Yes, It’s Time to Build, And…
Marc Weinstein is host of the Look Up! Podcast. He is an active writer, angel investor, entrepreneur, start-up advisor, and certified yoga instructor. Marc is a regular speaker at corporate events, universities, and conferences. Click here to view past presentations and to book Marc.
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Two weeks ago, Marc Andreessen, famed founder of Netscape and one of the most powerful venture capitalists in Silicon Valley issued a call to arms:
“There is only one way to honor their [our forefathers & foremothers] legacy and to create the future we want for our own children and grandchildren, and that’s to build.
I could not agree more!
Yes, it’s time to build, AND it’s time for younger generations like mine to determine in what direction we want to take this nation.
We can start with a few questions that can hopefully deepen our understanding and guide us to build in the right direction.
Build for Who?
Build What? (Andreessen spent the most time on this one)
Each of these questions alone is far too much for a weekly newsletter to explore, so I’ll be breaking down each category into its own section over the next few weeks.
Start with Why
I don’t mean to go all Simon Sinek on you here, but this seems to be the most important consideration.
While it may seem like an exceptionally easy question to answer, the outcome of building is so important, that we cannot afford to throw nuance to the wind.
Bold claims like “we build to drive economic growth,” or “we build to create jobs,” or “we build for a brighter future,” are great for motivational speeches, but each answer will lead to a vastly different outcome. Defining our “Why Build?” will possibly determine how we measure success.
GDP Growth: Building for Building’s Sake
Each year, the Chinese Communist Party sets an official target rate for the country’s Gross Domestic Product (GDP). Local state and city leaders expected to do their part achieve this number.
The growth of the Chinese economy since GaiGe KaiFang (the opening & reform of Chinese economy in 1978) has been nothing short of remarkable. Over 800 million people have risen out of poverty. The CCP believes that in order to sustain this new normal, they need to maintain economic growth. This laser focus on GDP growth has led to some strange outcomes. It seems the CCP has confused the metric with the goal.
Over the last decade tremendous malinvestment into fixed assets has led to the rise of completely useless ghost cities. Many of the banks that financed this investment are now insolvent as the State Owned Enterprises that borrowed to build, are not generating enough income to repay their loans. I won’t even mention the massive waste of energy and other natural resources used to construct these monuments to the GDP god.
As Goodhart’s Law states,
“When a measure becomes a target, it ceases to be a good measure.”
GDP, Financialization, & Wealth Inequality
Although GDP has many known flaws, we share a similar obsession with this metric in the west. As in China, building for the sake of driving economic growth as measured by GDP has led to serious imbalances that will continue if we don’t change course.
First, the US economy has become completely “financialized” — finance, insurance, real estate, rental and leasing accounted for 20% of our GDP in 2019. Activities like the creation of derivative products contribute to GDP growth, but create outsized risks to the broader economy, moral hazard from bailouts, and do not improve the well being of our citizens.
It is not surprising, that as the US economy has become increasingly “financialized,” wealth inequality has grown to unprecedented levels. The top 10% of Americans own 81% of the stock market and the top 1% own 38% of the wealth.
GDP growth does not address wealth inequality, and wealth inequality leads to political instability, so it is one of the greatest issues of our time.
For those of you interested in a potential counterweight to GDP that accounts for wealth inequality — I’d check out Democratic Domestic Product, which measures output per individual vs. output per dollar.
“Why Build?” may also be to increase our Gross National Happiness. GDP measures how much money we spend, but not how we are actually doing. The US is currently ranked #1 with 25% of global GDP, but #19 in terms of happiness. Nearly 40,000 Americans have died by suicide in 2019 and anxiety disorders including depression affect 40 million Americans annually, a number that will only rise with growing unemployment.
Build for the Jobs, Stupid
OK, so what if the answer to “Why build?” is to create new jobs? Since our government instituted mandatory quarantine to respond to COVID-19, over 24M Americans lost their jobs. This level of joblessness has not been seen since the Great Depression.
Meanwhile, as Andreessen points out, stimulus to individuals and small business has been delayed or outright stalled. It is unclear if/ how small business will survive or how quickly these unemployment numbers will correct. Joblessness in America may become the new normal. Many companies might choose to operate with reduced staff amidst continued economic uncertainty.
Building with the goal to create new jobs is likely necessary. But why must we focus on work for work’s sake?
In a famous encounter in the 1960s, economist Milton Friedman was visiting a canal build in Asia. He asked why the workers were using shovels rather than heavy equipment. His guide responded that this was a jobs program, to which Friedman replied, “Then why not just give them all spoons?”
Yes, we can put America back to work, but first we must ask (yes you guessed it) “why?” we must create these jobs. Perhaps we can find answers that bring meaning back to work itself.
It’s 2020, we no longer need to accept an economy focused solely on survival! Existing and living are two completely different things.
If we are to inspire future generations, we must believe that humans can do more than “get by,” but instead can find meaning in work and in life.
Build to Invest in our Future
On its surface, investing in future generations seems like another strong reason to build. However, there are likely sacrifices that we will have to make today in order to build for the future.
Our collective impact on the environment is a clear example of this zero-sum trade off between current and future generations. So far, we have not proven the collective will to make changes.
For example, a recent scientific study showed that if current soil degradation rates persist, we will run out of necessary top soil for farming in 60 years. But how can we change farming practices without negatively affecting the 2m small and medium sized farmers in the US? And what about the 23 million Americans living in food insecurity (access to calories but not nutrition) today.
Another example — WTI crude oil prices went negative last week, and it’s likely that many US oil and gas companies will go bankrupt in the near future. They will be unable to compete with state-owned oil companies like those in Saudi Arabia and Russia. As these businesses fail, we have an opportunity to pivot US energy away from fossil fuels to clean energy sources.
But oil and gas businesses employ over 10 million Americans in relatively high-paying jobs. Who is to decide that these people should suffer for our future?
Building alone does not provide the answers to these challenging questions. As I know from first-hand experience, “move fast and break shit” doesn’t always work.
So Why Build?
Live your questions now, and perhaps even without knowing it, you will live along some distant day into your answers. — Rilke
It’s clear there are many important reasons for us to build, and the simplest reason of them all is because we MUST.
What other choice do we have?
Perhaps like Sisyphus, we are destined to forever roll the boulder of our collective humanity uphill.
Though there is no perfect answer, at least asking Why Build? will lead to critical reflection; reflection that may only lead to further questions, which I leave open until another day.