All Segments
Ep.78 — Jesse Livermore — Future of Money, Education, and Health
51 segments available
Jesse Livermore (pseudonym), a Research Partner at OSAM, is back to Infinite Loops for his second appearance to talk about: - Payments in the Metaverse - Crypto regulation - Incentives of governments vs. corporations - Rise of online education - Universal Basic Income Follow Jesse on Twitter https://twitter.com/Jesse_Livermore, and check out his writing here http://www.philosophicaleconomics.com/
Segments Timeline
Welcome to Infinite Loops
Jim O'Shaughnessy introduces the Infinite Loops podcast, emphasizing the goal of resetting thinking patterns to avoid getting caught in infinite loops of thought. He highlights the importance of multi-faceted perspectives, including history, philosophy, and quantitative analysis, to foster better investing and nuanced thinking.
"[Music] hi i'm jim o'shaughnessy and welcome to infinite loops sometimes we get caught up in what feel like infinite loops when trying to figure things out markets go up and down research is presented..."
Introducing Jesse Livermore
Jim welcomes Jesse Livermore, a research partner at OSAM, for his second appearance on the podcast. They discuss the speculative nature of their conversation, particularly focusing on the metaverse and its implications for society, currency, and human behavior.
"jim o'shaughnessy is chairman and co-chief investment officer of o'shaughnessy asset management where jamie catherwood is an associate all opinions expressed by jim jamie and podcast guests are solely..."
Speculating on the Metaverse
The conversation shifts to the concept of the metaverse, referencing 'Ready Player One.' Jim and Jesse speculate on the future of currency in this virtual reality, questioning whether traditional currencies like USD or new forms will dominate. They explore the implications of living in a fully immersive digital environment.
"i listened to the first podcast we did and then you and i texted back and forth and we kind of dropped off when you were speculating on okay so the oasis becomes a reality so that's the metaverse the ..."
The Nature of Currency in the Metaverse
Jesse discusses the characteristics that a currency would need to have in the metaverse, emphasizing functionality, tangibility, and scarcity. He reflects on the importance of these attributes to ensure that the currency can effectively facilitate transactions in a virtual space.
"crazy predictions and or they have a very difficult time not the cheerleaders for the metaverse or the oasis but rather others our history is littered with examples that we could give of people saying..."
Scarcity and Value in Digital Currency
The discussion continues with Jesse referencing Douglas Adams' work to illustrate the concept of scarcity in currency. He emphasizes that any currency in the metaverse must have a mechanism to ensure scarcity to maintain its value and prevent inflation.
"i'm fully expecting a nick bostrom existential crisis piece on what's happening over the next 10 years but we'll get into that but let's start where we left off if that's okay with you first welcome t..."
Blockchain as a Solution
Jesse proposes blockchain technology as a potential solution for ensuring scarcity and value in digital currencies. He discusses the need for a connection between the blockchain and the currency's tangible aspects, highlighting the importance of trust in the system.
"doesn't give us problems and it would have to be something that is tangible in a different way so we have physical like we use physicality as a current measure for what's tangible to us in a metaverse..."
The Role of Trust in Currency
The conversation shifts to the necessity of trust in any currency system, especially in the context of cryptocurrencies. Jesse and Jim explore the implications of a currency's value being tied to public perception and the potential risks if that trust erodes.
"of thing be could it be an nft could it be i don't know you tell me i mean i'm not an expert on this but the blockchain stuff would seem like a natural solution for the scarcity problem something that..."
Human Nature and Currency Systems
Jesse reflects on human nature's impact on currency systems, discussing how people's experiences shape their understanding and trust in financial instruments. He emphasizes the challenges of predicting future behaviors based on past experiences.
"universe could come in and say the only thing you can use as money is this thing that we've installed into the system that would really help i would think because if you don't have that you're kind of..."
The Challenge of Predictions
The discussion delves into the difficulties of making accurate predictions about financial systems and currencies. Jesse and Jim highlight the unpredictability of human behavior and the limitations of theoretical models in anticipating future events.
"potentially what you're saying is that maybe i mean is there an opportunity for like is that a company is something a company that basically is the issuer of these things that we're going to use as cu..."
The Need for Assurance in New Systems
Jesse expresses his desire for assurance and control in new financial systems, particularly in the context of cryptocurrencies. He discusses the importance of managing human nature's shortcomings to foster confidence in participating in these emerging markets.
"the government for years didn't really understand them and then you had like guys like buffett saying these are weapons of mass destruction and potentially he's right we saw what happened in 2007 and ..."
Understanding Complex Systems
The conversation concludes with a reflection on the complexity of financial systems and the importance of experiential learning. Jesse emphasizes that understanding often comes from personal experience rather than theoretical knowledge, highlighting the adaptive nature of human beliefs.
"surface so like if i come into the world in 1985 and i'm a trader and i see all these derivatives that are new and there's never been a problem before i'm gonna use that as my guide and i'm gonna say ..."
The Evolution of Knowledge
Livermore reflects on the evolution of societal knowledge since the Enlightenment, referencing David Deutsch's 'The Beginning of Infinity.' He argues against limiting choices to existing options, advocating for the exploration of future possibilities. This segment highlights the importance of adaptability and innovation in understanding the world.
"that is a very unreliable form of trying to anticipate the world and interact with the world so i just throw that out there i completely agree with that joe weisenthal called me a anarchist on our pod..."
Lessons from Historical Oversights
In this segment, Livermore examines historical examples of companies like Xerox and Kodak that failed to capitalize on their innovations. He discusses how hindsight can reveal missed opportunities and the importance of being aware of potential disruptions in the market. This analysis serves as a cautionary tale for current and future businesses.
"because when you look at the history of bad forecasts they look like a barbell because as you might guess i just did this and there are many more on this side which failed to see the impact of somethi..."
Government's Response to Crisis
Livermore critiques the ability of governments to adapt and respond to crises, particularly in the context of the COVID-19 pandemic. He argues that governments worldwide were slow to innovate and that their responses were shaped by unique circumstances. This segment explores the complexities of government action and the incentives that drive decision-making.
"because they are based in large part on credo which means i believe credit credit comes from credo and so these are deep in our base code of human os and you pointed out some things that we would all ..."
Incentives in Government vs. Corporations
Livermore contrasts the incentives of government organizations with those of corporations. He explains how market forces drive corporate efficiency, while government entities may lack the same accountability. This discussion sheds light on the challenges of effective governance and the potential for misalignment of incentives.
"of got me thinking on this whole idea do you think governments can catch up i think governments are so far behind the innovation cycle and again i'm not picking on the us government here in fact if an..."
The Complexity of Government Regulation
In this segment, Livermore delves into the complexities of government regulation, particularly in sectors like education and healthcare. He argues that outdated systems hinder innovation and that the regulatory environment often fails to keep pace with advancements. This analysis raises questions about the future of regulation in rapidly evolving industries.
"in doing that now any organization is like that a corporation wants to stay afloat it wants to be prosperous it wants to continue to exist it wants to grow but the key thing about a corporation is tha..."
Unique Responses to Unique Crises
Livermore discusses the unique circumstances surrounding the government's response to the COVID-19 pandemic, suggesting that the political environment and prior experiences shaped the outcome. He emphasizes that such responses may not be replicable in future crises, highlighting the importance of context in policy-making.
"for it because you can hide it or because you can just nobody's noticing or whatever whereas that's a lot harder to happen in the corporate sector where everything is measured everything comes down to..."
The Role of Incentives in Governance
Livermore concludes by exploring the role of incentives in governance and how they differ from those in the corporate world. He argues that while governments can achieve positive outcomes, the alignment of incentives is crucial for effective governance. This segment encapsulates the challenges and opportunities facing modern governments.
"i guarantee you and i don't want to get political but if you had had covet in 2011 it would have been a very different outcome the policy response would have been very different now part of the reason..."
Government vs. Private Enterprise: A Stagnant System
Jesse Livermore discusses the lagging response of government regulations compared to private enterprise innovations. He highlights the outdated nature of public institutions, such as education and healthcare, and questions whether a collaborative public-private solution can emerge. Livermore argues that true progress often requires minimizing government intervention, as entrenched systems resist necessary change.
"in 2020 now and i want to say some people might disagree that it was the right response i think we both agreed it probably was look at the result i mean it's working but you wouldn't have gotten what ..."
The Challenges of Regulatory Change
In this segment, Livermore elaborates on the difficulties regulators face in adapting to new innovations. He explains how existing incentives within government structures hinder progress, making it challenging to implement necessary changes. Livermore emphasizes that private companies can often adapt more swiftly than government entities, which are bogged down by bureaucracy.
"the way you start this problem is you just kind of get the government out like in other words if you can just create a solution that doesn't require this it doesn't require this kind of external regul..."
Chaos and Innovation: Historical Perspectives
Livermore references historical patterns where periods of chaos lead to innovation and progress. He cites Lord Whitehead's assertion that chaotic times often precede golden ages, while cautioning about the potential pitfalls of government rigidity. This segment explores the tension between technological advancement and governmental inertia.
"it needs to produce and to optimize the outcome in the government you've got so much built-in intentional stuff to slow that down that's probably part of the problem is that it's entrenched parts of t..."
The Role of Government in Economic Redistribution
This segment focuses on the government's role in wealth redistribution following economic crashes. Livermore discusses how historical patterns show that after periods of significant wealth accumulation, governments often step in to redistribute resources more equitably. He connects this to current economic conditions and the potential for government intervention post-COVID.
"these echo chambers in social media i think there's a way to mitigate that somewhat with some technology solutions with some other solutions as well but it seems to me because the other thing because ..."
Antitrust and Innovation: A Conflicted Agenda
Livermore examines the conflicting agendas of antitrust regulation and wealth redistribution in the tech industry. He discusses how current administrations aim to prevent monopolistic practices while also trying to ensure equitable wealth distribution. This segment highlights the complexities of regulating rapidly evolving tech companies.
"but now the footings have been more equalized because the people who got really rich during that gilded bubble age are now poorer that's when the government tends to come in and have a much more activ..."
Exponential Change vs. Linear Change
In this segment, Livermore contrasts exponential change with linear change, emphasizing the challenges of regulating companies like Amazon. He discusses how the rapid pace of innovation complicates traditional regulatory approaches, making it difficult for governments to respond effectively to the evolving landscape.
"so in this course that i just launched i was talking to mark andreessen about this and the point that he was making is that he thinks in terms of anti-trust and regulation because the new administrati..."
The Challenge of Breaking Up Tech Giants
Livermore addresses the difficulties of breaking up large tech companies, arguing that even if they were divided, the market dynamics would likely lead to a winner-takes-all scenario. He suggests that without innovative solutions, the same issues will persist, regardless of regulatory efforts.
"be protected because the government won't let them just be bought out and reduce competition but then at the other side of the equation there's this more active state role trying to come in and redist..."
Learning from History: Human Reactions to Change
In this reflective segment, Livermore emphasizes the importance of studying human behavior in response to change rather than solely focusing on historical events. He argues that understanding human reactions can provide insights into navigating the complexities of modern economic and technological shifts.
"for the government to go after amazon you like the citizenry probably wouldn't be very happy about that i think that's a really important point like it's almost like corporations are becoming governme..."
The State of Public Education
Livermore critiques the current state of public education, arguing that it fails to prepare children for the realities of the modern world. He raises questions about how to reform education systems to better meet the needs of students, emphasizing the role of local government in driving change.
"against those companies would be warranted in certain situations but for some of the reasons that you mentioned and also for other reasons i don't think it's going to happen people make noise about th..."
Lessons from Historical Crashes
Jesse Livermore discusses the inevitability of market crashes and their impact on innovation. He draws parallels between the early automobile industry and today's technological advancements, emphasizing that while crashes are painful, they do not erase the underlying innovations. Livermore suggests that studying human reactions to change is more valuable than merely examining historical events.
"when crashes happen because investors get burned and all of that happens but it's not like the innovations and or the technologies that were interesting disappear and cars what there were 200 automobi..."
The Crisis in Public Education
Livermore critiques the current state of public education, arguing that it fails to equip children with necessary skills. He highlights the lack of consensus among parents about educational goals, which complicates reform efforts. Livermore reflects on the consequences of standardized testing and the misalignment of incentives within the education system.
"human beings react to these things one of the things that i'm worried about is because i also want to get your input on this jesse public education it's a travesty it literally is not educating childr..."
The Disconnect in Educational Goals
In this segment, Livermore explores the varying expectations parents have for their children's education, from critical thinking to college readiness. He discusses the challenges of defining educational deliverables and how this ambiguity affects the effectiveness of the education system. Livermore emphasizes the need for a clearer understanding of educational objectives.
"problem i think there's a lot of interesting things that are happening at least on the i'm not an expert on this but it's just on the teaching side itself the idea of learning how to teach better i've..."
Innovations in Online Education
Livermore examines the potential of online education platforms to disrupt traditional schooling. He mentions successful models like Khan Academy and discusses the importance of measurable skills, particularly in coding. Livermore argues that the ability to assess competencies objectively can bridge the gap between education and employment.
"tied to actual performance only in a very loose like legacy historical way like oh people that went to harvard my experience is that they tend to be smarter so therefore i want to be with someone who ..."
The Future of Credentials in Education
In this segment, Livermore discusses the evolving landscape of educational credentials, particularly in coding. He highlights the challenge of credentialing subjective skills like management and creativity, contrasting them with the objective nature of coding. Livermore suggests that as the job market changes, the value of traditional degrees may diminish.
"corporations that you are competent there's an incentive maybe for google but see google has to like create the diploma that isn't like a mic diploma they have to create that because again it's all ab..."
The Role of Social Media in Skill Validation
Livermore speculates on the potential of social media platforms like Twitter to serve as a global intelligence network for skill validation. He discusses how individuals can demonstrate their competencies outside traditional educational pathways, emphasizing the importance of adaptability in the evolving job market.
"specific thing if they want to do other things like i just think of the old joke where a lawyer hires a plumber to come and fix his toilet and the plumber comes downstairs after being up there for two..."
The Value of Coding Credentials
Jesse Livermore discusses the importance of coding as a measurable skill in the job market. He explains how companies are creating credentials that serve as a bridge between potential employees and employers, emphasizing the objective nature of coding as a key factor in this process. This segment highlights the challenges of credentialing less quantifiable skills like management and creativity.
"most promising of the opportunities and i think part of the reason for that is that if you think about coding coding is a very objectively measurable process the ability to code is something that's ve..."
The MBA vs. CFA Debate
In this segment, Livermore explores the value of different financial credentials, particularly the MBA and CFA. He reflects on how market demand can influence the perceived value of these credentials, and how clever marketing strategies can create scarcity and desirability around certifications. This discussion sheds light on the complexities of credentialing in the finance industry.
"credentialize management ability how do you credentialize teaching ability as a teacher those are very difficult to credentialize and so you get stuck and then you get into the same kind of games wher..."
Challenges of Measuring Management Skills
Livermore raises concerns about the difficulty of objectively measuring skills in management and creativity compared to coding. He argues that without objective metrics, credentials can become mere status symbols rather than indicators of true capability. This segment delves into the implications of relying on traditional educational pathways for assessing talent in high-level jobs.
"marketing whiz and he or she created this huge demand for cfas by making them scarce very smart the cfa test is designed so the majority fail and somebody really clever either read the book persuasion..."
Universal Basic Income and Job Purpose
Jesse Livermore shares his evolving views on Universal Basic Income (UBI) and its limitations in providing a sense of purpose. He emphasizes that while UBI can address income needs, it does not fulfill the human desire for contribution and productivity. This segment discusses the importance of meaningful work and the challenges faced by individuals in a rapidly changing job market.
"credential so you know how you're playing another little gimmick game that's a workaround if you don't have something that's objective that can be objectively measured it becomes much easier to like n..."
The Role of Make Work Jobs
In this segment, Livermore discusses the concept of 'make work' jobs that provide structure and purpose without necessarily contributing to the economy. He reflects on the value of jobs that keep people engaged and motivated, even if they don't produce tangible outputs. This conversation highlights the need for societal roles that foster a sense of belonging and purpose.
"question i had for you which is as i look at this thing coming along and we're in the middle in the early innings honestly i think now so i think that there's going to be a group in society again worl..."
Military Service as a Model for Engagement
Livermore draws parallels between military service and the need for structured engagement in society. He discusses how military roles can provide purpose and discipline, even in peacetime. This segment explores the potential for creating organizations that offer similar benefits to civilians, emphasizing the importance of community and contribution.
"that you have something to contribute you need a job for that or some sort of interaction with the world that's going to be a challenge i think i can say this as someone who was in the military i'll s..."
Public Service Corps and Humanitarian Efforts
Livermore and his co-hosts discuss the idea of establishing a public service corps to address humanitarian needs. They explore how such organizations could provide meaningful work while contributing to society. This segment emphasizes the importance of creating roles that fulfill both economic and social needs, particularly for those unable to participate in the traditional job market.
"like make work jobs but i think that there's an argument for what i would call make work jobs jobs that don't really actually involve producing anything that is needed but are valuable because they gi..."
Incentives for Innovation in Public Works
In this concluding segment, Livermore reflects on historical examples of government incentives that spurred innovation, such as the railroad boom. He discusses the potential for combining public initiatives with private enterprise to create valuable contributions to society. This conversation highlights the need for creative solutions to address modern challenges in the workforce.
"maybe the market would miss because that's another valuable aspect if the market's already solving that need and you don't want to have some other entity that just goes in there and distorts it you wa..."
The Role of Government in Innovation
Livermore and his co-host discuss the historical role of government in fostering innovation, citing examples like DARPA and the moon landing. They explore the challenges of mobilizing public interest today and the potential for government to lead in areas where private sector investment may be lacking.
"should be looked at today where i don't know what the kind of national project would be but something where the government can kind of provide the incentive for private investment private sector to ta..."
Climate Change and Public Engagement
The discussion turns to climate change and the potential for public engagement through investment in electric vehicles. Livermore argues that creating excitement around environmental initiatives could mirror past public enthusiasm for space exploration, highlighting the need for compelling narratives to drive investment.
"ideas either of you jesse or jamie what do you guys think could generate that kind of excitement in the general public today jesse i'm looking at you well i got one if you want to keep that jamie samm..."
Healthcare Innovations and Future Challenges
Livermore expresses skepticism about the pace of technological advancement, particularly in healthcare and education. He emphasizes the importance of addressing significant societal needs and the challenges of innovating in these complex fields, suggesting that breakthroughs may be harder to achieve than anticipated.
"that's the first one that comes to mind yeah okay i just wonder so i was nine years old when they landed on the moon so i kind of remember watching it not really i think i remember what my mom told me..."
The Future of Healthcare and Technology
The segment focuses on the potential for breakthroughs in healthcare, particularly through mRNA technology and CRISPR. Livermore speculates on the future of these innovations and their implications for society, while acknowledging the difficulties in predicting the next major advancements.
"are two they're not quite as grand but like how about viruses now that we've got cove in this situation the idea of the government you need the government to take risks that the private sector can't a..."
Stagnation vs. Progress
Livermore shares his concerns about stagnation in technological progress, reflecting on past predictions about self-driving cars and the challenges of innovation. He argues that while there may be significant advancements in healthcare, overall societal change may not be as rapid as some hope.
"documentary about bill gates and here he is he's trying to solve this stuff by dysentery and changing refuse into drinkable water and it seems to me that those would be pretty great us government init..."
Imagining the Future
The conversation shifts to speculative thinking about the future, with Livermore encouraging imaginative discussions about societal advancements. He reflects on the importance of igniting public imagination and the potential for transformative changes in healthcare and technology.
"very imaginative here because most prophecies are wrong and the value of them i think well it's like reading science fiction so i love science fiction because as my friend josh wolf says science ficti..."
The Next Decade: Expectations and Reality
Livermore and his co-hosts discuss their expectations for the next decade, particularly in healthcare and technology. They explore the potential for significant advancements while acknowledging the challenges and complexities involved in achieving meaningful change.
"the real thing and we find out this has got a lot of issues to bring into public use and are we even 10 years away now i don't even know i mean i wouldn't be surprised if we don't have self-driving ca..."
Empathy as a Tool for Change
In this segment, Livermore shares his thoughts on the importance of empathy in understanding others' perspectives. He believes that fostering empathy can lead to a better world, as it encourages individuals to consider the well-being of others, which is crucial in resolving conflicts and improving societal interactions.
"let's see god how old will you be in 10 years jamie i will be 35. do you think that they will see a lot of this kind of like massive exponential change in society and in the cool things that they can ..."
Data vs. Personal Experience in Risk Assessment
Livermore discusses the challenges of assessing risks, particularly in the context of COVID-19. He argues that individuals often rely too heavily on personal experiences rather than broader data, which can lead to misconceptions about the severity of risks. He advocates for a more data-driven approach to public health decisions.
"going to be things that are like embryos that don't yet exist that have not yet become fully grown human beings those are the ones that are going to be the ones where you see the most revolutionary ch..."
Closing Thoughts and Future Insights
As the podcast wraps up, Livermore shares his insights on the future of healthcare and the importance of understanding broader societal impacts. He encourages listeners to follow his work and stay informed about upcoming developments in the fields of economics and healthcare.
"and whenever we have conflicts i think it's always helpful to try to imagine that perspective not because the perspective of the person is necessarily valid they could be in the wrong but just the act..."