Balaji Srinivasan and The Network State: Will the founders win?

"Beware how you trifle with your marvelous inheritance, this great land of ordered liberty, for if we stumble and fall, freedom and civilization everywhere will go down in ruin." - Henry Cabot Lodge

The year is 2179, your great-great-great grandchildren are sitting in a park, waiting for their mother to finish work. Her husband is the main caregiver. The air is free of micro-particles. There is a statue of Tim Ferriss nearby. Yoga, meditation, intermittent fasting and healthy sleep are taught at ‘school.’ As is finance. Education is focused on ‘how’ to learn, not ‘what’ to learn. The institutions which allow this country to operate are open-source and sit on the Blockchain. It is a success. Far beyond what even Balaji S Srinivasan (buh·laa·jee?sree·nee·vaa·sn) could have imagined when he wrote about this on his blog 1729.

However, this isn’t Utopia. It’s only 2179, after all. The human condition is still fragile, universally speaking. There are societal issues and infrastructure problems. People still get sick. Very sick. But there is a high functioning health service to care for them. Most survive. Not everyone is educated but those who want access to continued education and life-long learning have equal and open access to the best available. Those who can, teach. There is still crime but criminals are re-educated, not incarcerated or executed. There are no prisons as we know today. But dangerous people don’t walk the streets. Somewhere far away, a war is raging.

The Network State

Although unrecognisable from what we know, there are ‘newspapers’, ‘politicians’, ‘financial institutions’ and ‘manufacturing’. People still remember ‘the Old World’.

The name of this new country doesn’t matter. There are many of them. What does matter is how we got here. Was this new world inherited or was it founded? Was it passed on from the Du Ponts and the Forbes and the Rockefellers? Generational wealth inherited by those born with a name and a family lot? Was it built upwards? Layer upon layer, filling in the cracks, papering over the faults and correcting failure after failure with taxes and government bailouts?

Or was this country founded? Was it created from the decentralised digital offspring of Vitalik Buterin and Satoshi Nakamoto and Elon Musk (last seen floating towards the Kuiper Belt as a hologram on a Dogecoin satellite)? Was it built from the cloud down? Ten million people with a vision all linked together through an ideology. Did the infrastructure come last? Built on reclaimed land and made of plastic?

Founding Verses Inheriting and the Network State

"One way to inherit an institution is to pass it from parent to child, along with the fortune. That's the model that the Wall Street Journal and the New York Times Company still follow, where the Murdochs andSulzbergers named their successors from within the family."

Balaji S. Srinivasan

In his latest article on the mind-altering 1729, Balaji S Srinivasan continues his exploration of the Network State. Like the rap game which battled east v west, Balaji pits the inherited wealth and institutions of the East Coast of America (the old world) against the founded wealth and institutions of the West Coast (the new world) of America. He explains their history, why they excel, why they suck and why the West Coast would be better suited to building our future world.

Dre verses Biggie. Du Pont verses Zuckerberg. The New York Times verses Twitter.

Civilisation is at stake.

The Institutional Beast From The East (Coast): Inherited Names, Inherited Wealth

• Examples of inherited wealth – The Du Ponts, Forbes, Mellon families.
• Examples of inherited institutions – Wall street Journal , New York Times Company

Let's start with the East Coast, a land (tribe or mentality) of inherited names, inherited wealth and inherited institutions. Who you know, where you were born and which part of your parents last will and testament had your name on it. One day you are not the CEO of the #wallstreet Journal, the next you are. One day your responsibility amounts to looking after your family, the next you have 10,000 people under your watch. It’s reactionary, it’s often corrupt, it’s nepotism gone mad. But for hundreds of years, it has ‘worked’.

Of course it has worked. There was nothing preventing it from not working. No reason why the Du Ponts and the Forbes would jettison a life of privilege and success to start from scratch, to move west and look for a mind shift, a career change, something ‘else’. As the culture became entrenched in the families which sought to exploit it, so society at large became immune to its lack of creative spark, dynamism, and reluctance to be proved wrong or seek out new opportunity.

Comfort is the enemy of progress.

And there is nothing more comfortable than inherited wealth to those who know nothing else.

Reading Between The Lines Of Read-Only Culture

The last year has only amplified the ravaging incompetence which radiated outwards from the nerve centre of the East Coast elite. Balaji uses what he refers to as the ‘read-only’ culture to explain the ineptitude.

When you inherit an institution you miss out on the invention; you lack knowledge of the creative spark which set the institution on the road to where it is. You have no need for first principles and starting from scratch. The culture of knowing how to create has long been eroded away.

Balaji goes on to liken it to bilingualism. Being a father of bilingual children and living away from my ‘culture’, I have invested interest in this particular insight. If, as Balaji says, culture is not passed on because the children can’t write or speak the stories of their parents (hence, read-only), the culture slowly disappears. In the same way that when the blueprint of the institution isn’t passed on (because it was lost decades ago) the institution is merely stagnating, waiting to be de-railed and sent tumbling into oblivion.

Of course this may be fine, the institution may rumble on in its own disjointed fashion for decades. And many have. Outwardly the status quo is met, the dividends are paid, share-holders are happy and those Sunday Family get-togethers in the Hamptons are full of exquisite dalliance and chateau Lafite.

Then Covid-19 comes along and the ineptitude running the debacle comes to the fore. The lack of first principles and knowledge of creation is exposed. The whole inherited machine comes to a grinding halt.

There is no reinvention because there is nobody around who can invent.

“This is a microeconomic explanation for how Idiocracy happens slowly. People think the cultural capacity remains because the artifacts surround them...but the culture producers are actually slowly vanishing, and their descendants can only repeat, not create.”

Balaji S. Srinivasan

The fallout is catastrophic. As Balaji highlights, during the course of the pandemic, public health, media, military, police, education and fire departments failed. The wheels didn’t just fall off, the car drove into the ravine, all our hope and dreams for a speedy end to the pandemic locked inside.

How The West Was Won: Founded Institutions, Founded Wealth & New Names

Meanwhile the Sun is shining on the West Coast of America. 29 degrees and a warm north-easterly. The philosophy, like the rap, is laid back, cool, and always reinventing itself.

Although decentralised, the West Coast is where the founder movement was born and matured. As Balaji says, It (The West Coast Mentality) is everything the East Coast dynasties aren’t. Mark Zuckerberg didn’t wake up one morning and have a billion subscribers and sixty thousand people working for him. He started in a dorm room tout seul and went from there.

The West Coast Founders had no choice but to work from first principles; to start from scratch. Ethereum, Paypal, SpaceX, Amazon, Bitcoin, Buzzfeed, MOOC. These institutions started from nothing but the thirst for something different, the right questions, luck and effort; these institutions were founded by young, mobile, connected visionaries with no links to inherited wealth, names, history and the read-only culture which stems from it.

Yes, they had no fortunes to lose or reputations to sully, but whereas inheritance rarely questions anything, foundation questions everything.

Balaji appears to be putting all his eggs in the West Coast Basket. And for what it’s worth, I agree. But just as setting off into the wilderness alone is often ill-advised, galloping into the 22nd Century with the youthful swagger and open-minded genius of the tech generation alone could have consequences.

Downsides Of A Founder Country

There is an elephant in the room. Since we are talking of east and west, how about a little moral compass to guide our thoughts for a minute. It’s all good and well having Jeff Bezos and Amazon leading the logistics side of the operation, but doing so without speaking of tax avoidance, working conditions and the piggybacking off the inherited institutions we are seeking to replace, is asking the future to ignore the very behaviours we want to get rid of. I am ignorant to the current situation regarding Amazon and state-run/inherited institution delivery services but believe they have used and continue to use them – please met me know in the comments. Tax avoidance questions are still to be clarified and working conditions are, at times, inhumane. *1

Facebook, for all the good it does, has its demons to deal with. Including, but not limited to, privacy, security, censorship, war-crimes, child abuse, fake news, anti-Semitism, Myanmar, Uyghur, white supremacy, and an awful news feed.

"Over the course of 2020, public health failed, public schools failed, fire departments failed, and police departments failed. National, state, and local governments failed. Media corporations failed and even the US military failed. Just about every Western institution run by a political heir failed."

Balaji S. Srinivasan

What Direction Home?

Head to the future on an inheritance and humanity will end up a failed state, ineptitude piled on ineptitude. Corruption, scandal and viscous failure every time an unexpected event happens.

Fortunately the inheritance momentum is fading and a new phoenix is rising from the flames of a post-Covid world. The veil of inability for the read-only culture to adequately answer the issues of our times has been ripped away. Climate change, polarisation, inequality, education, healthcare, technology. None of these can be re-imagined by the read only culture of inherited institutions. To continue the analogy, they have forgotten how to write.

Over the coming decades the weak links of the founder model will be fixed, partly by the blockchain, mostly by the communal connected spirit and desire of those who lead it and their followers. Communication, infrastructure, media, finance, insurance, logistics. These will all be the preserve of the founders. These are the pillars of any civilisation. When done correctly those civilisations thrive.

Can The Old World Come?

For the time being there is still a place for the old world, there is still plenty of opportunity for it to use its time and resources. Human nature needs it so. Military, diplomacy, and the human condition’s need for some kind of higher functioning administrative machine orchestrating their life will remain the preserve of inherited political family power. Only 14% of the US population own cryptocurrency of one sort or another. Outside the US that figure plummets.

The audacity to even believe that the voting system, the financial centres, the media empires and education can not only be made better but infinitely so, is not the common belief. For the majority the idea that a future world could be made up of cloud cities with no borders, no walls, no fixed address; where money is decentralised, healthcare universal, well-being a norm, injustice minimal and where supply chains are managed and protected via impossibly complex algorithms and voted on universally, is indistinguishable from magic.

But what was once magic is now chemistry, biology and physics.

What was once magic is now science.

#thenetworkstate #blockchain #balajisrinivasan #founders