(This will begin a series of posts about the art of thinking strategically in the Frankensteinian world we find ourselves in today.)

Don’t misunderstand the title of the post. I am in love with ideas. I collect all sorts of ideas across many diverse disciplines and store them away either to use or to put into my cabinet of curious ideas to look at occasionaly. The ideas I use regularly tend to be built on simple, powerful, and timeless principles. As a group, the ideas I use, all have tremendous explanatory power as well as the ability to reduce cognitive load because of their simplicity and power. A quick list include The Golden Rule, Occam’s Razor, Bayesian thinking, exponential behavior, leverage, controlling what matters, form and function, cause and effect, opposites (Yin and Yang), interconnectedness, and others. They serve as guides and signposts to help guide me through the maze of of patched up and stitched together systems we find in the world today. 

And yet, with all of their power, ideas have a dark side. There is a problem with them. In fact, there are three problems with them, that when combined, make operating in Frankenstein’s World even harder. The three problems, which we will discuss in turn, are:

1. Ideas can be weaponized faster and better than at anytime before today. 
2. The Internet is the ideal channel to broadcast bad ideas over. 
3. The shelf life of ideas (the finite time during which they remain relevant) is decreasing. 

Humans have the unique ability to weaponize anything around them to increase leverage, inflict harm, and kill. We’re good at it, honed by thousands of years of experience. From using the power of supreme deities to incite wars of religion (Crusades and Jihad) to racial supremacy (the Master Race) to extreme economic policies (The Great Leap Forward), weaponized ideas are far more powerful than swords, guns, bullets, and bombs, resulting in some of our greatest catastrophes and the deaths of hundreds of millions. What is new is the science and technology behind this weaponization. Fueled by cognitive research, we have a much greater understanding of how the brain works. Technology companies use this to command your attention by hijacking System 1 through the amygdala forcing an immediate response. We are good at telling sticky stories that grab us and compel action. Add AI to the process and you have an entire new industry creating AI slop (low quality content) turned out in exponential numbers. The insidious nature of this lies in that when ideas are presented as stories with their own set of facts, we actually believe we are thinking rationally with System 2. We accept them without fact checking. System 2 is actually bypassed. 

The second problem is the reach of the Internet. As of today, over six billion people on the planet have access. This ubiquitous access means that today’s weaponized ideas are much more viral than at anytime in the past. The Italian programmer Alberto Brandolini captured it best in his law which states that the amount of energy required to refute bullshit is an order of magnitude greater than the amount required to create it. For that reason, it is often referred to as the Bullshit Asymmetry Principle. A lie can literally travel around the world while the truth is getting dressed. When the lie arrives first, it becomes entrenched in the mind like a tick. The cost and effort to dislodge it are enormous. All of this leads to where we find us today; a world awash in exponential loads of bullshit of conspiracy theories, misinformation, and disinformation. 

Lastly is the shelf life of ideas. All ideas have a value proposition associated with them which changes over time as everything evolves. If the idea cannot be adapted to accommodate change, then it is no longer useful and is replaced by other ideas. We sometimes call this the “marketplace of ideas” in which the best ideas win out. In today’s world of bullshit, that is no longer the case. Outdated ideas tend to stick around even though they may be outdated. This increases the cost to figure out which ideas are still relevant to us. This curation process is most important thing we can do and yet is largely neglected in today’s world. It is not taught in schools.

As an example, take zero percent interest rates that were in place for over a decade from 2008 to 2015 and then 2020 to 2022. An entire generation of bankers and financiers used the low nominal rates to fuel massive leveraged buyouts and inflated asset valuations. The return of interest rates have now caused private equity firms to change how they operate without low interest rates, and yet, higher interest rates have been the rule, not the exception. 

Or take the idea of interstate war. Once thought to be relegated to the dust bin of history, Putin proved otherwise in 2022 with the war in Ukraine. This coincides with the return of Great Power Politics. After the end of the Cold War, the United States was left as the sole superpower in the world. Unipolarity reigned supreme. Now we find ourselves in a multipolar world with strategic rivalries between the United States, Russia, China, India, and the European Union. In this mode of competition, the idea of a global supply chain now looks more like a strategic vulnerability called a chokepoint than an excellent business strategy. You get the concept. Ideas come in and out of vogue depending on how the world adapts. 

We see this play out in the headlines today. AI companies are in a race to build AI data centers. The idea is that specialized data centers are needed to process the immense workloads AI requires. OpenAI for example, is expected to spend up to $1.4 trillion dollars over the next decade on Stargate, a global network of connected data centers. States are rolling out the red carpet and promising tax breaks in an effort to attract these centers. Stock analysts talk about the AI arms race and gush enthusiastically about the opportunity these stocks represent for investors. AI mania is here. There is a catch though. Many of the data centers being built or in planning will require vast amounts of energy (similar in consumption to large metropolitan areas and not planned for in the current electrical grid), consume vast amounts of water for cooling, and return polluted water to the environment. When those variables are factored in, the shine goes off the AI data center idea. 

We will see the weaponization of ideas centered on the new fed chair Kevin Warsh, who believes the fed is operating on outdated models. Along with treasury secretary Scott Bessent, both were mentored by Stanley Druckenmiller, the legendy hedge fund manager for Dusquesne Capital. If Warsh does indeed follow through and change how the fed operates, look for a clash of ideas over topics like how inflation is measured, how much forward guidance the fed should offer, and how much reduction will occur on the fed’s balance sheet. Investors who do not recalibrate to match the new fed process will find the upcoming journey much more difficult than in the past. 

To recap, the problem with ideas is that today we can weaponize ideas faster than ever before and disseminate more widely and quicker than ever before. At the same time, many of the ideas we latch onto are suspect. The question now is how to deal with it. We can no more give up ideas than we can stop breathing air. But there is one thing we can do. When faced with the most critical of issues, we can change our approach to tackling complex systems and the problems that arise from them. The following are strategies designed to effect this change. 

Become hypothesis driven. Rather than let ideas and solutions drive your thinking, develop hypotheses and educated guesses that explain the behavior and facts you are witnessing. This is the polar opposite of being idea driven. Rather than start with a solution looking for a problem, you start by defining the problem and then looking for the best solution. While not applicable for everyday life, hypothesis driven thinking is basically the scientific method applied to complexity. Done correctly, you avoid the pitfalls of the problems with ideas. 

Assess the situation thoroughly. Every complex situation we find ourselves in is unique. Complex systems are all custom made of multiple layers and components interacting together. The problems complex systems create are often called Wicked Problems, problems that are difficult to solve because of their constantly changing, and often contradictory nature. You have to understand the situation at hand thoroughly which means the elements involved and how they react with each other. Relationships are critical as they can identify potential feedback loops. 

Study history. Finally, study history. Life is not a lab in which we can repeat experiments over and over again to see what works and what doesn’t. In life, we are called upon to make choices and live with the results of our decisions. One of our most powerful guides is history, which is a collection of all ideas, experiments, tweaks, and adjustments humans have made over the centuries. In this view, history can be read as how our ancestors dealt with their own wicked problems they faced, their thinking around those problems, and the ideas they used to tackle them with. History is the closed thing we have to the ability to repeat an experiment. 

Ask questions. Questions are our most important cognitive tool. They can clear fog and highlight promising paths to follow. The two most powerful questions are what and why. Why seeks the element of motivation while what seeks the elements of cause and effect. Together they form the basis of powerful thinking. Questions are a manifestation of our curiosity, which is our ultimate superpower. Curiosity drives us to explore the unknown. When we explore two great things happen. First, we become aware of our situation and surroundings. Increased awareness is always a good thing, helping us separate fact from fiction. Second, curiosity drives us to getting closer in touch with reality. Seeing something we do not understand indicates there is something off with our worldview. There is a piece missing or wrong. Questioning the situation drives us to update the models of reality we have in our heads. Stay curious and ask questions.