Steve Forbes Interviews George Gilder on Current Issues

Recently, Steve Forbes interviewed our long time friend and partner in venture capital, George Gilder.  In this podcast on Steve Forbes' "What's Ahead" series of podcasts, Steve addresses some pertinent topics regarding trade and the economy, which are definitely worth noting, before he delves into his interview.

In this interview, Forbes asks Gilder about some very important topics relating to his recent book "Life After Google".  George explains why he thinks we are due for a change in computing architecture from the centralized and controlling world of Google to a new paradigm ushered in by distributed ledger computing and blockchain. This new paradigm will restore the power to the innovator, the entrepreneur and dampen the influence of the powerful "cloud titans,"like Google.

For our investors, this concept is not new as we have been discussing this impending shift for the last couple of years.  Nonetheless, we think it is crucial for these new ideas to be referred to regularly and understood completely as we transition from the centralized cloud to a more secure, less intrusive distributed architecture.

An important offshoot of this is to understand how such currently buzz-worthy concepts like "artificial intelligence" (AI) play into this shifting landscape.  As George so adeptly points out "faster is not better".  The World Wide Web with its vast and power-hungry data centers are "not even close to replicating the human brain", like those "clowns in Silicon Valley who think they are duplicating our 14 watt, zettabyte brain...with their tinker-toys based on AI".  Gilder pleads "that is speed of processing, and has nothing to do with consciousness or intelligence or creativity or any of the features that our brain shows...imagination, for example". As professional investors navigating in a world where investing in many circles has become nothing more than an algorithm, we couldn't agree with George more fervently.

Gilder continues, the "AI-cures-all" mentality assumes the entrepreneur is easily replicated "chemically" and is made up of "material forces" instead of a brilliant and intricately created form that itself is creative in ways that "always come as a surprise".  From this we can ascertain how Gilder relates the new paradigm to a reconfirmation of entrepreneurial capitalism, or as we much prefer to describe it, free enterprise.  It has become popular today to suggest that everything is a "zero sum game", that nothing is really created but simply shuffled around from one to another; the ultimate "trading scheme", if you will.  These ideas are part of what has given rise to the recently revived fascination with socialism, the failed economic model resulting in pain and misery everywhere it has been tried throughout history, and even today (Venezuela and Cuba, for example).

Regarding how the new paradigm relates to capitalism, Gilder says "growth is learning" and if the promise of AI were to be thoroughly true, then creativity and knowledge would be able to be planned.  It cannot. If it could, then socialism would work, and it does not.  Here, Gilder is echoing themes from his other recent book "Knowledge & Power" and its predecessor "Wealth & Poverty"; both books are also "must-reads".

It strikes us as frightening that George says he recently was in China and was warmly received at colleges and universities in that country when speaking in these terms, and yet he says he is "not ever invited" to universities in the United States.  China is still a communist country.  However, it is ironic   that the Chinese people seem to be much more receptive of these capitalist concepts (likely because they understand the problems of communism).  "Life After Google" is selling like crazy there.

George also touches on the problems with government subsidizing higher education as well as the folly of fixating on "trade gaps".  But as confirmation of our long-expressed concern over the "8000 to 4000 problem" (the number of public companies has been cut in half in recent years), George talks about the much smaller number of public companies we have today, compared to where we were at the beginning of the 21st century, and the "serious problem" that this creates.  Simply put, besides the obvious lack of new investment opportunities in public companies, the smaller number of companies going public has real ramifications for the economy and job creations.  Simply put, it acts as a drag on both.  Agreeing with our view about the reasons for this phenomenon, Gilder rails against the over-regulation and burdensome requirements companies must adhere to in order to be public, not to mention the cost of complying.

Overall, and as usual, George Gilder further solidifies his place in history as one of the most forward-thinking and gifted commentators on all things technology and economics.  We are honored to call him a friend and colleague and recommend all investors explore his vast writings.

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