Korea carried in a world where the old rules of collective security were being pulverized by Putin’s aggression in Ukraine and China’s change of rhetoric regarding Taiwan.
And as in the 1980s, faddish ideas tend to reinforce these geostrategic tensions. Although the empirical evidence that industrial policy works is rather scant (for every example where it has worked, there are five examples of failure—a pretty bad batting average), it came back into vogue a few years ago in certain circles. My interpretation is that this resurrection of interest in industrial policy is based on a clear reality—that is, the poor productivity growth in many advanced economies since 2000 and the consequent stagnation of wages. But that diagnosis is incorrect (again, with a few exceptions): this stagnation has more to do with demographics than with any other factor.
New U.S. Strategy
It is the confluence of all these forces (economic, geostrategic, and ideological) that led Jack Sullivan, the National Security Advisor for the Biden administration, to give two key speeches, one on September 16, 2022 and another on October 12, 2022. I invite the reader to read the two speeches in their entirety. It is better to start with the second speech, which announced the new U.S. national security strategy, and then go to the first one, which, although delivered earlier, describes in more detail the specific measures regarding semiconductors.
Here are some of the fundamental ideas of these two speeches (I am merely summarizing what Sullivan said, not agreeing or disagreeing with it):
What does “small yard, high fence” mean? That, instead of establishing very broad restrictions on the export of technologies, in this case semiconductors, the United States is going to focus on creating very strong barriers (the “high fence”) at very specific pressure points (the “small yard”; for example, as I explained in my previous article, on extreme ultraviolet light photolithography machines and the lasers they use), which are essential in the manufacture of more advanced semiconductors. It is this “robust guardrails” strategy that is reflected in the October 7, 2022 restrictions.
My reading of the situation is that at least in the short term, the United States will control enough pressure points to make life seriously difficult for the Chinese semiconductor industry.
Will this new U.S. strategy work? There are several points to consider. First, the United States does not control all the most advanced technologies. In particular, we have the leading lithography company, ASML, located in the Netherlands; and a leading company in the silicon wafer industry, Tokyo Electron in Japan (the other three key companies here, Applied Materials, Lam Research and KLA are U.S. companies and therefore fully subject to federal government restrictions).
The United States appears to have secured some government cooperation from the Netherlands and Japan, although its effectiveness remains to be seen. Technology companies have a long history of “obey but don’t comply” on these issues. ASML does not seem to be in the mood to be overly helpful, and since some of their equipment does not depend on U.S. patents that are subject to possible restrictions, they have a certain degree of freedom. Japan, on the other hand, with China on the prowl, appears to be more willing to cooperate with the United States. And then there is Taiwan, which is in a complicated situation: it neither wants to lose its technological advantage by setting up factories in the United States (which also makes it less important for the United States to defend), nor to unnecessarily provoke China.
My reading of the situation (while cautioning that I lack access to insider information on the trade secrets of these companies) is that at least in the short term, the United States will control enough pressure points to make life seriously difficult for the Chinese semiconductor industry.
How Will China React?
The second point to consider is China’s ability to react to these restrictions. I do not buy the argument made by opponents of the new export restrictions. They claim the restrictions will incentivize China to develop its own industry. But the reason the United States approves the sanctions is that China is already doing this. The incentive already existed! Perhaps it is stronger now, but the difference is marginal.
In the past, China has been very creative in solving its problems of access to forbidden technologies, as it did during the development of satellites in the 1990s (I recommend Hugo Meijer’s book about the U.S. restrictions on technological exports to China since 1979). This past success suggests that in a few years, China may have made up much of its backlog in semiconductor manufacturing, especially in a world of high technological diffusion. For example, RISC-V is a free hardware instruction set that has improved tremendously in recent years and may change the future of the industry for some time to come. There are no secrets in RISC-V: it’s all in the network.
If China catches up to the United States in 2030, rather than 2025 (to posit two arbitrary years), then thanks to restrictions, that is five years of additional geostrategic advantage. Foreign policy is about surviving tomorrow.
As before, this argument about China’s ability to catch up is often presented as a reason not to impose restrictions. Again, I believe this argument is flawed. From the U.S.’s perspective, any additional delay in China’s convergence on the technological frontier is a net gain. If China catches up to the United States in 2030, rather than 2025 (to posit two arbitrary years), then thanks to restrictions, that is five years of additional geostrategic advantage. Foreign policy is about surviving tomorrow. The day after tomorrow, we shall see.
But it is not just a question of short-sightedness or short-termism. The United States believes that the reputational cost with China of these new restrictions is small (relations were already broken, so there is not much “continuation value” to maintain) and that in the long term, the future is in its favor. Both demographically and in terms of social vitality, the U.S. is much better positioned than China (this book, and this other one, are two recent accounts of this perspective). My own more recent research on China suggests that the combination of perverse demographics and a clear drop in productivity growth predicts economically bad times in the 2030s for the Asian giant.
Considering these two points together, yes, the United States will be able to inflict damage on the Chinese semiconductor industry, and while this impact is not absolute, it is enough to justify embarking on this policy. In a world where there are no magic wands for anything, but only partial patches to complex problems, this is the policy that maximizes the benefits to the United States, at least in light of what we know right now.
This article is adapted from a version originally published in February 2023 at El Confidencial, a leading Spanish digital newspaper. We are grateful to Professor Jesús Fernández-Villaverde for his permission to publish it in English here, and to Thomas Howes for his translation.
The pet industry grew rapidly over the past three years as people, stuck at home during the pandemic, decided to add a furry friend to their families. Analysts say this industry, where spending was $118 billion in 2019, isn’t done with big growth and predict it will more than double by 2030 to $277 billion.
This category is very dog-dominated — dog owners spend, on average, $1,480 per year, while an average of $902 is spent annually by cat owners; therefore, there are a lot of dog-focused products, including food.
Some startups in the pet space have tried to give equal footing to both dogs and cats, for example, The Farmer’s Dog, which direct-to-consumer cat food brand Smalls co-founder and CEO Matt Michaelson says is a close competitor. However, there are relatively few that cater just to cats. Smalls is among a small group that includes Cat Person, Ziggy, Made by Nacho and KatKin.
“It became really clear that during the pandemic, adoption was skyrocketing,” Michaelson told TechCrunch. “Cat adoption really outpaced dog adoption, so we expected the category to heat up and that there would be more innovation at this point. However, we’re still really alone in bringing fresh food to the category and to cat parents. That was a surprise to us. We think there’s a continuing manifestation of the cultural bias against cats and toward dogs in the U.S.”
Five years and over four product introductions later, Michaelson and co-founder Calvin Bohn are guiding the company to take matters into its own hands and expand by opening a first-of-its-kind cat café and launching into retail, Michaelson said. This was buoyed by $19 million in Series B funding in a round that closed in mid-2022.
The company has now raised a total of $34 million, which includes a $9 million Series A that TechCrunch covered in 2020. Michaelson didn’t disclose valuation for the most recent round, but did call it an “up round.”
The Series B is led by existing investors Founder Collective, Companion Fund and Left Lane Capital and also includes new investors like Valor Capital, 301 INC, General Mills’ venture capital arm and The Ohio State University’s endowment fund.
In addition to the cat café, which will open in New York in the fall, and retail launch, the new capital enables Smalls to grow its headcount by 25%. The company has 50 people currently.
The brand has doubled year over year in both customers and revenue since 2017, growing to eight figures in sales to feed more than 100,000 cats. Amid all that growth, Smalls also has a path to profitability, Michaelson said.
“We are still a tiny sliver of a $12 billion category,” Michaelson said. “Anyone can advertise on TV or the subway, but only Smalls could open a cat café and it make sense. That’s one example of many things we want to do to build the brand. The other piece is continuing to invest in product innovation. Fresh food is a very fast-growing category, and we think there’s plenty of room in it, but we need to stay one step and two steps ahead of the category to continue to bring healthier food and healthier products to market.”
Fresh funding gives cat food brand Smalls avenue into retail for the first time by Christine Hall originally published on TechCrunch
One fusion startup is betting that a 70-year-old idea can help it leapfrog the competition, so much so that it’s planning to skip the experimental phase and hook its prototype reactor up to the grid.
The decades-old concept, known as a stellarator, is deceptively simple: design a fusion reactor around the quirks of plasma, the superheated particles that fuse and generate power, rather than force the plasma into an artificial box. Easier said than done, of course. Plasma can be fickle, and designing “box” around the fourth state of matter is fiendishly complex.
That’s probably why stellarators spent years in the fusion-equivalent of the desert while the simpler doughnut-shaped tokamak ate everyone’s lunch, and nearly all of their research funding.
But not all of it. Type One Energy is the brainchild of a handful of physicists steeped in the stellarator world. One built the HSX stellarator at the University of Wisconsin-Madison, two more performed experiments on it, and a fourth worked on the Wendelstein 7-X reactor, the world’s largest stellarator.
Together, they founded Type One in 2019 and nudged forward their approach to fusion at a steady pace. The company wasn’t in stealth — TechCrunch+ identified it as a promising fusion startup last year — but it was operating on a slim budget.
Fusion startup Type One Energy gets $29M seed round to fast-track its reactor designs by Tim De Chant originally published on TechCrunch
From Hell: How to Dance with the Devil on Your Back
Like Satan, an algorithm is a servant that carries out your commands...perfectly (be careful what you wish for). Think about plantations. They're attempts to force human beings to carry out other human beings' commands perfectly. A silicon wafer is a plantation for electrons.
So many other links but that's one huge main one.
...I used to live in Davis, CA. It was a gigantic factory, made of columns and rows and columns and rows of fruit trees and almond trees and etc, stretching as far as the eye could see. Machine-like in its precision. The Great Central Valley is so flat you can see it from space, and they use lasers to guide the irrigation channels. Workers and enslaved people also treated with this kind of profit maximizing precision aka violence.
Next step: all the dualisms that plague us, subject-object, human-animal, person-machine, masculine-feminine...are possible because of the master-slave template of Mesopotamian-style societies with a certain agricultural logistics running in the background.
The fantasy of AI is that its personhood will be "greater than the hum of its parts" (as Daniel Dennett put it).
This is precisely the problem. We are inventing the wheel of the master-slave duality, and hardwiring it into powerful machines made of silicon and plastics and metals, and robot dogs. Dogs have always been trained as slaves.
One of the main criticisms leveled against ESG investing is that the movement is all talk, no action. The main reason for this is that there simply aren’t enough entrepreneurs providing adequately ESG-aligned investing opportunities. In fact, a third of VCs face difficulties with identifying suitable ESG investment opportunities, even though 97% of them find it important in making investment decisions, driven by the lack of adequate ESG disclosures and excessive costs for gathering and analyzing ESG information.
At the same time, ESG-focused assets under management are projected to increase from $18.4 trillion to $33.9 trillion in the coming years. Whether these figures become reality is increasingly up to entrepreneurs who need to get serious about delivering high-quality ESG data, fast.
There simply aren’t enough entrepreneurs providing adequately ESG-aligned investing opportunities.
Investors have lower levels of confidence in companies that do not collect investment-grade data (shorthand for data that meets high standards of timeliness, accuracy, completeness and auditability), and the majority of investors see unstandardized and poor quality data as their biggest barrier.
Regardless of your market and industry, the best way to get started with delivering investors with high-quality data is to embrace preexisting reporting and disclosure frameworks as early on as possible. There are many frameworks to choose from, including Sustainability Accounting Standards Board (SASB), Global Reporting Initiative (GRI), Task Force on Climate-related Financial Disclosures (TCFD), CDP (originally known as the Carbon Disclosure Project) and United Nations Global Compact (UNGC). Although founders may need to carefully consider which framework to prioritize in the beginning, most of the frameworks are complementary in nature and mature firms tend to lean on several of them in their reporting.
For example, the GRI framework examines a company’s influence on the broader economy, environment and society to identify material concerns, while SASB is more tuned to serve the interests of investors who are interested in ESG data that could significantly affect the financial performance of firms in their portfolio. In short, GRI is an ‘inside-out’ framework that examines the company’s impact on the world, while SASB is an ‘outside-in’ framework that looks at the effects of the climate on the company and the risks it faces.
What ends up working best for any given company at any particular time will be down to a number of unique factors, and effective prioritization is key.
The Securities and Exchange Commission (SEC) introduced a proposed set of rules concerning mandatory climate disclosures last year. Under the proposed rules, firms who file with the SEC need to disclose a number of data points, including whether climate-related events are likely to push the needle on any of the accounts in its financial statements and what governance structures are in place to mitigate against climate risks. The disclosures envisioned in SEC’s proposal are largely in line with those of the TCFD and Greenhouse Gas Protocol, and if you are gearing up for an IPO, you would do well by ensuring that your ESG data is aligned with these frameworks as a matter of priority.
Investors want best-of-the-best ESG data. Here’s how to give it to them by Jenna Routenberg originally published on TechCrunch
The United States supported a coup in Honduras in 2009. Fast forward a dozen years, and the Latin American country finally escaped the repressive thumb of far-right administrations when a leftist president — and the country’s first female head of state — was elected. She promised reform, including as it pertains to the mining sector, which has devastated portions of the country’s environment and used horrific violence to suppress its opponents. As Jared Olson details, however, hope soon faded:
They blocked the road with boulders and palm fronds. They unraveled a long canvas sign, bringing the vehicles to a stop — a traffic jam that would end up stretching for miles. Drivers stepped out into the oppressive August humidity, annoyed but not unaccustomed to this practice, one of the only ways poor Hondurans can get the outside world’s attention. Several dozen people, their faces wrapped in T-shirts or bandannas, some wielding rusty machetes, had closed off the only highway on the northern coast. It was the first protest against the Pinares mine — and the government’s failure to rein in its operations — since Castro came to power eight months before.
Things weren’t going well. That Castro’s campaign promises might not only go unfulfilled but betrayed was made clear that afternoon last August when, as a light rain fell, a truck of military police forced its way through the jeering crowd of protesters and past their blockade — to deliver drums of gasoline to the mine.
Since their creation in 2013, the military police have racked up a reputation for torture and extrajudicial killings as a part of its brutal Mano Dura, or iron fist, strategy against gangs. Though it earned them a modicum of popularity among those living in gang-controlled slums, they also became notorious for their indiscriminate violence against protesters, as well as the security they provided for extractive projects. They’ve faced accusations of working as gunmen in the drug trade and selling their services as assassins-for-hire. The unit was pushed by Juan Orlando Hernández, now facing trial in the United States for drug trafficking, while he was president of the Honduran congress, in his attempt to give the military power over the police — his “Praetorian Guard,” in the words of one critic.
Castro had been a critic of the unit before her election. But after a series of high-profile massacres last summer, she decided that — promises to demilitarize notwithstanding — the unit would be kept on the streets. And here they were, providing gasoline and armed security to a mining project mired in controversy and blood.
In a provocative essay, scholar and author Sophie Lewis, best known for her 2022 book in support of “family abolition,” makes the case for how society can not only protect trans children, but also learn from them. This is a call for a more expansive, generous, utopian way of thinking about the potential of youth:
The fear I inspired on the parent’s face riding the subway was what distressed me most about the incident in New York. Later that day, when I recounted the anecdote on Facebook, an acquaintance commented – unfunnily, I felt – that I was a “social menace”. A threat to our children, et cetera. Ha, ha. But what was the truth of the joke? What had I threatened exactly? A decade after the event, “The Traffic in Children,” an essay published in Parapraxis magazine in November 2022, provides an answer. According to its author, Max Fox, the “primal scene” of the current political panic about transness is:
a hypothetical question from a hypothetical child, brought about by the image of gender nonconformity: a child asks about a person’s gender, rather than reading it as a natural or obvious fact.
In other words, by asking “are you a girl or a boy?” (in my case non-hypothetically), the child reveals their ability to read, question and interpret — rather than simply register factually — the symbolisation of sexual difference in this world. This denaturalises the “automatic” gender matrix that transphobes ultimately need to believe children inhabit. It introduces the discomfiting reality that young people don’t just learn gender but help make it, along with the rest of us; that they possess gender identities of their own, and sexualities to boot. It invites people who struggle to digest these realities to cast about and blame deviant adults: talkative non-binary people on trains, for instance, or drag queens taking over “story hour” in municipal libraries.
In recent years, the market economy has come under attack from both sides of the political aisle. In some cases, both Democratic and Republican policies are even converging to expand the role of the state in the economy. Young people remain disillusioned with capitalism, while CEOs of major corporations adopt “ESG” policies and focus on matters of social justice and equity while de-emphasizing shareholder value. It seems that the success story of the market economy—the dramatic increase in our living standards worldwide over the past two hundred years—has been forgotten.
In late 2022, Samuel Gregg, a long-time contributor to Public Discourse and Distinguished Fellow in Political Economy at the American Institute for Economic Research, addressed these questions and others in his book, The Next American Economy: Nation, State, and Markets in an Uncertain World, which has received acclaim since its publication. I was recently able to interview Gregg about the themes explored in the book. An edited interview follows.
Kelly Hanlon: In the opening chapter, you make the case that there are threats to the market economy from both the left and the right. On the left, there is what you call “stake-holderism” whereby firms are no longer focused solely on increasing shareholder value. On the right, meanwhile, there are calls for economic nationalism, with an ever-growing list of demands for the use of government action to engineer particular outcomes. What are the broad contours of the debate between the left and the right today? Where do the two sides converge? And why are you so alarmed at calls for intervention in the economy?
Samuel Gregg: Thanks for this conversation, Kelly. The first thing to note is that today’s economic debate is less between the right and the left per se. It’s focused on two things. One is the state’s role in the economy. Many on the right have embraced economic ideas difficult to distinguish from those on the left. If you look at some of the economic statements of two politicians as different as, say, Senator Marco Rubio and Senator Elizabeth Warren, you discover they effectively line up on the same interventionist page on many economic issues. Another division is between those who believe in using state economic intervention to try and realize particular moral–cultural ends like buttressing two-parent families, and those skeptical of the effectiveness of such measures.
But even deeper arguments lurk beneath the surface of these fights. They range from disputes about American economic history to the causes of America’s obvious social dysfunctionalities, the meaning of liberalism, America’s relationship with the rest of the world, and even how much conservative America considers itself bound to the American Founding. I’m convinced that many economic disagreements today function as proxies for other issues.
As for my alarm about creeping interventionism, it’s driven by several concerns. One is the very-hard-to-refute evidence attesting to such policies’ general failure to realize their ends and their propensity to inflict considerable economic, social, and political damage. Take, for instance, industrial policy. Its track record of success is utterly abysmal. It also breeds some of the worst cronyism. The same is true of tariffs. I’m also worried about the way that many conservatives seem content to use regulation and the administrative state to try and engineer particular social and economic goals. Leaving aside the fact that tinkering with, say, the tax code won’t do much to reverse the deep destruction inflicted on the family by, say, the disaster of the Sexual Revolution or LBJ’s Great Society programs, this involves acquiescing in the undermining of limited government constitutionalism in America. That is an odd position for American conservatives to hold, even tentatively.
KH: Part of the so-called stake-holderism of the left centers on the adoption of ESG policies throughout corporate America. Broadly speaking, what is ESG and why are corporate leaders advancing these kinds of policies? In a recent symposium at Law and Liberty, you suggest that one solution is that CEOs should better communicate their firm’s value and purpose. But, if CEOs are buying into the ESG agenda, doesn’t this suggest a deeper problem that goes beyond the value of the market economy—and into the realm of formation, education, and culture? How can we encourage CEOs to resist and reject the ESG ideology?
SG: ESG is about principles that purport to allow investors to invest their capital in ways that promote Environmental, Social, and Governance goals alongside profit and shareholder value. To no one’s surprise, most of these goals reflect progressive priorities.
Why do businesses embrace ESG? In a few cases, they’re led by CEOs and boards of directors who are “woke” true believers. That shouldn’t surprise us. After all, business executives swim in the same messy cultural streams as the rest of us. They’re no better equipped than anyone else to understand the degree to which ESG is an ideologically charged weapon.
In other instances, CEOs have told me that younger investors want more alignment between their investment choices and their political preferences. There’s certainly evidence for that, yet there’s also evidence indicating significant gaps between people’s stated political preferences and how they actually invest their capital. There’s a limit, it turns out, to the willingness of wealthy, uber-woke lefties to pay more for less return! Making matters even worse is that many companies see ESG as a way to charge higher fees. They’ll charge more fees to investors for putting their capital in ESG funds on the basis that the higher fees reflect your willingness, as ESG jargon says, “to invest your values.” When, however, you examine the composition of ESG funds, you discover that they’re not that different from non-ESG funds. When Elon Musk called ESG a “scam,” he had a point.
But maybe most importantly, corporate America’s present romance with ESG owes much more to CEOs’ trying to preempt government efforts to regulate them down such paths or get progressive NGO activists off their backs. Alas, corporate America doesn’t seem to grasp that these groups are unappeasable and that regulators like the Securities and Exchange Commission are already way down this path. Whatever businesses do in this area will never be enough for those activists or regulators trying to force companies to embrace progressive priorities.
So, those are some of the factors at work. As for the formation issues you mention, you’re right. Milton Friedman often stressed that most CEOs aren’t especially articulate when it comes to explaining the good that businesses do qua businesses, or what you might call the vocation of business: that it’s through pursuing profit and shareholder value that business makes its particular contribution to society’s general welfare. Wealth creation not only provides for people’s material needs and wants. It also facilitates employment over the long term as well as sustaining and growing the capital that people need to raise families, secure their retirement, be philanthropic, build schools, support religious congregations, educate their children, etc. And if enough CEOs embraced this vocational outlook and had the courage to make this case in a public way, it would go some way to highlighting the incoherences and ideologies underlying the ESG agenda.
Wealth creation facilitates employment over the long term as well as sustaining and growing the capital that people need to raise families, secure their retirement, be philanthropic, build schools, support religious congregations, educate their children, etc.
KH: On the right, there seem to be two camps who are increasingly calling for government intervention in many areas of private life—the industrialists and the integralists. Can you give a high-level overview of these two camps, and their views on economic policy? What are their fundamental assumptions? What problem is each camp trying to solve? What, if anything, do they get right—or wrong—about the policies they promote?
SG: Far, far more wrong than right, I’m afraid. Some people in both camps are pointing to obvious social problems that mark America. Well, few are going to dispute that much of American culture is in very bad shape, as indicated by things like divorce rates, a collapsing birthrate, the prevalence of gender ideology in the academy, the number of young men checking out of the workforce to embrace a life of drugs and video games, etc.
Advocates of industrial policy argue that things like trade liberalization have contributed to these developments and that it’s possible via a range of interventionist and regulatory measures to generate better economic outcomes than markets in particular economic sectors and more optimal social conditions for, say, families or blue-collar workers. Work is important, they say, and providing work is one way of addressing these issues.
Putting aside the dubious and highly economistic cause-and-effect logic underlining such diagnoses of America’s social problems, let me say this: work is a good in itself. Even the humblest types of work allow humans to acquire any number of virtues that make us who we’re supposed to be as humans. But using government to try and provide work, or even to try to rig the labor market toward providing particular types of work, is a counterproductive way of going about that. Protectionism and industrial policy generate massive misallocations of resources, trivialize economic truths like comparative advantage and trade-offs, and create massive disjuncts between production and consumption. In the long term, such policies corrode competition, incentivize entrepreneurs to become cronies, and give even more power to legislators, lobbyists, and bureaucrats in places like Washington, D.C., who are about as insulated from market forces as it is possible to be. The long-term results are economic stagnation, the displacement of market exchange in favor of a hyper-politicized economy, and the endless proliferation of barriers to economic growth—all of which severely cramp the economy’s long-term capacity to generate jobs.
Concerning the other group you mention, the integralists, some of them adhere to economic nationalist policies. So, to the extent they embrace such ideas, they’re subject to the same critiques. Other integralists, however, want to implement the economic policies associated with corporatism. Broadly speaking, corporatism means top-down coordination by state officials of an economy in which the forms of private property and market exchange are maintained but embedded in legal and political structures that prioritize the establishment and enforcement of a consensus focused on achieving specific economic and social goals.
The problems with corporatism are manifold. They include the creation of economic insiders and outsiders based on access to political power, the evisceration of economic freedom and property rights, the cronyism and clientelism it breeds, the marginalization of consumer needs and wants from the economic equation, etc. Then there’s some integralists’ determination to creatively reinterpret the U.S. Constitution, much like progressives have, to legitimate rule by unaccountable bureaucrats overseeing a corporate state via an imperial presidency, and to abuse the lexicon of the common good to rationalize such things.
KH: As I talk to young people, particularly in their late teens through late 20s, there’s an underlying desire for equality. We see this in some of the conversations around wealth inequality, with the assertion that a new tax policy could eliminate inequality. There seems to be a related sense that the accumulation of wealth is itself deeply immoral. Have you encountered these concerns? And, if so, what arguments have you found compelling in persuading others that the creation of wealth is not inherently evil?
SG: Let’s start with equality. Have you noticed the selective character of contemporary equality-angst? I haven’t heard many of the people you describe expressing worries about the visible decline of the rule of law throughout America. And if anything is grounded on the equality in dignity enjoyed by all humans and the principles of natural justice that flow from that, it’s the rule of law. Or the blindingly obvious injustices that are integral to the workings of affirmative action programs? Or how “anti-racism” and DEI programs legitimate discrimination against large numbers of Americans because of their race or sex? I don’t hear such things even being acknowledged, let alone discussed.
Wealth inequalities are inevitable in any economy in which market exchange, economic creativity, and the satisfying of consumer preferences prevail. They’re also a precondition for, and a byproduct of, economic growth. If you want a “no-growth” economy—a sentiment I’ve heard expressed by some traditionalists and, ironically, radical greens who hold basically pagan religious views—then you’d better saddle up for life in an impoverished society in which most people are desperately poor while the wealthy are those skilled at using force to extract large pieces of an ever-shrinking economic pie for themselves. As for trying to eliminate wealth inequalities, that’s a sure-fire way of opening up the path to all the evils—not just the inefficiencies but the evils—of socialism.
Is the accumulation of wealth in itself immoral? Well, if it occurs through, for example, lying, theft or, say, owning a brothel, it’s obviously immoral because such choices are intrinsically evil. I’d even argue that it’s morally dubious to accumulate wealth through rent-seeking insofar as cronies effectively engage in wealth-extraction from the rest of us. But there are so many more ways to increase one’s wealth that are completely legitimate and also provide opportunities for vocational growth by everyone involved in a business enterprise.
The real action concerning the morality of possessing wealth concerns its use: the free choices that we make about how we use the wealth that we have justly acquired. You really can’t go wrong if you follow Aquinas on this topic. He neatly summarizes all the entitlements and obligations associated with property ownership, including wealth that exceeds our vocational needs and responsibilities. A few years ago, my friend Adam J. MacLeod wrote an excellent book that addresses these questions in a manner cognizant of twenty-first century economic life. It’s really worth reading.
If you want a “no-growth” economy, then you’d better saddle up for life in an impoverished society in which most people are desperately poor while the wealthy are those skilled at using force to extract large pieces of an ever-shrinking economic pie for themselves.
KH: Another point that I’ve encountered with some frequency is the view that other (non-American, perhaps even non-democratic) political and economic arrangements are better suited for life in the twenty-first century. By all measures, we’re living in the most prosperous time in human history. For those who advocate state capitalism and economic nationalism, are there examples in history where those regimes have worked well? Have they ever outpaced the free market in terms of the general welfare of a country’s population? If state capitalism doesn’t work on the whole, are there areas where state intervention may be helpful? Or, more broadly, what role should the state play in the market economy?
SG: My book highlights several cases where economic nationalist policies have been widely deployed and details the long-term damage they inflicted on otherwise healthy economies. Japan is the classic example. When I was a teenager, numerous policymakers, books, novels, and even films like Black Rain, Rising Sun, and Die Hard suggested that Japan and Japanese-style industrial policy was the future. And just as all that hysteria crescendoed, Japan collapsed into what became a 20-year economic slump.
There are several reasons for that, but in the early 2000s, the Japanese finance ministry published an official paper conceding that Japan’s extensive use of industrial policy had been a major contributor to Japan’s economic stagnation. I’d argue that China is now making similar mistakes because they’ve used more and more industrial policy since 2008 in an economy what was only ever very partially liberalized. No one should be surprised that we’re now seeing the same problems emerge on a mass scale in China—something those American conservatives who are fans of Chinese economic policy studiously avoid mentioning. The more Xi Jinping continues deepening the directive role of the Chinese Communist Party, the Chinese state, and the Chinese military in China’s economy, the weaker and less productive that economy will become.
So: what should the state do in the economy? For a start, government has some very basic responsibilities like protecting and adjudicating property rights, providing public works, ensuring law and order, administering the rule of law, and maintaining monetary stability. None of these are small tasks, and the U.S. government is presently doing a lousy job in all these areas. I also think that a very basic safety net should be provided by the state, though I’d want strict limits on this, not least because of the economic and social damage that expansive welfare states inflict on society and the soft despotism that they facilitate. Lastly, governments should ensure that the rules governing international trade are being followed, and act when proxy actors for regimes like Communist China engage in activities like intellectual property theft. Again, it was only in 2018 that the U.S. government finally got around to begin addressing this decades-old problem with Chinese nationals and businesses in any meaningful way.
The more Xi Jinping continues deepening the directive role of the Chinese Communist Party, the Chinese state, and the Chinese military in China’s economy, the weaker and less productive that economy will become.
These are the state’s prime responsibilities as far as the common good’s economic dimension is concerned. Everything else, to my mind, is normally better handled by free economic processes and those non-economic associative institutions we call civil society. The latter is where most welfare functions should be located. Of course, there are always emergencies that may necessitate state action beyond the parameters I’ve just mentioned, but such interventions should be limited and never become permanent features of economic life.
KH: In the book, you make the case that Americans face a choice between state capitalism and a free market economy. It seems as though if we do nothing, we’ll continue down the path toward state capitalism. How do we move closer to a free market economy? What gives you hope that we will move closer to a free market?
SG: Let’s be clear. State capitalism is already the norm in America’s economy. The last time the federal government actually shrank was during Calvin Coolidge’s presidency!
Virtually all economic freedom indices show America as being in decline in the realm of economic liberties. Our economy is riddled with interventionism, industrial policies, and cronyism from top to bottom. Our default settings for macroeconomic policy remain strongly neo-Keynesian. The notion that American economic policy had been run since the 1980s by so-called “market fundamentalists” is absurd. The refusal—the refusal!—of many American conservative legislators even to discuss reforming those entitlement programs that are driving us into ever-greater debt and that facilitate so many social problems isn’t just disappointing. It’s plain irresponsible.
That said, those who believe in entrepreneurship, free competition, trade liberalization, and their moral, legal, and political foundations must rethink how they make their case. Yes, we must press for deregulation of our ever more regulated economy, we need to get incentives aligned correctly, we should get the state out of doing things that it does badly, and we must focus the government on those activities I just mentioned. But if the case for markets is reduced to more stuff produced more efficiently for more people, or associated with Davos Man borderless world delusions, or involves trivializing the very real bonds that many Americans have to their nation and communities, millions of Americans won’t listen to them, no matter how compelling the economics.
Those who believe in entrepreneurship, free competition, trade liberalization, and their moral, legal, and political foundations must rethink how they make their case.
The line I often hear is “America is a country with an economy, not the other way round.” To which I say, “Amen.” But America is also a country in which the idea of being a commercial republic is at the core of our identity. Much of my book involves spelling out how the idea of a commercial republic is inscribed into key texts, speeches, and documents of America’s Founding like the Federalist Papers and George Washington’s “Farewell Address.” As the historian Gordon Wood points out, this is where America finds its identity as a nation.
Put simply, key Founders believed that America’s future was to be a polity in which free and dynamic commerce would play a powerful role in defining society, as opposed to, say, the priorities of aristocratic or feudal societies. The “republic” side of this political economy equation is that this commercial society would operate within the context of institutions and sets of virtues that draw upon classical, religious, and moderate Enlightenment sources.
That, I’d suggest, is the vision that those who regard free markets as the most optimal economic system for America should embrace. Protectionists and industrial policy advocates play the patriotism card all the time. That’s ironic, given that tariffs and industrial policy are always driven by, and always focused on, promoting sectional and special interests rather than the general welfare of 330 million Americans.
Let me sum it up this way: America isn’t meant to be just another European social democracy engaged in managed decline. America isn’t meant to be a corporatist state like the World Economic Forum’s envisaged “stakeholder capitalism,” let alone Mussolini’s Italy. America doesn’t have to relive that miserable economic decade known as the 1970s. If those who believe in free markets can tap into that vision of America’s understanding of itself as a commercial republic and what this means for the United States’ place in the world, we have every reason to be hopeful.
. . . [Divine] Mercy is found even in the damnation of the condemned, for, while not completely loosening the punishment, It nonetheless lessens it short of what is entirely deserved. (Summa Theologiae Ia.21.4 ad 1).
I would like to address J. Daryl Charles’s argument published here at Public Discourse yesterday that the death penalty is a mandatory punishment for premeditated murder, necessary to achieve justice, and necessary to respect the image of God in the offender by holding him responsible for his acts. I cannot address everything that Charles argues in his essay. I will do only three things. First, I will argue that Charles has not and cannot successfully press the case that the use of the death penalty is mandatory in the exercise of punitive justice. Second, I will argue that it should be abolished in the United States, against the background of Thomas Aquinas’s argument (that Charles himself cites) that taking a criminal’s life is lawful in order to protect the common good. Third, I will conclude by reflecting on the implications of the image of God within us for justice and mercy.
The Early Church and Capital Punishment
On the first point, consider only the early Church figures that Charles cites. By and large, they do indeed recognize the legitimate authority of a political community to take the life of an offender. However, they also recognize something that Charles does not: it is within the state’s authority to refrain from this punishment and to instead extend mercy. (In this section, I summarize, paraphrase, and later quote the excellent article by Phillip M. Thompson, “Augustine and the Death Penalty,” in Augustinian Studies, January 2009, pp. 188–203.)
For example, Lactantius in one work forbids anyone in authority charged with the administration of justice from charging anyone for a capital crime, but in another acknowledges the state’s authority to put someone to death. Tertullian recognizes the authority of the state to impose death, and yet forbids any Christian from doing so. So also, the Christian author Athenagoras, whom Charles does not cite, forbids Christians from participating in it. This is not yet a point about mercy. However, it suggests a certain abhorrence on the part of the early Church for the death penalty as inconsistent with the life of a Christian. The secular or pagan state may be permitted to impose death as a punishment, but the authors suggest Christians ought to play no part in exercising that power.
The early Church figures recognized something that Charles does not: it is within the state’s authority to refrain from capital punishment and to instead extend mercy.
Augustine, however, is particularly important when it comes to mercy. He recognizes the authority of the state to impose death as a penalty, particularly to protect the common good from a threat to its safety. And he does not forbid Christians from participating in it, as others had. But he also pleads for mercy on the part of governing authority. In one case pleading for mercy he writes, “[W]e do not in any way approve the faults which we wish to see corrected, nor do we wish wrong-doing to go unpunished because we take pleasure in it. … [However,] it is easy and simple to hate evil men because they are evil, but uncommon and dutiful to love them because they are men.” Even if one does not agree with Augustine that one should love the offender because he is a man, as it seems Christ commanded us to do, Augustine gives evidence in the Christian community of the recognition that not only justice is the task of the state, but also that mercy is within the authority of the state, as much within its authority as is the authority to execute the offender.
However, the importance of mercy amid justice is no sectarian Christian virtue. The responsibility of governing authority to show mercy is a fact recognized by Seneca, no Christian, in his letter to Nero, De Clementia, where he argues that mercy in a ruler is essential to governing. As a stoic, however, his argument for mercy is significantly different from Augustine’s, focusing not on loving the offender as a fellow human being, but on the need to rein in both leaders’ and society’s passions of cruelty and savagery, passions that often accompany the just desire to punish. He goes on to argue that the power of the emperor to extend mercy is even greater and more manifest than is his power to condemn, “for anyone can take a life, but few can give it.” That power in a ruler is in fact godlike, according to Seneca. Aquinas agrees when he writes that among all of God’s attributes, it is in mercy that God’s omnipotence is most clearly shown. (“Unde et misereri ponitur proprium Deo, et in hoc maxime dicitur eius omnipotentia manifestari” ST IIaIIae 30.4.)
Just as one would be hard pressed to find a culture with a governing authority, biblical or otherwise, that had not at some point asserted and exercised the right to put capital offenders to death for heinous crimes, one would be equally hard pressed to find one that did not claim the authority to exercise mercy and punish short of death. Good government in the administration of criminal punishment will establish a range of possible punishments for a crime, acknowledging the need for both mercy and equity in judging which punishment is best in the circumstances. Again, this is a point recognized by the pagan Seneca, who argued that mercy does not come after the judgment of just punishment, to limit justice as it were, but enters into the determination of what justice is in a particular case.
Aquinas on Capital Punishment
Aquinas argues that this governing authority to establish the character of punishment and its application to cases is rooted in the natural law. But in the end, positive human law determines the actual force and scope of punishment. Any such “determination” of the actual punishment appropriate for a crime has only the force of human law, not the force of the natural law itself (ST IaIIae 95.2). We decide how crimes will be punished as a matter of human positive law, not by deriving them from natural law. This determination is part of our dignity as images of God: we participate in divine providence by being provident over ourselves. We use our reason both to recognize the natural law within us and to establish human law over diverse political communities and common goods (ST IaIIae 91).
In addition, like Seneca before him, Aquinas recognizes that it is also the task of judicial authority to exercise equity (epikeia) when determining punishment under human law. The judicial authority does this by taking into account circumstances not anticipated by the legislature when it crafted the law. In other words, judicial authority sets aside “the letter of the law,” lest one sin against the common good by application of the “letter of the law” (ST IIaIIae 120.1).
If we acknowledge Aquinas as an authority on these matters, as Charles seems to do in citing him, these points make it clear that it is well within the governing authority of a community to refrain from the use of the death penalty to punish crime. Political leaders can even refrain from legislating that capital punishment will be among the range of punishment for serious crimes, including premeditated murder. This decision ultimately requires reflection about how to preserve and promote the common good of a particular community in a particular place and time.
Political leaders can even refrain from legislating that capital punishment will be among the range of punishment for serious crimes, including premeditated murder.
A Case for Abolition
Now I would like to argue that the death penalty should be abolished, at least in the United States and many other nations as well. Of course, Aquinas’s argument about the lawfulness of a community’s taking the life of an offender is often cited by proponents of the death penalty in the way Charles cites it—as if permissibility requires the exercise of the death penalty in certain cases, that is, makes it “mandatory.” However, Aquinas’s argument is merely that it is lawful to take the life of an offender to protect the common good from threat. He does not come anywhere close to arguing that it is required or mandatory for certain crimes.
It is very important to notice about Aquinas’s argument that it is not based on principles of restitution, that is, not based on the need to redress the harm done to the one who has been wronged. Nothing can be done to redress the wrong done to the one who has been killed. Nothing can undo that, no recompense given, no restitution made. This is a point that Charles himself recognizes in the case of murder. In addition, though it might sound harsh, it is not the task of governing authority to criminally punish offenders in order to assuage the anguish of the family and friends of the murdered. Those left behind or affected by a murder may derive a certain amount of psychological catharsis in seeing the responsible parties punished, but it is probably not lasting. What’s more, in terms of restitution, nothing can undo what they have lost. That is in part the horror of the crimes done—that nothing can be done to restore to the one abused or to family and friends what has been taken from them. At best, punishment can be merely symbolic with respect to restitution in these cases.
Criminal law punishes not on behalf of the individuals who have been harmed by a crime, but on behalf of society’s common good, which has been harmed by a crime. It punishes to restore the order and peace of society that has been disturbed by the crime, and to further protect it from threat. But even here in the case of capital crimes, society cannot have restored to it what the crime has taken; society cannot have restored to it the human being killed. No punishment will return the order of tranquility and innocence lost to a society by the abuse of children, or to women and men by various forms of violence. However, a certain amount of peace and tranquility can be restored in protecting society from further threat of such things.
Close attention to Aquinas’s argument suggests that a malefactor loses, in a way proportionate to the gravity of the crime, the protections afforded by society to the innocent and thus becomes subject to the punishment of the law. This is its retributive aspect, that formally the gravity of the punishment is directed to the will of the offender in a way proportionate to the gravity of the crime willed by the offender. But, as we’ve seen above, the idea of “proportion” here is not a conclusion drawn from the natural law, but a “determination” of human law in light of the common good that punishment serves to protect. The offender becomes subject to the loss of property or the loss of freedom of movement, for example. Also, in some cases he becomes subject to the loss of life.
Aquinas’s argument is not that killing an offender is always lawful, much less that it is mandatory. It is lawful upon a condition, namely, that it is necessary to protect the common good from a threat.
What Aquinas does not argue, however, is that having become subject to punishment, even possibly the loss of life, a criminal’s loss of life is required or mandatory. It is not the so-called lex talionis—an eye for an eye, a tooth for a tooth, and a life for a life—that allows for the lawfulness of killing another human being. The lawfulness of ending an offender’s life is based on the need to protect society from the threat by the one who has lost the protection of society. So, one cannot claim that according to Aquinas the killing of a human being is lawful in order to pursue retribution or restitution for the wrong done. It is lawful to protect from harm, which is forward-looking, not backward-looking.
Thus, Aquinas’s argument is not that killing an offender is always lawful, much less that it is mandatory. It is lawful upon a condition, namely, that it is necessary to protect the common good from a threat. Absent that condition, Aquinas does not argue or even suggest that killing a malefactor, including one who has committed murder, is lawful. Indeed, in his discussion of clementia as mercy extended to those who are subject to punishment (ST IIaIIae 157.3 ad 1), he suggests that the desire to harm through punishment should be avoided and mitigated, even when someone deserves punishment. He also says that it is better when the one doing the punishing decides the wrongdoer has had enough, rather than pursue the full extent of punishment possible.
One can ask under what conditions governing powers should exercise mercy. The exercise of mercy ought also to take into account the common good. Aquinas’s argument that it is lawful to take the life of a malefactor to protect society from threat also suggests that mercy is legitimately exercised when no threat to the common good is posed by the offender. This would be the case when, for example, the offender can be rendered harmless to the common good by means other than killing. This point concerning the death penalty is made explicitly by Pope St. John Paul II in his encyclical Evangelium Vitae.
In the thirteenth century when Aquinas made his argument, it might not have been possible in general to render a murderous malefactor harmless short of killing him. However, it is now possible in the United States and many other modern nations to protect the common good from the threat of those who have committed murder and other heinous crimes. That being the case, we have no reason to think that it is lawful for those nations to kill human beings who in other times and places might pose a threat to the common good. Given the imperative to act with mercy as much as with justice, the death penalty ought thus to be abolished in the United States and other such countries.
It is now possible in the United States and many other modern nations to protect the common good from the threat of those who have committed murder and other heinous crimes.
Mercy and Justice
To conclude, Charles makes much of the idea that the image of God in human beings is not taken seriously if we do not hold offenders responsible for their crimes, particularly those who have killed with premeditation. I agree with that proposition. What Charles and other defenders of the death penalty do not take seriously enough is the thought that being made to the image and likeness of God is not a static fact of human nature, but a responsibility. Nothing can erase from the nature of a human being the image created within him or her by God, no sin or crime however heinous. We acknowledge that fact when we hold our fellow human beings and ourselves responsible for our actions. However, being made to the image of God is a vocation, that is, a call to being godlike in all that we do. So, those of us who seek justice in the punishment of others must ask ourselves what our godlike responsibility is in the circumstances in which we live.
God is not simply a God of justice, but also a God of mercy. Mercy and justice are not set against one another. As Aquinas argues, they are manifest in every act of God’s (ST Ia 21.4). Even so, divine justice is founded upon divine mercy. Even the pagan Seneca recognized that mercy is as godlike as justice. In addition, mercy is not a poor second cousin to justice. Again, Aquinas argues that among human virtues, mercy is the greatest of all virtues, greater even than justice (ST IIaIIae 30.4). Mercy does not come in after justice to limit it. Mercy informs justice. Indeed, if we take Aquinas seriously, justice strives after mercy as its goal. “It is clear that mercy does not take away justice, but is in a certain way, the plenitude of it” (Ia 21.3 ad 2). Justice must always then be informed by mercy. After all, with the responsibility to live up to the image of God within us, it is worth pondering the fact that not even the damned in Hell are punished by God as much as justice alone might allow that they deserve. How much more, then, should punishment be loosened for those among us who have not yet been damned?
Rethink Ventures just announced a €50 million specialist fund focused on mobility, automotive and logistics. With keywords “clean, safe, and digital,” the Munich-based firm is focusing especially on Europe-based startups at the early stage, stretching into Series A financing. LPs include ZF Ventures, Hellmann Worldwide Logistics, KION Group, Berylls and HAVI, as well as the European Investment Fund and a handful of family offices.
“The transportation sector faces significant challenges as the global demand for mobility and logistics continues to grow. With more than 25% of greenhouse gas emissions coming from this sector and additional negative externalities such as congestion and the significant usage of physical space, there is a lot of pressure to rapidly change the way we move people and goods,” says Jens-Philipp Klein, general partner at Rethink. “Our mission is to back early-stage startups that address these challenges and help them scale their technologies and products using our capital, deep expertise and access to a strong network of corporates. Together with all stakeholders in the industry, we aim to foster solutions that eventually will provide clean, digital and safe mobility for everyone.”
The fund says that its top priority is to provide unparalleled support to its portfolio companies while adding long-term value to their corporate partners, creating a mutually beneficial ecosystem that creates a positive impact for all.
The fund’s thesis-driven investment focus is on next-generation vehicle technologies (software defined, autonomously operated, new powertrains), mobility (providing comfortable, safe and affordable mobility for everyone), logistics (digital, automated and sustainable operations) and energy (infrastructure to power a clean, emission-free future of transportation).
The new fund has made three investments to date: Deftpower, an automotive charging platform that enables companies to launch, manage and scale electric charging offerings to their customers; Shipzero, a data-driven platform to measure and reduce CO2 emissions in global freight transportation; and Rydes, a SaaS solution for corporations to foster sustainable employee mobility by giving their employees access to various transport offerings.
Rethink rethinks mobility and logistics with new €50M fund by Haje Jan Kamps originally published on TechCrunch
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