a16z Podcast - a16z Podcast: On Morals and Meaning in Products, Business, and Life

Episode Date: March 21, 2018

Focusing only on the technical, "crunchy, wonky stuff" behind policies or products sometimes misses the humanity at the center of why we're doing the thing in the first place. Because systems -- whether algorithms and artificial intelligence, or capitalism and other such "operating systems" -- need to work for people, not the other way around. Or so observes economist and author Arthur Brooks, president of the American Enterprise Institute (AEI) -- a public policy think tank focused on free enterprise (and where he recently announced he will be passing on the baton after a decade of leadership). So how does this philosophy of human dignity and human potential apply to automation and jobs, to education, to entrepreneurship? And not just in the "conventional" entrepreneurial sense of building companies and products -- but in changing one's life? The answer, argues Brooks in this quick, hallway-style episode of the a16z Podcast with Sonal Chokshi (recorded in one of our earlier Washington, D.C. roadshows) -- has to be rooted in the philosophy of human meaning. And that involves truly needing each other... so no one is left behind given technological progress and innovation. image credit: Maria Eklind/ Flickr

Hi everyone, welcome to the A6 and Z podcast. I'm Sonal. Today's episode is about the morals, yes, morals and meaning of entrepreneurship, of all kinds, from starting a business to building products to changing one's life. It's based on a quick hallway style conversation, recorded in one of our previous Washington, D.C. road trips with Arthur Brooks, president of the American Enterprise Institute or AEI, a public policy think tank focused on free enterprise and more. touch on topics such as automation, jobs, education, immigration, and other topics in this episode. But first, we begin by quickly touching on his background and where he began, since Arthur will be passing on the baton next summer at AEI after a decade leading it. How does one go from being a professional horn player to going Durand, to getting the PhD in economics, to getting to the AEI? I'm sorry to the university to AEI. Most people that are listening to us have some weird background. They've tried a bunch of different things, and that's the New America. When I was 19, I dropped out of college. I'm

dropped out, kicked out, splitting hairs. And I went on the road playing music. I played chamber music for a long time. I played a couple of years with a jazz guitar player named Charlie Bird. I wound up in the Barcelona symphony. When I was in Barcelona, I got completely interested in math, in statistics, in political science, and especially in economics. And so I started taking a lot of economics classes, and I found it was kind of like a

crystal ball. I could describe so much a behavior. I mean, it's not perfect. But I found that it was sort of changing the way that I saw the world. And so I decided that's what I wanted to do. do. And I stopped being a musician, went back to school, finished my bachelor's and my master's in Ph.D. And I found when I was in academia that I could even go back to the think tank world and have a lot of impact in public policy. And that's why I wound up at AI.

That's so interesting. One of the things you talked about that you studied is life hacking. And it's a phrase I actually don't like the phrase because I don't even know what that means and it feels like a buzzword. But what was that to you? What did that mean? Well, I'm very interested in the human performance movement. And as a behavioral economist, I'm particularly interested in the research that shows how people can optimize their own life. And there's a huge amount of it. It's in the leadership literature. It's in the social psychology literature.

It's in the literature on metaphysics and applied philosophy. It's just all over the place where you find people that are looking for a different way of solving old problems, which is incredibly entrepreneurial. I mean, what you find is the most inflecting entrepreneurs in the Silicon Valley. That's what they've done, too. Well, we can do that with respect to human performance as well. It's a frontier of research to look at how we can use ourselves in our lives as laboratories. Is the goal just to be happier?

It's actually to have more meaning. That's really what people are all about. They're looking for meaning. And it's taken me a long time to come to that. I wrote a book on happiness called Gross National Happiness in 2008. It's actually, by the way, a really relevant topic because one of the topics that's top of mind is how GDP is maybe not the right measure or the measures that go into creating it are wrong, or it doesn't capture the dematerialization of goods. And I've heard people actually make an argument

for a gross happiness product. Happiness really isn't to be all and all. I'll give you a good example of that. Nobody has kids because kids bring immediate happiness. On the contrary, you find all the evidence suggests that every additional kid you add to your house lowers your happiness. You do it for other reasons.

You do it because kids can create value in your life and value in the lives of other people as you send them into the world. How can I add more meaning to my life and to the lives of other people. So the life hacking movement isn't really hacking. It's the systematic, scientific, empirical investigation in the search for meaning.

So how does that connect to your work in technology and policy? I've noticed this thing, especially a lot of people I meet in Silicon Valley, where there are a lot of people who are in the mindfulness movement, they're into entrepreneurship, they're building products, they're into the quantified self. There's a lot of things that sort of connect their personalities, and I can't quite figure out what the underlying theme is. Because I personally am not into all of those things.

I'm into maybe one of them, but connect the dots for where you are and the work you're doing with technology and policy today. Well, just in general in terms of policy, we believe that the free enterprise system and American leadership are good things. And they lead more people to lead a better life when we do these things right. But you have to have good public policy. And some of it is really nutty, crunchy, wonky stuff. It's how to get tax policy right, how to get foreign policy right.

But if it's going to be meaningful, and this is how I answer your question, it has to be rooted in a philosophy of human meaning. In other words, the why of your work is really super important. We have two answers to the why question of our work, and that's because human dignity and human potential are important. That's really what it comes down to. We all have a natural right to human dignity, and that there can and should be a great future for everybody.

So when we're not rooted in that, it's not meaningful. That's interesting you mentioned moral rooting because it's like a word that people never even mention when they talk about what they're building, whether it's a business, a family, a life for themselves. But one of your most recent books argued the moral case for optimism, arguing the case for what you do, which is for a free enterprise and free society. Talk to me about why you made that link in that book. Too often, those of us who work in the free enterprise system, whether we're in policy or whether people are doing a startup or whatever it happens to be, intimately

involved in the free enterprise system, either studying the system or using the system, they don't think about the human side of their work. They think about down the road, the instrumentalities about it, the money that's involved in it, or in the think tank world, we'll talk about how it's more efficient than the alternatives and how it leads to more GDP than socialism or something. But that's really just about money. It's about numbers. It's not really looking at the human.

Exactly right. And if you're going to take a humanistic approach to these things, you have to make the moral argument. Does this help people more or help people less? And there's a historical grounding of this. Adam Smith wrote the wealth of nations in 1776 where it talked about the invisible hand and it led to these ideas of laissez-faire, et cetera,

and it guided the way that we understand modern capitalism, but that wasn't his most important book. His most important book was written 17 years earlier and it was called The Theory of Moral Sentiments. Oh, I didn't realize that. Yeah, and Adam Smith believed that was a more important book and he came back to it and worked on it for the rest of his life until his death.

The theory of moral sentiments talks about what a good society is all about, how we're supposed to act, how we're supposed to treat other people, how it's important to be honest and forthright and to have integrity and to seek higher things. Adam Smith was not an economist. Adam Smith was a moral theologian.

Economics is like a religion and the way people fight about it. It actually feels like religious war of ideas sometimes. Yeah, and that's a mistake. It really is. So as an economist, I have to remember that I should be a moral theologian. And software engineers that are listening to this

should be moral theologians. What is the meaning behind your work? Right. Back when I was in the music business, My favorite composer was Johann Sebastian Bach. He lived from 1685 to 1750, unbelievably prolific. He published a thousand pieces of music. And he was asked, before he died, he was a famous teacher during his life, not a famous composer.

He was asked, why do you write music? And he said, the aim and final end of all music is nothing less than the glorification of God and the enjoyment of man. And I thought to myself, whether you're religious traditionally or not, the idea of doing things for others to lift them up. It's like having a higher reason than just yourself. A lot of people in the Valley that are working super hard, they're writing code, for example. How can you tie the code you're writing to the enjoyment and the edification of other people?

If you can see that, I know it's not going to be super direct every day. I got it. But if you can see that, then suddenly the technical aspects of your work take on meaning. That's the moral case for the free enterprise system. One of the things that I've heard from a lot of entrepreneurs in terms of what drives them. Of course, every job has mundane aspects to it.

One of the driving things is this idea of a mission, that they're on a mission for their company, they believe in a better way, that they want to make the world a better place to their product, that they're building. And that's one of the things that helps give them that meaning. Absolutely.

Which is kind of an interesting way of connecting the dots. I want to pause for a moment. You mentioned earlier about how there's this tendency to divorce sort of the humanity from these statistics and the numbers of the efficiency analyses.

What's your take on automation and jobs and the future of work. It's a hoary issue because technologists say things will be better. You have to believe in it. But we're in the middle of a disruption, and you don't really see that effect immediately for everyone. So what are your thoughts on that topic? Well, it's very tricky, and it is true that there is a disruption.

And by the way, this is nothing new. All throughout history, we've had these dislocations and disruptions as technology and innovation has changed the way that we do things. And technology, innovation is nothing more than a new way of blending old inputs. labor, capital, land, entrepreneurship, blending them in different ways. It's not that you have to innovate in terms of software or biotech or something. It's just that you do things in a new way. And that changes the inputs, and people are involved in the inputs,

and that dislocates people. And we're in the middle of a big one of these things. We move from the industrial revolution to the post-industrial revolution to the idea revolution, and certain people are left behind. This blended, by the way, with the Great Recession in 2008, 2009, such that basically 80% of the income distribution. The bottom 80% has experienced zero economic growth.

Right. This is what's top of mind. This is why political populism is so important to people right now. Either you have one variant of populism says raise the drawbridge. Don't let it any immigrants. It's foreigners fault. And the other side says off with their heads. It's rich people who've got your stuff. And both of those approaches are nonsense. Neither one

of those approaches is legitimate. But you understand the sentiments that go on behind that because America is a land of progress. So if I go to Spain, where I live for many years, people will say, what are you guys complaining about? You're getting three squares a day. But for us, that's not enough.

Virtually everybody listening to us on this podcast didn't come just to get three squares. They came to make progress and see their kids make progress. And when you see progress stop in the bottom 80% of the population, you're going to get a lot of frustration. So the real key is what are we going to do to make more progress, more mobility, more opportunity, to lift people up,

and so they can lift themselves up. In a nutshell, here's what it comes down to. It's not good enough for us to help people. We have to need more people. Our society and our culture and our economy doesn't need enough people. It's also true of the displacement of manufacturing jobs and people who no longer have jobs due to automation. And yet, automation is also creating a better life for many in the long term.

How do we then reconcile the short-term displacement and the fact that some of those people will never work again or that there may be new skills that they didn't. How do we... Well, to begin with, we have to make sure that we're not having the same conversation 10 years from now. That means we actually need to have policies. The most important thing that we need to do

in terms of policy in this country to start solving this problem is an education system that meets our needs. I did a lot of work in mathematical modeling and AI before I came to the American Enterprise Institute and I have to say that I thought that the natural trajectory of things was everybody who was going to do work

in, I don't know, genetic algorithms and neural nets. But no, the future, of the economy is everybody being needed in the things that actually are necessary. So here's what I want you to consider with me for a second. We have very high rates of youth unemployment in the United States, especially for those who haven't finished high school or didn't go to college. At the same time, we have millions of open jobs in the skilled trades. Why is this?

Because the gold standard for work right now is going to college and being a knowledge worker. The American Welding Association, I just learned this. there are 300,000 skilled welding jobs that are open today. We can't find people to do them. These are high-paying jobs. I mean, I talked to a guy who did a welding training when he was in prison. His first day walking at a prison, he had a $58,000 job offer with a company car. Now, what's going on where we have a society where our priors are so goofed up

that we have this elitist, fixed idea that everybody's got to go to college, just like I did, and just like you did, so they can have some. sort of coding job when that doesn't match their skills and passions. So you're arguing for like an apprenticeship type model? We need a national apprenticeship system in the trades. We need a voucher system for people at every age to go to trade school. We need to actually start tracking and matching people to their skills in their junior and senior years. That's just like in Germany, like the gymnasium system actually.

What we could do it the American way, which is to say, I'm not going to look at a kid and have them take some sort of test and say, you are a welder. No, that's not what I'm going to do. I just want people to be able to pursue their skills and passions and be successful in life in jobs that you can't outsource. I do want to mention a line from Harry Potter where Dumbledore tells Professor Snape because he was a Slytherin, which is one of the four houses of Harry Potter's world, and he could have probably been a Gryffindor, which is like the house everyone wants to be in, the cool

house. And he set the line, sometimes I worry that we sort too soon. And I found that to be incredibly moving because I'm not born in India, but my family's India, and the caste system is basically almost exactly like this notion of dividing people into four houses. And this idea that you can essentially be sorted and you have to decide too soon, it doesn't leave room for not fitting in one category. So how do you sort of reconcile this notion of an apprenticeship system and the skill-based approach with this limitation? Well, you give people more choices. So that's why I wouldn't want the government to be tracking

people. If you go to the Great Paradise of Northern Europe, there are countries where it's very difficult to pick your major in college. Right. So we hear political candidates say, yeah, we need free college in America. Well, you go to the countries that are free college. And you have limited choices where you get to go to school and even when you get to study. Because if you have the government pay for everything, the government gets to decide everything, too. The free enterprise system really is free enterprise, free enterprise for our lives as well. We just need more choices such that kids can learn new things in high school, that they can go to trade school instead

of college. They can go to college later if they want. We just need more choices for people. And I'm especially interested in ways that we can have a worker reentry programs for military, for people who are coming out of prison. The whole point is, how do we make every single person necessary? This is our moral goal. Tolerance is not the goal. That's too low a standard. Just living together is not good enough. We need to need each other.

And we need systems that say, how can I need somebody who has been left behind? The modern economy is so interesting in India today because the world is waking up and saying, we need poor Indians. I mean, it didn't say, let's go help them. Charity's not going to get the job done. It said, actually, we need these people in their initiative, their entrepreneurship, and their energy, and their hard work. I mean, that's how... That's the driver.

That's what vacuumed my family into the United States and yours, too. There's these words on the base of the Statue of Liberty. Give us your poor. It has a moral implication to it. So, to switch gears for a moment, how do you think about AI in this? I mean, you had a background in AI, and we've talked about meaning. Yeah.

happens when part of those entities that we're talking about the human meaning become algorithms, bots, AI? Well, AI is like any other operating system that we would use that would help organize our lives and give us greater prosperity. AI in a very real way is like capitalism. Capitalism is a central operating system on how our economy works, and we have two choices. We can either make capitalism work for us or we can work for capitalism. Anytime you work for a system, you're upside down. going to lead to tears. Systems have to work for people. People shouldn't work for systems. People who are designing systems who are listening to us, they understand that. If people are supposed

to work for the system, the product is going to fail. The product has to be in service of people in their everyday lives. It doesn't mean your product is going to succeed and your startup is going to be successful, but it is indeed a necessary condition to that. I mean, that actually translates even down to the user interface level, like how thoughtful it is to the person, and how easy it is to use. Exactly right. And the same thing is true with capitalism as a central operating system of our economy. And when capitalism works for us to enhance our lives to give us greater freedom, to make it possible for us to love one another in a way that our prosperity can grow, we can share with one another, and people have better lives, are not dying of

preventable diseases, which is what the free enterprise system has done in pulling two billion people out of poverty since 1970, then it's good. But when people are working for capitalism effectively, that leads to the tyranny of materialism. Same thing is true of AI. Artificial intelligence is like capitalism. It is a wonderful thing for enhancing. what we do, and there's a tremendous amount of it embedded in what we do all the time, and that can enhance our lives such that we can be more fully alive. It can free us up for more humanity and less drudgery. But the dystopian fears that people always have is that people are going to be working for artificial intelligence effectively, that the algorithm is going

to be reversed. The conversations about AI are actually parallel to the conversations on bioethics. There are a lot of things that we can do that it's not necessarily the case that we should, just because we can. The people who believe in the inevitability of technological advance in all areas at all times, these are people who have basically decided that morality is not important.

They believe in the wealth of nations without them theory of moral sentiments. Wait, just to pause for a moment, to them technological advance is the advancement of humanity. It's not because that elevates technological advancement to the level of religion. And there are a lot of people who have religions

they don't even know that they have religions. I totally agree with you. pretty much everyone in the U.S. who thinks they're an atheist is actually completely religious but for something different like Steve Jobs or a MacBook Pro or Star Wars. Yeah, and we have these sort of mildly sacramental activities and the things that we do

that don't really advance a particular cause but they represent a piety. I'm a traditionally religious person and I've made this conscious choice because I realize that the world of religion gives me something that my intellectual life can't. These are different worlds and they're highly complimentary. Well, you know, Arthur,

you actually gave me a great segue to something I've been dying to talk to you about, which is your work connecting entrepreneurial theory and what conventional entrepreneurship looks like and that world of ideas. And I want to hear your thoughts on that because you spent a lot of time studying this, documenting this, teaching about it. Yeah, I wrote a book once called Social Entrepreneurship, a textbook, so I don't recommend that anybody go out and buy it.

And I thought an awful lot about how entrepreneurship occurs outside of conventional frameworks. So entrepreneurs really have a few things in common. They put capital at risk. They're in search of explosive rewards. They use resources that they don't currently have in hand. They really all have these three things in common. When I study social entrepreneurs, people who, everything from start a religious temple to a chamber music society to something that does a microlending program in a very poor country,

what they have in common is they put a different kind of capital at risk. They put social capital or cultural capital or linguistic capital or something at risk. Fascinating. There's in search of explosive rewards that are not denominated in dollars. They want lives saved, people listening to great music, people who are exposed to a religion for the very first time, and they're counting on resources they don't currently have, whether those are dollars or not. So the entrepreneurship experience is the entrepreneurship experience, whether or not is the conventional

one or not. And how do you define conventional? Conventional is how we think of it in the economy. So a startup that hires a bunch of people, you wait for the curves to cross between. revenues and costs, you go to IPO, et cetera. And when you're dealing with social entrepreneurs, they use the same algorithm, but they have a different currency. They denominate the values in a different way.

The other thing to keep in mind that we study a lot, and this is how it impacts on ideas, importantly, I think, is that the most conventional entrepreneurs look for demand that exists but is currently unmet. Visionary entrepreneurship is the kind where the demand doesn't even exist yet. The reason that Jobs was such an inflecting visionary character was because he believed in latent demand. So every two to three years, he would come out with a product and say, people are going to need this and they don't even know it yet.

That's what the most amazing entrepreneurs have always done, is to work on a demand curve that's only in the ether. I think about this an awful lot because me and my 225 colleagues believe that a competition of ideas is fundamental to a good and free society, and that's not a specific tangible product. The ideas truly are in sort of the ether of our imagination. So I'm very interested in the iPhone model in the world of pure ideas. And so even when you roll the product out, it's not going to be a physical thing.

It's going to be a new way of thinking. And there's going to be a demand for this new way of thinking. You've mentioned the word inflecting a few times. And I don't think I've actually really ever heard it in that way. I've heard inflection point or inflection. But what do you mean by inflecting? If you have a concave curve that's going upward, but it's, increasing less and less and less and less.

An inflection is one that would start to make it convex after that and make it start going up even faster and faster and faster. So you can imagine how inflection is really important if you go into an old industry. And it's like, yeah, we're making money, but we're making less and less, and things aren't going to go right. What can we do to kickstart it so that it actually looks like an early stage startup? That's what inflection is all about. So when I talked about an inflecting idea, it's a person or idea that goes into an

extant social system and stimulates it to suddenly get really fast and really good. You find great spiritual leaders are inflecting leaders. You find that tremendously visionary entrepreneurs can be the inflectors of a particular space and a new idea can do that as well. That's a really sexy concept and I think it would help to ground it. What are the implications concretely for policy, technology policy in particular? How do you sort of take all those things and connect them into what we need to do next. Well, you start off by remembering the why of what you do. What can you say in seven seconds that explains the why of what you're all about?

If it's basically, if you say, okay, tell me about your company. And you've got 30 minutes, that's very unlikely you're going to inflect the space. Right. On the other hand, if you can actually say, I guess it's in 140 characters less, if you can say, we believe in the best life for the most people. If you're a politician, you can say, I want to go to Congress so I can fight for you and your family. whether you vote for me or not. If you can say something that has moral content

about helping other people, then you're on the right track. Step number one is rooting what you're doing in the why of your work. It doesn't have to necessarily be moral, but you're saying it has immoral. You know, actually, it does have to be moral. Because it has to say

what's written on your heart. That's the necessary condition. By the way, products and policies all have a lot of things in common. You're mixing up old inputs in new ways. Both have legacies, both have, new things for a better way. That's a great analogy. Conventional thinking about entrepreneurship thinks about it in terms of starting a company, starting a firm. But real entrepreneurship is a way

of life. And the most entrepreneurial people are people who put their capital at risk. And who puts their capital at risk? Their language capital, their social capital, and their spiritual capital, and their cultural, everything. Those are immigrants. And that's an incredibly important thing to realize because immigrants are doing startups. with their lives. Every single person listening to us today can be an entrepreneur, no matter where they are in their professional lives, by seeing their own life as a startup. Where do I want to be in a year and five years? Once we bring the ideas of entrepreneurship to bear in our everyday lives, then the vistas open up. I mean, the aspiration just doesn't know any boundaries. That's the American

dream at the micro level, and that's what I believe I'm here to fight for. That's great. Well, Adler, thank you for joining the A6 and Z podcast.