🌀🗞 The FLUX Review, Ep. 18

September 2nd, 2021

Episode 18 — September 2nd, 2021 — Available at read.fluxcollective.org/p/18

We’re a ragtag band of systems thinkers who have been dedicating our early mornings to finding new lenses to help you make sense of the complex world we live in. This newsletter is a collection of patterns we’ve noticed in recent weeks.

“Nothing is original. Steal from anywhere that resonates with inspiration or fuels your imagination. Devour old films, new films, music, books, paintings, photographs, poems, dreams, random conversations, architecture, bridges, street signs, trees, clouds, bodies of water, light and shadows. Select only things to steal from that speak directly to your soul. If you do this, your work (and theft) will be authentic. Authenticity is invaluable; originality is non-existent. And don’t bother concealing your thievery — celebrate it if you feel like it. In any case, always remember what Jean-Luc Godard said: ‘It’s not where you take things from — it’s where you take them to.’”

— Jim Jarmusch

🚀🛬 Every J-curve is an S-curve in the making

Kryder’s law, which stated that disk storage capacity grew exponentially, held for years and years, but it’s over now. Moore’s law may be over too.

Like Kryder’s and Moore’s laws, many things appear to be exponentially-growing J-curves. Startups look like they’ll grow without bound. A population introduced to a resource-rich environment goes up and up. We see the hockey stick and start believing it will go “up and to the right” forever.

But forever is a long time. Everything hits carrying capacity eventually, running out of some kind of resource that constrains its growth. A startup fills its entire total addressable market. A colony of bacteria booms until it eats through its entire supply of nutrients. For CPUs, you eventually run into quantum limits. You just can’t make stuff smaller anymore!

Many phenomena appear to be J-curves, with a bright future of robust growth. But the more exponential the growth, the sooner your phenomenon pass an inflection point and slows down, eventually approaching some asymptote and tracing out an S-curve. Zoom far enough into the first half of an S-curve and it sure looks like a J-curve. Zoom out on a J-curve, and you’ll spot the inevitable plateau.

The hard part is knowing where you are in the S-curve. Are you at the beginning of the curve, where the exponential growth has yet to amaze you with its strength? Or are you in the curve’s upper middle and nearing stagnation?

One trick here is to look at the limiting factors. What correlated things also change exponentially? (Is the supply of nutrients dwindling exponentially?) Or, are the winds starting to change? (Is the user sentiment suddenly changing direction?) With exponential curves, once you see the change, it’s almost always too late, so it pays to consider these limiting factors as early as possible in the endeavor — and track the new ones that show up. You can never predict the S-curve perfectly, but by thinking about the limiting factors, you can keep yourself from believing that growth will go on forever.

🛣️🚩 Signposts 

Clues that point to where our changing world might lead us.

🚏🕹 China will limit kids to just 3 hours of online gaming per week

Chinese regulators announced that they will require gaming platforms like Tencent to heavily limit children’s access to online video games: users under 18 will only be able to play online between 8 and 9 PM on Fridays, Saturdays, Sundays, and public holidays.

🚏🌬 An upcoming 800-foot-tall wind turbine will power up to 20,000 houses

A renewable energy firm has announced it’s working on the world’s largest wind turbine, which will stand 794 feet (242 meters) tall with blades the length of a football field. The rise of such titanic turbines is thanks to accelerating returns from scale; this turbine’s blades are just 19% longer than those of the company’s current turbine, but it’ll generate 45% more power.

🚏💰 International thieves have stolen tens of billions of US unemployment aid

Governments across the US have opened up vast troves of unemployment aid and relaxed the requirements to get these dollars, making them ripe targets for thieves. Using stolen credentials purchased off the dark web, fraudsters across the world impersonated Americans and siphoned off between $87 billion and $400 billion in relief money in what one security researcher called “perhaps the single biggest organized fraud heist we've ever seen.”

🚏🏃🏼‍♂️ It’s boom time for fitness resorts

After a year-plus spent mostly sitting at home, many Americans now want to shed the “COVID 19,” referring to the pounds they’ve gained during the pandemic. So they’re flocking to resorts where they take part in intensive fitness training sessions, healthy living workshops, and nutritious dining programs. Though these retreats cost thousands of dollars per week, many of them have been sold out for weeks — or even months — straight.

🚏📉 Consumer confidence hit its lowest point since 2011

The US’s consumer confidence index, which measures how optimistic people are about their financial futures, fell 13% from July to August thanks to the Delta variant. The new reading marked the index’s lowest point of the pandemic era, and indeed its lowest reading since 2011.

🚏🐛 A startup is breeding insects to turn food waste into valuable materials

One Singaporean startup has started feeding food waste to fly larvae, which can eat up to four times their body weight each day. The company currently turns these critters into fertilizer and animal feed, and it plans to start extracting valuable biomaterials, such as an antimicrobial substance often used in cosmetics, from the bugs.

🚏🏛 A Reddit analyst claims that Congress’s stock trades handily beat the market

One member of the WallStreetBets subreddit reviewed public data on the stock trades made by members of the US Congress between 2019 and 2021 and found that their investments earned a total 32.4% return, a full six points higher than the S&P 500’s 26.4% return.

📖⏳ Worth your time

Some especially insightful pieces we’ve read, watched, and listened to recently.

  • The Death of Behavioral Economics (Jason Hreha) — A behavioral scientist argues that the “nudges” that behavioral economics recommends rarely work in practice and seeks to understand why the field became so popular in the first place. He concludes that “the reason that fields like behavioral economics are so seductive is because they promise people easy, cookie-cutter solutions to complicated problems.

  • Why You Should Be Worried About China’s Debt Crisis (Economics Explained) — Discusses the social and financial factors that have made China’s economy overleveraged and its real estate market vastly overinflated, and the systemic aspects that make it hard to change any of these deep-seated problems with the wave of a wand.

  • A Surprising Use for Randomness in the Brain (NeuWrite West) — Examines how the human brain generates randomness to help us navigate new problem spaces, take up fresh perspectives, and break ties when making decisions.

  • How Highways Make Traffic Worse (Vox) — Uses intuitive visual metaphors to explain why adding more lanes to highways often just worsens traffic, introducing the concept of induced demand and exploring the feedback loops that transportation engineers overlook at their peril.

  • The Gig Economy Celebrates Working Yourself to Death (New Yorker) — Argues that the US’s fixation with hustle culture and its love of self-reliance narratives just paper over deep flaws in the country’s economic system, exemplified by gig economy startups’ upbeat ads that are actually “dystopian” on closer inspection.

  • Newsletters Can Move Markets (The Diff) — Byrne Hobart describes how lower trading fees and cheaper information flows are reshaping the ways that investors get and share investment ideas, and how individual writers’ trading tips are now able to move markets.

  • Titan’s Strange Chemical World Gets Simulated in Tiny Tubes (Wired) — Describes new “exobiology” research that recreated the conditions on Saturn’s moon Titan and produced crystalline organic molecules that could theoretically be used by alien life on the planet, which is the only world in the universe besides Earth known to have stable bodies of liquid on its surface.

📚🌲 Book for your shelf

An evergreen book that will help you dip your toes into systems thinking.

This week, we recommend 7 Powers: The Foundations of Business Strategy by Hamilton Helmer (2016, 217 pages).

This classic book offers a comprehensive yet succinct overview of the key components of any sound business strategy. The author calls them Powers, or conditions that allow organizations to create persistent differential results. Though some Powers will be familiar to students of strategy, such as economies of scale or switching costs, some are new and pretty insightful, such as counter-positioning. The book also provides a useful distinction between statics and dynamics, hinting at the underlying complexity of any business strategy, where Powers change and mutate over time. With its consistent structure and crisp prose, this book is a great companion for any systems thinker who is dabbling in business strategy.

🕵️‍♀️📆 Lens of the week

Introducing new ways to see the world and new tools to add to your mental arsenal.

This week’s lens: Snarl slogans.

“Eat the rich!” The precursor of this phrase is attributed to Jean-Jacques Rousseau in the 18th century. In its modern usage, it’s a cry against wealth inequality and a call for systematic change. While it’s sometimes used as a call for full-on non-market socialism, more often (in the US) it is a call for general economic reform. In many ways, this has all of the hallmarks of a good slogan. It’s short. It’s catchy. It captures the direction. However, it has one dangerous property: it’s a snarl slogan.

A snarl slogan is a slogan which paints an extreme that makes it easy for the opponents of a position to misuse. Such slogans are easily — and often intentionally — misinterpreted. Opponents of economic reform can easily say, “See, they say, ‘Eat the rich!’ Any money you ever make, they will take away from you.” With this twist, it doesn’t matter whether or not the participants are interpreting the slogan correctly — the slogan itself becomes the means to gridlock the conversation. Snarl slogans have this property of rapidly becoming inkblots for an ideology. They have a strong “but what it really means is…” vibe. 

Often, it only takes a bit of game-theoretic thinking to think through how a snarl slogan will be abused by others. Snarl slogans often make strong statements that make people feel righteous — without actually proposing anything concrete. They actively ignore the nuances. 

We often think of slogans in political or commercial contexts, but slogans can come up in many contexts. When you hear or coin a call to action, don’t just think about how it resonates with folks who already share your perspective. Think too about how it may be (mis)interpreted by those with alternate perspectives. You may be surprised how easy it is to snarl up the conversation. 

🔮📬 Postcard from the future

A short ‘what if’ piece of speculative fiction about a hypothetical future that could result from the forces changing our world.

// In a world of ever increasingly extreme weather events, financial swings, and more and more systematic uncertainty, how will Wall Street look to take advantage of the situation?

// Automated email response, September 2nd, 2023.

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