The U.S. and Israel attacked Iran and killed its leadership. For the first time ever, Iran responded with its military dead man's switch to shut down Gulf oil and gas.

We are now in a global energy crisis until further notice.

Read the new @bismarckanlys Brief (link below): The whole global economy depends on the flow of cheap oil and to a lesser extent gas. Oil is a necessary input for chemical manufacturing, and thus effectively all manufacturing, and for all transportation.

These are fungible global commodities, so everyone feels the price hit.

Let's talk about something that will shape our future, but no one is yet considering or predicting:

China will eventually open its borders to mass immigration. When it does it will absorb truly astounding numbers of immigrants, if proportional to say what the UK or Canada this will be 200-300 million or so people.

This might sound almost physically impossible, but the surprising almost disturbing truth is that in the modern world it is easy move 200 million people.

In 2023, 4.4 billion passengers were carried by the world's airlines.

Indian Prime Minister Narendra Modi and his party have kept India on track for economic growth and becoming a great power.

Achieving succession and consolidating power will be necessary to fulfill his ambitions for India.

Read the new @bismarckanlys Brief (link below): Modi has definitively broken India's half-century-old political status quo, by appealing to the patriotic Hindu middle class of India.

He is a career politician who rose up through the ranks of his party and has forgone marriage and children to devote his life to politics.

The Cyberspace Administration of China (CAC) has now instructed companies to cease testing and orders of Nvidia chips.

This policy means the growing Chinese AI industry will instead be feeding the Chinese semiconductor sector directly. This news confirms our analysis in the @bismarckanlys Brief from two weeks ago on the strategic importance of the DeepSeek and Huawei partnership.

https://x.com/SamoBurja/status/1963257939675799682

Offering a superior option to China’s stifling universities, DeepSeek's Liang Wenfeng has harnessed the country’s mathematics talent and founded an AI lab capable of advancing technology.

Read the new @bismarckanlys Brief and the first in our new AI series (link below): DeepSeek is a Chinese AI lab that rose to prominence in January when it matched OpenAI's most advanced model at a price thirty times lower.

A small company, it has open-sourced nearly everything and quickly become popular in China, even causing other AI labs to open-source too.

Larry Ellison, the founder of Oracle, is the second-richest man in the world.

He is applying his fortune and his company to making fast progress in medicine and biotech using artificial intelligence and health data collection.

Read the new @bismarckanlys Brief! (link below): Ellison's fortune derives from his 40% stake in Oracle, the enterprise software company he founded in the 1970s and which is worth $700 billion today.

Like IBM or Palantir, Oracle essentially provides the software and IT expertise that most organizations are too rigid to learn.

Northrop Grumman is the third-largest U.S. defense contractor makes unique weapons like the B-21 stealth bombers and silo-launched nuclear missiles.

It is unfortunately another example of a dead player in defense contracting.

Read the new @bismarckanlys Brief! (link below) Formed in 1994 when California-based Northrop Corporation, acquired NY-based Grumman, the company inherits a technological legacy in stealth.

Northrop developed the B-2 Spirit’s iconic curved surface shape, which better redistribute the electromagnetic energy of radars.

One of the key innovations in drone warfare has come, surprisingly, from a poor, heavily-sanctioned country: Iran.

Iran made guided missiles cheap and expendable, which we now call "drones." Necessity may spur further innovation.

Read the new @bismarckanlys Brief! (link below) Iran's Shahed drones are effectively just cruise missiles, with similar range to a Tomahawk or Kalibr. They are slower, but fly lower to avoid defenses. They carry less payload.

But most importantly, they are 10x-300x cheaper, as low as $20-30k per unit, rather than millions.

As far as I can tell, the most notable political science results of the 21st century is democracy cannot work well with low fertility rates.

All converge on prioritizing retirees over workers and immigrants over citizens escalating social transfers beyond sustainability. I think this means we should try to understand non-democratic regimes better since they will represent the majority of global political power in the future.

Such institutional selection theories are completely wrong.

Corporations don’t evolve through natural selection. That requires heritable variance under differential fitness. The culture, technical knowledge, and structure of organizations is captured by personnel not bylaws.

Unless personnel persists, corporations have nearly no heritable variance. This is perhaps a case for why we should clone exceptional employees but has nothing to do with organizational structure.

The origin of successful companies lies with exceptional founders who know how to assemble these organizations. These founders are the inventors of relevant social technologies.

Does this mean creative destruction doesn't have a role? No, not at all. The personnel and machinery in dysfunctional institutions are indeed wasted. They should be reallocated to functional firms. Everyone is better off when they do!

But it is a conceptual and empirical error to think this is the mechanism that creates such firms in the first place! It isn't.

Regardless of the particular measure we use, exceptional institutions do exist, but they are rare. Most things fail. Things that exist have avoided failure—so far. Institutions that we do see are functional enough to persist.

Those who aren't capable of social technology invention are at best making photocopies of functional organizations. The mistakes they make far outweigh any learning. Failure doesn't teach that much.

Dead organizations of the type Dwarkesh is describing make decisions by committee and try to iterate towards local optima. Live players who found and run functional institutions are capable of seeing, considering, and working toward a much broader range of outcomes and working toward novel global optima.

First principle companies lead by live players like SpaceX will *always* outperform bureaucratic or committee driven organizations like Boeing. We've seen this in hundreds upon hundreds of company case studies at @bismarckanlys.

In fact Apple is an instructive case. It is more profitable than ever. It faces no competition. Remember under perfect competition profits fall to zero. Yet, after the death of Steve Jobs it simply and persistently failed to innovate at the same level. Its vast profits are a market failure not a market success: they represent vast misallocation.

It is in fact a dead player, and a slowly decaying functional institution can keep on winning—until it breaks. Which Apple will one day. Unless taken over by a live player.

No committee ever appoints a live player if they can help it, simply because that's how committees work. It has to be somewhat of a hostile takeover like what happened to old Twitter when Elon took it over or what Carl Icahn did back in the day.

What does this mean for politics?

It is precisely because the stakes are so high, and because there is no inherent check on the sovereignty of great powers, that we must work very hard to avoid dysfunctional and extractive institutions in government.

It means we should have much much more creative destruction in politics. Because in politics too machinery, personnel, and, yes, territory are distributed inefficiently. Here too we should embrace first principles thinking and live players.

Great nations and the peoples of countries like the United Kingdom, France, and Germany are today misgoverned in a way very reminiscent of Boeing or RTX or Lockheed Martin or a dozen other companies run on the "portfolio theory of the firm." Those companies and governments are not at all like Nvidia, OpenAI, Anduril, or SpaceX.

And the world is poorer, less technologically advanced, more violent, and less free because of it.

Let's fix all dysfunctional institutions, be they private or public. Out with the portfolio theory of government! In with first principles thinking. Some further recommended reading on this topic:

samoburja.com/functional-ins…

samoburja.com/institutional-…

brief.bismarckanalysis.com/p/the-apple-pa…

It really is looking like the Russia-Ukraine war permanently knocks Europe out of the running as a 21st century power. Europe was set on track to be there 2005-2008. Even for much of the 2010s it was plausible it would recover from the 2008 financial crisis after a lost decade.

If you believe in GDP your intuition should be that Americans are much richer than Austrians AND that Austrians are much richer than Japanese. Per capita GDP:

United States 86,601
Austria 58,669
Japan 32,859

Asiapoors. I'm originally from Slovenia. An Eastern European country.

It's GDP per capita recently surpassed that of Taiwan and Saudi Arabia.

Slovenia 34,544
Taiwan 33,234
Saudi Arabia 32,881

Hungary is a developed liberal democracy that has been continuously ruled by populist, nationalist conservatives for 15 years.

Yet despite this, they have surprisingly not meaningfully changed the country's trajectory.

Read the new, very long @bismarckanlys Brief! (link below) Long-time Hungarian Prime Minister Viktor Orban and his Fidesz party have turned repeated large electoral victories since 2010 into institutionalized power.

Orban skillfully empowered parliament over the courts, making it possible to reform Hungarian society by passing laws.

The fertility discourse is almost always automatically gendered.

I don't think this is right. Both women and men are seeing fertility preferences drop massively.

I know about equal numbers of couples where the man or woman are against reproduction. We should listen to women on why they don't want children. Not just surface but deeply and reflect on the said and unsaid.

Men want fewer children as well (data shows this) and we can and should ask them to get a second answer without ignoring the first.

Sony Group is Japan's most valuable consumer technology conglomerate.

It famously led global innovation in electronics for decades. Succession failure has made it less than the sum of its parts.

Read the new @bismarckanlys Brief:


1/n brief.bismarckanalysis.com/p/sony-suggest…
Sony is the world leader in image sensor semiconductor manufacturing, the largest video game company by revenue, the second-largest music publishing company, and the fourth-largest film studio.

2/n

Intel, the leading U.S. chip designer and manufacturer, missed multiple major technological opportunities.

Its recent pivot to contract manufacturing is heavily backed by the U.S. government.

Read the new publicly-available @bismarckanlys Brief:

1/n brief.bismarckanalysis.com/p/the-attempt-…
The vast majority of Intel's business is designing and manufacturing central processing units (CPUs) for personal computers and servers.

These are all based on Intel's proprietary x86 instruction set architecture, long giving Intel a global quasi-monopoly in PC CPUs.

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This remains one of the best essays on the practice of rationality. Warmly recommend reading it!

paulgraham.com/identity.html Taking this essay seriously has only yielded benefits over the years. It is the main reason I've refused to join or identify with a movement for the last decade.

People who implore you to join one, point to the benefits of group strategies.

99% of smartphones and mobile devices rely on processors using the designs of one semiconductor company: Arm.

But the British firm, now owned by SoftBank, faces a long-term tradeoff between profits and viability.

Read the new @bismarckanlys Brief:

1/n brief.bismarckanalysis.com/p/arms-long-te…
Arm is a small company with a big role. It designs central processing units (CPUs) using the ARM instruction set architecture, patented intellectual property which it also widely licenses.

Over 280 billion chips have been shipped using ARM architectures.

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The storied U.S. defense firm Raytheon builds everything from long-range radar installations to guided missiles.

But today it is just one of a few distinct subsidiaries in a dead player's portfolio.

Read the new public @bismarckanlys Brief here:

1/🧵brief.bismarckanalysis.com/p/raytheon-is-… Since 2023, Raytheon is no longer an independent company, but a subsidiary of the newly-named RTX Corporation.

Raytheon is one of the company's three distinct "business units": aircraft components manufacturer Collins Aerospace, engine maker Pratt & Whitney, and Raytheon.

The Google subsidiary Waymo has deployed self-driving taxis in multiple American cities.

Neither regulators nor hardware costs are likely to impede its slow but steady progress.

Read the new @bismarckanlys Brief:

1/n brief.bismarckanalysis.com/p/google-leads…
Waymo's technology relies on reference mapping and a suite of expensive sensors including lidar. This limits the vehicles' operational areas.

This is a contrast to, for example, Tesla's self-driving which focuses on mimicking human vision with machine learning on cameras.

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U.S. manufacturing is in deep trouble because modern U.S. executives treat firms as financial products rather than firms.

Artificially balanced "firms" optimized to look good on financial metrics do not sustain traditions of knowledge nor infrastructure. They are dead players. The theory of the firm by Robert Coase nicely explains how a for-profit company can be a functional institution.

In contrast the amorphous corporation that does everything and nothing, cannot even in principle solve either component of the succession problem.