Pivot

Richard Kramer: Welcome to Bubble Trouble, conversations between the independent analyst Richard Kramer, that's me, and the economist and author, Will Page, where we lay out some inconvenient truths about how financial markets really work.

We'd like to wish our listeners a happy new year, and summarize what we've done last year, which was a terrific year for Bubble Trouble, because we spent a lot of the year pricking the bubbles. We did NFTs. Remind me what else we did, Will. Cryptocurrency-

Will Page: Metaverse. If there's a bubble there, we pricked it first.

Richard Kramer: We did. [laughs] That is a great tagline for the podcast, "If there is a bubble that burst, we pricked it first." Today, it is a day to go down to the pub and have a chat that is gonna be focused on my cohost, Will Page's paperback edition of Tarzan Economics, renamed Pivot, and I will ask him why he's renamed the book in a moment.

There's quote from Adam Grant and Scott Galloway on the cover, and a new afterword on the back, and we're gonna take this episode to probe Will a little bit on what he learned in the past year or so of Bubble Trouble, and what new he had to add to Tarzan Economics, now named Pivot, so back in a second with that.

Well, as I said, we don't do shameless plugs here on Bubble Trouble, but we're gonna make an exception for my esteemed cohost, Will Page, and heading into the third year of Bubble Trouble, I have to ask him what he's learned since he wrote Tarzan Economics, which I think you said it came first of April, April Fool's Day on 2001.

Will Page: [laughs] Ain't no joke.

Richard Kramer: And also, you know, why did you change the title of that terrific Tarzan Economics, Tarzan and Jane, all those great allusions to Pivot? Explain that one to me.

Will Page: Why, why not swing around a jungle in scantily clothes didn't work? I'll tell you why, what I learned, and why I changed, it can be merged together here. I learned that the words... Books with the word economics don't sell in airports and train stations.

That is, [inaudible 00:02:05] loved the book, they just didn't like the travel. If you're gonna go on a long haul flight and you're killing time in the departure lounges, looking at the book shelves at WHSmith, or Hudson Travel in America, then books on economics are not the ones you pick off the shelf to read for nine hours.

But books called Pivot, well, maybe there's a chance there, so they loved the book, they wanted a title change, so we went back to the drawing board and we came up with Pivot, and it's full title: Eight Principles for Transforming Your Business in a Time of Disruption.

And not just, you know, a new title, a new book cover, new brand, but also an afterword, for a four and a half thousand word afterword deeply relevant, looking at what stuck with the book, and what's relevant today.

Richard Kramer: You know, there were a lot of things in that afterword that we had talked about on Bubble Trouble, whether it was wash trades, or-

Will Page: Yep.

Richard Kramer: But quite a few examples of things that we called out of bubbles, and maybe are disruptions that didn't happen.

Will Page: I just saw a recent article about wash trades, I think it was in like, Wall Street Journal, one of these newspapers, and toe for toe, it read like they'd been listening to our podcast of March 2022-

Richard Kramer: Could be they have, could be they have.

Will Page: NFTs are not for me. Still our most popular podcast, Richard.

Richard Kramer: So, I cannot get out of my mind this image of scantily clad... Whether men or women, in leopard skin bikinis swinging through the jungle, so-

Will Page: Is that why you're sweating here in the studio, or is that temperature?

Richard Kramer: I, I, I want to talk about this swinging vines analogy you have in the book-

Will Page: Mm-hmm.

Richard Kramer: Letting go of one vine, the old one, and clinging onto the new one, that sort of point of hanging in the air, and not sure whether you can grab onto that new vine, which is that nervous point of disruption where companies, industries, businesses have to transition.

Now, there's one sector that you call out in the afterword, that you say that hasn't done this, and that's education.

Will Page: Mm-hmm.

Richard Kramer: And there was something interesting on radio for this morning, I think, about how dissatisfied students are with this notion of hybrid learning. They signed up to go to university, they paid all these expensive fees, and they're sitting in their dorm rooms watching Zoom lessons, and-

Will Page: [inaudible 00:03:59] Stanford Business School which had Stanford Business School: $40,000/year. Netflix: $9.99/a month."

Richard Kramer: Right.

Will Page: And you stare at screens-

Richard Kramer: You know-

Will Page: And the, the action is the same.

Richard Kramer: You know, universities are in cost crisis seemingly perpetually, but how do you transform something that's part commercial, part a public good, because we obviously want people to be well educated, but 100% tradition, if you look at how the indus-... These universities market themselves, when you look at industry, like, that's still clinging to the old vine, and struggling to transition to the new one, what's your thesis?

Will Page: So, let me unpack in this two quick steps. Firstly, I just want to take on the issue of are universities in a funding crisis? If I look at my own university, University of Edinburgh back home, to which I'm a fellow of the Edinburgh's Futures Institute, they have money.

If you look at their investment fund, they have lots of money, but it's almost like they're asset rich but cash poor, so I do think universities have to check themselves when they say they're in a funding crisis when their investment vehicles are producing amazing returns.

You cannot plead poverty on one hand, and champion amazing returns for your investment vehicle on the other hand. I just want to just air that taboo topic right here, right now. But looking at, we've heard about [inaudible 00:05:15] and online education courses disrupting universities for years.

I think it comes down to a challenge of two things, where you wash out all the pros, and cons, and arguments for and against will we have universities in the future, can we all just go online training?

I think the value of the brand you can't undermine. Parents all over the world will aspire for their kids to go to Oxford, Cambridge, Harvard, Yale. That brand has a legacy value, and that's not going away. In fact, it could be appreciating in value.

But the other end of the spectrum is a relevance, the real time relevance of the curriculum that's being taught. So, I mentioned in the book that when I was at university, at the term of the millennium, the top three subjects were law, accountancy, and banking.

If you wanted to earn the big bucks, you applied to do those three professions, you studied courses that would get you into those professions. Now, it's UX designers, software engineers, it's developers, it's tech jobs that earn the big bucks, and that tech is moving so fast that I don't think the curriculums can keep up to date.

Richard Kramer: Mm.

Will Page: So if you study C Quill for four years at university, sorry, we're onto Google Big Query. If you study Tableau at university this year, sorry, we're moving onto Google Studios. I think the Tarzan economics, letting go of the old vine and reaching out to new vine, starts to happen when you realize these curriculums are next year's curriculum, should I say, is already out of date.

Richard Kramer: But it's the power of those luxury brands, and certainly those luxury brands, like all luxury brands these days, have been marketed with global appeal, so all of these Ivy League universities are attracting students from all over the world, notably from China, and India, and so forth-

Will Page: Yep.

Richard Kramer: And they're promoting that luxury brand experience, if you will, but that experience is being hugely diluted if all you're doing is sitting there watching online classes.

Will Page: Right. And I think where the rubber hits the road is when the employers out there don't want you to be paying a fortune in potentially debt to acquire this brand, but not acquire the skills that you need.

You start to see Google build their own universities. "Come train at Google. You'll earn money as opposed to accumulate debt, and you'll actually learn the tools we need for you to sell ou adverts, and develop our business."

Now, it sounds very vocational, and there'll be an academic [inaudible 00:07:28] backlash to that because what about learning about philosophy, what about learning about the arts? But that cost benefit analysis of I could be $100,000 in debt, and have a degree that's already out of date, versus I could be $200,000 up and have vocational training that gets me further into the hierarchical structure of a firm, I think over time, people will recalculate that cost benefit and make their own decisions.

Richard Kramer: I don't know, you still get to have three or four years of getting absolutely shit faced with your friends at parties, and-

Will Page: What the Economist can't capture is getting shit faced at parties, and to be absolutely clear, full disclosure, I drank my way through university, and I don't remember much of it, but I did get a 2.1, so-

Richard Kramer: There you go.

Will Page: Yeah. Richard, you uncovered an inconvenient truth there. I mean, I'm talking here about the relevance of the curriculum, and the value of the brand, but the true value, like you say, is the ability to get drunk for three or four years of your life, and have a rocking good time.

And on that, can I just reflect on my time at university, of what my big brother, my far brainier big brother said to me, which is if you get a first class degree at university, that meant you studied too hard. If you get a 2.2 degree at university, that meant you partied too hard, so I'm pleased to say I got a 2.1, which I meant I got the balance between partying and studying just about right.

Richard Kramer: Well, we're not gonna go over your university career here, although I think you do have a point you want to make about price discrimination in the university sector.

Will Page: Well, yeah. I mean, it's quite surreal that you can study competition level at university, and watch how universities have used competition level with price discrimination, but just the sheer price that overseas students, particular students from China are paying to study here, vis a vis what domestic students are paying.

And by the way, domestic students in Scotland pay nothing-

Richard Kramer: Mm.

Will Page: Because it's... That's the 9,000 pound question, "Why don't you have to pay for university in Scotland?" But I just remember one of my biggest reflections of the year was going to the Bristol Festival of Ideas, and sitting at this table with all these other speakers, and hearing this very senior person at Bristol University talk to me about what was wrong with the world, and the ethics, and the principles of university education.

And I said, "Who pays your wages?" And he said, "Oh, it's obvious. The Chinese Bourgeois pays for one third of the entire British University system."

Richard Kramer: Mm.

Will Page: And it's just to remember how much of this brand value of this curriculum that's being subsidized by overseas students, and particularly that of China. Now, they could make a decision to study elsewhere tomorrow, we just have to keep that risk in mind.

Richard Kramer: Yeah, and as our good friend, Scott Galloway says, these universities are luxury brands that have enormous endowments, the endowments of the Harvards, and Yales, and Princetons, and Columbias are enough so that they could allow every student to go there for free, but they don't because they like to pile up the cash.

Will Page: [inaudible 00:10:05] crisis.

Richard Kramer: Let me move on... Let me move on to another topic that you spent a lot of time on in, in your book, and indeed, we've spent a lot of time talking about at Bubble Trouble, which is this attention economy, and I have to say, I'm really sick of talking about the attention economy.

I think we nailed the Metaverse-

Will Page: We sure did.

Richard Kramer: FPS-

Will Page: We nailed it first.

Richard Kramer: We, we looked at a lot of other areas of the attention economy we felt were just over hyped, and I'd frankly, rather talk about the distraction, or the interruption economy because we have so many things trying to claim our attention, it doesn't seem like we can pay attention to anything any more.

And I want to concentrate a little bit more to avoid this interruption economy, and ask is this attention economy just a cruel joke, is it just some excuse for the feebleness of a service that they have to grab you instead of allowing the qualities of the service to actually attract users?

Will Page: There's a lot in this one, and let's remind ourselves about an expression I used in the original book, Tarzan Economics-

Richard Kramer: Mm.

Will Page: The tragedy of the commons.

Richard Kramer: Yes.

Will Page: So we think about fishermen, I would have an incentive to over fish the North Sea and maximize my profits. Richard Kramer would have an incentive to over fish the North Sea and maximize his profits. There's a scarce good there's non excludible.

But if we both over fish the North Sea, there'll be no fish left, and I think that kind of summarizes what the interruption economy is doing to us-

Richard Kramer: Mm.

Will Page: A wealth of information leads to a poverty of attention, and we have that tragedy in front of our faces. But what I explore in the afterword of the paperback edition of the book Pivot is really about whether that is what actually gets this Metaverse off the starting blocks.

It's a means to an end. Let's not talk about the future as the Metaverse, let's talk about the future as anything that can capture your undivided attention. Now if the Metaverse can deliver that purpose, maybe there's life in it yet, but I'm thinking the one example I sometimes mull over is staff training.

So most staff training exercises involve distractions, looking at your phone, staring out the window, chatting to your friends whilst the lecture or the whiteboard is going on. But if it's in a Metaverse style staff training, where you have to pay attention, and you will follow those instructions.

I just think step back from bashing the Metaverse for a minute, we're in a distraction economy-

Richard Kramer: Mm.

Will Page: Interruption economy, and we need ways to capture your undivided attention. The Metaverse might be one of them.

Richard Kramer: Now another section you touch on in the afterword is about all of what you call dubious crowd drawing behavior, and I think NFTs was a great example of that, a lot of what's going on in this attention economy is that kind of-

Will Page: Mm.

Richard Kramer: Crowd drawing behavior, can you do something ever more outrageous to get people to look? Um, and I have to ask, are influencers sort of the new carnival barkers of our age? There's no regulation, there's been recent fines for many of them for pumping crypto schemes.

We talk about wash trades. How are we gonna regain our critical faculties when we have all of these people shouting for attention, and indeed, they're being paid to shout for our attention?

Will Page: That's true, and, uh, first of all, I'd like to quote [inaudible 00:13:12] who said many years ago about Facebook, and fake news, and influencer economy, he said, "As a chairman of ITV, if anything like that happened in his commercial breaks, he would be up in front of the regulator by Monday morning."

That's a regulated economy, but that's not where the crowds are. Viewership on linear TV... Not that we actually measure it accurately, is definitely on the wane. The attention that is going over the TikToks, the Instagrams of this world, where the influence economy thrives.

And in the book, I talk about one of the most thriving professions in the influencer economy is... How do I phrase it? It's a... It's like a surgeon, sort of a, a part time surgeon who can offer you BBL. Now, do you know what BBL stands for?

Richard Kramer: I do know what a BBL is.

Will Page: Spell it out for me, sir.

Richard Kramer: A Brazilian Butt Lift.

Will Page: [laughs] So when that type of service is thriving in the influencer economy, you do have to wonder, is there a case for regulation? So, yeah. It's just interesting to see regulation where the...

Is where the crowds are not, linear media world, broadcast radio. But regulation is not where the crowds are at, which is the, the world of social influencer marketing, and that... Uh, that imbalance, I think you can't ignore, and we, we...

Here in the UK, I mean, we have Online Harms Bill, which I call a Christmas Tree Bill, where everybody's trying to stick a new item on there-

Richard Kramer: Mm. Mm-hmm.

Will Page: As it goes through the Parliament. But I think that's definitely high on their agenda, which is that does something need to come pass here, in terms of trying to regulate the wild west of the influencer economy, so we don't have Brazilian Butt Lifts as the most thriving profession going on, on, on, on that particular marketplace.

Richard Kramer: Mm. Now, I was a fan of the concept of Tarzan economics because I like the idea of Tarzan being a moral hero who'd swing down on the vines and rescue the damsel in distress. In this case, it was 100 years ago, so let's not talk about the modern... What the modern version might look like, whether Tarzan would be the female, and it, it would be a dude in distress, or whatever it would be these days.

But, but here, there is... This is something you point out in the afterword, there is no effective regulation. This attention economy has just exploded upon us like a, uh, fragment bomb, fragmentation bomb, and no one seem to be able to put the genie back in the bottle.

How do we recapture attention such that people can actually read a book? Do people read books anymore? Clearly, million titles published. Independent book shops are opening all, all over the place, record levels of independent bookshops in the UK. But how do you recapture that attention that has been so distracted?

Will Page: That requires some attention. Well, firstly on your point, books, let's remind ourselves that the favorite quote from the original manuscript, Tarzan Economics, which is 80% of books that are sold go unconsumed, that is, they sit on the shelf-

Richard Kramer: Ah.

Will Page: They sit on a glass table. They might be a gift for someone else, but a very esteemed publisher said to me that he sets out his P&L every year knowing that 80% of everything he produces in sales is actually not consumed by the consumer, which is where he said-

Richard Kramer: [inaudible 00:16:10]

Will Page: [laughs] That's where he said that a record collection... A record collection defines who you are, and the book collection defines who you really want to be.

Richard Kramer: Mm.

Will Page: And I look my own bookshelf, I would say that rule of thumb is broadly correct. But it's interesting. I mean, I don't know... I don't quite know how we're gonna solve this, but one thing I would add to this mix of a conversation is when you learn that over half of the vinyl buyers in the UK don't have a record player, well, they're not paying attention to the record, but they are buying merchandise.

So, they are buying a body of work that lasts 50, 60 minutes. They're not listening to it, but they see that purchase as a form of merchandise, and there may be something in there we can tease out, in terms of what does that mean for an attention economy, or as you rightly say, a distraction economy?

Richard Kramer: But maybe that vinyl is a bit more of a rare commodity that they feel will have some resale value, whereas the books are ending up in your local charity shop. With that, I think we need to move to the break, and we're gonna touch on some other points when I come back with our infamous author, Will Page, author of both Tarzan Economics and Pivot, and he got a two for one special on most of the content. We'll be back in a moment.

We're back with part two of Bubble Trouble, going over Will Page's afterword, and further thoughts on his brilliant work, Tarzan Economics, now retitled Pivot, and I won't go through the long title because we- we've been through all that, that mouthful already.

So Will, I want to come back and call out one of the areas you tough on in your afterword, where you're debating the Ronald Coase, Theory of the Firm, and the idea that these old fashioned companies are dying because all of these new breed of firms don't have any of their internal transaction costs or overheads.

And I guess our point, and we've talked about this on previous Bubble Troubles that people can look back and listen to, is that a lot of those new fangled firms have just simply sneakily avoided the cost of the overheads of, of those traditional firms.

And we can name many, whether it's paying benefits, or national insurance, or tax, or obeying the law in regulation. I mean, are these new companies just side stepping the corporate social responsibility that we always thought companies should have, or is this just the Milton Freedman taken to the extreme, or a fantasy land, to quote Curt Anderson, who we had on the podcast last year, that the only responsibility of firms to make as much profit as they can, everything else be damned, and whoever else they steamroll in the process, it doesn't matter.

So, have we really given up on, on Coase, and the theory of the firm, and the idea that companies can do the right thing, and is the world just now one where everybody's trying to disrupt everybody else, and never mind the consequences?

Will Page: Well, first of all, I liked how you, you used the word sidestep, how you might sidestep your responsibilities as an employer. Now, I use the term... It's a bit of a derogatory term, but the term champagne socialist.

Quite often, you hear a person saying, "Oh, I employ a cleaner to clean my house because I can do something more productive with my time." That's how capitalism works, "And I pay them the minimum wage."

And then you say, "But do you pay their health care, and pension fund contributions as well?" And the conversation goes dead. It's an interesting way of just, like, what is the labor market conditions for the gig economy?

Just step back for a second and say, "Are they getting all the benefits that the firm would produce?" But let me just come back on the Coase theorem. It is now almost... What, 100 years old, that theorem-

Richard Kramer: Mm, yeah.

Will Page: Written before World War II?

Richard Kramer: The '30s.

Will Page: So if you look at what he was saying, and what he got the Nobel Prize for, he said the time that a firm would spend... If you imagine an economy being a sea full of consultants, searching for the person who could make that car. "I think Richard Kramer can make that car."

Bargaining with Richard Kramer about what will it cost for Richard Kramer to make that car, and enforcing the quality of the car that Richard Kramer makes. The search, the bargain, and the enforcement costs make it pointless to have Richard outside the firm. It's better to bring him inside the firm and have this command and control structure called companies to make that car.

It's a really clever extraction of why do we have firms? Why are we just a sea full of consultants? 'Cause the transaction costs make it unworkable. And what I'm arguing in the afterword of the book Pivot is that these transaction costs are coming down, making the option to go it alone that much easier.

LinkedIn makes it harder... Easier to find the person to do the job, bargaining that's much more price discovery about how much it's going to cost to do the job, and enforcement... If you think about the feedback effects of review sites, makes it easier to know the job has been done well.

And those very simple examples, I would argue that more people are revisiting that famous 1937 paper, the Theory of the Firm, and asking, "Well, do I need to work for a command control structure called a firm, or can I in fact go it alone?"

I'm not saying it's an extreme scenario, I'm just saying the pendulum is swinging back in the favor of doing it yourself as opposed to going inside the company.

Richard Kramer: But when I think of the gig economy, or the creator economy, a lot of times I think of that as a very Darwinian, "You're on your own, mate." Kind of struggle for a lot of the people that are supposed to be liberated in this economy.

And if you scale that up... And this is something I want to touch on in Bubble Trouble in 2023, if you scale that theory up to the society level, how do you contribute to public goods? How do you pay for roads, and hospitals, and all those things if everybody is just taking their own and not contributing anything beyond that?

And I think what you're talking about is, well, the firm would like to divorce itself from the responsibility of looking after its workers, of paying the taxes, and the overheads that go along with supporting those workers, and just let the worker come to them only when they need them.

And scheduling that is certainly not an easy feat, and we're sitting here in the UK right now with a health service in crisis, partly because we haven't thought through how we're gonna need to staff it, and looking after the people that work in it, and indeed, we're paying well over the odds to these contracting firms that are bringing nurses in for three or four times what they would be paid directly working for the NHS, and that's a terrible social outcome.

So, I'm not sure we want to chuck out the firm just because transaction costs have gone down. We still want those firms, and indeed, employers generally to live up to their obligations, don't we?

Will Page: You're right, Richard, but I do think that you're slightly on the pessimistic edge of the spectrum here, in terms of where this all ends up. Uh, there was one tech company I'd love to see flourish in 2023, it'd be one that could solve the problem that I illustrated at the start of my answer, that is our middle class family employs a cleaner, they pay the cleaner the minimum wage, they think that's the social just thing to do, but they pay you nothing for health care, and nothing for pension, and nothing for any other benefits on top.

Then let's imagine that we're here at this amazing studio of Platoon, part of the [inaudible 00:23:15] empire here in North London, and we're with our producer, Lizzie. Last I mentioned, Lizzie is not one of the best producers in the land, but instead, she's an actress, and she's waiting some tables to make some disposable income, she's working in theater, and she's doing some day care jobs just to make ends meet.

So, she's at the lower end of the income level, and she's got three jobs. What if we could have an app which... To allow those three employers to easily contribute to her pension, and to her healthcare costs on a pro rata share of hours paid?

Something like that could produce the solution which allows this gig economy... Which is already thriving. What, four and a half million in Britain are in the gig economy, maybe more, but could thrive even more.

I just want you to think about, can tech provide us solutions to get those transaction costs to fall even further than they're already falling?

Richard Kramer: I mean, I think they could, but the problem is... And this is again, something that we talked about at length with Cory Doctorow in the second podcast we did with him was how labor has been atomized, and disintermediated by big companies, and you d-... You... In many of those big companies, they don't recognize Unions. They don't recognize agglomerations of labor that would like to fight for some basic rights.

And instead, they want an endless pool of labor with... Where they can get away with paying as little as possible, and I think that sort of paternalist employer, it exists is some places, but it feels as if it's a lost art sacrifice to the god of efficiency and transaction costs.

Will Page: Cory made a wonderful point in that podcast. Uh, really. Out of all the pods that we've done last year, I think Cory was the most lyrical guest that we've ever had, but he was talking about...

I challenged him to say that, you know, Amazon's offering lower prices, and that helps the consumer, but then he... [laughs] Do you remember he said those words, "But the consumer is also working for Amazon as well."

Richard Kramer: Yeah.

Will Page: So it's... He brought it full circle. He was a guest that made you see the world differently.

Richard Kramer: Indeed. And I think his point about monopsony is that the... They are monopolizing... Large companies are monopolizing sellers, and we as employees, or potential gig economy employees are contractors to those companies, don't have much power over our labor relative to the companies that potentially could employ them.

Will Page: I don't see this is a solution to the problem you're highlighting, but I go back to my original thesis, the ability to leave that company, and then to consult back into them, where you name your own price-

Richard Kramer: Mm.

Will Page: And your own terms, potential offers an alternative. I'm not saying that's a good thing, but I'm saying it also adds to the growth of the gig economy is being in the firm becomes... Relatively speaking, less desirable because of those conditions that you highlight.

Richard Kramer: I mean, I will throw out as a theme that I would like to explore for the rest of 2023, what the long term consequences of this gig economy are because I think it has many-

Will Page: Yeah.

Richard Kramer: Damaging and deeply disturbing implications for where we go as a society, but let me touch on one more.

Will Page: Yeah. Any- anyone who says, "I'm gonna go it alone." Is not thinking, "I'm gonna go it alone forever." But you're right, where does this go if you'll go it alone?

Richard Kramer: Right. We lose that social cohesion. I want to bring up one point you had on your... The last page of your afterword on the next disrupters, but I think you let it go way too easily. You talked about bankers, and lawyers, and accounting firms that got used to virtual online courtrooms.

Remember the guy in Texas who was presenting the court case, [laughter] and he had a cat avatar, and then-

Will Page: In Britain, we had tell judges how to use computers-

Richard Kramer: Yeah, indeed.

Will Page: And that's an actual truth.

Richard Kramer: It is indeed. While many of them are supposed to have the wisdom of ages, where Zoom meetings-

Will Page: [laughs] The Dark Ages.

Richard Kramer: To face to face pitches for bankers, and but aren't all of these professions about to get smoked by artificial intelligence? And here, we're not talking about people at the bottom end of the pay spectrum, just looking to make a few extra bucks for a few extra hours of work, but some of the most highly paid professionals whose jobs are about to be replaced by computers.

And in that sense, uh, you could have a lawyer that would spend 10 hours drafting your will, or your, your mortgage agreement with your... The person you're buying your house from, but now that's something that ChatGPT, or an AI program, can spin up for you in a second.

Will Page: Well, timely as I spent this afternoon playing around with ChatGPT in my afterwords, it's all loaded up there, and I was trying different variations. But if you go back to the first part of this podcast, Richard, we talked about getting drunk at university.

Let me just say cheers to that because if I look at what ChatGPT is today, and if you asked it to write an essay about the Ottoman Empire today, for me, it resembles a student who's spent too much time getting drunk at university-

Richard Kramer: Yeah.

Will Page: Not enough time attending lectures, and has scrambled to get through the exam to the best of their abilities but that's not gonna be like that forever. It's the riding tide of digitalization, [laughs] as the digits gets bigger, so too does the tide.

It's this doesn't stop here. Now, if I turned to your world of the analyst economy, there's a famous remark from a large international bank, the Chief Operator Officer, I was on stage with him, it was an Andrew Neil in Canary Wharf, and he said to me, "My research budget at this bank is $110 million."

Wow. That's a lot of money to spend on producing PDF reports. And then he said to me, "97% of them will go unread." So, I want to think about the banking community, your world here, and what could ChatGPT do to that?

Firstly, it could write better headlines, so a bit more than 3% actually get read. That would be an interesting use case. Secondly, it could survey the chatter that's out there to find out of all the hype [inaudible 00:28:53] into three major groups, and address those three groups of themes coherently, that could be an interesting use of ChatGPT.

But, thirdly, if you loaded up all your research into ChatGPT, ran the program throughout it with the codex algorithm, I think you could have proprietary information which produces the research for you, so what AI could be attacking in that respect is the analysts themselves.

Richard Kramer: Well, I'll tell you where I would push back, and I'm gonna tell a tale about one of my mentors, a professor in graduate school was an incredibly broad minded guy, he was an anthropoLogist, and an ethnographer, he was a professor in the Department of Landscape Architecture and Regional Planning, and he was also a consultant to State Farm Insurance, which is the largest insurance company in the world-

Will Page: Huge.

Richard Kramer: It's a mutual, and trying to help the CEO and the board understand big picture issues, to understand why is that Japan doesn't grow? Well, they've engineered a deliberate no growth economy because 80% of the arable land is forest, and they have-

Will Page: Whoa.

Richard Kramer: Limited energy resources, and if they were to grow 3%, they would wipe out the... What they have in terms of resources. So he said to me once... And I'm gonna get to the key point on this.

He said, "Everyone will tell you time and again through your education that you need to specialize. You need to get better and better at one thing. But when you're good at a lot of things, everybody will want you. If you're a professor of economics that also has something to say about sociology, and history, or culture, every university will fall over themselves to get you.

Will Page: Right.

Richard Kramer: But what's happened is we've had... In the Academy, people get more and more specialized, hyperspecialized, so where in the Latin Department, the professor of 15 Century Latin can't talk to the professor of 16 Century Latin 'cause they don't quite speak the same language, and there's too much specialization, but for an analyst, or for anyone who has to look at complex problems and solve them, the wider a net you can cast, the more endogenous inputs you can get, the more creative solutions you come up, and the better quality of work you have.

Will Page: So you could have an analyst, you could have 50 analysts, you could have 50,000 analysts, all experts in supply sized shocks to the economy, which is what we have just now, but none of them are experts in military conflict, and not one of them has got an int-... An interest in Russian History.

Richard Kramer: It... Precisely. And then-

Will Page: ChatGPT ain't got a hope in hell in making sense of that then.

Richard Kramer: Can someone then situate that in the context of, "Well, what have we as a society globally experienced?" And very rare that we have experiences for society on a global level. Typically, they're at a country or regional level.

Will Page: Mm.

Richard Kramer: We've all experienced this thing called the pandemic in the past two years. It's affected us in different ways, but in every country in the world, people all of a sudden became hyper aware of an environmental influence that hitherto, they'd been ignorant of.

So, how do you situate that in the context of people reassessing their lives, reassessing their thinking about resources and personal safety? There's a... And my point is the wider net you can cast, the more broad minded you can think, the more you'll be able to outwit the computer programs, which let's face it, they are running algorithms which...

As broad as the learning sets can be, they will come up with a fairly s- s- straightforward answer to problems.

Will Page: They are dealing with no nos.

Richard Kramer: Yes.

Will Page: There's two things, just to wrap that one up there, which is one, it goes back to our discussion about universities in part one, which is I struggle to see the departments and the faculties in university collaborating enough.

Richard Kramer: Absolutely.

Will Page: In fact sometimes, they're driven to not collaborate. The business department doesn't want to speak to the music department. Well, there's this thing called the music business, and you can roll that across the entire curriculum.

The psychology department is speaking to the economics department. Well, one feeds the other. And then second thing is one thing the pandemic irked me about, and I've had this bug in my basement for a long time, is how the BBCs and the CNNs of this world constantly roll out experts in unprecedented events.

Richard Kramer: Mm.

Will Page: "I'm an expert in global pandemics." Really? What's your track record like? [laughter] Let's see the time shares in that data.

Richard Kramer: Well, let me give you one last point before we wrap up, and, you know, I read something today about how what a bust the creator economy has been, [laughter] right, and I re- remember we were talking on a previous podcast, the-

Will Page: That was a good idea while it lasted.

Richard Kramer: The $100 billion creator economy, and we were all gonna be creators, and all you needed... Al Lizzie, our producer sitting next to us needed was to have 5,000 people paying her $10 a month and she was golden, and if we could all just be individual creators.

And it was a classic extrapolation of upper middle class behavior to the mass market, and a classic inability to realize that as we talked about on a previous podcast, we cannot be walking around tossing out fivers to every busker we walk by on the street, or every piece of content we consume on the internet. And there's a limited number of times we can pay attention to someone sufficiently that we feel we're getting value to reward them as a creator.

And to me, taking a... Looking at a higher level of abstraction at that creator economy pitch, I think we were able to say a year ago, "This is just not gonna work that way. There's not gonna be enough people that are willing to support these creators because this is something that is very much an upper middle class thing."

And the same was as if you look at who supports the arts, or who gives to universities, a very narrow segment of the population. You'd like it to be greater, but the economic period doesn't support that.

And when 40% of the people in the US are living at or below the poverty line, you've got a lot of people that simply don't have the resources to be participants in the creator economy.

Will Page: I think going back to the [inaudible 00:34:56] of this podcast, "If there's a bubble that burst, we pricked it first," you certainly pricked the creator economy first. I think in 2021, actually, you called that one as BS.

But I think what's hurting the creator economy is spread and frequency.

Richard Kramer: Mm.

Will Page: To your first point, spread.

Richard Kramer: Mm.

Will Page: The spread of that audience willing to [inaudible 00:35:13] and then the frequency is, how often can you produce that content? Now, I speak of my own specialism of music, but we're having discussions now about whether the TikTok... TikTok-ification of the music industry is meaning people have to be always on.

Okay, but what does that mean for their mental health? I just want to take that as a microcosm of a wider problem. If you want to make it work in the creator economy, the output that you have to produce to get those fivers to come in might exceed your mental, and physical, and health capacity.

Richard Kramer: Yeah.

Will Page: So I think that's just... And that takes me way out of my comfort zone, talking about health issues like that, but we've got to be respectful of if you want to be a sub stack writer, or you want to get to 10,000 people [inaudible 00:35:56] a month.

Richard Kramer: You're on a treadmill. You're on a constant treadmill.

Will Page: You, you know what you are? You know what you are? You're Alice in Wonderland. You're in the Red Queen race-

Richard Kramer: Yeah.

Will Page: Where you have to run as fast as you can in order to stand still.

Richard Kramer: Yeah. And just to wrap up this wonderful episode talking about Will's book, and our themes for 2023, we want to let our listeners know Will and I have never done Bubble Trouble for economic reasons. We don't make money from it all, and we're doing this because we enjoy it, it's fascinating, and we're not eager to be on a treadmill of constantly churning out content for our livelihoods.

There's just so many bubbles out there still to reflect upon, and we look forward in 2023 to digging into some of these issues and getting to an even higher level of abstraction about them. We'll be back next week with Will Page and myself, Richard Kramer, and this has been another Bubble Trouble. Thanks very much for listening.

If you're new to Bubble Trouble, we hope you'll follow the show wherever you listen to podcasts. Bubble Trouble is produced by Eric Nuzum, Jesse Baker, and Julie Nat at Magnificent Noise.

Special thanks this week to Oliver Bloice and Elizabeth Arnold at Platoon 7 Studios in London for helping us record this episode. You can learn more at BubbleTroublePodcast.com. Until next time, on behalf of my cohost, Will Page, I'm Richard Kramer.