Welcome to Stuff I Thought About Last Week, a personal collection of topics on tech, innovation, science, the digital economic transition, the finance industry, and whatever else made me think last week.

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In today’s post: a look at the paradox of information as current digital trends reverse a long arc of rising information freedom; turning toys into weapons; a geeky look at ergodicity economics; and, much more below.

Summer Schedule: the next SITALWeek will publish on August 11th.

Stuff about Innovation and Technology
Onboarding Digital Agents
HR software company Lattice announced last week that their software now onboards AI workers. Lattice software can be used to set goals and give feedback to AI employees as well as place them in org charts so that managers can assess and hold them accountable for their performance. Lattice will also train AI employees on corporate branding and their roles in the company. I’ve previously discussed the inevitable trajectory of replacing jobs with AI (which robs AI of the constant stream of new information that it needs to sustain), but the thought exercise of human managers being held accountable for the performance of AI workers is bone chilling.
 
AI’s Walled Web
Since the dawn of the Information Age (and its predecessor, the printing press), conventional wisdom says that we are on a one-way path towards open access to information. It’s worth examining that theory more closely. As I was reading this article about the long saga over Google Chrome ending support of tracking cookies, the persistence of the outdated concept of the “open web” struck me as naive. While there have always been gatekeepers – from tribal councils, to monarchs and churches, to newspapers and social network algorithms – we are approaching an era where AI has effectively cemented the walled gardens of the mega tech companies, i.e., the closed Internet is already a fait accompli. I’ve long covered the slow vacillations between closed and open information systems from various angles. Thus far in the Internet Age, we’ve moved from dial-up platforms like AOL to the first search engines that enabled the dotcom era, then on to the social networks that have aggregated content (alongside the mobile OS and app store duopoly); and, now, we are entering the AI filter era, which will consume the Internet only to spit out walled garden tea-party conversations. At this point in time, it seems laughable that unadulterated information could ever experience a resurgence, barring some seismic event. 
 
I am reminded of an exchange between Stewart Brand and Steve Wozniak that occurred 40 years ago in which Brand remarks: “On the one hand you have—the point you’re making Woz—is that information sort of wants to be expensive because it is so valuable—the right information in the right place just changes your life. On the other hand, information almost wants to be free because the costs of getting it out is getting lower and lower all of the time. So you have these two things fighting against each other.” We might, perhaps, indulge a broader perspective here on this tension between free and expensive and speculate that, throughout human history, power grabs via informational gatekeeping have caused wars, rebellions, and other tragedies. Crosscurrently, the Scientific Revolution, the Renaissance period, and the rise of Western liberalism laid the groundwork for the Internet and the democratization of information. However, AI will be the mechanism that will reverse this centuries-long divergence, once again swinging the pendulum in favor of information control by autocratic gatekeepers. Let’s call it wronging a right. Whereas previous digital technologies led to near-zero marginal cost for growth and consumption, AI seems to buck this trend (at least for now; however, inevitable efficiency gains should eventually revert course, we can hope). Currently, AI is so expensive to create and maintain that only a few companies can afford to do so. Therefore, it’s collapsing the free-expensive tog-of-war into a strange paradigm where information will only be valuable when accessed through a small number of new, expensive conversational interfaces and operating systems (note that, so far, evidence for the impact of Google’s AI search results is mixed, but it’s very early days). We’re also seeing accelerated aggregation occur for video (YouTube) and news/content/etc. (social networks). Although there still exists the possibility of an informational Catch-22 – whereby AI will run out of content to feed its insatiable appetite, thus stalling its ability to advance toward a higher level of intelligence (see: Will Generative Search Sideline its Teacher? and Digital Surrogate Delusion) – the natural progression from here is for AI to create content/data for AI engines/agents to consume and serve to users. 
 
In such a world of circular AI information, the decades-long shift away from objective reality will be complete. And, will anything still hold value when there is no space for genuine “human” output? (Granted, of late, humans have been so influenced by technology and algorithms that it’s hard to call anything uniquely human anymore; rather, the human contribution to civilization has been declining, and the percentage may soon approach zero – it’s been an odd consequence of the aberrant vector of information democratization combined with growth of connected technologies). After human input is thoroughly minimized, the next natural progression will be the creation of an AI economy, composed of trillions of agents interacting with each other, that supersedes and feeds off the increasingly irrelevant human economy. For humans, the existential will become inconsequential, and the least of our concerns will be tracking cookies on the Internet. As far as it goes for everything else we call life, I reckon there will be a backlash as we discover that an entirely hands-off-the-wheel approach might not work in the complex, analog world. Afterall, I don’t know if it’s possible to find meaning in the world without the lens of the human brain. As I posed in You Are Special?, when humans are no longer bigger than the game of life, will anyone want to keep playing?
 
Weaponizing Toys
Necessity has always been a potent motivator for pushing the technological envelope, and the Ukraine-Russia war has proven an exigent accelerant for AI/autonomous weaponry. Reading in the NYT about how toys – from racing drones to video game controllers – are being turned into weapons of war, I couldn't help but think of the plot of the 1992 Robin Williams movie Toys (which seems likely to have been inspired by the plot of Ender’s Game. Note: if you go looking for Toys, you will only find second-hand physical copies available). It’s an odd coincidence that Eric Schmidt bears some resemblance to the martially aggressive Toys’ character Lt. General Leland Zevo (played by the late, great Michael Gambon). In the movie, Zevo discusses his outlook for war with the higher ups of the US military: “You've gotta look to the future. The future is anarchy. I'm talking about lawlessness...I'm talking about the breakdown of the whole system. The military defending people against people...How can you possibly justify that one stealth bomber costs more than the government spends on cancer research in the whole United States? But 1 million little planes at $5000 apiece?...This is the future!”

Miscellaneous Stuff
Six Degrees of Anonymity
Actor Kevin Bacon is highly recognizable from his 106 acting credits. He recently went incognito in a popular LA mall: “People were kind of pushing past me, not being nice. Nobody said, ‘I love you.’ I had to wait in line to, I don’t know, buy a fucking coffee or whatever. I was like, This sucks. I want to go back to being famous.”

Stuff About Demographics, the Economy, and Investing
Genetic Ergodicity
Economist Jason Collins takes a look at ergodicity economics through a genetic lens in his latest post. Longtime readers will be familiar with the idea of non-ergodic systems, whereby an individual’s path through time rarely (and only coincidentally) overlaps with the average, expected outcome. It’s an important concept we first referenced in our 2014 paper Complexity Investing because it underpins the notion of just how difficult it is to predict anything. Ergodicity reframes many behavioral economics concepts that investors have been misguidedly taking for granted. Collins’ post is a great overview of ergodicity and ends by demonstrating there are some situations in evolution where certain seemingly irrational individual behaviors in a non-ergodic world are explainable by considering the ergodic genetic ensemble of a population. One might extrapolate that there are times when it makes sense to switch between (or combine) an additive and multiplicative framework for decision making, depending on whether you are considering the individual vs. group (or percentage vs. whole) perspective.

✌️-Brad

Disclaimers:

The content of this newsletter is my personal opinion as of the date published and is subject to change without notice and may not reflect the opinion of NZS Capital, LLC.  This newsletter is an informal gathering of topics I’ve recently read and thought about. I will sometimes state things in the newsletter that contradict my own views in order to provoke debate. Often I try to make jokes, and they aren’t very funny – sorry. 

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