"Strauss and the war on data" was one of our most successful early posts but I would dearly love never to have another excuse to revisit it.

 NOAA 

From the NYT via LGM:

President Donald Trump’s administration is seeking to end nearly all of the climate research conducted by the U.S. National Oceanic and Atmospheric Agency (NOAA), one of the country’s premier climate science agencies, according to an internal budget document seen by Science. The document indicates the White House is ready to ask Congress to eliminate NOAA’s climate research centers and cut hundreds of federal and academic climate scientists who track and study human-driven global warming.

The administration is also preparing to ask for deep cuts to NASA’s science programs, according to media reports today.

The proposed NOAA cuts—which could be altered before the administration sends its 2026 budget request to Congress in the coming weeks—would cut funding for the agency’s research arm, the Office of Oceanic and Atmospheric Research (OAR), to just over $171 million, a drop of $485 million. Any remaining research funding from previously authorized budgets would be moved to other programs. “At this funding level, OAR is eliminated as a line office,” the document states.

If approved by Congress, the plan would represent a huge blow to efforts to understand climate change, says Craig McLean, OAR’s longtime director who retired in 2022. “It wouldn’t just gut it. It would shut it down.” Scientifically, he adds, obliterating OAR would send the United States back to the 1950s—all because the Trump administration doesn’t like the answers to scientific questions NOAA has been studying for a half-century, according to McLean.

The administration’s plan would “eliminate all funding for climate, weather, and ocean laboratories and cooperative institutes,” says the document, which reflects discussions between NOAA and the White House Office of Management and Budget (OMB) about the agency’s 2026 budget request. Currently, NOAA operates 10 research labs around the country. They include influential ocean research centers in Florida and Washington state; five atmospheric science labs in Boulder, Colorado, and Maryland; and a severe storm lab in Oklahoma. It also operates the Geophysical Fluid Dynamics Laboratory in New Jersey, the birthplace of weather and climate modeling, as well as a lab in Michigan devoted to the Great Lakes. The agency further funds cooperative institutes, which support a large collection of academic scientists who work closely with the NOAA labs.

The proposal would cut NOAA’s competitive climate research grants program, which awards roughly $70 million a year to academic scientists. It would end support for collecting regional climate data and information, often used by farmers and other industries. And it would terminate the agency’s National Oceanographic Partnership Program and college and aquaculture sea grant programs, which support a host of research efforts.

NOAA officials still have time to persuade OMB to alter the request, but NOAA sources said it is unlikely to substantially change. But this proposal is only the first stage of the budget process; Congress will have the final word in setting NOAA’s spending.

It will certainly face strong opposition from Democrats. “Trump’s budget plan for NOAA is both outrageous and dangerous,” said Representative Zoe Lofgren (D–CA), the ranking member of the U.S. House of Representatives’s science committee, in a statement to Science. “This administration’s hostility towards research and rejection of climate science will have the consequence of eviscerating the weather forecasting capabilities that this plan claims to preserve.”

At NASA, science programs also face severe cuts, according to details first reported by Ars Technica. The White House is considering requesting a nearly 50% cut to NASA science’s office, down to an overall budget of $3.9 billion. According to Ars Technica, the plan calls for: “a two-thirds cut to astrophysics, down to $487 million; a greater than two-thirds cut to heliophysics, down to $455 million; a greater than 50 percent cut to Earth science, down to $1.033 billion; and a 30 percent cut to Planetary science, down to $1.929 billion.”

Such NASA cuts would require ending the operations of a huge host of earth science satellites. They could also result in the closure of NASA’s Goddard Space Flight Center in Maryland, which has thousands of employees and is one of the agency’s premier centers for earth science research. The cuts would also end plans for Mars Sample Return, the DAVINCI mission to Venus, and the Nancy Grace Roman Space Telescope, which is almost fully assembled.

At NOAA, the agency’s budget would be cut by $1.7 billion, the OMB memo said. The proposal also seeks to cut the National Ocean Service in half, with “no funding for Integrated Ocean Observing System Regional Observations, Competitive Research, Coastal Zone Management Grants, National Coastal Resilience Fund, or the National Estuarine Research Reserve System.” The requests would also close the National Centers for Coastal Ocean Science.

Other NOAA divisions would also be hit. OMB is seeking to radically rework the next-generation geostationary weather satellites planned by the agency’s National Environmental Satellite, Data, and Information Service (NESDIS). That includes cutting its planned atmospheric pollution and ocean color instruments because, as the document puts it, the satellites will deliver exclusively “weather” data. It could also cut the infrared sounder, which tracks changes in the vertical distribution of temperature and moistures, catching storms before they form, and a lightning mapper.

The request would also cut funding for the National Center for Environmental Information—the nation’s primary archive of climate data—by $18 million. And it trims mission support for NOAA’s satellites and data systems by $141 million, among many other proposals.

Though Republicans in the U.S. Congress have so far not shown much resistance to the administration, McLean expressed some hope that lawmakers will not approve these cuts, citing how much of NOAA spending is spread throughout their districts. But that’s not a sure thing, he says. “It’s a very different Congress today.” 

 

Sunday, November 4, 2012

Strauss and the war on data

The most important aspect of Randianism as currently practiced is the lies its adherents tell themselves. "When you're successful, it's because other people are inferior to you." "When you fail, it's because inferior people persecute you (call it going Roark)." "One of these days you're going to run away and everyone who's been mean to you will be sorry."

The most important aspect of Straussianism as currently practiced is the lies its adherents tell others. Having started from the assumption that traditional democracy can't work because most people aren't smart enough to handle the role of voter, the Straussians conclude that superior minds must, for the good of society, lie to and manipulate the masses.

Joseph and I have an ongoing argument about which school is worse, a question greatly complicated by the compatibility of the two systems and the overlap of believers and their tactics and objectives. Joseph generally argues that Rand is worse (without, of course, defending Strauss) while I generally take the opposite position.

This week brought news that I think bolsters my case (though I suspect Joseph could easily turn it around to support his): one of the logical consequences of assuming typical voters can't evaluate information on their own is that data sources that are recognized as reliable are a threat to society. They can't be spun and they encourage people to make their own decisions.

To coin a phrase, if the masses can't handle the truth and need instead to be fed a version crafted by the elite to keep the people happy and doing what's best for them, the public's access to accurate, objective information has to be tightly controlled. With that in mind, consider the following from Jared Bernstein:

[D]ue to pressure from Republicans, the Congressional Research Service is withdrawing a report that showed the lack of correlation between high end tax cuts and economic growth.

The study, by economist Tom Hungerford, is of high quality, and is one I’ve cited here at OTE. Its findings are fairly common in the economics literature and the concerns raised by that noted econometrician Mitch McConnell are trumped up and bogus. He and his colleagues don’t like the findings because they strike at the supply-side arguments that they hold so dear.

And with Sandy still on everyone's mind, here's something from Menzie Chinn:

NOAA's programs are in function 300, Natural Resources and Environment, along with the U.S. Geological Survey (USGS) and a range of conservation and natural resources programs. In the near term, function 300 would be 14.6 percent lower in 2014 in the Ryan budget according to the Washington Post. It quotes David Kendall of The Third Way as warning about the potential impact on weather forecasting: "'Our weather forecasts would be only half as accurate for four to eight years until another polar satellite is launched,' estimates Kendall. 'For many people planning a weekend outdoors, they may have to wait until Thursday for a forecast as accurate as one they now get on Monday. … Perhaps most affected would be hurricane response. Governors and mayors would have to order evacuations for areas twice as large or wait twice as long for an accurate forecast.'"

There are also attempts from prominent conservatives to delegitimize objective data:

Apparently, Jack Welch, former chairman and CEO of General Electric, is accusing the Bureau of Labor Statistics of manipulating the jobs report to help President Obama. Others seem to be adding their voices to this slanderous lie. It is simply outrageous to make such a claim and echoes the worrying general distrust of facts that seems to have swept segments of our nation. The BLS employment report draws on two surveys, one (the establishment survey) of 141,000 businesses and government agencies and the other (the household survey) of 60,000 households. The household survey is done by the Census Bureau on behalf of BLS. It’s important to note that large single-month divergences between the employment numbers in these two surveys (like the divergence in September) are just not that rare. EPI’s Elise Gould has a great paper on the differences between these two surveys.

BLS is a highly professional agency with dozens of people involved in the tabulation and analysis of these data. The idea that the data are manipulated is just completely implausible. Moreover, the data trends reported are clearly in line with previous monthly reports and other economic indicators (such as GDP). The key result was the 114,000 increase in payroll employment from the establishment survey, which was right in line with what forecasters were expecting. This was a positive growth in jobs but roughly the amount to absorb a growing labor force and maintain a stable, not falling, unemployment rate. If someone wanted to help the president, they should have doubled the job growth the report showed. The household survey was much more positive, showing unemployment falling from 8.1 percent to 7.8 percent. These numbers are more volatile month to month and it wouldn’t be surprising to see unemployment rise a bit next month. Nevertheless, there’s nothing implausible about the reported data. The household survey has shown greater job growth in the recovery than the establishment survey throughout the recovery. The labor force participation rate (the share of adults who are working or unemployed) increased to 63.6 percent, which is an improvement from the prior month but still below the 63.7 percent reported for July. All in all, there was nothing particularly strange about this month’s jobs reports—and certainly nothing to spur accusations of outright fraud.

We can also put many of the attacks against Nate Silver in this category.

Going back a few months, we had this from Businessweek:

The House Committee on Appropriations recently proposed cutting the Census budget to $878 million, $10 million below its current budget and $91 million less than the bureau’s request for the next fiscal year. Included in the committee number is a $20 million cut in funding for this year’s Economic Census, considered the foundation of U.S. economic statistics.

And Bruce Bartlett had a whole set of examples involving Newt Gingrich:

On Nov. 21, Newt Gingrich, who is leading the race for the Republican presidential nomination in some polls, attacked the Congressional Budget Office. In a speech in New Hampshire, Mr. Gingrich said the C.B.O. "is a reactionary socialist institution which does not believe in economic growth, does not believe in innovation and does not believe in data that it has not internally generated."

Mr. Gingrich's charge is complete nonsense. The former C.B.O. director Douglas Holtz-Eakin, now a Republican policy adviser, labeled the description "ludicrous." Most policy analysts from both sides of the aisle would say the C.B.O. is one of the very few analytical institutions left in government that one can trust implicitly.

It's precisely its deep reservoir of respect that makes Mr. Gingrich hate the C.B.O., because it has long stood in the way of allowing Republicans to make up numbers to justify whatever they feel like doing.

...

Mr. Gingrich has long had special ire for the C.B.O. because it has consistently thrown cold water on his pet health schemes, from which he enriched himself after being forced out as speaker of the House in 1998. In 2005, he wrote an op-ed article in The Washington Times berating the C.B.O., then under the direction of Mr. Holtz-Eakin, saying it had improperly scored some Gingrich-backed proposals. At a debate on Nov. 5, Mr. Gingrich said, "If you are serious about real health reform, you must abolish the Congressional Budget Office because it lies."
...                                                                                                                                                                                                                                                                                                                                                            

Because Mr. Gingrich does know more than most politicians, the main obstacles to his grandiose schemes have always been Congress's professional staff members, many among the leading authorities anywhere in their areas of expertise.                                                                                                                                                                                                

To remove this obstacle, Mr. Gingrich did everything in his power to dismantle Congressional institutions that employed people with the knowledge, training and experience to know a harebrained idea when they saw it. When he became speaker in 1995, Mr. Gingrich moved quickly to slash the budgets and staff of the House committees, which employed thousands of professionals with long and deep institutional memories.

Of course, when party control in Congress changes, many of those employed by the previous majority party expect to lose their jobs. But the Democratic committee staff members that Mr. Gingrich fired in 1995 weren't replaced by Republicans. In essence, the positions were simply abolished, permanently crippling the committee system and depriving members of Congress of competent and informed advice on issues that they are responsible for overseeing.

Mr. Gingrich sold his committee-neutering as a money-saving measure. How could Congress cut the budgets of federal agencies if it wasn't willing to cut its own budget, he asked. In the heady days of the first Republican House since 1954, Mr. Gingrich pretty much got whatever he asked for.

In addition to decimating committee budgets, he also abolished two really useful Congressional agencies, the Office of Technology Assessment and the Advisory Commission on Intergovernmental Relations. The former brought high-level scientific expertise to bear on legislative issues and the latter gave state and local governments an important voice in Congressional deliberations.

The amount of money involved was trivial even in terms of Congress's budget. Mr. Gingrich's real purpose was to centralize power in the speaker's office, which was staffed with young right-wing zealots who followed his orders without question. Lacking the staff resources to challenge Mr. Gingrich, the committees could offer no resistance and his agenda was simply rubber-stamped.

Unfortunately, Gingrichism lives on. Republican Congressional leaders continually criticize every Congressional agency that stands in their way. In addition to the C.B.O., one often hears attacks on the Congressional Research Service, the Joint Committee on Taxation and the Government Accountability Office.

Lately, the G.A.O. has been the prime target. Appropriators are cutting its budget by $42 million, forcing furloughs and cutbacks in investigations that identify billions of dollars in savings yearly. So misguided is this effort that Senator Tom Coburn, Republican of Oklahoma and one of the most conservative members of Congress, came to the agency's defense.

In a report issued by his office on Nov. 16, Senator Coburn pointed out that the G.A.O.'s budget has been cut by 13 percent in real terms since 1992 and its work force reduced by 40 percent -- more than 2,000 people. By contrast, Congress's budget has risen at twice the rate of inflation and nearly doubled to $2.3 billion from $1.2 billion over the last decade.

Mr. Coburn's report is replete with examples of budget savings recommended by G.A.O. He estimated that cutting its budget would add $3.3 billion a year to government waste, fraud, abuse and inefficiency that will go unidentified.

For good measure, Mr. Coburn included a chapter in his report on how Congressional committees have fallen down in their responsibility to exercise oversight. The number of hearings has fallen sharply in both the House and Senate. Since the beginning of the Gingrich era, they have fallen almost in half, with the biggest decline coming in the 104th Congress (1995-96), his first as speaker.

In short, Mr. Gingrich's unprovoked attack on the C.B.O. is part of a pattern. He disdains the expertise of anyone other than himself and is willing to undercut any institution that stands in his way. Unfortunately, we are still living with the consequences of his foolish actions as speaker.

We could really use the Office of Technology Assessment at a time when Congress desperately needs scientific expertise on a variety of issues in involving health, energy, climate change, homeland security and many others. And given the enormous stress suffered by state and local governments as they are forced by Washington to do more with less, an organization like the Advisory Commission on Intergovernmental Relations would be invaluable.

 

Why, Robot?

 

[Early Optimus prototype]

When you factor in the pivotal role that Optimus plays in the weak bull case for Tesla, companies and divisions of companies developing bipedal humanoid robots primarily focused on the personal/household market are being valued in the hundreds of billions of dollars, despite a questionable use case and an even more questionable basic design.

As far as I can tell, with all the coverage of these businesses, virtually no one is questioning the assumptions that must be true in order to justify this level of investment. Keeping in mind that, at best, a fifth of U.S. households have robotic vacuum cleaners—and a substantial portion own dishwashers but don't even bother to use them—what share of households in the U.S., let alone the world, are going to shell out thousands, probably tens of thousands of dollars for a robot butler? Given their top-heavy, unstable design, highly inefficient locomotion (compared to wheeled alternatives), and their expense and complexity, why should the humanoid form become the standard, despite offering little to no significant gains in functionality?

And finally, when you get past the fantastic claims and staged—if not outright faked—video demonstrations, how likely is it that these things will pay off soon enough to justify the money being poured into them? 

There are some notable similarities between this hype bubble and what we've seen around AI and large language models, but with one key difference: while they may prove to be something of a dead end in the long term, LLMs are, for the moment, arguably the best tools we have for natural language processing. Bipedal humanoid robots aren't really the best at anything.

If you're presenting two interpretations of Musk and you literally label one of them the "real Elon," you may have revealed a slight bias

[Smith has a good post up on capital flight. Not in any way relevant to the topic here, but I wanted to say something nice.]

I read this more than a couple of times to make certain that Smith didn't have his tongue in his cheek. This level of credulity and straw-manning had to be a joke, right? Sadly, no. This is absolutely consistent with what Smith has written about Musk in the past—and since.

As we've pointed out before, Noah Smith represents a small but wealthy and highly influential group of thinkers: technocratic techno-optimists, largely centered around the Bay Area and distinguished by a tendency to worship billionaire visionaries like Elon Musk and Marc Andreessen. Needless to say, the levels of cognitive dissonance have grown deafening around these fellows over the past few months.

Smith represents a viewpoint that carries extraordinary weight in places like The New York Times—which is reason enough to look closely and critically at what he's been saying. In this case, he's also being profoundly dishonest. He grossly misrepresents the arguments* of most of Musk’s detractors while being highly selective with his examples.

It would take me far longer to list the pertinent cases that Smith omitted than it probably took Smith to write the original post, but just to illustrate the point, here’s what I found after a five-minute Google search on Elon Musk’s love of free speech.

Vice: X Purges Prominent Journalists, Leftists With No Explanation

NBC News: Elon Musk worries free speech advocates with his calls to prosecute researchers and critics 

The Guardian: Elon Musk has become the world’s biggest hypocrite on free speech

USA Today: When free speech champion Elon Musk threatens speech, we should take it seriously 

The Verge: Elon Musk is absolutely not a ‘free speech absolutist’

The examples that Smith does include are mostly supported by Musk’s own version of events. For example, Elon Musk insists that he loves Jewish people—but I’m pretty sure there have been examples in the past of antisemites using that very same defense. 

For more background, here's what you find if you follow Smith's link.

Elon Musk has publicly endorsed an antisemitic conspiracy theory popular among White supremacists: that Jewish communities push “hatred against Whites.”

That kind of overt thumbs up to an antisemitic post shocked even some of Musk’s critics, who have long called him out for using racist or otherwise bigoted dog whistles on Twitter, now known as X. It was the multibillionaire’s most explicit public statement yet endorsing anti-Jewish views.

ICYMI: Musk was responding to a post Wednesday that said Jewish communities “have been pushing the exact kind of dialectical hatred against whites that they claim to want people to stop using against them.” The post also referenced “hordes of minorities” flooding Western countries, a popular antisemitic conspiracy theory.

It’s the kind of post you can find easily on X these days, and likely would have gone unnoticed had Musk, with more than 160 million followers, not re-shared the post with the comment: “You have said the actual truth.”

The antisemitic conspiracy theory — which posits that Jews want to bring undocumented minority populations into Western countries to reduce White majorities in those nations — is often espoused by hate groups.

It’s the same conspiracy echoed in the final written words of Robert Bowers, the convicted murderer of 11 people at the Tree of Life synagogue in Pittsburgh in 2018. His last social media post said that a Jewish nonprofit dedicated to aiding refugees “likes to bring invaders in that kill our people.” The mass shooting was the deadliest attack against Jews in American history.

Musk, in subsequent posts, expounded on his views. He wrote that he does not believe hatred of White people extends “to all Jewish communities.” But then he singled out the Anti-Defamation League, claiming that it promotes racism against White people.

 

 

 Noah Smith Dec 21, 2024

Musk’s friends and confidantes expect the former. They probably know him as a reasonable guy — a Reaganite conservative who was driven to the center-right by the excesses of wokeness, who loves free speech and free enterprise and small government and responsible fiscal and monetary policy and peace between nations, who wants to bring human civilization to Mars and accelerate tech progress and so on.

Let us call this version of Elon “Real Elon”.

But it’s possible to imagine another version of Elon, who exists in the perfervid imaginations of his detractors. Let us call this “Evil Elon”. Regular people, observing Elon’s actions in the public sphere, can’t always tell the difference between Real Elon and this fantasy supervillain.

Whereas Real Elon opposed the CR because of concerns over government spending and legislative complexity, Evil Elon opposed it because it contained national security provisions that would have nixed some of Tesla’s planned investments in China:

Cynics note that the shorter replacement CR, which Elon supported, would have actually spent more money than the CR that Elon killed — the main difference being that the replacement CR didn’t contain restrictions on U.S. investment in China:

In fact, while Real Elon loves capitalism and individual freedoms, Evil Elon is a consistent and dedicated ally of the Chinese Communist Party. When Real Elon calls for Taiwan to become a “special administrative zone” of China, he does it because he wants to avoid World War 3; Evil Elon does it because he likes authoritarian rule, and because the Chinese Communist Party has paid him off.

On Ukraine, similar, Real Elon just wants to end the conflict and stop more Ukrainians from dying. After all, Russia is powerful and determined enough that they’ll almost certainly be able to hold onto a piece of Ukraine at the end of the war; why not just trade land for peace and be done with it?

But Evil Elon wants Putin to triumph, because he sympathizes with authoritarian rulers in general. No one knows what Elon and Putin talked about during their frequent conversations since 2022. But believers in Evil Elon suspect that they conspired to bring about a Russian victory in the war.

When former U.S. Army officer Alex Vindman accused Elon of being used by Putin, Real Elon accused Vindman of treason and threatened him with “the appropriate penalty” because hey, we all get mad on social media and like to punch back at people who attack us. But Evil Elon did it because Vindman was on to something.

When Real Elon declared his support for the German far-right party AfD, it was because he saw Germany spinning into industrial decline and suffering from an immigration policy that failed to exclude violent criminals. But Evil Elon did it because he likes that AfD is vocally pro-Putin and pro-CCP.

In fact, believers in Evil Elon suspect that his support for AfD might also be due to the whiff of Nazi apologia and antisemitism that hang around some of the party’s candidates. Real Elon is a stand-up guy — when he agreed with a tweet about Jewish communities pushing anti-White hatred, he publicly apologized, declaring it the worst tweet he’s ever done, and declaring himself a “philosemite”. And when Real Elon accidentally endorsed a Tucker Carlson interview with a Hitler apologist, he quickly deleted the endorsement once he realized what it actually contained.

But believers in Evil Elon think that these are just the kind of public relations moves that a supervillain would do to cover his tracks. They fear that the massive wave of antisemitism that has swamped X since Elon took over is the result of intentional boosting, rather than simply the inevitable result of more lenient moderation policies combined with the reaction to the Gaza war.1 They do not buy Real Elon’s protests that other platforms have even more antisemitism. ["Musk did not say who performed the audit or share any details from the report. He did not answer any questions for other journalists." -- MP]

And so on. Essentially, Evil Elon is a somewhat cartoonish supervillain, who wants to set himself up as the ruler of one of three great dictatorships, ruling the world with an iron fist alongside his allies Xi Jinping and Vladimir Putin — a new Metternich System to enshrine right-wing values and crack down on wokeness and progressivism and obstreperous minorities all over the world.

* While you can certainly find examples of all sorts of crazy anti-Elon theories in the more febrile corners of social media, most of Musk's mainstream critics (such as Linette Lopez, Edward Niedermeyer, Russ Mitchell, and former Tesla booster Fred Lambert) and detractors (like the well-researched channel Common Sense Skeptic) argue that Musk is an unethical businessman and profoundly unreliable narrator whose business depends on staying in the good graces of the CCP and who has increasingly fallen under the influence of the alt-right. I can't comment on the perfervidity of their imaginations (though those I've  chatted with have seemed quite reasonable and sober), but as you'll see from the CSS video, the have a remarkable amount of evidence backing their position.

Patrick Boyle is the ideal choice for explaining the business of Elon Musk

I've already referred this video in a previous post about Musk using his AI company to make himself whole after the Twitter fiasco, and I plan to come back to it when we get around to discussing the New York Times finally catching on to what some of us have been saying about the true value proposition of Tesla for years now. Squeezing one more post in might be overkill, but I really wanted to share a couple more quotes.

Another reason people might not be buying Teslas is that, with the rate at which parts are falling off Cybertrucks, there’s really no urgency to buy one. If you want one, you could just start collecting the parts from the side of the road. After about a year, you’d have enough to assemble your own. In many ways, the Cybertruck is like a reverse kid’s car — they deliver you a fully assembled truck, but over time, you end up with a collection of parts in boxes in your garage.

...

Now, of course, I'm no naysayer. Long-term viewers know how positive I've been about the Hyperloop at the heart of the Line City in Saudi Arabia, and if it wasn't for the functionality of Musk's Hyperloop, the whole thing would make no sense.

In a totally unrelated side note, Elon Musk told Fox News on Thursday that the administration is going to go after people pushing lies about Tesla.

So, just to be clear, I expect all of the abovementioned projects to be delivered next year on schedule, and I think that they'll be great.

Well worth your time.

Here's an example of Boyle's "positive" coverage of Neom and the hyperloop.

"Because it felt so good when they paused."

 When asked why he kept writing for television despite all the aggravations, Harlan Ellison would cite the story of the moron who liked being beaten in the stomach with a sawed-off baseball bat.

"Why did he like being beaten in the stomach with a sawed-off baseball bat?"

"Because it felt so good when they stopped."

Or even just paused, apparently.

The news probably doesn't justify the reaction of the markets bad at this point, not bad is good enough, showing the central importance of lowering expectations.

Josh Marshal predicted Trump would cave one week ago:

As a matter of political predictions, I don’t think this will be sustainable. We’re starting the fun with even the most die-hard Trump reps saying they sure hope it will be awesome through gritted teeth with beads of sweat already forming on their brows. We’re already seeing headlines that talk about the biggest trade regime revolution in a century, a new global age of trade restriction, etc. Again, I don’t think it’s sustainable. There are other new ages that we’re definitely already in. We’ve already wrecked the post-war Atlantic alliance and done irreparable damage to the post-war world order which rests upon it. But this is different. These tariffs could help usher in a new era of protectionism and break past economic and trading alliances. They certainly will push us further in a direction of a high-fear rather than high-trust global order. I’m simply saying that I don’t think these tariffs themselves will last. The pain will be too widely distributed, the ideological hold is too thin and the path to overturning them too clear. 

It is almost impossible to overstate how unpopular this policy was, particularly with one group that almost always has Trump's ear. Here was how things looked when the market closed Monday.

Here's where their fortunes stood at Monday's market close:

1. Elon Musk

Net worth: $298 billion

3-day change: down $35 billion

Year-to-date change: down $135 billion

Tesla and SpaceX CEO Elon Musk Graeme Sloan for The Washington Post via Getty Images

Elon Musk's net worth has fluctuated wildly in recent months. Excitement about his proximity to the president has been replaced by concern, as anger has grown toward the White House's DOGE agency, and public backlash against Tesla has hammered the automaker's stock.

The world's richest person derives his wealth primarily from his stakes in Tesla and SpaceX. His other businesses include SpaceX, Neuralink, X, The Boring Company, and xAI.

Trump's second favorite real billionaire

7. Larry Ellison

Net worth: $147 billion

3-day change: down $21 billion

Year-to-date change: down $45 billion

Larry Ellison is Oracle's cofounder. Elizabeth Frantz/REUTERS

Larry Ellison is the cofounder, executive chairman, and chief technology officer of Oracle, one of the world's largest software and cloud computing companies.

Ellison is also a major investor in Tesla and owns a large portion of Lanai, a Hawaiian island.

Along with OpenAI's Sam Altman and SoftBank's Masayoshi Son, Ellison is spearheading Project Stargate, a $500 billion AI infrastructure initiative supported by Trump.

 And to add insult to injury...

4. Warren Buffett

Net worth: $154 billion

3-day change: down $14 billion

Year-to-date change: up $12 billion

Warren Buffett is the chairman and CEO of Berkshire Hathaway. Reuters/Mario Anzuoni

Warren Buffett, 94, is the chairman and CEO of Berkshire Hathaway. His conglomerate owns scores of businesses including Geico and See's Candies, and holds multibillion-dollar stakes in public companies such as Apple and American Express.

The legendary investor's track record of capitalizing on market crashes, and his company's scale and diversification, have made Berkshire a haven for investors who've pushed its stock up 8% this year.

 

"The Problems With Humanoid Robots"

Humanoid robots are certainly having their day. We are seeing a flood of articles and think pieces discussing how these mechanical men are about to change our lives any day now. What’s much harder to find are serious discussions about whether making a robot look like a human makes any sense.

This post by Brad Porter, someone with considerable experience making robots that actually do things, is a good start.

There are three specific problems with humanoid robots. One first I believe will be overcome with continued advances in AI. The second might be overcome with enough investor dollars. The third is the Achilles heel.

1. The AI isn’t there yet. We lack the generalized controls necessary for robust balancing systems to work in production environments.
2. Hardware investments when the AI isn’t there are bad investments. The dollars required to bring a humanoid robot to production quality are likely to be well over $1B invested.
3. Biomimicry isn’t the right approach. Humanoid robots aren’t the right design solution for most production tasks.

Stephen Boyd, one of the true luminaries in the space of controls research and engineering gave an interesting talk. In fairness to Dr. Boyd, I’ll summarize my take-aways which may be different than what he hoped to convey. But overall the talk compared a number of controls techniques, including reinforcement learning, and articulated clearly how they could be reduced to problems of convex optimization, greatly simplifying the problem space. But then he said something interesting (paraphrasing, but hoping I got this right), “so just get the dimensionality under 6 and these problems become classically solvable.”

That was a big a-ha for me. This is exactly what we do in robotics. We reduce the dimensionality of the problem down below 6 degrees of control actuation and we derive a controller using some combination of math, convex optimization, RL or equivalent techniques. Quad-copter drones are 4 degrees of actuation and generally an IMU. Cars are throttle, brake, steer. Airplanes are generally aileron, rudder, elevator, throttle. What Agility has done beautifully is simplify the physics of walking such that the controller can be modeled as a spring-mass system. What Boston Dynamics has done, impressively, is demonstrated the ability to transition from one control regime to another seamlessly, but each controller is simplified. Successful hand controllers in production have reduced the dimensionality with eigenhands, or lower-dimensional controls spaces.

 ...

As I said up front, I think advances in ML/AI will address this problem. We will eventually get more robust robotics controllers, but there’s a reasonable argument that this problem is as hard, or maybe even harder given the open-ended nature of the world, as developing a self-driving car. For instance, self-driving cars are passively stable. They don’t care if they’re transporting liquids or solids, mass sloshing doesn’t affect them. But if a humanoid robot is carrying a box with a bowling ball in it, the controls problem just got very very hard. Humans stabilize our bodies with a lot of different muscles, including our neck muscles which subtly refine the position of our head to keep our center of mass above our feet. That’s super hard to do! And look, we still can’t put a timeline on robust AI for self-driving cars.

 

This brings us to our second problem. Hardware is expensive. And complex hardware is really expensive. Combining complex hardware engineering costs with open-ended, unsolved AI problems, means the funding requirements are open-ended. And it’s not like you can do some work with a humanoid without solving the balancing problem. I suppose some humanoids are just using a wheeled base, but they’re not intrinsically stable… their center of mass is still too high to be safe.

Is there enough money in the venture ecosystem to make a dent in this? Probably, though Softbank has some of the deepest pockets and thrown a lot of money at robots. Google as well. The returns for those investments to date are more than a little disappointing.

But the biggest problem is that humanoids are the wrong solution for most tasks. Not all tasks, I do think Disney’s animatronic actors will become more and more sophisticated and impressive. In Toyko, there’s a hotel where animatronic dinosaurs check you in. An animatronic human might be a little friendlier than a dinosaur. But when it comes to doing real work in the world around us, biomimicry isn’t the answer.

...

Wheels are the right answer in logistics, in manufacturing, in hospitals, in airports, in stadiums, on the sidewalk, in office complexes, and in nearly every commercial environment. Also, passive stability, having at least 3 points of contact on the ground, preferably 4, is extremely valuable. Keeping the payload inside the cone of stability rather than cantilevered in front of a robot is better as well.

Sure, the whole humanoid robot thing is a scam, but at least Musk puts some effort into it.

This just lazy.

First some background.

Synapse claimed to keep customer deposits in FDIC insured bank accounts, and argued that this provided a comparable level of depositor protection to conventional bank accounts. However Synapse was not a bank, and so did not provide FDIC protection for depositors against its own bankruptcy.

The company was backed by Andreessen Horowitz [we'll be coming back to this in a future post (spoiler alert: Marc Andreessen is an arrogant, entitled idiot) -- MP] and had roughly 100 direct business relationships, indirectly serving 10 million retail customers through those relationships.

Following the bankruptcy declaration, "tens of thousands of U.S. businesses and consumers" lost access to Synapse's services, leaving questions as to the location of funds. In May 2024, former FDIC Chair Jelena McWilliams, appointed as bankruptcy trustee, said there was a “shortfall” between Synapse’s records and those of the banks, estimated at $65 million to $96 million.

The CEO of Yotta Savings – a fintech company which relied on Synapse to manage customer deposits – released financial data in November 2024 showing that 13,725 former customers lost deposited money due to the Synapse bankruptcy. They were refunded $11.8 million, a fraction of their $64.9 million deposits. 

How do you follow up destroying the life savings of your customers? We'll let Patrick Boyle tell the next part of the story. [ChatGPT proofed from the transcript.]

In plain English—Synapse, which built the technology to know whose money is whose, has run out of money and no longer has any employees who can figure it out.

Well, where have they all gone? Sankaet Pathak, the founder and CEO of Synapse, announced in August that he had raised $11 million in VC funding for a new robotics startup called Foundation. In his Twitter video, he said that he had been working on the startup for three months—basically since the bankruptcy announcement—and his goal is to automate GDP through AI and robotics to free people from labor jobs, allowing them to pursue their passions.

He explains that declining birth rates will lead to severe labor shortages in 20–30 years, risking civilizational collapse, making this mission urgent. So yeah, I get that some people are worried about having lost their life savings—but Sankaet is battling civilizational collapse through AI robots… a noble cause indeed.

His near-term goal, he says, is to have a walking humanoid robot by year-end—that will be quite a breakthrough. If he needs one quickly, I’d buy that Honda one that was running around and kicking a football ten years ago.

It's a sign of the times. This guy drives his company into the ground then immediately gets investors to give him millions of dollars for an obviously thrown together knock-off of an Elon scheme that was itself a transparent con. 

 

The "we'll be okay as long as Elon is in charge" take has aged badly.

We're going to be picking on Noah Smith a lot, and I feel genuinely bad about it. These are not crocodile tears. It seems profoundly unfair to go after someone not because they are stupid or despicable, but because they are the smartest, most articulate person advocating an important school of thought.

Smith speaks for an influential group that is generally Bay Area-centered, mainstream center-left, technocratic techno-optimists. Marc Andreessen is arguably their intellectual leader, though few of them share, and in some cases even acknowledge, the extreme libertarianism at the core of his ideas. They are also decidedly prone to hero worship.

This group is small in terms of absolute numbers, but it includes lots of billionaires and it has a wildly disproportionate impact on the discourse through journalists like Ezra Klein. To make matters worse, the group tends to get something of a free pass from the press at large. All of this makes the need for genuinely critical scrutiny all the more pressing.

From Why America's future could hinge on Elon Musk -- Iron Man, or Dr. Doom? *
by Noah Smith
Oct 26, 2024

In recent months, a number of progressive commentators have suggested that Musk’s support for Donald Trump is part of a campaign to become a “Shadow President”. Many people I talk to in the tech industry also believe this — but they think of it as a good thing. Many of them, even the conservatives, despise Donald Trump as a human being, but they hope that with Trump aging and fading, Musk and J.D. Vance will be running the show in a competent technocratic manner. Put a superhero in charge, the thinking goes, and you get super-results — just as happened with SpaceX and Tesla.

 Apologies to longtime readers who have heard this before, but we need a quick reality check here. SpaceX has achieved some highly impressive, albeit largely incremental, advances with former TRW rocket scientists building off TRW technology. Outside of making some admittedly very good hires, Elon Musk's contribution to this consisted almost entirely of hyping the company and bringing in extraordinary amounts of funding for an operation that was, and probably still is, hemorrhaging cash. 

Tesla is a niche automaker that, for a while, managed to dominate a small corner of the market while turning a small profit, due primarily to government subsidies. Musk's most notable accomplishment with that company was an extraordinary and unprecedented stock pump, keeping the P/E ratio well over 100 even after the company started shrinking.

But even if we were to accept the myth of SpaceX and Tesla, why would we expect Musk to have any special powers when it came to running the government? His only relevant experience with the institution has been getting it to give him large amounts of taxpayer dollars. The answer is because Smith and the rest of this group believe Musk is omnicompetent, that he's a secret genius, and a founding lord of Ithuvania. 

These myths of supermen among us were incredibly popular for most of this century, but it's time we acknowledged how costly they could be. 

 

 

 *We'll be coming back to this one.

Is Elon stepping back to spend more time with his families?

Probably not, and even if he does, certainly not for the reasons being given.

This is a perfect Politico story, providing juicy insider details to make readers feel that they're getting the straight dope while downplaying aspects that will embarrass her sources.

Trump Tells Inner Circle That Musk Will Leave Soon by Rachael Bode

 President Donald Trump has told his inner circle, including members of his Cabinet, that Elon Musk will be stepping back in the coming weeks from his current role as governing partner, ubiquitous cheerleader and Washington hatchet man.

The president remains pleased with Musk and his Department of Government Efficiency initiative but both men have decided in recent days that it will soon be time for Musk to return to his businesses and take on a supporting role, according to three Trump insiders who were granted anonymity to describe the evolving relationship.

...

Musk’s defenders inside the administration believe that the time will soon be right for a transition, given their view that there’s only so much more he can cut from government agencies without shaving too close to the bone.

...

Both men subsequently hinted publicly at a transition. When Fox News’ Bret Baier asked Musk on Thursday whether he’d be ready to leave when his special government employee status expires, he essentially declared mission accomplished: “I think we will have accomplished most of the work required to reduce the deficit by $1 trillion within that time frame.”

Marshall is calling bullshit on both the idea that Musk is ready to go or that anyone thinks DOGE has reached a stopping point.

Thirdly, Elon Musk is now in the position of every dictator whose already killed too many people. They have to hold on to power because giving it up is too dangerous. Will the Justice Department stop wielding national police power to defend Tesla’s market cap? Unlikely. And without Elon’s presence and the fear he inspires, more facts about the crimes and the consequences of his wilding spree will dribble out. DOGE has always run on fear and Musk inspires the fear. Will people decide that they can go back to maybe buying a Tesla? I doubt it, because of items one and two and item three as well.

Fourthly and lastly, there’s far too much damage and blood on the ground for Elon to step aside. Would anyone have cared if bin Laden had decided to “step back” in November 2001 and focus on his other terror affiliates? Unlikely. What had happened had happened. There was no going back. This is all the more the case now because the details of what has already happened, the consequences and pain for ordinary Americans. The laws broken, the money squandered, the national assets plundered are only now beginning to become clear. That won’t stop. And as we saw in Wisconsin, Musk cannot help but put himself front and center even when it’s objectively crazy to do so. That’s who he is and no one ceases to be who they are.

Before we get into the question of what Elon Musk is likely to do, a few notes on the Politico piece.

For starters, the piece acknowledges an elephant in the room but possibly not the biggest one. Obviously, the timing of all these Elon’s leaving stories has everything to do with the events of Tuesday night. The Politico piece discusses the Wisconsin half of those events, but it leaves out perhaps the more frightening Trump and the GOP.

The Republicans held on to the two seats up in Florida—any other outcome would have been politically cataclysmic—but the numbers were really bad in context. In Florida's 6th District, the Republicans saw almost a 10% drop in support in a district that has been Republican for the last 35 years. In the Deep Red Panhandle’s First District, they saw a similar drop, giving them their worst percentages of the 21st century.

Yes, n=2, but those two  elections took place in the context of a lot of other data points that generally told the same story, and keep in mind, that was before "liberation day" and the resulting carnage in the markets. Every member of the House GOP who won their last election by less than 10% is taking a long hard look at these results and at the parts of the administration that are dragging them down.

Elon has turned out to be a huge political liability and Trump would certainly be willing to toss him overboard. The question is would he go?

Musk is a narcissist/bully with a messiah complex. He's clearly enjoying himself, so this is not a gig that he would be eager to leave, even without the opportunities for self-enrichment. That said, there are some powerful incentives for him to go.

One aspect that both Bode and Marshall don’t seem to fully factor in is just how precarious the situation with Musk’s finances has become.

Tesla is one of the all-time great examples of the principle that the market can stay irrational longer than you can stay liquid, but eventually all bubbles pop, and the news for this company has been brutal over the past few months. In addition to the self-inflicted doge wounds, the second generation of products has performed really badly. Sales were flat or trending down even before Musk hooked up with Trump, and competitors, particularly BYD, are absolutely kicking their ass.

Despite all of this, Tesla is still valued for explosive growth. With these prices, even if profits increase by a thousand percent over the next five or so years, investors have basically just broken even. Even under normal circumstances, it takes a great deal of pumping to keep a stock that high. When the company appears to be shrinking rather than growing, that level of hype becomes almost superhuman.

On top of that, if Musk is still reluctant to step away, Trump has tremendous leverage he can apply. The profitability of Tesla depends on regulatory credits. With SpaceX, the situation is even more dire, particularly given the difficulty of justifying the Artemis program while cutting far more popular government programs to the bone. If Elon were to make him mad enough, Trump could completely destroy his financial empire, ironically in the name of government efficiency.

But here's where it gets really interesting. Very much like his co-president, Elon Musk is an angry and vindictive man given to lashing out in self-destructive ways when he feels he's been made a victim. The CEO of an ad-supported company publicly telling advertisers to go f*** themselves is possibly the stupidest thing you'll ever see, but it was entirely on brand. Musk also has a history of mounting coups against partners, often in the most gratuitously vindictive and petty way possible. The way he forced out the actual founders of Tesla is a perfect example.

With all that in mind, remember that JD Vance is Peter Thiel's, and by extension, Elon Musk's, man in the White House.

Normally, conversations about the 25th Amendment are rightly treated as non-starters, but these are far from normal times. Given the circumstances and the personalities involved, Elon Musk and the rest of the tech billionaire wing of the Republican Party would almost certainly at least think about forcing Trump out should he become sufficiently inconvenient.

As the old curse goes, may you live in interesting times.

Why should robots look like us and, more to the point, why should we look like us?

 We need a thread on robots, and within that thread, we need a thread on robots that look like people.

I apologize for continuing to hammer this point, but the voices that dominate our discussion of the future—the tech messiahs, the Silicon Valley visionaries, the techno-optimists—are all working from a worldview that comes from and in most cases is largely limited to that of post-war popular science fiction, particularly the stories that made their way into comic books, pulp magazines, movies, and TV shows. One of the most striking examples of this is the continued allure of the bipedal humanoid robot, a template these retro-futurists keep coming back to despite it violating pretty much every principle of engineering and design.

One of the great ironies of this is that, though in classic science fiction pretty much any species will evolve along these lines given enough time, the reality of how we got this way appears to be more Rube Goldberg than inevitable destiny. It's possible we only look the way we do because the savannas had hot sun and tall grass.

A humanoid form is unquestionably a poor design for a robot. There is, however, some question as to whether it's a good design for a human.

From Bipedalism and Other Tales of Evolutionary Oddities by Telmo Pievani

 One such example is Ardipithecus, which was a forest biped that walked along branches. For two-thirds of the natural history of hominins (six to two million years ago), our ancestors, cousins, and relatives rightly preferred a hybrid solution: an arboreal life so they could protect themselves from predators (with persistent ancient traits such as curved fingers and long arms) and the prudent bipedal exploration of open glades in search of food. Lucy lived in this way, and died when she fell out of a tree. This was by far the most intelligent strategy at the time for those that were yet to become brave hunters, but were delicious prey for felines and giant eagles. Today, baboons and many other primates do the same. So let us forget the story of human evolution that begins with the heroic “descent from the trees” to conquer the savanna on foot. Only in the early days of the genus Homo did we become complete bipeds.

And many of our companions still curse that day. Walking upright on your legs becomes a big risk if your diet changes in the meantime, your brain starts to grow, and you have to give birth. The pelvis cannot expand much because if it did, you would not be able to stand upright. Consequently, the baby’s head passes with considerable difficulty. If you could reset and go back, the ideal engineering solution would be to give birth directly from the abdomen, but this is not possible because our birth canal is a modified version of that of reptiles, which lay eggs, and of early mammals, which give birth to tiny offspring via the pelvis. So compromises are improvised, fixing pregnancy at nine months and giving birth to helpless babies whose brains are only one-third developed, with the remaining two-thirds being completed later. It remains a truly imperfect solution, however, if we think not only of how many mothers and babies have died during childbirth, but of how painful it is for women at the best of times.

The transition to bipedalism generated negative consequences in almost every part of the body. Human feet, with their plantigrade locomotion, have to tolerate high stress levels. Our neck, with that heavy, swinging bowling ball balanced on top, becomes a weak point. The abdomen, with all of its internal organs, is exposed to all sorts of trauma. The peritoneum is being pushed down by the force of gravity, provoking a predisposition to hernias and prolapses. You might even feel the consequences on your face. The next time you have a cold and feel the mucus pressing into every orifice of your face, think about the fact that your constipated maxillary sinuses have their drainage channels pointing upward toward the nasal cavities — against gravity! This makes them completely inefficient and easily clogged up with mucus as well as with other slimy substances. This seems like a bad design, but the fact is that in a quadruped, the opening of the maxillary sinuses faces forward, which works well. Yet for former quadrupeds like us, our faces have only recently adopted a vertical position, and this is the result.

Archaeologist André Leroi-Gourhan was right in saying that the history of humanity began with good feet, before great brains. But it was an ordeal, particularly in the beginning. Then we grew to like it, and with those legs we became migrant primates, with a strong sense of curiosity and no more boundaries to hold us back.

This seems like a good time to revisit the idea of omnicompetence

A companion piece to Brian Klaas's secret geniuses and our Ithuvania thread. More relevant now than when Levy first wrote it.

Tuesday, September 12, 2017

More magical heuristics -- Levy's omnicompetence

Yesterday, I introduced the term magical heuristics (still open to a better name) to describe nonrational mental tools used by many journalists and investors particularly when discussing science and technology. I laid out four general categories for these heuristics: magic of association; magic of language; magic of attitude; magic of destiny.

This post from Alon Levy (one of the most important contributors to the Hyperloop debate) perfectly fits with two of these categories, magic of association and magic of destiny (the idea that there are chosen ones among us destined for greatness). The whole thing is very much worth reading, but I've selected below the paragraphs that are most relevant to this thread and added emphasis to bring home the point:

There is a belief within American media that a successful person can succeed at anything. He (and it’s invariably he) is omnicompetent, and people who question him and laugh at his outlandish ideas will invariably fail and end up working for him. If he cares about something, it’s important; if he says something can be done, it can. The people who are already doing the same thing are peons and their opinions are to be discounted, since they are biased and he never is. He doesn’t need to provide references or evidence – even supposedly scientific science fiction falls into this trope, in which the hero gets ideas from his gut, is always right, and never needs to do experiments.

...

I write this not to help bury Musk; I’m not nearly famous enough to even hit a nail in his coffin. I write this to point out that, in the US, people will treat any crank seriously if he has enough money or enough prowess in another field. A sufficiently rich person is surrounded by sycophants and stenographers who won’t check his numbers against anything.


...

The more interesting possibility, which I am inclined toward, is that this is not fraud, or not primarily fraud. Musk is the sort of person who thinks he can wend his way from starting online companies to building cars and selling them without dealerships. I have not seen a single defense of the technical details of the proposal except for one Facebook comment that claims, doubly erroneously, that the high lateral acceleration is no problem because the tubes can be canted. Everyone, including the Facebook comment, instead gushes about Musk personally. The thinking is that he’s rich, so he must always have something interesting to say; he can’t be a huckster when venturing outside his field. It would be unthinkable to treat people as professionals in their own fields, who take years to make a successful sideways move and who need to be extremely careful not to make elementary mistakes. The superheros of American media coverage would instantly collapse, relegated to a specialized role while mere mortals take over most functions.

This culture of superstars is a major obstacle frustrating any attempt to improve existing technology. It more or less works for commercial websites, where the startup capital requirements are low, profits per employee are vast, and employee turnover is such that corporate culture is impossible. People get extremely rich for doing something first, even if in their absence their competitors would’ve done the same six months later. Valve, a video game company that recognizes this, oriented its entire structure around having no formal management at all, but for the most part what this leads to is extremely rich people like Bill Gates and Mark Zuckerberg who get treated like superstars and think they can do anything.

 

Reposting this one because it's April 1st and because it has one of my favorite titles

 We haven't had much occasion to mock the education reform movement recently (Michelle Rhee hasn't had many feature stories lately). Fortunately, we can always count on McKinsey and Company for new material.

 [Not sure what happened to the formatting. Perhaps it's Blogger playing a prank on us.]

Tuesday, April 1, 2014

Being a management consultant who does not suffer fools is like being an EMT who faints at the sight of blood

An April 1st post on foolishness.

When [David] Coleman attended Stuyvesant High in Manhattan, he was a member of the championship debate team, and the urge to overpower with evidence — and his unwillingness to suffer fools — is right there on the surface when you talk with him.

Todd Balf writing in the New York Times Magazine

Andrew Gelman has already commented on the way Balf builds his narrative around Coleman ( "In Balf’s article, College Board president David Coleman is the hero and so everything about him has to be good and everything he’s changed has to have been bad.") and the not suffering fools quote certainly illustrates Gelman's point, but it also illustrates a more important concern: the disconnect between the culture of the education reform movement and the way it's perceived in most of the media.

(Though not directly relevant to the main point of this post, it is worth noting that the implied example that follows the line about not suffering fools is a description of Coleman rudely dismissing those who disagree with his rather controversial belief that improvement in writing skills acquired through composing essays doesn't transfer to improvements in writing in a professional context.)

There are other powerful players (particularly when it comes to funding), but when it comes to its intellectual framework, the education reform movement is very much a product of the world of management consultants with its reliance on Taylorism, MBA thinking and CEO worship. This is never more true than with David Coleman. Coleman is arguably the most powerful figure in American education despite having no significant background in either teaching or statistics. His only relevant experience is as a consultant for McKinsey & Company.

Companies like McKinsey spend a great deal off their time trying to convince C-level executive to gamble on trendy and expensive "business solutions" that are usually unsupported by solid evidence and are often the butt of running jokes in recent Dilbert cartoons.  While it may be going too far to call fools the target market of these pitches, they certainly constitute an incredibly valuable segment.

Fools tend to be easily impressed by invocations of data (even in the form of meaningless phrases like 'data-driven'), they are less likely to ask hard questions (nothing takes the air out of a proposal faster than having to explain the subtle difference between your current proposal and the advice you gave SwissAir or AOL Time Warner), and fools are always open to the idea of a simple solution to all their problems which everyone else in the industry had somehow missed. Not suffering fools gladly would have made for a very short career for Coleman at McKinsey.

 

In the interest of efficiency, I’m reusing the following headline: “Controlling the boards of both companies may have helped with the negotiations”

As you may have read over the weekend, Elon Musk found a company that agreed to take the social platform formerly known as Twitter off of his hands. Perhaps not coincidentally, the buyer happened to be another company controlled by Musk. 

From CNN:

Elon Musk on Friday evening announced he has sold his social media company, X, to xAI, his artificial intelligence company. xAI will pay $45 billion for X, slightly more than Musk paid for it in 2022, but the new deal includes $12 billion of debt.

Musk wrote on his X account that the deal gives X a valuation of $33 billion.

“xAI and X’s futures are intertwined,” Musk said in a post on X. “Today, we officially take the step to combine the data, models, compute, distribution and talent. This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach.”

Musk didn’t announce any immediate changes to X, although xAI’s Grok chatbot is already integrated into the social media platform. Musk said that the combined platform will “deliver smarter, more meaningful experiences.” He said the value of the combined company was $80 billion.

Musk has made a slew of changes to the platform once known as Twitter since he purchased it in 2022, prompting some major advertisers to flee. He laid off 80% of the company’s staff, upended the platform’s verification system and reinstated suspended accounts of White supremacists within months of the acquisition.

While X’s valuation is lower than what Musk paid for the social outlet, it’s still a reversal of fortunes for the company. Investment firm Fidelity estimated in October that X was worth nearly 80% less than when Musk bought it. By December, X had recovered somewhat but was still worth only around 30% of what Musk paid, according to Fidelity, whose Blue Chip fund holds a stake in X.

 

Since both of these are privately held businesses, the details are even murkier than usual, but Patrick Boyle does a good job of cutting to the chase.

While the news reports that Twitter is back above the $44 billion price that Elon Musk paid for it in 2022, many investors are highly skeptical about this valuation, as user numbers and advertising revenues have declined significantly since 2022. The transaction that values the business at $45 billion was X AI, another Elon Musk company, buying it. A person who saw the documents described the earnings number reported as being wildly adjusted to the FT. It's not obvious that an unrelated party would pay anything like that to buy the 12th most popular social network.

This transaction is similar to when Tesla bought SolarCity in 2016, where Musk folded a company that's been losing value into one that's been gaining value. He owned 54% of the AI company and used it to buy Twitter, in which he owned 80%.

The other investors in XAI shouldn't be too happy with this, as they owned a clean investment in an AI company that is now saddled with a social media app that has lost its relevance.

About that SolarCity deal, here's what we had to say back in 2021...

Controlling the boards of both companies may have helped with the negotiations

 One of the essential texts for understanding how Musk became the world's richest man is this long-form expose by Bethany McLean (best known for her reporting on Enron). We've talked about this piece before, but it's worth revisiting given recent events.

Remember Musk's fortune is almost entirely based on the sudden spike in Tesla's stock price and his holdings in the company (though the bonus deal didn't hurt). I'm not a finance guy, so I may be missing something, but it appears that a big chunk of those holdings came from this deal (keep in mind, Tesla was trading around $40 at the time of the merger. As I'm writing this it's at $742).

 Emphasis added.

SolarCity was founded by two of Musk’s cousins, Lyndon and Peter Rive, who grew up with him in South Africa. Musk, who put in $10 million, was the largest shareholder and chairman of the board. The initial idea, the Rives explained, was not to be a manufacturer but rather to control the entire consumer experience of going solar, from sale to installation, thereby driving down costs. For a time, SolarCity was a hot stock, growing almost tenfold from its public offering in 2012 to its peak in early 2014.

...

 But the initial success of the company’s stock masked some difficult realities. SolarCity’s business model was to front the costs of installing solar panels and allow homeowners to pay over time, which created a constant need for cash. That required raising money from outside investors, often big banks, who were then entitled to the first chunk of the payments homeowners made—leaving SolarCity in a never-ending scramble to raise more debt. The real engineering that took place at SolarCity, in short, was financial, not environmental.

On the consumer side, SolarCity was plagued by complaints about misleading sales tactics and shoddy installations. As the problems mounted, some workers began to feel manipulated by the company’s talk about being a force for good in the world. “I turned a blind eye to a lot of the silliness because of the idealism,” says one former senior employee. “I don’t know when the Rubicon was crossed, but there were micro-crossings every day.”

...

On October 28, 2016, just before shareholders were set to vote on the acquisition of SolarCity, Musk strode onto a platform erected on the set of Desperate Housewives at Universal Studios’ back lot in Los Angeles. He talked about the existential threat presented by global warming and the desperate need for sustainable energy. Then he gestured to a group of houses that had been set up around him. They might look normal, he said, but they actually featured a revolutionary new product called the Solar Roof—shingles that would last longer and cost less than a regular roof, even before factoring in electricity. Tesla expected production to begin the following summer.

The next month, shareholders approved Tesla’s acquisition of SolarCity. “Vote tally shows ~85% of unaffiliated shareholders in favor of the Tesla/SolarCity merger!” Musk tweeted. The deal doubled Tesla’s debt load, but it was good for Musk, who converted his stake in SolarCity into more than $500 million in Tesla stock. By preventing SolarCity from collapsing, he also shored up his most valuable asset: investor faith in his own genius. If any piece of his empire had faltered—if Musk were shown to be fallible rather than superhuman—it would have cast doubt on the narrative that enables him to raise cheap capital for his money-losing enterprises.

“Thanks for believing,” Musk tweeted to his shareholders.

That October, as Musk was making his pitch about the Solar Roof, a former Fortune 500 executive was watching it online at a friend’s barbecue. The former executive, who had spent years researching solar technology, understood what it took to make the Solar Roof work—and he was confident that Musk hadn’t figured it out. “He spewed total BS,” says the executive, who asked not to be identified. “I was flabbergasted. I was convinced in the moment that the shingles were fake.”

Adopting the Twitter handle @TeslaCharts, the executive began drawing on his Ph.D. in science, and his background as a financial analyst, to share infographics that detailed Musk’s overreach. His follower count mushroomed, and he became a core member of a group of outspoken Tesla critics who go by the Twitter hashtag #TSLAQ—Tesla’s stock symbol followed by the Q that companies pick up when they are delisted due to bankruptcy.

Many of them, in fact, were first drawn to Tesla by SolarCity, with its pile of debt and mountain of losses. “If it weren’t for SolarCity, #TSLAQ wouldn’t exist,” says @TeslaCharts. He points out that Musk faced a catch-22 of sorts: If he hadn’t bailed out SolarCity, his whole debt-laden empire might have cracked. Yet without the bailout, Tesla would be far more healthy. “When the history of Tesla is written,” he says, “the acquisition of SolarCity will be seen as the moment where the narrative took a decisive turn.”

Others shared @TeslaCharts’ suspicions about Solar Roof. Robinson, who covers SolarCity for the Buffalo News, had flown to Los Angeles for Musk’s presentation. Afterward, he asked an engineer for the company if the tiles Musk had pointed to were real. “Oh no,” the engineer replied. “These are dummies. We just popped them up here to show you.” Robinson wasn’t outraged—it made sense that Musk would show a prototype—but he took note of the contrast between the rhetoric and the reality. “They made it sound like they had figured out how to get it to work,” he says.

And Tesla continued to make it sound that way. In early 2018, the company announced that production of the Solar Roof had begun in Buffalo. That fall, Tesla told Bloomberg News it was “gearing up for tremendous growth in 2019. We have a product, we have the customers, we are just ramping it up to a point where it is sustainable.”

But in its quarterly letter, a month earlier, Tesla had confessed that the product wasn’t actually ready yet. “We continue to iterate,” the company wrote. In a legal filing, Tesla acknowledged that the much-hyped technology it had acquired from Silevo wasn’t all that it was cracked up to be. And last May, an investigation by Reuters revealed that most of the solar cells being produced in Buffalo were being sold overseas, not used in the Solar Roof, because demand was so low.

Customers who tried to purchase a Solar Roof took to Twitter to share their horror stories: Kevin Pereau, a California homeowner, said he paid a deposit of $2,000 to have a Solar Roof installed more than two years ago—then never heard from the company again. He got his money back only after he started tweeting at Musk every single day.

Musk, meanwhile, is still making promises. Last March, he proclaimed that 2019 would be the “year of the Solar Roof.” In late July, he tweeted that Tesla is “hoping” to turn out 1,000 Solar Roofs a week by the end of the year. But even onetime believers have become doubters. The MIT Technology Review, which included the Solar Roof in its list of 10 “breakthrough technologies” in 2016, now calls it a “flop.” In a recent analyst note, JP Morgan warned that Solar Roof will be a “niche” product at best. Musk has “sustained a kind of Kabuki theater in which the Solar Roof ramp is always imminent, but never here,” wrote investor John Engle, a #TSLAQ member.