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analysis and threads on digital, investing, and the new space economy. <a href="https://iondrive.substack.com?utm_medium=podcast">iondrive.substack.com</a>

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April 10, 2021

ISSUE 13: The Depth of the Riches

Good evening.My apologies for a few quiet weeks since the last update. A lot has been happening at work and in family life. Vaccination in the United States continues apace and work travel looks to resume, at least partially, as early as this month. As a result, for this spring and summer, I expect to publish once every three to four weeks. The new cadence is in part to ensure the quality of each update measures up to your expectations. Popular among many writers today is the importance of publishing frequently. I am not one to argue a general case against that, but do believe that, if a trade-off is inevitable, quality must precede quantity, as fewer issues at a consistent quality would be a better mark of respect for the reader’s time than more issues of varying constitution. On the other hand, a more measured cadence is only fair to my family, who have been cheering me on with nary a scratch on the chin since I embarked on this project at the beginning of the year.I look forward to filing dispatches from the road in the near future and introducing the voices of some of my friends to you in future issues.Now onto the update.1.If you wanted to look into the eyes of someone who takes immense pride in their professional expertise yet is hurt deeply by accusations of the contrary, you only need turn to the Netflix documentary <a target="_blank" href="https://www.netflix.com/title/81406333">Made You Look: A True Story About Fake Art</a>. In it, Ann Freedman is the hapless director of an old and respected gallery in New York that was involved in one of the largest forgery scandals in recent history. From 1994 to 2009, eighty million dollars changed hands, endorsed and brokered by Freedman, before the purported works of American maestros such as Mark Rothko and Jackson Pollock were unmasked as scams. Though several art industry insiders and observers in the documentary accuse Freedman of deliberate and criminal fraud, the FBI notably did not pursue prosecution, citing lack of evidence to prove guilt beyond reasonable doubt.But perhaps the FBI also noticed a parallel between Freedman and another hapless expert, Abraham Bredius. Nicknamed “the pope” by his contemporaries, Bredius was the leading world expert on the works of the Dutch master Johannes Vemeer. A wealthy and venerable retiree in Monaco by 1937, Bredius disastrously misidentified a forgery as a newly discovered Vemeer when a well-meaning friend brought a painting to him in an effort to raise money for the anti-fascist Italian resistance. British economist Tim Harford gives a fascinating full account of the story in his book <a target="_blank" href="https://timharford.com/books/worldaddup/">How to Make the World Add Up</a>, but in brief, Bredius seemed to have harbored a personal pet theory that a period of Vemeer’s work was missing, and the forgery played into the unfounded theory perfectly. As Harford notes:When Bredius saw the picture, he didn’t just see a painting. He saw proof that he had been right all along.2.It’s tempting to sneer at the blunders of Freedman and Bredius. They certainly seem to be the mistakes of a self-important and self-assured elite on niche subjects entirely irrelevant to the well-being of society at large. But that would be wrong. In 2006, Professors Charles S. Taber and Milton Lodge of Stony Brook University published a study in the American Journal of Political Science entitled <a target="_blank" href="https://www.jstor.org/stable/3694247">Motivated Skepticism in the Evaluation of Political Beliefs</a>. In the study, the authors presented participants with both pro and con arguments on the topics of affirmative action and gun control. The authors then measured whether participants in the study were influenced by their prior beliefs. They were. Not only did the participants rate arguments that confirmed their prior beliefs more favorably, they also registered a level of animosity against conflicting arguments beyond what could be supported by logic. Deconfirmation bias and confirmation bias coexisted.More dispiritingly, even when given total choice over which arguments to consume, most participants willfully shunned information that contradicted their prior attitudes and beliefs. That choice, by the way, is called freedom of information in an open society. As Taber and Lodge lay out the implications in their paper:Our studies show that people are often unable to escape the pull of their prior attitudes and beliefs, which guide the processing of new information in predictable and sometimes insidious ways…Skepticism is valuable and attitudes should have inertia. But skepticism becomes bias when it becomes unreasonably resistant to change and especially when it leads one to avoid information as with the confirmation bias. And polarization seems to us difficult to square with a normatively acceptable model (especially since the supporters and opponents in the policy debate will diverge after processing exactly the same information). Moreover, up to some tipping point for persuasion, our model predicts polarization even from unbalanced and counterattitudinal streams of information.In other words, if you find our societies so irreconcilable even when people are presented with the same information, it’s because it is our nature to hang on to our pre-existing views, to willfully ignore conflicting arguments, and to engage in motivated skepticism. As proposed by Israeli psychologist Ziva Kundra: all reasoning is motivated reasoning.3.In the world of economics and finance, a cornerstone theory is the Efficient Market Hypothesis (EMH). The idea is that at any given point in time, the price of an asset reflects all there is to know about the asset. Consequently, it’s impossible for an investor to consistently generate alpha, or, excess return above the market.In an earlier era of modern finance, the prototypical protagonist, however tortured, was undoubtedly Gordon Gekko. A character in Oliver Stone’s 1987 film Wall Street, Gekko was sharp, ruthless, and amoral when it suited him. In popular imagination, Gekko epitomized the active investor with the uncanny ability to generate superior returns. Ironically, thirteen years before the film debuted, real-life economist and Nobel Prize laureate Paul Samuelson had published an essay, <a target="_blank" href="https://jpm.pm-research.com/content/1/1/17">Challenge to Judgment</a>, in which he argued that, over the long run, the active investor performed no better, if not worse, than the market. A year after Samuelson’s essay, entrepreneur John C. Bogle acted on the essay’s findings and created the world’s first index fund through his company the Vanguard Group. Though this first fund failed, Bogle kept the faith and his subsequent funds not only succeeded immensely but started a passive investment orthodoxy that persists even today.Yet not all is well in passive investment land. A recently published paper in the <a target="_blank" href="https://privpapers.ssrn.com/sol3/papers.cfm?abstract_id=3716401">Quarterly Journal of Finance</a> looked at fund performance data and whether the fund’s manager was exposed to EMH in school. It turns out that managers who attended schools that taught EMH were more likely to manage index funds. When they did manage active funds, they held portfolios with larger numbers of stocks and deviated less from their investment benchmarks, meaning these active funds in fact looked more like index funds. And how did these EMH managers do? The paper deploys five models in its answer.First, the net returns (first column in the table below) of exposed managers from the authors’ data set were higher, but the difference is statistically insignificant as shown by a p-value of 0.8510. Expense ratios (the last column) of exposed managers, however, are lower on a statistically significant level at a p-value of 0.0006. However, it is the middle two models that were the most damaging to EMH. In short, they show that on a risk-adjusted basis, managers exposed to EMH performed worse on a statistically significant level. Note that the paper’s conclusions may not contradict Samuelson and Bogle as strongly as the above analysis might imply. As the authors of the paper note:These [passive] managers do not generate superior performance, but the funds charge lower fees and generate higher fund flows.And in Samuelson’s original essay, his verbatim argument was not that passive managers would do better, but that active managers don’t, at least not over the long run: Perhaps there really are managers who can outperform the market consistently — logic would suggest that they exist. But they are remarkably well-hidden. However, what is most interesting and hopeful for me in this whole debate on active vs. passive investing styles is a growing awareness from both sides on the unintended consequences of passive investing. Namely, because a passive investing style tracks the market instead of attempting to beat it, on a market-wide basis there is a lower level of informed scrutiny to try to separate well-managed companies from the rest. From the perspective of the companies in the market, passive investors also means management no longer enjoys the level of reward for a job done better. Over the long run, it is not hard to see wealth creation suffer for society as a whole.Shortly before he passed on in 2019, Bogle himself called attention to the potential gravity of the matter: If historical trends continue, a handful of giant institutional investors will one day hold voting control of virtually every large U.S. corporation. Public policy cannot ignore this growing dominance, and consider its impact on the financial markets, corporate governance, and regulation…It seems only a matter of time until index mutual funds cross the 50% mark. If that were to happen, the “Big Three” might own 30% or more of the U.S. stock market—effective control. I do not believe that such concentration would serve the national interest. And so it would seem that while evidence exists in both academic research and the real world that motivated reasoning — or, said more harshly, wishful thinking — continues to trouble individuals and societies alike, in plumbing the depths of the riches in high finance and wealth creation, counterexamples of rational, open minds do not elude us either.If you’ve enjoyed this update, consider forwarding to a friend and asking them to subscribe by pressing the button below. Thank you for your support.From Aspen, ColoradoVictor This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit <a href="https://iondrive.substack.com?utm_medium=podcast&utm_campaign=CTA_1">iondrive.substack.com</a>

March 15, 2021

ISSUE 12: Among Whispering Pines

Good evening.1.When I was 12, I got a job as student reporter for my school paper. To file my first report, one of my cousins, a civil engineer, took me to her work so I could observe engineers install a new railroad track that would pass not far from the school. On that sunny summer day in the back canyons of north San Diego County, I was mesmerized.The first step in laying down a track isn’t obvious. It happens below the surface. Like <a target="_blank" href="https://www.youtube.com/watch?v=fxqSWRrKOMY">drainage systems on a farm</a>, the ground is first graded then pipes laid in to ensure water never logs below the grade that could cause erosion or degradation. Next, a layer of coarse sand creates a slightly malleable but firm ballast to which crossties can be secured. Crossties can be of timber or concrete, and it’s important to align the center of the ties to the center of the tracks. If not, the ties will tilt.Now the rails are lowered and bolted onto the ties. More calibrations happen at this stage to ensure a precise alignment. It used to be that the rails were joined with fishplates, metal bars with tapered ends. Now it’s common to weld the rails, as technology improves to ensure ambient temperature fluctuations don’t expand or contract the rail.At this point another layer of ballast is applied, consisting of small, irregular rocks. Under gravity, they bunch up and tighten the hold of the track system as a whole. After some trains pass, a third layer of ballast can be applied as the weight and vibration of the trains shake up the rocks, helping them find odd, loose spaces to fill and making the base even stronger.While on break, one of the engineers asked me if I knew how wide the rails were spaced apart. I did not. Four feet and eight-and-a-half inches exactly. And how was this distance, also know as the standard gauge, determined?More popular than fact was a debunked myth that Colonial America engineers selected the gauge in honor of the Imperial Roman chariot, which just about accommodated two horses cantering forth side-by-side. While the measurements do roughly match, <a target="_blank" href="https://www.civilwaracademy.com/confederate-railroads">historical records</a> show it was less the result of a singular, conscious, and affirmative decision than coincidences of history and a self-reinforcing socioeconomic phenomenon called path dependence.2.At the heart of physics is the study of a system’s behavior in terms of its motion as a function of time. Expressed in equations of motion, behaviors can be modeled mathematically, which could then be used for predictions.One such behavior is called holonomy. In a holonomic system, as long as we know the position of an object, we know its state. It doesn’t matter what path or how long the object takes to get to that position.A nonholonomic system, by logic, is then any system where the state of an object depends on the path it takes to get to its position. An example of a nonholonomic system is a model globe on a desk. Imagine the globe at rest and on the surface of the globe currently in contact with the desk is the country of Malaysia. Now roll the globe along any continuous path on the desk but return it to its original location without slipping, twisting, or picking it up. It’s unlikely the part touching the original spot on the desk is still Malaysia. The state of the globe depends on the path it takes.Path dependence, when extended into social sciences, partially explains why the standard gauge in the United States today approximates that of the Imperial Roman chariot. As painstakingly documented by economist Douglas Puffert in his book <a target="_blank" href="https://press.uchicago.edu/ucp/books/book/chicago/T/bo6038566.html">Tracks Across Continents, Paths Through History</a>, the standard gauge was an early beneficiary of what we today call the network effect. When early vehicles were designed, tools were created to make and repair them. The more these tools were adopted, the more it made sense to keep making vehicles according to specifications these tools were designed to work with, even as new vehicle technologies emerged. But powerful they may be, network effects aren’t sufficient to explain entirely the survival of the gauge. Coincidences of history also played a role. Before the start of the American Civil War, for example, there were nine regional rail networks and each had to determine which gauge to adopt. Professor Puffert notes:[T]he process was path dependent, in that later outcomes depended on the specific course of preceding events rather than simply on such a priori factors as technology, tastes, or factor endowments.Further, engineers didn’t base their decision on the most widely used gauge in the nation as a whole, but whatever was adjacent to their region. This was borne out by data showing that, despite the supposedly standard gauge of four feet and eight-and-a-half inches representing 80% of all rails in the 1830s, it dropped to merely 55% by the 1860s. What reversed the decline was historical coincidence: Northern generals and military planners happened to recognize and take advantage of the superior logistics of railroads before their Southern counterparts. In the Atlanta campaign, for example, Major General William T. Sherman used rail to not only increase speed but also scale. According to military historian Christopher Gabel in his book <a target="_blank" href="https://www.amazon.com/Railroad-Generalship-Foundations-Strategy-Illustrated-ebook/dp/B06XGQR5X2">Railroad Generalship: Foundations Of Civil War Strategy</a>:In previous North American wars, armies of 30,000 taxed the limits of wagon-haul logistics and local requisition. But in 1864, Sherman waged an offensive campaign with an army of 100,000 men and 35,000 animals. His supply line consisted of a single-track railroad extending 473 miles from Atlanta to his main supply base at Louisville. Sherman estimated that this rail line did the work of 36,800 wagons and 220,800 mules!It shouldn’t be surprising that after the Union had won the war, the gauge used by the Union became the national standard, and that gauge was: four feet and eight-and-a-half inches. In other words, history matters. Had the Union lost the war, it’s far from clear what our railroad gauge would be today.3.While path dependence is an excellent descriptive framework to analyze nature and socioeconomic events, its utility as a normative framework for the entrepreneur is even greater. On the one hand, the network effect element of path dependence feeds much of the business literature today, as social media networks and gig economy marketplaces exploit the self-reinforcing forces of two-sided demand and supply.On the other hand, path dependence could also lull established players into complacency. With success, entrepreneurs begin to look for formulae to replicate. Instructive rules are articulated on analyst calls and in employee handbooks. Investors, pundits, and publishers propagate a sense of infallibility. Soon, board strategy meetings center around a schematic of the company’s flywheel. Investments are weighed based on their ability to take advantage of or strengthen the flywheel.I want to be clear. Learning from past actions and elevating the quality of thinking are absolutely critical to long-term entrepreneurial success. It’s that often the conventional tools of strategic analysis implicitly assume a static landscape in which past success can be replicated with the same actions that led to it. But as the late Professor Clayton Christensen of Harvard Business School explains in the innovator’s dilemma, established players fail not because they lose their edge in what they do well but because what they do well becomes less relevant in the face of a disruptor. Path dependence is fundamentally a mindset of conservatism, solving for the optimal equilibrium between innovation risk and short-term profit. Guide investments by the flywheel by all means, but the greater long-term threat to the entrepreneur isn’t investing outside the flywheel but that someone else develops a different flywheel with better product-market fit.As to commentators and analysts, the frame of path dependence offers a lesson for our craft as well. In 1927, Austrian journalist and biographer Stefan Zweig published a celebrated book, <a target="_blank" href="https://www.fischerverlage.de/buch/stefan-zweig-sternstunden-der-menschheit-9783100025401">Sternstunden der Menschheit</a> (Stellar Moments in Mankind), in which individual historical characters were given significant credit for particular courses of history. As is with pundits in general, Zweig excelled at gathering information, striking up useful friendships, and reconstructing a scene of significance. But in searching for a moment that was not only significant but also dramatic to retell, analysts fall victim to exaggerating its significance. And as Sternstunden der Menschheit gained widespread readership not only in Continental Europe but also the United States and Latin America, it became a mold plate of sorts for many subsequent historical analyses based on biographies.Ironically, Zweig gives a half-warning against this approach in his book: When it looks at great accomplishments, the world, bent on simplifying its images, likes best to look at the dramatic, picturesque moments experienced by its heroes.... But the no less creative years of preparation remain in the shadow.In physics, a system may be falsely identified as nonholonomic if adding a parameter, also known as raising the dimension of the space, allows the system to satisfy holonomic constraints. Using the model globe example, if the globe must return to its original position on the desk by precisely retracing its path, then the country of Malaysia would once again make contact with the desk when the globe returns. The last year has upended and subverted not only the lives of too many of us, but our beliefs. Our world may or may not be a nonholonomic system at a higher dimension, but we are unlikely to return to the world that was. Perhaps the lesson here then is to beware of both the power and the constraints of path dependence, and in building a more resilient future for ourselves and others, we look for ways to free ourselves of the burden of our success, even as we build upon it.If you’ve enjoyed this update, please consider forwarding to a friend or subscribing below. Thank you for your support.From Aspen, ColoradoVictor This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit <a href="https://iondrive.substack.com?utm_medium=podcast&utm_campaign=CTA_1">iondrive.substack.com</a>

March 8, 2021

ISSUE 11: Wreckers of Outworn Empires

Good evening.1.At the end of last week’s update I touched on legibility, the human inclination to simplify complex systems so as to impose control over them. Treated extensively in the 1990s by political scientist and anthropologist James C. Scott of Yale University in his book <a target="_blank" href="https://yalebooks.yale.edu/book/9780300078152/seeing-state">Seeing Like a State</a>, legibility is an intellectual cousin to high modernism, which exudes unwavering confidence in the potential of science and technology to master nature, including human nature, to meet human needs. The Bauhaus movement is perhaps legibility’s most beloved transatlantic celebrity. On the hilly banks of the Roaring Fork River, where I’ve been bolted down for much of the pandemic, the vision of Austrian émigré and Bauhaus instructor Herbert Bayer has left its imprint all over the valley. Inside the ruminative Aspen Institute, expert curators staff a <a target="_blank" href="https://www.aspeninstitute.org/bauhaus-100th-anniversary/">dedicated gallery</a>.But elsewhere too has modernism exerted its hold. When an elite group of European planners met in Athens in 1933 to proclaim a new vision for cities, they called themselves modernists. The Athens Charter, as the vision came to be known, cherished legibility and advocated freestanding, monofunctional buildings laid out neatly on a grid but surrounded by vaguely-defined no man’s land, and it has proliferated on a global scale since.In 2019, architect and leading researcher at the Royal Danish Academy of Fine Arts Jan Gehl refuted in a new <a target="_blank" href="https://gehlpeople.com/announcement/soft-city-book-out-august-20/">book foreword</a>:All in all, these new [modernist] principles represented the most radical course change in the history of human settlement. And, by and large, there was never a proper assessment of whether these changes actually worked for mankind. They, in fact, did not…as exemplified by the widespread discontent...2.In 2010, the United States National Aeronautics and Space Administration (NASA) and the University of Alabama in Huntsville (UAH) co-founded a consortium to investigate systems engineering and to advance its discipline. It turns out one of the pre-dominant issues confronting large-scale systems engineering is that of system complexity. In the consortium’s seminal publication <a target="_blank" href="https://www.nasa.gov/sites/default/files/atoms/files/nasa_tp_20205003644_interactive2.pdf">Engineering Elegant Systems: Theory of Systems Engineering</a>, the co-authors explain:System complexity is defined as a measure of a system’s intricacy and comprehensibleness in interactions within itself and with its environment. This definition points to two factors in complexity: (1) Physical/logical intricacy and (2) human cognitive comprehension.Note that last bit on the human element. We’ll come back to it a few more times in this update. The consortium goes on to provide a granular table of properties of a complex system:What’s remarkable is that of the five properties, two, emergence and nonlinearity, aren’t even internal to the system but stem from the limitations of the human mind.In social sciences too have these properties amply manifested. Nineteenth-century French economist, journalist, and member of L'Assemblée nationale Frédéric Bastiat wrote in his 1850 pamphlet <a target="_blank" href="http://bastiat.org/fr/cqovecqonvp.html">That Which is Seen, and That Which is Not Seen</a>:In the sphere of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause — it is seen. The others unfold in succession — they are not seen: it is well for us, if they are foreseen. Between a good and a bad economist this constitutes the whole difference — the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee.Across the English Channel in 1691, John Locke <a target="_blank" href="https://la.utexas.edu/users/hcleaver/368/368LockeSomeConsiderationsAlltable.pdf">successfully argued</a> that the government ought not to cap interest rates, because lenders would find ways to evade the law and pass the cost of evasion to “widows, orphans and all those who have their estates in money”. Those the government intended to protect would perversely end up with higher liability. The reasoning has withstood the test of time, as <a target="_blank" href="https://www.federalreserve.gov/econres/notes/feds-notes/federal-funds-rate-control-with-voluntary-reserve-targets-20190826.htm">central bankers and economists even today</a> acknowledge and try to mitigate the same concern in major interest rate and price control policies.3. At the moment, space is again in the headlines. Thanks to a handful of space cadet billionaires but also the current pandemic alerting us to the monstrously tragic consequences of tail risk, expansion of human presence into space has taken on greater moral meaning and urgency. This space expansionist view rests not only on a wealth of science fiction by generations of influential writers such as Jules Verne and H.G. Wells, but also substantial work produced by serious scientists, engineers, military planners, and an informed, diverse, global space intelligentsia. Indeed the name of this newsletter, the Ion Drive, takes inspiration from the eponymous electric propulsion system for spacefaring.In <a target="_blank" href="https://iondrive.substack.com/p/issue-3-the-case-for-space">ISSUE 3: The Case for Space</a>, I borrow the words of Mark Hopkins, an economist and board member of the <a target="_blank" href="https://space.nss.org/">National Space Society</a>: The vast majority of resources in the solar system lies in space rather than on the Earth. This is true of both materials and energy… The sun produces ten trillion times more energy than what is currently used by the human race. If we could bring just a small percentage of that to Earth, we will have all the energy we need, and it’s a clean, inexhaustible resource. There is vast potential for increasing the size of the human economy by tapping into these resources... Space makes possible a prosperous and hopeful future for all of humanity.But in examining the folly of legibility in forestry last week, I couldn’t help asking whether full-throated space expansionism has also fallen prey to a failure to appreciate complexity. After all, despite widely different rationales and even heated disagreement among space advocates, all take for granted expansion to space is a Good Thing. Where is the debate on the unintended consequences? On Bastiat’s that which is not seen?It helps here to pinpoint an essential physical property of space little discussed in popular media. Although at first the void between stars and planets may seem like a wide open commons in which spacecraft can sail in any direction, the existence of gravitational wells makes specific lanes of travel more fuel-economical. Meanwhile, radiation belts and other natural phenomena lethal to machines and human life render certain zones highly undesirable. For example, the Earth’s massive gravity well means it takes more energy to travel from the Earth to the Moon than from the Moon to Mars. Linear distance matters less than fuel economy, and the void of space consists of unseen celestial, energetic mountains, valleys, deserts, and seas. Associate Professor Everett Dolman of the School of Advanced Airpower Studies at Maxwell Air Force Base, Alabama illustrates in his 2002 book <a target="_blank" href="https://www.routledge.com/Astropolitik-Classical-Geopolitics-in-the-Space-Age/Dolman/p/book/9780714681979">Astropolitik, Classical Geopolitics in the Space Age</a>:Perhaps the most intriguing point locations useful for strategic or commercial bases in Earth-Moon space are the gravitational anomalies known as Lagrange Libration Points, named for the eighteenth-century French mathematician… Lagrange calculated that there were five specific points in space where the gravitational effects of the Earth and Moon would cancel each other out… An object fixed at one of these points (or more accurately stated, in tight orbit around one of these points) would remain permanently stable, with no expenditure of fuel… The occupation and control of these points is of such vital importance that an advocacy group called the L-5 Society was formed to influence national policymakers. Dolman compares these advantageous points in space topology to choke points in conventional military planning. Their importance is that they dictate specific tactics and rationale for not only efficient exploitation but optimal control of space.So the uncomfortable truth, perhaps why it’s hardly spoken of by non-military space advocates, is that, much like conflicts on Earth, when we go to space we bring our problems with us, except with the practically infinite resource of the Solar System we can wreak destruction infinitely more terrible on each other.But even assuming we somehow overcome our Cainitic tendencies, the techno-geographic comparison of space to an open frontier seems inaccurate at best. Daniel Deudney, professor of political science and international relations at Johns Hopkins University elaborates in his 2020 book <a target="_blank" href="https://global.oup.com/academic/product/dark-skies-9780190903343?cc=us&lang=en&">Dark Skies, Space Expansionism, Planetary Geopolitics, and the Ends of Humanity</a>:The technologies of access to space may improve in the future, but until they do very significantly, the sky literally is the limit for nearly all human activities… The existence of a formidable barrier-boundary between the terrestrial Earth and the astrosphere also means that all the growth of human numbers and interactions is occurring within an effectively closed space… Thinking accurately about the geography of the planet strongly confounds the claim that expansion into space has reduced the closure produced by the expansion of machine civilization within the finite confines of the terrestrial Earth. Space activities are bringing parts of the Earth into much closer interaction than reducing their interaction through spatial interaction… [W]e should expect that a significant opening of the astrosphere as a full frontier will quickly produce an extreme density of interaction, interdependence, and degradation.In other words, Deudney cautions us that there is great discontinuity going from a vibrant human presence on Earth to a vibrant human presence in space, and such discontinuity could be fatal. I rather like Deudney’s visualization, reproduced below with slight edits. Arrows represent movement of people.Professor Deudney’s entire book is like an oversized gem, almost overwhelming in contrarian insight and every chapter a worthwhile endeavor to examine up-close. As a real science-based and realpolitik book, Dark Skies steps up toe-to-toe in intellectual heft with an equally haunting work of science fiction, the Hugo Award-winning <a target="_blank" href="https://us.macmillan.com/books/9780765382030">Three Body Problem</a> trilogy by Liu Cixin. Both warn against space exploration, though the authors advocate diametrically opposed political systems in their works.I am skeptical of the feasibility of Deudney’s recommendation to reverse, regulate, and relinquish broad groupings of current and aspirational space programs. Among Deudney’s wish list are large earth orbital infrastructures, colonization of Mars and asteroids, national or private enterprise asteroid orbit alteration, and ballistic missiles and orbital weapons. For although Deudney provides well-reasoned rationale, he leaves out prescription on how key policymakers and public support might be rallied domestically or treaty discussions coordinated internationally. That said, readers should hardly place the burden on Deudney, or any one person for that matter. This is literally the problem of solving for planetary, perhaps even Solar Systemic, peace.In the end, I also believe that the human longing to explore new worlds will simply be too great to tame for long. Better we accept it as fact and solve for its dangers than hope for space-abstinent future generations. 4.Let us return then to the NASA-UAH consortium, which definitionally includes the limits of human cognition in describing system complexity. Humans learn as we are presented with new information. Recent research, such as studies mentioned in a 2016 <a target="_blank" href="https://blogs.scientificamerican.com/cross-check/are-brains-bayesian/">Scientific American</a> article, postulates that the human brain may operate in a probabilistic mode, accepting only tentatively what it believes to be true, and updating such belief as new information emerges. For example, we see a bike across the street and decide it’s pink but remain open-minded that it’s really red because of the angle of the sunlight.This very human cognitive computation is encapsulated in a mathematical equation: Bayes’ Theorem. The theorem’s simplest form states that the probability of A being true given B equals the probability of B being true given A multiplied by the unconditional probability of A and divided by the unconditional probability of B. If this is a mouthful and the bicycle example above hasn’t shed enough light, consider the following post by science humor Twitter account IFLScience:Stories fill <a target="_blank" href="https://yalebooks.yale.edu/book/9780300188226/theory-would-not-die">another book</a> of how the Reverend Thomas Bayes discovered the theorem in 1740 and why it suffered nearly two centuries of scorn before acceptance by mainstream science, but at the core of Bayes’ Theorem was acknowledgement that the search for truth must not be all objectivity and precision — that modern science must not be wholly legible. Today, the theorem has been credited, among countless examples, with cracking the Enigma Code, powering search engines and speech recognition, rate-setting at central banks, and creating a new field in high-energy astrophysics such as the discovery of the Higgs-Boson particle. So where do we go from here? I am no scientist nor astro-geopolitical strategist. Any discussion on the subject immediately strains the intellectual credibility of this newsletter. As an analyst of economics and design, I find the only call to action I can credibly extend is that my fellow commentators adopt a Bayesian framework in our discourse of space exploration. Rather than unqualified endorsement of a public program or private venture just because it relates to space, ask what our Bayesian priors would be, and how the new initiative might affect the posterior probability distribution of our knowledge.In the introduction to her book on Bayes, author Sharon Bertsch McGrayne summarizes:[Bayes’s rule] is a logic for reasoning about the broad spectrum of life that lies in the gray areas between absolute truth and total uncertainty… Bayes has provided a way of thinking rationally about the world around us…[a]nd it says that we can learn even from missing and inadequate data, from approximations, and from ignorance. Perhaps given a choice between passion and passionate reason, the latter poses the greater danger, and a Bayesian approach to space exploration is vital if we were to avoid wrecking our already outworn home.If you’ve enjoyed this update, please consider forwarding to a friend or subscribing below. Thank you for your support.From Aspen, ColoradoVictor This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit <a href="https://iondrive.substack.com?utm_medium=podcast&utm_campaign=CTA_1">iondrive.substack.com</a>

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What is ion drive?: analysis and threads on digital, investing, and the new space economy. <a href="https://iondrive.substack.com?utm_medium=podcast">iondrive.substack.com</a>
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