If you haven’t read my infamous disclaimer, it’s NOT this: “the views and opinions included in this email belong to their author and do not necessarily mirror the views and opinions of the company.” But it’s also not not that. Beware all ye who enter here…
The Revolutionary Claim
China’s underlying advantage is manpower. Over the last half century since Nixon, they have leveraged that labor cost advantage, and turned it into a manufacturing advantage: they now have an industrial monopoly — very few high-tech products are now built outside of Shenzhen.
But the structural advantage is ultimately built on top of a population advantage. To deleverage their structural advantage, first equalize the population advantage, then build a structural advantage of our own.
Equalize The Population Advantage
China ONLY has 1 billion people, approximately 1/7th of the world population. But 70% of the world makes less than $10 a day. That’s 4.9 billion people. That’s a 5:1 advantage. English is already the lingua franca of trade in the developing world. Globalization is rapidly spreading the internet and modern computers to every corner of the world. An overwhelming supply of decentralized global labor exists.
China does not have an inherent manpower advantage. China only has a manpower advantage in manufacturing because they built one. Manufacturing benefits from concentration: local network effects and local capital investments require local labor.
All that’s required to equalize China’s manpower advantage is a structural advantage of our own.
Build A Structural Advantage Of Our Own
We’ve built a structural advantage in software, but China is eroding that advantage steadily, and we might not be able to prevent them from catching up in AI research.
But one thing the United States can do, that China can’t copy, is build an industrial monopoly in knowledge work. Knowledge work, like high-end manufacturing, requires more than just raw labor: it requires process mastery, a trained workforce, and capital investment. But unlike high-end manufacturing, the workers can be anywhere, because the factory is on the internet.
Invisible is the coolest factory on the internet. We’ve built a Digital Assembly Line to industrialize process work. In the future, we’ll move beyond instruction-based processes to commoditize all knowledge work: executive support, writing, research, analysis, organization, engineering, design, and more.
There is more demand for knowledge work, than there is for high-end manufacturing. Knowledge work is required to build the companies of the future. Without the ability to dynamically and scalably externalize this work, productivity will always be limited to the number of knowledge workers inside of a company. But with an Invisible Assistant, a company can “Delegate to Automate” all of its commodity knowledge work, so that it can focus on specialized innovation.
The stakes are high. Because if Invisible succeeds, it won’t just be our agents, partners and investors who benefit. Not just the United States, but the whole world, would benefit. How?
- Our company represents a nationalist vision for American industrial leadership. Although China might prevent Invisible from entering into its domestic market, China cannot compete with Invisible around the world, first and foremost, because of the language barrier. English is the lingua franca of global trade, not Chinese. Given America’s larger, wealthier and more educated middle class, and its historical leadership in technology, knowledge work is already a competitive advantage, but we don’t have the ability to scale it internally, or export it to the world: so it hasn’t been an industrial monopoly or a defensible geopolitical structural advantage — until now. Spread the gospel: we’ll double productivity, halve costs, and grow GDP at 6% a year again.
- Our company represents a globalist vision for American industrial leadership. No more fear about technology replacing jobs. Knowledge work gets created as fast as it is destroyed, because delegation demand is infinite. This will be the first company in history to contain entire cycles of economic disruption inside of itself. Spread the gospel: if you have a good attitude, a good internet connection, and can read, write and speak English — we will interview you, and if you make the cut, we’ll hire you, train you, and give you an upward path. Pax Americana.
- Our company represents the best hope for world peace. “When trade crosses borders, armies don’t.” When economic growth is rapid, inter-dependent countries don’t fight over scarce resources. But rapid economic growth in traditional industries comes at the cost of huge material waste, environmental pollution, and very limited creative progress. That’s unsustainable, which is why knowledge work is the industry of the future. Industrializing knowledge work eliminates waste, consumes no natural resources, and empowers the creativity necessary to solve not just for environmental pollution, but for all the world’s problems.
In this light, Silicon Valley’s dogmatic insistence on investing in pure software companies and not in software-enabled services is a strategic national mistake. Our software advantage can be eroded. But a decentralized, global labor network coordinated in an American online factory… can’t.
“I have successfully privatized world peace. What more do you want!?”
The Religious Insight
I want peace. But I am afraid of war.
I want peace so that I can create in peace. The First Commandment in The Bible is not “Thou shalt have no other gods before me” but “Be fruitful and multiply.” I don’t interpret this literally as have children but spiritually as be creative.
To have faith that I am made in the image of God, is to have faith in the power of the divine spark within— the creative force, the imaginative force — to discover the mysteries of nature (name the Animals), to receive ideas from beyond nature (walk with God), and to use these discoveries and ideas to transcend the limits of nature, to build a better world (a new Eden).
The more we reveal the potential of technology, the more technology reveals our own potential. For that reason, I do not believe we need to be afraid of technology replacing us at all. I believe we should be afraid of the opposite: of stagnation — of not evolving fast enough, not automating what we can. Because the more we can automate, the faster we can discover what we’re truly capable of, expressing that divine spark.
“I know my fate. One day there will be associated with my name the recollection of something frightful — of a crisis, like no other before on earth, of the profoundest collision of conscience.”
If Invisible systematically industrializes knowledge work, it will eventually create a crisis. But not the one that people fear. It won’t be a crisis of massive unemployment. But a crisis of massive creative employment. And that will force mass evolution, mass spiritual progress, mass conversion — in a sense — in the direction of The First Commandment, as a matter of incentives, of economic necessity. (This is why the best automation company in the world should also be the best training company. The education system is defunct, and Invisible=World-Class Private Education For All. A subject for another essay.)
But I am not a follower of Rousseau. There is darkness in human nature too, not just light. Ancient tentacles of corruption. Evil, too, must be confronted.
I am afraid of war, because apocalyptic tension between the great powers is inevitable in a world with scarce resources, stagnant growth, and direct competition. Jealousy began with Cain and Abel. Cain was jealous of Abel. He couldn’t compete. So he killed him. (Ref: Girard, Thiel… in all of this)
For the same reason, the rich must fear expropriation by the poor, in the name of inequality and income redistribution; and a hegemon must fear a jealous challenger with an incompatible value system. The gains from trade, from brotherhood, must outweigh the gains from conflict, to preserve peace. And the only way to increase the gains from trade is not just to innovate, but to innovate in entirely new directions. If the leaders cannot prove that their model works, not just for them, but for their followers, too, then their followers will kill them.
Without war, nations stagnate. All but the most virtuous forget The First Commandment. Decadence sets in. Prophets start to come and preach repentance. Until the handwriting is on the wall, and it is too late. Warfare has an extraordinary ability to focus everyone on returning to The First Commandment, innovating and making rapid progress. But warfare is extraordinarily destructive of human potential.
That is why a Cold War, as terrifying as it is, is preferable to either a stagnant peace or a real war, although peaceful trade without stagnation would be the best of all. (A question for another time is: without mimetic competition, how can you motivate a peaceful, prosperous nation to relentlessly innovate: to move beyond Man to Superman?)
That is why I don’t think the best outcome for the world is simply America winning, and China losing. The best outcome for the world is America and China co-evolving, forcing each other to innovate, while deepening their economic co-dependence.
Perhaps the most striking difference between this Cold War and the last one, is that America has lost its sense of moral superiority. This is not Capitalism vs. Communism. Or simply Democracy vs. Authoritarianism. It’s something more complicated. Between the two models, I obviously believe that the Chinese model is more repressive of The First Commandment to express human potential. But China is outgrowing America, and in that sense, it is out-obeying the Commandment: maybe it is Abel in the story, and we are Cain. America’s failure to grow has led to an economic malaise, coupled with a dangerous techno-economic-political-philosophical-religious relativism. To defeat China peacefully, America has to prove, again, that it has a better model. But that will require spiritual evolution. To rediscover its Will To Power, America has to obey The Great Commandment to Innovate, break through its economic malaise, and find a raison-d’etre capable of motivating its jaded population to greatness again.
Invisible is not a strategy about how we can win a zero-sum mimetic conflict, because that is not a game worth playing. Invisible is a strategy for winning the game of games: peace through innovation, diplomacy through a superior model, economics as religious expression. Invisible is a story that we can tell ourselves about not just how, but why, America must lead the world again.
The Geopolitical Analysis
None of the other powers that contest America’s foreign policy have economic heft except for China. Europe continues to stagnate. Iran’s relative economic power has declined as a result of the deregulation of fracking and other US energy innovations, and although Russia plays an impressive game of chess, they are a third-rate economic power, emboldened by China.
China’s economic strategy vis-a-vis the United States:
1. IP Theft.
2. Currency Inflation.
3. Protectionist Trade Policy Preventing Imports.
4. Global, Strategic Infrastructure Monopolies.
China, it’s all about China. And the rift between China and the United States is less a game of mad man’s poker, than a realpolitik rebalancing away from financing a mis-aligned, expansionist and ascendant World Power. That the political philosophy of China’s ruling class is mis-aligned with liberal, democratic values should come as no surprise. Nor can we naively hope that gentle persuasion to shift popular sentiment will result in gradual liberalization: the state runs the media and a vast domestic suppression and oppression apparatus. President Xi, having consolidated power, is ruler-for-life, and has presided over thousands of state-sponsored assassinations in his bid for absolute power. The human rights abuses of the regime are well documented. And China’s oft-flaunted “capitalism” is not based on free markets, property rights, and the rule of law, but on protected mercantilist monopolies, which are corporate proxies for state dominion of industry.
Although “the rise of China” has brought tens of millions out of poverty, and that is, of course, to be celebrated, to fail to finally recognize that this regime is a mis-aligned, expansionist and ascendant World Power would be dangerous. Presidents Bush and Obama, distracted by wars in the Middle East and domestic financial crisis, were all-too-friendly with China. But there has been a sea-change in both parties since 2016. Trump is no longer the only hawk on China. Of the Democratic candidates running for President in the 2020 election, Biden may be the only one that is not a China hawk.
This is The Second Cold War, but the players are different, and the world is more integrated, so it requires a different response. The 19th century French senator and economist Frederick Bastiat said that “when trade crosses borders, armies don’t.” In dealing with World Powers that are too large to isolate and sanction, it is inadvisable to completely cut off economic ties, because desperation increases risk of a hot war.
But, on the other hand, to finance the economy of a hostile nation that grows three times faster than our own is madness. Our consumers buy their products, our corporations finance their manufacturing base and employ their workers. Then they buy our debt with the profits, increasing their leverage over us.
The philosophical stakes of the first Cold War were polarized: “Is Communism or Capitalism superior?” But the stakes this time are nuanced, reflecting an axial shift: “Is Authoritarian Mercantilism or Liberal Nationalism superior?”
Putin and Xi preside over what are essentially mafia economies, where every major industry is dominated by a for-profit monopoly or oligopoly, protected by various state policies. These are de facto organs of the state, because all the captains of industry are “members of the party,” vassals to their feudal lord.
It is a still-common mistake to say that China has embraced “capitalism.” Their markets are not free markets, even domestically. It would be absurd to imagine a global culture exporter like Disney being born in China. The kind of free thinking, free speech and imagination required for that kind of creativity are too dangerous to tolerate in a censored society. Although Chinese society is full of entrepreneurial ambition, that energy can only be safely directed towards industrial efficiency, and although its growing middle class is rapidly acquiring Western luxury tastes, all imports are at risk of being copied by a protected domestic competitor. The social contract between the Chinese people and its ruling elite works, because its economy is growing fast, and that growth has been translating into rapid progress in the standard of living for the average person. If that feudal patronage broke down, ironic oppression would be necessary to keep down proletarian unrest. This is not capitalism, it is authoritarian mercantilism.
The shattering of the Globalist Consensus amongst the Liberal Democracies is not the result of one or two election flukes, or of reactionary xenophobes, but of a growing recognition that multi-lateral diplomacy has broken down and is no longer capable of delivering rapid results. In the half-century after WWII, global and regional inter-governmental institutions like the United Nations, the European Union, the IMF, the World Bank, and NATO built a New World Order around a broad liberal consensus on trade, the rule of law, and regulation.
But that World Order has been flouted by a coalition of mis-aligned players like North Korea, Venezuela, Iran, Russia and China. This list is shorter than it was, with the toppling of hostile regimes in Iraq, Afghanistan and Libya under the Bush and Obama administrations: and history may judge these bloody, messy, expensive wars more favorably in the long-view, simply as a policing action to impose consequences for flouting the World Order. Hopefully, Venezuela and Syria will be the next to fall. But Turkey is straddling both sides, increasingly re-aligning itself with Russia, but afraid of losing its relationship with Europe and The United States. One of the lessons of the last two decades has been the relative futility of Nation Building in the developing world.
So if the answer isn’t more diplomacy, and the answer isn’t more conquest and nation building, then what is the answer? The nationalist answer is “trade war,” which isn’t just about tariffs, but is really about matching China, measure for measure, on their mercantilist economic warfare: penalties for IP theft, for currency inflation, for blocking imports… and more interference in building global infrastructure monopolies. This basic set of counter-measures is likely to survive into the next Presidential administration. And it is grounded in a sensible realpolitik analysis: they are not invulnerable. For example, they have a debt bubble that is at risk of collapse. They import innovation through IP theft and rely entirely on manufacturing, so if Western manufacturing leaves their country, it would really hurt them.
The medium-term goal is not a liberal, democratic China — that would also be unrealistic — but a China that is aligned with the globalist agenda, that does not flout IP, that has open books, that plays by the rules.
But the problem with the nationalist “answer” is that it isn’t enough. It’s not enough to force change, and meanwhile, it reinforces a mutually destructive antagonism. It is highly unlikely that without more pressure, the Chinese government won’t capitulate at the risk of losing face.
This is where our revolutionary claim comes in. Their underlying advantage is manpower, on which they have built a defensive structural advantage in manufacturing. Equalize the underlying advantage and build a defensive structural advantage in knowledge work, and the geopolitical landscape shifts in our favor.
But even that might not be enough. The final coup de grâce is ideological. America has lost The Will To Power. It needs to regain moral and visionary authority. China doesn’t have a desirable future to look forward to because of demographic collapse. America doesn’t have a desirable future to look forward to because of stagnation and wage stagnation.
What is needed is a miracle. Something to remind everyone that the future can be even more glorious than the past. That The Manhattan Project, The Apollo Program, and The Internet are the beginning of history, not the end. That the great immorality is to limit human creativity. That the greatest folly is not to play zero sum games.
This is a story I tell myself, because it motivates me. The higher the stakes of success, the more motivating it is to work for success.
Historical outcomes are not inevitable. My goal is not to convince you that these claims are true. Even I don’t believe them, or disbelieve them. Their truth will be borne out by action; until then, they are merely an imaginative possibility. If we work hard, if Invisible succeeds, we might make them true. I would like that. Very much. But history rarely cooperates.
Invisible is not a messiah and I am not its prophet. Nor do I claim to have correctly read the strategic map of the world. What I wish to model is not company-as-messiah, but rather entrepreneurship-as-heroism. If there are problems in the world, they are not for others to solve, but for us to solve. And if the company is our craft, our art, our cathedral — our life’s work — then it ought to express our gravest concerns and our highest hopes.
I want to die knowing that I lived what I thought. And thought about what I lived.
Marshall Sutherland (basically his idea)
Erinn Woodside (post-disruption identity crisis)
Hayley Darden (“Delegate to Automate”)
Rene Girard, Works
Peter Thiel, Straussian Moment
Peter Thiel, Stagnation
Peter Thiel, Nationalism
Peter Thiel, Zero To One
Bannon, On China
Kyle Bass, On China
Lee Kuan Yew, Interviews