Sunday, April 19, 2020

A Time to Build

Tech oligarch and notable venture capitalist Marc Andreessen has the answer to our problems. We must build. Surely, he is right. America is falling behind those nations that build more. We are not productive. 

He summarizes:

Our nation and our civilization were built on production, on building. Our forefathers and foremothers built roads and trains, farms and factories, then the computer, the microchip, the smartphone, and uncounted thousands of other things that we now take for granted, that are all around us, that define our lives and provide for our well-being. There is only one way to honor their legacy and to create the future we want for our own children and grandchildren, and that’s to build.

Now, you might think that this is uncontroversial. And yet, recall that one Barack Obama, echoed later by Elizabeth Warren, said that: “You didn’t build that.”

The culture war against builders has produced a situation where we do not build as much as we can. In a nation led by lawyers and by social justice warriors, building cannot be a priority. Lawyers do not build. Social justice warriors do not build anything. They deconstruct what others have built. Or else, they drive up costs by skimming a portion of the profits for themselves.

We have been told, over and over again, that builders were really oppressing minorities. This does not contribute to productive enterprise. If anything, it stigmatizes building as a vast criminal conspiracy.

After all, America seems to have recognized the problem. It tried to solve it by electing a builder to the White House. How did the disloyal opposition react to that?

According to Andreessen, the coronavirus pandemic has exposed America’s failure to build.

We don’t have enough coronavirus tests, or test materials — including, amazingly, cotton swabs and common reagents. We don’t have enough ventilators, negative pressure rooms, and ICU beds. And we don’t have enough surgical masks, eye shields, and medical gowns — as I write this, New York City has put out a desperate call for rain ponchos to be used as medical gowns. Rain ponchos! In 2020! In America!

We also don’t have therapies or a vaccine — despite, again, years of advance warning about bat-borne coronaviruses. Our scientists will hopefully invent therapies and a vaccine, but then we may not have the manufacturing factories required to scale their production. And even then, we’ll see if we can deploy therapies or a vaccine fast enough to matter — it took scientists 5 years to get regulatory testing approval for the new Ebola vaccine after that scourge’s 2014 outbreak, at the cost of many lives.

In the U.S., we don’t even have the ability to get federal bailout money to the people and businesses that need it. Tens of millions of laid off workers and their families, and many millions of small businesses, are in serious trouble *right now*, and we have no direct method to transfer them money without potentially disastrous delays. A government that collects money from all its citizens and businesses each year has never built a system to distribute money to us when it’s needed most.

Why do we not have these things? Medical equipment and financial conduits involve no rocket science whatsoever. At least therapies and vaccines are hard! Making masks and transferring money are not hard. We could have these things but we chose not to — specifically we chose not to have the mechanisms, the factories, the systems to make these things. We chose not to *build*.

You don’t just see this smug complacency, this satisfaction with the status quo and the unwillingness to build, in the pandemic, or in healthcare generally. You see it throughout Western life, and specifically throughout American life.

We are all in on regulation. We love the idea of deconstruction. And this means that we no longer build.

Andreessen continues:

You see it in housing and the physical footprint of our cities. We can’t build nearly enough housing in our cities with surging economic potential — which results in crazily skyrocketing housing prices in places like San Francisco, making it nearly impossible for regular people to move in and take the jobs of the future. We also can’t build the cities themselves anymore. When the producers of HBO’s “Westworld” wanted to portray the American city of the future, they didn’t film in Seattle or Los Angeles or Austin — they went to Singapore. We should have gleaming skyscrapers and spectacular living environments in all our best cities at levels way beyond what we have now; where are they?

You see it in education. We have top-end universities, yes, but with the capacity to teach only a microscopic percentage of the 4 million new 18 year olds in the U.S. each year, or the 120 million new 18 year olds in the world each year. Why not educate every 18 year old? Isn’t that the most important thing we can possibly do? Why not build a far larger number of universities, or scale the ones we have way up? The last major innovation in K-12 education was Montessori, which traces back to the 1960s; we’ve been doing education research that’s never reached practical deployment for 50 years since; why not build a lot more great K-12 schools using everything we now know? We know one-to-one tutoring can reliably increase education outcomes by two standard deviations (the Bloom two-sigma effect); we have the internet; why haven’t we built systems to match every young learner with an older tutor to dramatically improve student success?

You see it in manufacturing. Contrary to conventional wisdom, American manufacturing output is higher than ever, but why has so much manufacturing been offshored to places with cheaper manual labor? We know how to build highly automated factories. We know the enormous number of higher paying jobs we would create to design and build and operate those factories. We know — and we’re experiencing right now! — the strategic problem of relying on offshore manufacturing of key goods. Why aren’t we building Elon Musk’s “alien dreadnoughts” — giant, gleaming, state of the art factories producing every conceivable kind of product, at the highest possible quality and lowest possible cost — all throughout our country?

You see it in transportation. Where are the supersonic aircraft? Where are the millions of delivery drones? Where are the high speed trains, the soaring monorails, the hyperloops, and yes, the flying cars?

Why don’t we build? Andreessen says that we lack the desire. I disagree with him on this point, but I will allow him his word:

The problem is desire. We need to *want* these things. The problem is inertia. We need to want these things more than we want to prevent these things. The problem is regulatory capture. We need to want new companies to build these things, even if incumbents don’t like it, even if only to force the incumbents to build these things. And the problem is will. We need to build these things.

He is underestimating the cultural forces that make it impossible to build anything, cost effectively. The collusion of bureaucrats, lawyers, regulators, environmentalists, diversity officers and labor unions make it far too cost inefficient to build much of anything.

And besides, what makes anyone think that our young people, educated to become social justice warriors, not engineers, have the brainpower to build anything. They are being educated in schools that value diversity more than outcomes, that refuse to respect the results of standardized tests, that have killed meritocracy and have generally dumbed them down. Why do you imagine that this cohort is capable of building anything, even if they had the desire.  


Ignatius Acton Chesterton OCD said...

Manufacturing creates wealth. This is not new news.

Yet we have offshored so much manufacturing output from “uncompetitive” industries. While textiles may be uncompetitive, it’s not true for items like durable goods. Yet we’ve not just allowed them to go, we’ve encouraged them to go. Wall Street loves offshoring. So does the GOPe. So do the Democrat elites. Lots of profits to be made in labor arbitrage. The offshoring sped up in the Reagan/Bush years, and was made exponentially worse by NAFTA and “free market” principles in action. We forgot that America is a nation.

Now we see impoverished towns like those of the Midwest, where opioid addiction runs rampant. Skyrocketing divorce rates and out-of-wedlock births. Men cannot earn enough to win a woman and support a family the old-fashioned way, so our social structure crumbles and social mobility is destroyed. That’s why Trump’s “America First!” message resonated. And it wasn’t because of jingoistic patriotism — these are the people who know firsthand what happens when D.C. and Wall Street sell out the American worker.

And now we can’t buy ponchos.

It is interesting that so many people bemoan our best and brightest not going into STEM fields, while ignoring the fact that the cream of the crop has been going into finance for decades. Somehow this is acceptable — even emphasized as sensible. Finance may efficiently allocate capital and resources, but it doesn’t create anything. Free enterprise allows creativity to be rewarded with new businesses created by entrepreneurs. Enduring value-creation through building/making things — manufacturing Manufacturing creates wealth. That’s why Wall Street-friendly policy is so pernicious: it relies on financiers and politicians chaining up the wealth creators while robbing the till. And best of all, it’s an all-cash business!

Andreeson is right. We’ve stopped building things. Because building things doesn’t look sexy in the world of the Glowing Box, a world Andreesen accelerated with MOSAIC (and later, Netscape). His roots are in the Protestant Work Ethic of his Midwestern upbringing. Wonder what happened in the decades that followed...

Ignatius Acton Chesterton OCD said...

“The collusion of bureaucrats, lawyers, regulators, environmentalists, diversity officers and labor unions make it far too cost inefficient to build much of anything.”

Precisely. More luxurious, teat-sucking professions made possible by wealth-creators.

And I do not share Andreeson’s opinion that it is worse in America than it is in Europe. The European destruction is structurally much worse.

Great post, Stuart!

trigger warning said...

We haven't eschewed building things as much as we've made building things impossible. Bureaucratic regulatory Lilliputians have bound the American economy in a web of expensive rules, iterated endlessly. Even the lackwits of the Lightworker regime were forced to admit that "shovel ready" was simply not an option anymore. I laugh when I hear the words "infrastructure investments" from the mouths of politicians. The environmental impact statements alone paralyze any significant new activity. Or you can ask Bezos about doing business in NYC. And if you're a white male with a freshly minted PhD in physics, are you going to seek an academic or government position, perhaps with a mandatory "diversity oath", or jump on the Wall St bandwagon and make a few bucks?

UbuMaccabee said...

Grow it, mine it, or make it. That's the core economy. The rest is ornamentation.

Sam L. said...

Democrats HATE progress. That's why they they build roadblocks and write laws to prevent making things better and easier.

urbane legend said...

Where are the supersonic aircraft? Where are the millions of delivery drones? Where are the high speed trains, the soaring monorails, the hyperloops, and yes, the flying cars?

There is another answer to the question asked here. Where are these things? They are waiting for a customer base that will pay for them. Supersonic aircraft? We have the ability to build them; there is no point. Supersonic aircraft offer very little in time saving to justify the associated expense of flying them. Same with the high speed trains.

As for flying cars, nothing designed to do two things minimally well will do one thing adequately. Flying requires wings, cars have no use for them; where to put the wings when using the car ability? Comfortable cars require four wheels and moderately long suspension movement; the airplane need only three wheels and little suspension movement. Where do you park this turkey, when at work or at home? The differences between the two vehicles makes a long list. There will never be flying cars.

David Foster said...

Marc Andreessen is a distinguished venture capitalist, and there has been plenty of 'building' going on among the companies his firm invests in. You can see their portfolio here:

I haven't gone though the whole list..would take a while...but doesn't look like there are a lot of companies there which are involved in heavy manufacturing, construction, etc. In any case, the companies that *are* there represent a tremendous amount of risk-taking, creativity, and plain hard work by the entrepreneurs. This is hardly 'smug complacency.' Same with a lot of other startups.

One thing that has happened is that a lot of entrepreneurial talent has migrated into the world of 'bits' rather than the world of 'atoms', to use Peter Thiel's terminology. Reasons? Partly a matter of less regulation, partly that less-mature industries tend to have more easily-available opportunities. In any case, one has to wonder whether someone with the attributes of say, Andrew Carnegie or George Westinghouse would be working today on social media apps rather than on steel or air brakes.

But the idea that American society as a whole has become lazy and smugly complacent is overstated. Marc A should know this if anybody does.

David Foster said...

ATTITUDES toward manufacturing, and toward "thing" industries in general, have played a major role in this situation. Some history and perspective in my 2010 post Faux Manufacturing Nostalgia:

The mid-1960s fate of the GM-Fisher Body Craftsman’s Guild initiative (for boys) is, I think, especially interesting.

Ignatius Acton Chesterton OCD said...

David, with all due respect, I wholeheartedly agree with this statement:

“One thing that has happened is that a lot of entrepreneurial talent has migrated into the world of 'bits' rather than the world of 'atoms', to use Peter Thiel's terminology.”

And that’s the root of the problem. Whether Andrew Carnegie or George Westinghouse would’ve gravitated to this new world of riches is irrelevant. If we ignore the heart of what makes all these nifty (and increasingly necessary) abstractions possible, we die. Trillions of investment opportunities are riding on them.

I agree that a lot of talent has migrated to “bits” in the past 25 years. Just as it did to “high” finance the 25 years before that, and “high” marketing/advertising the 25 years before that. People chase money, and societies reward those creating the greatest return based on the perception of value. Alas, but true. The profits are delicious. Most of the time, it works. Again, allocation of resources. But just as wild degrees of financial derivatives create compounding risk if they are separated from the real “host,” the same is true with other economic abstractions as well. No?

This, in my mind, is the heart of the conceit. The bits and bytes are service efficiencies and forms of entertainment, but the CORE of the economy is atoms, as we are seeing with the “essential workers” and industries of the SARS-CoV-2 Coronapocalyse. We are divorcing our minds from the physical world we depend on.

This is knowledge workers convincing themselves of the value of their knowledge.

And, by the way, I myself am a knowledge worker. But the people I serve produce things. They bring in the bits and bytes people to make things more efficient, but the efficiencies are built on what the “atomic” creators have created. We in the West have taken those efficiencies and squandered them, creating a phony luxurious lifestyle brought to the couch by the Glowing Box. As my economic professor used to say, “We’re Roman farmers with an electrical grid that makes comfort possible.”

Without that electrical grid, everything collapses. The wilderness is still real. SARS-CoV-19 is showing us that. Just as with the NYC blackout of 1977, where a bolt of lightning struck and “A loose locking nut combined with a slow-acting upgrade cycle prevented the breaker from reclosing and allowing power to flow again.” I understand it was a part that cost less than $5.

A contraption of pieces acting together. That’s civilization. And our electrical grid. And we’re counting on every person and piece to do their/its job.

What do we do when the majority of the populous doesn’t know what the electrical grid is, much less appreciate it? To this day, scientists cannot tell us what the phenomenon of electricity ACTUALLY IS. We should have more respect for this miracle our modern lives are based on. Instead, it is another entitlement, with a bureaucrat to regulate it, a politician to “protect” it, and a lawyer to sue if anyone dare try to take away the Glowing Box from a hypnotized citizenry.

Andreesen may have an impressive portfolio of high-margin creativity, but what happens to all of us when the low-margin necessities are ignored? Nothing good, so far as I can tell...

I remember meeting the CEO of Covisint years ago, in Detroit. We engaged in a 90 minute conversation. Very interesting. And he was absolutely full of shit. It all sounds good, but it’s a race to the bottom, and starting an auto supplier business is not a Silicon Valley startup.

Not positive if Andreesen Horowitz invested in Covisint. I suspect they did — after all, it was a big attraction. But I can promise you Marc Andreesen could never create an automotive materials/components supplier company. Finance is much easier.

No offense.

Anonymous said...

Anonymous Englishman here.

Before the US inevitably took over in the 2oth century, the UK was often considered to be 'the Workshop of the World'. Even though I was a young, callow person, I still knew enough to look around me at the snowball of deindustrialisation was starting to gain momentum in the UK during the 1980s and be utterly horrified by the fact that NO-ONE seemed to be planning for what would happen afterwards. "We'll be transitioning to being a service economy" seemed to be the most crafted and detailed response uttered afterwards as some kind of half-hearted bromide. And when 'call centres' started to emerge as (at least) some kind of aftermath, it took - what? - less than a decade before even those were being outsourced to India in the name of 'efficiencies'.

And at the same time, wouldn't you know it, the UK's crime lords (always traditionally quite hostile to the trade in drugs, "I may be a criminal, but that stuff is the Devil's business") had their eyes bulging out on stalks when they saw the size of the returns it offered following the massive influx of opiates into the UK after the 1979 Iranian Revolution. So, effectively, you had the twin cancers of manufacturing contraction and drug expansion happening in tandem from the early 1980s onwards. What did anyone with even a half a brain think was going to happen? Communities striped of income, work, hope, facing a huge wash of cheap drugs? If you outlined that scenario as if it were a single person, people would have said 'We must do something to help them.' When it was whole towns, cities or areas of the country, the response seemed to be "Nah, it'll be fine.'

And as those above have so eloquently outlined - for anyone with the residual oomph to try and set up a business of their own, the banks wouldn't lend and the EU's continued expansion of regulation (which the Brits might have often bemoaned, but boy were they enthusiastic about enforcing) smothered those plans like an airtight seal.

Charles Murray - in his questionnaire to elites - includes the question "Have you ever walked on a factory floor?" Not even worked, but just walked. No prizes for guessing the ratio of answers to that one.

'Grow it, mine it, or make it.' I really like that. I might try and sneak down in the dead of Coronazone lockdown night and spray paint that over the door of the Houses of Parliament.

David Foster said... offense taken, of course, not sure there's even any disagreement. Re Marc A and whether or not he could create an auto components company--I don't know him, but I do knoq some other VCs and Angel investors, and some of them certainly could, IMO. Indeed, one of them has...he and his brother started a very interesting auto supplier, and he is continuing to invest in other enterprises.

"What do we do when the majority of the populous doesn’t know what the electrical grid is, much less appreciate it?"

Articles on energy--especially on energy storage--demonstrate that very few journalists realize that there is a difference between kilowatt and a kilowatt-hour. This includes business and 'tech' journalists. Describing the storage capacity of a battery in kilowatts is like describing the capacity of your car's gas tank in horespower.

David Foster said...

Re 'bits' vs 'atoms'...quite a few businesses involve both. For example, consider GE Healthcare. They definitely make 'things'...x-ray machines, CAT scanners, huge MRI machines, ventilators...but every one of these systems is software-controlled, whereas a few decades ago it would have been controlled by relays and analog electronics. And the product of most of these machines is 'bits' images for the radiologist or other physician, replacing the film-based images of an earlier era. Indeed, the CAT scanners couldn't work at all without extensive bit processing...the computation necessary to take individual 'slices' viewed by the hardware and assemble them into a 3-D view.

Ignatius Acton Chesterton OCD said...

Anonymous captures my thoughts exactly, and he’s ahead of the curve.

What happened in Britain was awful, and it was a bareknuckled political war that occasionally spilled into a hot war, if you call the Brits tendency to riot as open battle. By the way, do not, I think it’s making pretend when you shackle the constabulary like that — in the face of open, violent destruction.

As much as I admire Thatcher, her bull-nosed policy was to smash the trade unions. Utterly destroy them. The black flag.

In many ways, she had to, with the power of the nationalized coal pits, rail system, etc. — and how they took down Edward Heath’s government in 1974. Those unions, like the miners’ Arthur Scargill, were militant Marxists. Under existing policy, there was no impetus for the coal pits to become efficient. Thatcher had no other choice but to take it to ‘em. And she won.

However — as a matter of policy — to leave the British working class with nowhere to turn was shamefully rough. It was like turning POWs loose to fend for themselves after losing a war — which they did. But ‘twas the lot of places like Sheffield, Sunderland, Cardiff, Glasgow, Belfast.


David Foster said...

Anonymous Englishman....Tom Brown's book Tragedy and Challenge is an interesting and depressing analysis of what has happened to British manufacturing, based on his own considerable experience.

Callmelennie said...

In 1914, someone built a device that was capable of dropping a brick on an enemys head from about 1000 feet .. Ouch! Forty five years later, we had the B52 Which could drop 30,000 lbs of bombs from 30,000 feet

Sixty years later, we have, RUFK, the very same aircraft!! Maybe that guy das a point

Anonymous said...

Can't agree more with this topic and parties commenting.

In my opinion, Marx got it all wrong. Class struggle exists, but it not between capital and labor, rather it's between producers and consumers. What we are currently witnessing is an epic battle between those two forces. For many years now, our culture moved from one where production and the agents thereof were celebrated to one where consumerism and it's agents are celebrated. I give you Hollywood, the epitome of consumption. I give you China, the epitome of degrading production. Examples abound all around us, online and off.

The psychology of producers is very different from that of consumers. Think Mike Rowe vs. Logan Paul. I wonder who has the most followers on social media. Pretty sure we know that answer.

Trump understands this intuitively and why, I believe, he's spent his life walking the line between hyper-productivity and hyper-consumption. He knew that to be respected by both classes, he had to ascend within both class structures. In any case, he's probably the best man to transition America from a culture of consumption to one of production.

For this transition to happen, the money and status need to return to production. We agree it NEEDS to happen, the question is HOW to make it happen.